##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K/A


Amendment No. 2


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


For the Fiscal Year Ended December 31, 2004


Commission File Number 1-8485


Milacron Inc.








|                         |  |                      
|------------------------ |  | ---------------------
|Incorporated in Delaware |  | I.R.S. No. 31-1062125




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


|                               |  |                                           
|------------------------------ |  | ------------------------------------------
|Title of Each Class:           |  | Name of Each Exchange on Which Registered:
|Common Shares  Par Value $.01 |  | New York Stock Exchange, Inc.             

þ o


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DOCUMENTS INCORPORATED BY REFERENCE: None










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MILACRON INC.


2004 FORM 10-K/A


Amendment No. 2


TABLE OF CONTENTS


|                                                         |  |                                                                                           |  |      |     | 
|-------------------------------------------------------- |  | ----------------------------------------------------------------------------------------- |  | ---- | --- | 
|                                                         |  |                                                                                           |  | Page |    
|                                                         |  |                                                                                           |  |      |    
|                                                         |  | Explanatory Note                                                                          |  |      | 2   | 
|PART II                                                 
|Item 6.                                                  |  | Selected Financial Data                                                                   |  |      | 4   | 
|Item 7.                                                  |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations |  |      | 5   | 
|Item 8.                                                  |  | Financial Statements and Supplementary
    Data                                           |  |      | 34  | 
|PART III                                                
|Item 9A.                                                 |  | Controls and Procedures                                                                   |  |      | 99  | 
|                                                         |  |                                                                                           |  |      |     | 
|PART IV                                                 
|Item 15.                                                 |  | Exhibits and Financial Statement
    Schedules                                            |  |      | 104 | 
|                                                         |  | Index to Certain Exhibits and Financial
    Statement Schedules                           |  |      | 104 | 
|                                                         |  | Signatures                                                                                |  |      | 105 | 
|EX-11.1: STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
|EX-23.2: CONSENT OF EXPERTS AND COUNSEL                 
|EX-31.5: CERTIFICATION                                  
|EX-31.6: CERTIFICATION                                  
|EX-32.2: CERTIFICATION                                  



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EXPLANATORY NOTE










|                        |                                                |              |   |       |            |  |   |               |    |  |              |       |    |  |   |       |   
|----------------------- | ---------------------------------------------- | ------------ | - | ----- | ---------- |  | - | ------------- | -- |  | ------------ | ----- | -- |  | - | ----- | --
|                        |                                                | Three Months |   |       | Six Months |  |   | Nine Months   |    |  | Year         |      
|                        |                                                | Ended        |   |       | Ended      |  |   | Ended         |    |  | Ended        |      
|                        |                                                | June 30,     |   |       | June 30,   |  |   | September 30, |    |  | December 31, |      
|                        |                                                | 2004         |   |       | 2004       |  |   | 2004a         |    |  | 2004         |      
|                        |                                                |              |   |       |            |  |   |               |    |  |              |      
|As originally reported: |                                                |              |   |       |            |  |   |               |    |  |              |       |    |  |   |      
|                        | Net loss per common share  basic and diluted: |              | $ | (0.60 | )          |  | $ | (1.07         | )  |  | $            | (1.28 | )  |  | $ | (1.34 | ) 
|As corrected:           |                                                |              |   |       |            |  |   |               |    |  |              |       |    |  |   |      
|                        | Net loss per common share  basic and diluted: |              |   | (0.99 | )b         |  |   | (1.50         | )b |  |              | (1.72 | )b |  |   | (1.73 | )c
|                        | Increase in net loss per common share          |              |   | (0.39 | )          |  |   | (0.43         | )  |  |              | (0.44 | )  |  |   | (0.39 | ) 






|    |  |                                                                                                                                                       
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Net loss per common share for the three months ended
    September 30, 2004 is correct as originally reported and is
    therefore not being restated.
|   
|(b) |  | Beneficial conversion feature valued at approximately
    $18.0 million.                                                                              
|   
|(c) |  | Beneficial conversion feature valued at approximately
    $15.9 million.                                                                              

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| |   |                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------
| |  | Part II  Item 6  Selected
    Financial Data                                                                  
|
| |  | Part II  Item 7 
    Managements Discussion and Analysis of Financial Condition
    and Results of Operations
|
| |  | Part II  Item 8  Financial
    Statements and Supplementary Data                                              
|
| |  | Part III  Item 9A  Controls and
    Procedures                                                                
|
| |  | Part IV  Item 15  Exhibits and
    Financial Statement Schedules                                              
|
| |  | Exhibit 11.1  Statement Regarding Computation of
    Per-Share Earnings                                        

3



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PART II







|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data

Item 6 has been amended in this Form 10-K/A to
revise the applicable loss per common share amounts for the year
ended December 31, 2004 to reflect the restatement and to
add a footnote regarding such revisions, but has not been
otherwise updated or modified.


|                                                                                                             |                     |                                                 |       |       |       |         |        |      |       |      |        |      |       |      |         |       |      |      |         |       |      | 
|------------------------------------------------------------------------------------------------------------ | ------------------- | ----------------------------------------------- | ----- | ----- | ----- | ------- | ------ | ---- | ----- | ---- | ------ | ---- | ----- | ---- | ------- | ----- | ---- | ---- | ------- | ----- | ---- | 
|                                                                                                             |                     | 2004                                            |       |       |       |         |        |      |       |      |       
|                                                                                                             |                     | (as restated)                                   |       |       | 2003  |         |        | 2002 |       |      | 2001   |      |       | 2000 |        
|                                                                                                             |                     |                                                 |       |       |       |         |        |      |       |      |        |      |       |      |        
|                                                                                                             |                     | (Dollars in millions, except per-share amounts) |      
|Summary of Operations                                                                                        |                     |                                                 |       |       |       |         |        |      |       |      |        |      |       |      |         |       |      |      |         |      
|Sales                                                                                                        |                     | $                                               | 774.2 |       |       | $       | 739.7  |      |       | $    | 693.2  |      |       | $    | 755.2   |       |      | $    | 974.5   |      
|Earnings (loss) from continuing operations before cumulative
    effect of change in method of accounting(a) |                     |                                                 | (51.3 | )(b)  |       |         | (183.7 | )(b) |       |      | (18.7  | )(b) |       |      | (28.6   | )(b)  |      |      | 48.2    | (b)  
|                                                                                                             | Per common share(c) |                                                 |       |       |       |         |        |      |       |      |        |      |       |      |         |       |      |      |         |       |     
|                                                                                                             |                     | Basic                                           |       |       | (1.72 | )(d)    |        |      | (5.02 | )    |        |      | (.52  | )    |         |       | (.80 | )    |         |       | 1.26 | 
|                                                                                                             |                     | Diluted                                         |       |       | (1.72 | )(d)(e) |        |      | (5.02 | )(e) |        |      | (.52  | )(e) |         |       | (.80 | )(e) |         |       | 1.25 | 
|Earnings (loss) from discontinued operations                                                                 |                     |                                                 | (.5   | )(f)  |       |         | (7.2   | )(f) |       |      | (16.8  | )(f) |       |      | (7.0    | )     |      |      | 22.8    |      
|                                                                                                             | Per common share(c) |                                                 |       |       |       |         |        |      |       |      |        |      |       |      |         |       |      |      |         |       |     
|                                                                                                             |                     | Basic                                           |       |       | (.01  | )       |        |      | (.19  | )    |        |      | (.46  | )    |         |       | (.19 | )    |         |       | .60  | 
|                                                                                                             |                     | Diluted                                         |       |       | (.01  | )(e)    |        |      | (.19  | )(e) |        |      | (.46  | )(e) |         |       | (.19 | )(e) |         |       | .60  | 
|Cumulative effect of change in method of accounting                                                          |                     |                                                 |      |       |       |         |       |      |       |      | (187.7 | )(g) |       |      |        |       |      |      |        |      
|                                                                                                             | Per common share(c) |                                                 |       |       |       |         |        |      |       |      |        |      |       |      |         |       |      |      |         |       |     
|                                                                                                             |                     | Basic                                           |       |       |      |         |        |      |      |      |        |      | (5.15 | )    |         |       |     |      |         |       |     | 
|                                                                                                             |                     | Diluted                                         |       |       |      |         |        |      |      |      |        |      | (5.15 | )(e) |         |       |     |      |         |       |     | 
|Net earnings (loss)(a)                                                                                       |                     |                                                 | (51.8 | )     |       |         | (190.9 | )    |       |      | (223.2 | )    |       |      | (35.6   | )     |      |      | 71.0    |      
|                                                                                                             | Per common share(c) |                                                 |       |       |       |         |        |      |       |      |        |      |       |      |         |       |      |      |         |       |     
|                                                                                                             |                     | Basic                                           |       |       | (1.73 | )(d)    |        |      | (5.21 | )    |        |      | (6.13 | )    |         |       | (.99 | )    |         |       | 1.86 | 
|                                                                                                             |                     | Diluted                                         |       |       | (1.73 | )(d)(e) |        |      | (5.21 | )(e) |        |      | (6.13 | )(e) |         |       | (.99 | )(e) |         |       | 1.85 | 
|Financial Position at Year End                                                                               |                     |                                                 |       |       |       |         |        |      |       |      |        |      |       |      |         |       |      |      |         |      
|Working capital of continuing operations                                                                     |                     |                                                 | 193.4 |       |       |         | 22.2   |      |       |      | 166.9  |      |       |      | 176.5   |       |      |      | 102.5   |      
|Property, plant and equipment-net                                                                            |                     |                                                 | 128.4 |       |       |         | 140.8  |      |       |      | 149.8  |      |       |      | 165.8   |       |      |      | 165.0   |      
|Total assets                                                                                                 |                     |                                                 | 739.9 |       |       |         | 733.4  |      |       |      | 947.3  |      |       |      | 1,528.5 |       |      |      | 1,481.0 |      
|Long-term debt                                                                                               |                     |                                                 | 235.9 |       |       |         | 163.5  |      |       |      | 255.4  |      |       |      | 501.1   |       |      |      | 371.3   |      
|Total debt                                                                                                   |                     |                                                 | 253.1 |       |       |         | 323.4  |      |       |      | 301.5  |      |       |      | 576.7   |       |      |      | 457.2   |      
|Net debt (total debt less cash and cash equivalents)                                                         |                     |                                                 | 183.9 |       |       |         | 230.6  |      |       |      | 179.2  |      |       |      | 486.6   |       |      |      | 423.4   |      
|Shareholders equity (deficit)                                                                               |                     |                                                 | 50.4  |       |       |         | (23.6  | )    |       |      | 143.5  |      |       |      | 444.6   |       |      |      | 494.0   |      
|                                                                                                             | Per common share    |                                                 |       | (1.42 | )     |         |        | (.85 | )     |      |        | 4.07 |       |      |         | 13.11 |      |      |         | 14.64 |     
|Other Data                                                                                                   |                     |                                                 |       |       |       |         |        |      |       |      |        |      |       |      |         |       |      |      |         |      
|Dividends paid to common shareholders                                                                        |                     |                                                 |      |       |       |         | .7     |      |       |      | 1.4    |      |       |      | 12.4    |       |      |      | 16.8    |      
|                                                                                                             | Per common share    |                                                 |       |      |       |         |        | .02  |       |      |        | .04  |       |      |         | .37   |      |      |         | .50   |     
|Capital expenditures                                                                                         |                     |                                                 | 8.8   |       |       |         | 6.5    |      |       |      | 6.2    |      |       |      | 13.5    |       |      |      | 26.5    |      
|Depreciation and amortization                                                                                |                     |                                                 | 20.3  |       |       |         | 21.7   |      |       |      | 23.0   |      |       |      | 34.9    |       |      |      | 35.4    |      
|Backlog of unfilled orders at year-end                                                                       |                     |                                                 | 87.3  |       |       |         | 92.0   |      |       |      | 76.4   |      |       |      | 61.2    |       |      |      | 100.0   |      
|Employees (average)                                                                                          |                     |                                                 | 3,490 |       |       |         | 3,760  |      |       |      | 4,090  |      |       |      | 4,672   |       |      |      | 4,789   |      

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|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In the fourth quarter of 2004, the company elected to change its
    method of accounting for certain U.S. plastics machinery
    inventories from the last-in, first-out (LIFO) method to
    the first-in, first-out (FIFO) method, retroactive to the
    beginning of the year. The amounts presented herein for the
    years 2000 through 2003 have been restated to conform to the
    2004 presentation.                                                                                                                                                                                                                                                                      
|   
|(b) |  | Includes restructuring costs of $13.0 million (with no tax
    benefit) in 2004, $27.1 million ($25.5 million after
    tax) in 2003, $13.9 million ($8.8 million after tax)
    in 2002, $17.5 million ($11.0 million after tax) in
    2001 and $1.4 million ($.9 million after tax) in 2000.
    In 2004 and 2003, includes refinancing costs of
    $21.4 million and $1.8 million, respectively, in both
    cases with no tax benefit. In 2003 and 2002, includes goodwill
    impairment charges of $65.6 million and $1.0 million,
    respectively, in both cases with no tax benefit.                                                                                       
|   
|(c) |  | The number of shares used to compute earnings (loss) per common
    share data for all years prior to 2004 has been restated to
    reflect the effects of a bonus element inherent in
    the rights offering that was completed in the fourth quarter of
    2004. Under the terms of the offering, holders of common shares
    were permitted to acquire additional shares at a price of
    $2.00 per share compared to a weighted-average market price
    on the closing dates of $2.91 per share. As a result of the
    bonus element, shares previously used to calculate basic and
    diluted earnings (loss) per common share were increased by a
    factor of 1.0891.
|   
|(d) |  | In 2004, loss from continuing operations per common share and
    net loss per common share include the effect of a beneficial
    conversion feature that is included in the Series B
    Preferred Stock that was issued in June 2004. In addition to
    dividends on all preferred stock, the $15.9 million value
    of the beneficial conversion feature has been added to the
    applicable loss amounts in calculating the respective loss per
    common share amounts. See the Notes to our Consolidated
    Financial Statements and the Explanatory Note to this Amendment
    No. 2 on Form 10-K/A for further information.                                             
|   
|(e) |  | For 2004, 2003, 2002 and 2001, diluted earnings per common share
    is equal to basic earnings per common share because the
    inclusion of potentially dilutive securities would result in a
    smaller loss per common share.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   
|(f) |  | In 2004 and 2003, includes net income of $.8 million and
    net expense of $.8 million, respectively, related to
    adjustments of previously recorded gains and losses on
    divestitures of discontinued operations. In 2002, includes a net
    gain of $8.4 million on the divestitures of the Valenite
    and Widia and Werkö metalcutting tools businesses, the
    planned divestiture of the round metalcutting tools and grinding
    wheels businesses and adjustments of reserves related to the
    1998 sale of the machine tools segment.                                                                                                                           
|   
|(g) |  | Represents a goodwill impairment charge related to the adoption
    of a new accounting standard.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Item 7 has been amended in this Form 10-K/A to
revise the applicable loss per common share amounts for the year
ended December 31, 2004 to reflect the restatement, to add
explanatory disclosure regarding such revisions and the
restatement and to update applicable cross references, but has
not been otherwise updated or modified.




| |                                                      
| | -----------------------------------------------------
| | Restatement of Previously Issued Financial Statements



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Executive Summary




| |                 
| | ----------------
| | Company Overview











| |                                                     
| | ----------------------------------------------------
| | Plastics Markets  Background and Recent
    History







6



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| |                                   
| | ----------------------------------
| | Industrial Fluids  Recent History







| |                          
| | -------------------------
| | Consolidated 2004 Results





| |                             
| | ----------------------------
| | Opportunities and Challenges





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Consolidated 2004 Results




| |                          
| | -------------------------
| | Presence Outside the U.S.









| |                                          
| | -----------------------------------------
| | Internal Control Over Financial Reporting



8



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| |                                              
| | ---------------------------------------------
| | Significant Accounting Policies and Judgments





| |                                             
| | --------------------------------------------
| | Deferred Tax Assets and Valuation Allowances









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| |                                                         
| | --------------------------------------------------------
| | Accounts Receivable, Inventory and Warranty
    Reserves





10



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| |                                             
| | --------------------------------------------
| | Impairment of Goodwill and Long-Lived Assets





11



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| |                        
| | -----------------------
| | Self-Insurance Reserves



12



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##### Table of Contents









| |         
| | --------
| | Pensions



1 2 1 2




13



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1 4 1 2 1 4






Results of Operations






| |                      
| | ---------------------
| | Basis of Presentation



14



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| |                          
| | -------------------------
| | Earnings Per Common Share





| |                        
| | -----------------------
| | Discontinued Operations





| |                           
| | --------------------------
| | Pension Income and Expense





2004 Compared to 2003




| |                    
| | -------------------
| | New Order and Sales





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| |                            
| | ---------------------------
| | Margins, Costs and Expenses











| |                  
| | -----------------
| | Refinancing Costs

5 8


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| |                    
| | -------------------
| | Restructuring Costs















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Restructuring Actions


|                                       |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      |  |   |      |     |   |   |      |     | 
|-------------------------------------- | -------------------------------------------------------------------------------------------- | -------------- |  | ------------------- | ---- | - | ---------- | ---- |  | - | ---- | --- |  | ---- | ---- | --- | ---- | - | --- | ---- |  | - | ---- | --- | - | - | ---- | --- | 
|                                       |                                                                                              |                |  | Restructuring Costs |      |   | Cash Costs |     
|                                       |                                                                                              |                |  |                     |      |   |            |     
|                                       |                                                                                              | Year Initiated |  |                     | 2004 |   |            | 2003 |  |   | 2002 |     |  | 2004 |      |     | 2003 |   |     | 2002 | 
|                                       |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      | 
|                                       |                                                                                              |                |  | (In millions)       |     
|Machinery technologies  North America |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      |  |   |      |     |   |   |      |    
|                                       | Injection molding and blow molding employment reductions                                     |                |  | 2003 & 2004         |      |   | $          | 2.5  |  |   | $    | 3.8 |  |      | $    |    |      |   | $   | 1.7  |  |   | $    | .7  |   |   | $    |    | 
|                                       | Blow molding machinery and mold making relocations                                           |                |  | 2002                |      |   |            | 5.5  |  |   |      | 3.9 |  |      |      | 3.4 |      |   |     | .6   |  |   |      | 3.4 |   |   |      | .4  | 
|                                       | Southwest Ohio reorganization                                                                |                |  | 2002                |      |   |            |     |  |   |      |    |  |      |      | .6  |      |   |     |     |  |   |      |    |   |   |      | .1  | 
|                                       | Injection molding and extrusion early retirement program and
    general overhead reductions |                |  | 2001                |      |   |            |     |  |   |      |    |  |      |      | 2.3 |      |   |     |     |  |   |      |    |   |   |      | .6  | 
|                                       | Injection molding and blow molding facilities product line
    rationalization               |                |  | 2001                |      |   |            |     |  |   |      |    |  |      |      | .4  |      |   |     |     |  |   |      |    |   |   |      | .2  | 
|                                       | Other 2001 actions                                                                           |                |  | 2001                |      |   |            |     |  |   |      |    |  |      |      |    |      |   |     |     |  |   |      |    |   |   |      | .2  | 
|                                       |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      | 
|                                       |                                                                                              |                |  |                     |      |   | 8.0        |      |  |   | 7.7  |     |  |      | 6.7  |     |      |   | 2.3 |      |  |   | 4.1  |     |   |   | 1.5  |    
|Machinery technologies  Europe        |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      |  |   |      |     |   |   |      |    
|                                       | Blow molding product line rationalization and employment
    reductions                      |                |  | 2003                |      |   |            | .2   |  |   |      | 4.5 |  |      |      |    |      |   |     | .9   |  |   |      | .7  |   |   |      |    | 
|                                       | Injection molding sales office and employment reductions                                     |                |  | 2003                |      |   |            |     |  |   |      | 2.0 |  |      |      |    |      |   |     | 1.4  |  |   |      | .5  |   |   |      |    | 
|                                       | Injection molding and blow molding overhead reductions                                       |                |  | 2001                |      |   |            |     |  |   |      |    |  |      |      | (.4 | )    |   |     |     |  |   |      | 1.3 |   |   |      | 4.0 | 
|                                       |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      | 
|                                       |                                                                                              |                |  |                     |      |   | .2         |      |  |   | 6.5  |     |  |      | (.4  | )   |      |   | 2.3 |      |  |   | 2.5  |     |   |   | 4.0  |    
|Mold technologies                      |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      |  |   |      |     |   |   |      |    
|                                       | Downsize Fulda plant                                                                         |                |  | 2004                |      |   |            | 2.2  |  |   |      |    |  |      |      |    |      |   |     | .6   |  |   |      |    |   |   |      |    | 
|                                       | Mahlberg plant closure                                                                       |                |  | 2003                |      |   |            | 1.3  |  |   |      | 5.7 |  |      |      |    |      |   |     |     |  |   |      | 2.8 |   |   |      |    | 
|                                       | North American employment reductions                                                         |                |  | 2003                |      |   |            |     |  |   |      | 1.0 |  |      |      |    |      |   |     | .3   |  |   |      | .6  |   |   |      |    | 
|                                       | European sales reorganization                                                                |                |  | 2003 & 2004         |      |   |            | 1.0  |  |   |      | 3.6 |  |      |      |    |      |   |     | 2.4  |  |   |      | 1.3 |   |   |      |    | 
|                                       | Monterey Park plant closure                                                                  |                |  | 2002                |      |   |            |     |  |   |      | .5  |  |      |      | .9  |      |   |     |     |  |   |      | (.2 | ) |   |      |    | 
|                                       | EOC and Reform integration                                                                   |                |  | 2001                |      |   |            | .3   |  |   |      | 1.8 |  |      |      | 4.6 |      |   |     | .2   |  |   |      | .2  |   |   |      | 7.8 | 
|                                       | North American overhead and general employment reductions                                    |                |  | 2001 & 2002         |      |   |            |     |  |   |      |    |  |      |      | .9  |      |   |     |     |  |   |      |    |   |   |      | .3  | 
|                                       |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      | 
|                                       |                                                                                              |                |  |                     |      |   | 4.8        |      |  |   | 12.6 |     |  |      | 6.4  |     |      |   | 3.5 |      |  |   | 4.7  |     |   |   | 8.1  |    
|Industrial fluids and corporate        |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      |  |   |      |     |   |   |      |    
|                                       | Early retirement program and general overhead reductions                                     |                |  | 2003                |      |   |            |     |  |   |      | .3  |  |      |      |    |      |   |     | .1   |  |   |      | .2  |   |   |      |    | 
|                                       | Early retirement program and general overhead reductions                                     |                |  | 2001 & 2002         |      |   |            |     |  |   |      |    |  |      |      | 1.2 |      |   |     | .1   |  |   |      | .3  |   |   |      | .3  | 
|                                       |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      | 
|                                       |                                                                                              |                |  |                     |      |   |           |      |  |   | .3   |     |  |      | 1.2  |     |      |   | .2  |      |  |   | .5   |     |   |   | .3   |    
|                                       |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      | 
|                                       |                                                                                              |                |  |                     |      | $ | 13.0       |      |  | $ | 27.1 |     |  | $    | 13.9 |     |      | $ | 8.3 |      |  | $ | 11.8 |     |   | $ | 13.9 |    
|                                       |                                                                                              |                |  |                     |      |   |            |      |  |   |      |     |  |      |      |     |      |   |     |      | 



18



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Restructuring Actions


|                                       |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |   |      |      |  |   |     |     | 
|-------------------------------------- | -------------------------------------------------------------------------------------------- | -------------- |  | ----------- | ---------- | ------------- | ----- | ---- | ----------- | - | ---- | --- |  | ---- | ---- | ---- | ---- | - | ---- | ---- |  | - | --- | --- | 
|                                       |                                                                                              |                |  |             |            | Cost Savings  |      
|                                       |                                                                                              |                |  |             |            |               |      
|                                       |                                                                                              |                |  | Headcount   |            |               |       |      | Incremental |  
|                                       |                                                                                              | Year Initiated |  |             | Reductions |               |       | 2002 |             |   | 2003 |     |  | 2004 |      |      | 2005 |  
|                                       |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |  
|                                       |                                                                                              |                |  |             |            | (In millions) |      
|Machinery technologies  North America |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |   |      |      |  |   |     |    
|                                       | Injection molding and blow molding employment reductions                                     |                |  | 2003 & 2004 |            |               |       | 165  |             |   | $    |    |  |      | $    | 2.1  |      |   | $    | 8.8  |  |   | $   | 3.3 | 
|                                       | Blow molding machinery and mold making relocations                                           |                |  | 2002        |            |               |       | 42   |             |   |      |    |  |      |      | 3.7  |      |   |      | 4.7  |  |   |     |    | 
|                                       | Southwest Ohio reorganization                                                                |                |  | 2002        |            |               |       | 24   |             |   |      | .8  |  |      |      | 2.7  |      |   |      | 2.7  |  |   |     |    | 
|                                       | Injection molding and extrusion early retirement program and
    general overhead reductions |                |  | 2001        |            |               |       | 165  |             |   |      | 9.9 |  |      |      | 10.7 |      |   |      | 10.7 |  |   |     |    | 
|                                       | Injection molding and blow molding facilities product line
    rationalization               |                |  | 2001        |            |               |       | 64   |             |   |      | 4.4 |  |      |      | 4.2  |      |   |      | 4.2  |  |   |     |    | 
|                                       | Other 2001 actions                                                                           |                |  | 2001        |            |               |       | 52   |             |   |      | 5.0 |  |      |      | 5.0  |      |   |      | 5.0  |  |   |     |    | 
|                                       |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |  
|                                       |                                                                                              |                |  |             |            |               | 512   |      |             |   | 20.1 |     |  |      | 28.4 |      |      |   | 36.1 |      |  |   | 3.3 |    
|Machinery technologies  Europe        |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |   |      |      |  |   |     |    
|                                       | Blow molding product line rationalization and employment
    reductions                      |                |  | 2003        |            |               |       | 47   |             |   |      |    |  |      |      | 1.0  |      |   |      | 2.8  |  |   |     |    | 
|                                       | Injection molding sales office and employment reductions                                     |                |  | 2003        |            |               |       | 72   |             |   |      |    |  |      |      | .4   |      |   |      | 3.6  |  |   |     | .9  | 
|                                       | Injection molding and blow molding overhead reductions                                       |                |  | 2001        |            |               |       | 133  |             |   |      | 5.0 |  |      |      | 6.8  |      |   |      | 7.2  |  |   |     |    | 
|                                       |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |  
|                                       |                                                                                              |                |  |             |            |               | 252   |      |             |   | 5.0  |     |  |      | 8.2  |      |      |   | 13.6 |      |  |   | .9  |    
|Mold technologies                      |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |   |      |      |  |   |     |    
|                                       | Downsize Fulda plant                                                                         |                |  | 2004        |            |               |       | 25   |             |   |      |    |  |      |      |     |      |   |      |     |  |   |     | .8  | 
|                                       | Mahlberg plant closure                                                                       |                |  | 2003        |            |               |       | 64   |             |   |      |    |  |      |      | 2.1  |      |   |      | 3.8  |  |   |     | .2  | 
|                                       | North American employment reductions                                                         |                |  | 2003        |            |               |       | 38   |             |   |      |    |  |      |      | 1.0  |      |   |      | 3.1  |  |   |     | .1  | 
|                                       | European sales reorganization                                                                |                |  | 2003 & 2004 |            |               |       | 79   |             |   |      |    |  |      |      | .1   |      |   |      | 5.5  |  |   |     | .4  | 
|                                       | Monterey Park plant closure                                                                  |                |  | 2002        |            |               |       | 12   |             |   |      |    |  |      |      | .6   |      |   |      | .8   |  |   |     |    | 
|                                       | EOC and Reform integration                                                                   |                |  | 2001        |            |               |       | 233  |             |   |      | 3.0 |  |      |      | 5.2  |      |   |      | 5.2  |  |   |     |    | 
|                                       | North American overhead and general employment reductions                                    |                |  | 2001 & 2002 |            |               |       | 47   |             |   |      | 1.9 |  |      |      | 2.0  |      |   |      | 1.9  |  |   |     |    | 
|                                       |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |  
|                                       |                                                                                              |                |  |             |            |               | 498   |      |             |   | 4.9  |     |  |      | 11.0 |      |      |   | 20.3 |      |  |   | 1.5 |    
|Industrial fluids and corporate        |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |   |      |      |  |   |     |    
|                                       | Early retirement program and general overhead reductions                                     |                |  | 2003        |            |               |       | 11   |             |   |      |    |  |      |      | .5   |      |   |      | 1.4  |  |   |     |    | 
|                                       | Early retirement program and general overhead reductions                                     |                |  | 2001 & 2002 |            |               |       | 16   |             |   |      | .5  |  |      |      | 1.0  |      |   |      | 1.0  |  |   |     |    | 
|                                       |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |  
|                                       |                                                                                              |                |  |             |            |               | 27    |      |             |   | .5   |     |  |      | 1.5  |      |      |   | 2.4  |      |  |   |    |    
|                                       |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |  
|                                       |                                                                                              |                |  |             |            |               | 1,289 |      |             | $ | 30.5 |     |  | $    | 49.1 |      |      | $ | 72.4 |      |  | $ | 5.7 |    
|                                       |                                                                                              |                |  |             |            |               |       |      |             |   |      |     |  |      |      |      |      |  

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| |                           
| | --------------------------
| | Goodwill Impairment Charge





| |                   
| | ------------------
| | Results By Segment

Machinery technologies  North
America


Machinery technologies  Europe


Mold technologies


20



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Industrial Fluids




| |                                                    
| | ---------------------------------------------------
| | Loss From Continuing Operations Before Income Taxes





| |             
| | ------------
| | Income Taxes









| |                                
| | -------------------------------
| | Loss From Continuing Operations



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| |                        
| | -----------------------
| | Discontinued Operations







| |         
| | --------
| | Net Loss



2003 Compared to 2002




| |                    
| | -------------------
| | New Order and Sales









| |                            
| | ---------------------------
| | Margins, Costs and Expenses





22



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| |                    
| | -------------------
| | Restructuring Costs













| |                           
| | --------------------------
| | Goodwill Impairment Charge





| |                   
| | ------------------
| | Results By Segment



23



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Machinery technologies  North
America


Machinery technologies  Europe


Mold technologies


Industrial Fluids




| |                                                    
| | ---------------------------------------------------
| | Loss From Continuing Operations Before Income Taxes



24



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| |             
| | ------------
| | Income Taxes







| |                                
| | -------------------------------
| | Loss From Continuing Operations





| |                        
| | -----------------------
| | Discontinued Operations







| |                                                    
| | ---------------------------------------------------
| | Cumulative Effect of Change in Method of Accounting





| |         
| | --------
| | Net Loss



25



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Comparative Operating Results




|                                       |  |               |      |   |      |   |      |      |  |   |      |  
|-------------------------------------- |  | ------------- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                       |  | 2004          |      |   | 2003 |   |      | 2002 | 
|                                       |  |               |      |   |      |   |      |      | 
|                                       |  | (In millions) |     
|Machinery Technologies  North America |  |               |      |   |      |   |      |      |  |   |      |  
|Segment operating earnings as reported |  | $             | 16.0 |   |      | $ | 8.1  |      |  | $ | 7.5  |  
|Restructuring costs                    |  |               | (8.0 | ) |      |   | (7.7 | )    |  |   | (6.7 | )
|                                       |  |               |      |   |      |   |      |      | 
|Adjusted operating earnings            |  | $             | 8.0  |   |      | $ | .4   |      |  | $ | .8   |  
|                                       |  |               |      |   |      |   |      |      | 

|                                              |  |               |     |   |      |   |      |      |  |   |      |  
|--------------------------------------------- |  | ------------- | --- | - | ---- | - | ---- | ---- |  | - | ---- | -
|                                              |  | 2004          |     |   | 2003 |   |      | 2002 | 
|                                              |  |               |     |   |      |   |      |      | 
|                                              |  | (In millions) |    
|Machinery Technologies  Europe               |  |               |     |   |      |   |      |      |  |   |      |  
|Segment operating earnings (loss) as reported |  | $             | 1.9 |   |      | $ | (1.4 | )    |  | $ | (8.1 | )
|Restructuring costs                           |  |               | (.2 | ) |      |   | (6.5 | )    |  |   | .4   |  
|                                              |  |               |     |   |      |   |      |      | 
|Adjusted operating earnings (loss)            |  | $             | 1.7 |   |      | $ | (7.9 | )    |  | $ | (7.7 | )
|                                              |  |               |     |   |      |   |      |      | 

|                                       |  |               |      |   |      |   |       |      |  |   |      |  
|-------------------------------------- |  | ------------- | ---- | - | ---- | - | ----- | ---- |  | - | ---- | -
|                                       |  | 2004          |      |   | 2003 |   |       | 2002 | 
|                                       |  |               |      |   |      |   |       |      | 
|                                       |  | (In millions) |     
|Mold Technologies                      |  |               |      |   |      |   |       |      |  |   |      |  
|Segment operating earnings as reported |  | $             | 4.3  |   |      | $ | 1.8   |      |  | $ | 5.3  |  
|Restructuring costs                    |  |               | (4.8 | ) |      |   | (12.6 | )    |  |   | (6.4 | )
|                                       |  |               |      |   |      |   |       |      | 
|Adjusted operating loss                |  | $             | (.5  | ) |      | $ | (10.8 | )    |  | $ | (1.1 | )
|                                       |  |               |      |   |      |   |       |      | 



Market Risk




| |                                    
| | -----------------------------------
| | Foreign Currency Exchange Rate Risk





| |                   
| | ------------------
| | Interest Rate Risk

1 2 3 8 5 8


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Off-Balance Sheet Arrangements




| |                             
| | ----------------------------
| | Sales of Accounts Receivable







| |                              
| | -----------------------------
| | Sales of Notes and Guarantees



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Contractual Obligations




|                                         |                                    |               |       |       |      |       |      |      |       |   |      |        |  |      |      |      |  |   |       |       | 
|---------------------------------------- | ---------------------------------- | ------------- | ----- | ----- | ---- | ----- | ---- | ---- | ----- | - | ---- | ------ |  | ---- | ---- | ---- |  | - | ----- | ----- | 
|                                         |                                    |               |       |       |      | 2006- |      |      | 2008- |   |      | Beyond | 
|                                         |                                    | Total         |       |       | 2005 |       |      | 2007 |       |   | 2009 |        |  | 2009 |     
|                                         |                                    |               |       |       |      |       |      |      |       |   |      |        |  |      |     
|                                         |                                    | (In millions) |      
|Contractual Obligations                  |                                    |               |       |       |      |       |      |      |       |   |      |        |  |      |      |      |  |   |       |      
|Asset-based facility due 2008            |                                    | $             | 11.0  |       |      | $     | 11.0 |      |       | $ |     |        |  | $    |     |      |  | $ |      |      
|111/2% Senior
    Secured Notes due 2011 |                                    |               | 225.0 |       |      |       |     |      |       |   |     |        |  |      |     |      |  |   | 225.0 |      
|Other long-term debt                     |                                    |               | 5.9   |       |      |       | 4.1  |      |       |   | 1.2  |        |  |      | .4   |      |  |   | .2    |      
|Capital lease obligations                |                                    |               | 15.9  |       |      |       | 1.9  |      |       |   | 4.1  |        |  |      | 6.4  |      |  |   | 3.5   |      
|Operating leases                         |                                    |               | 32.2  |       |      |       | 11.8 |      |       |   | 14.3 |        |  |      | 5.1  |      |  |   | 1.0   |      
|Purchase obligations(a)                  |                                    |               |      |       |      |       |     |      |       |   |     |        |  |      |     |      |  |   |      |      
|Other long-term liabilities              |                                    |               |       |       |      |       |      |      |       |   |      |        |  |      |      |      |  |   |       |      
|                                         | Pension plan contributions(b)      |               |       | 62.6  |      |       |      | 2.5  |       |   |      | 44.1   |  |      |      | 16.0 |  |   |       |      | 
|                                         | Unfunded pension benefits(c)(d)    |               |       | 145.1 |      |       |      | 2.9  |       |   |      | 5.9    |  |      |      | 6.2  |  |   |       | 130.1 | 
|                                         | Postretirement medical benefits(d) |               |       | 45.9  |      |       |      | 3.1  |       |   |      | 5.8    |  |      |      | 4.5  |  |   |       | 32.5  | 
|                                         | Insurance reserves(d)              |               |       | 20.1  |      |       |      | 3.4  |       |   |      | 8.3    |  |      |      | 3.5  |  |   |       | 4.9   | 
|                                         |                                    |               |       |       |      |       |      |      |       |   |      |        |  |      |     
|Total                                    |                                    | $             | 563.7 |       |      | $     | 40.7 |      |       | $ | 83.7 |        |  | $    | 42.1 |      |  | $ | 397.2 |      
|                                         |                                    |               |       |       |      |       |      |      |       |   |      |        |  |      |     






|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | We did not have any significant purchase obligations as of
    December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   
|(b) |  | We are required to make contributions to our defined benefit
    pension plan for certain U.S. employees. The amounts shown
    above are estimates based on the current funded status of the
    plan and discount rates required to be used for minimum funding
    purposes by the Pension Funding Act of 2004 that was enacted on
    April 10, 2004. The amounts also give effect to
    supplemental early retirement benefits that were granted in
    connection with restructuring initiatives, the sale of the
    grinding wheels business and expectations regarding future
    changes in discount rates for funding purposes. The amounts of
    actual contributions can be expected to vary based on factors
    such as returns on plan assets, changes in the plans
    discount rate and actuarial gains and losses.
|   
|(c) |  | Represents liabilities related to unfunded pension plans in the
    U.S. and Germany.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(d) |  | The amounts presented for unfunded pension benefits,
    postretirement medical benefits and insurance reserves are
    estimates based on current assumptions and expectations. Actual
    payments related to these obligations can be expected to differ
    from the amounts shown. The amounts shown for insurance reserves
    are net of expected recoveries from excess carriers and other
    third parties totaling $13.8 million.                                                                                                                                                                                                                                                                                                                                                                                            



Liquidity and Sources of Capital






28



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5 8












3 8






29



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1 2


1 2




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | purchase 114,990,000
    of
    the 115 million
    aggregate outstanding principal amount of Milacron Capital
    Holdings B.V.s
    75/8%
    Guaranteed Bonds due in April 2005 at the settlement of a tender
    offer therefor;                                                                                                                                                                                                                                  
|
| |  | terminate and repay $19 million of borrowings outstanding
    under the revolving A facility of the Credit Suisse First Boston
    facility, which included additional amounts borrowed subsequent
    to March 12, 2004. We also used $17.4 million of
    availability under our asset based facility to replace or
    provide credit support for the outstanding letters of credit
    under the revolving A facility of the Credit Suisse First Boston
    facility;
|
| |  | repay the $75 million term loan B facility of the
    Credit Suisse First Boston facility; and                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | pay transaction expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                

1 2






30



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1 2 1 2


1 2


31



---



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Cautionary Statement






| |   |                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our ability to comply with financial and other covenants
    contained in the agreements governing our indebtedness,
    including our senior secured notes and asset based credit
    facility;                                                                                                                         
|
| |  | our ability to remediate or otherwise mitigate the identified
    material weakness in internal control over financial reporting,
    or any additional material weakness or significant deficiencies
    that may be identified;                                                                                        
|
| |  | global and regional economic conditions, consumer spending,
    capital spending levels and industrial production, particularly
    in segments related to the level of automotive production and
    spending in the plastics and construction industries;                                                              
|
| |  | fluctuations in currency exchange rates of U.S. and foreign
    countries, including countries in Europe and Asia where we have
    several principal manufacturing facilities and where many of our
    customers, competitors and suppliers are based;                                                                 
|
| |  | fluctuations in interest rates which affect the cost of
    borrowing;                                                                                                                                                                                                                                                   
|
| |  | production and pricing levels of important raw materials,
    including plastic resins, which are a key material used by
    purchasers of our plastics technologies products, as well as
    steel, oil and chemicals;                                                                                                  
|
| |  | 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 2004 and
    products expected to be introduced in 2005;                                                                                                                                                                                                           
|
| |  | any major disruption in production at key customer or supplier
    facilities or at our facilities;                                                                                                                                                                                                                      
|
| |  | disruptions in global or regional commerce due to wars, to
    social, civil or political unrest in the non-U.S. countries
    in which we operate and to acts of terrorism, continued threats
    of terrorism and military, political and economic responses
    (including heightened security measures) to terrorism;
|
| |  | alterations in trade conditions in and between the U.S. and
    non-U.S. countries where we do business, including export
    duties, import controls, quotas and other trade barriers;                                                                                                                                  
|
| |  | changes in tax, environmental and other laws and regulations in
    the U.S. and non-U.S. countries where we do business;                                                                                                                                                                                                
|
| |  | litigation, claims or assessments, including but not limited to
    claims or problems related to product liability, warranty or
    environmental issues; and                                                                                                                                                           

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| |   |                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | fluctuations in stock market valuations of pension plan assets
    or changes in interest rates that could result in increased
    pension expense and reduced shareholders equity and
    require us to make significant cash contributions in the future.






|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

Item 8 has been amended in this Form 10-K/A
(i) to revise the applicable loss per common share amounts
for the three months ended June 30, 2004 and
December 31, 2004 and the year ended December 31, 2004
to reflect the restatement, (ii) to add a note titled
Restatement of Financial Statements, (iii) to
add certain other explanatory disclosure regarding the
restatement, (iv) to revise the report of the
companys independent registered accounting firm on the
companys financial statements to reflect the restatement
and (v) to update applicable cross references, but has not
been otherwise updated or modified.




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MILACRON INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


Years ended December 31, 2004, 2003 and 2002


|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |       |       |        |       |       |       | 
|--------------------------------------------------------------------------------------------------------------- | --------------------------------------------------- | --------------------------------------- | --------------------- | ----- | ----- | ----- | ------ | ----- | ----- | ----- | ------ | ----- | ----- | ----- | 
|                                                                                                                |                                                     | 2004                                    |                       |       |       |       |       
|                                                                                                                |                                                     | (as restated)                           |                       |       | 2003  |       |        | 2002  |      
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|                                                                                                                |                                                     | (In millions, except per-share amounts) |                      
|Sales                                                                                                           |                                                     | $                                       | 774.2                 |       |       | $     | 739.7  |       |       | $     | 693.2  |      
|                                                                                                                | Cost of products sold                               |                                         |                       | 626.6 |       |       |        | 603.8 |       |       |        | 572.1 |      
|                                                                                                                | Cost of products sold related to restructuring      |                                         |                       | 1.4   |       |       |        | 3.3   |       |       |        | 1.9   |      
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|                                                                                                                |                                                     | Total cost of products sold             |                       |       | 628.0 |       |        |       | 607.1 |       |        |       | 574.0 |      
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|                                                                                                                |                                                     |                                         | Manufacturing margins |       |       | 146.2 |        |       |       | 132.6 |        |       |       | 119.2 | 
|Other costs and expenses                                                                                        |                                                     |                                         |                       |       |       |       |        |       |       |       |        |      
|                                                                                                                | Selling and administrative                          |                                         |                       | 126.9 |       |       |        | 129.0 |       |       |        | 121.0 |      
|                                                                                                                | Restructuring costs                                 |                                         |                       | 11.6  |       |       |        | 23.8  |       |       |        | 12.0  |      
|                                                                                                                | Refinancing costs                                   |                                         |                       | 21.4  |       |       |        | 1.8   |       |       |        |      |      
|                                                                                                                | Goodwill impairment charge                          |                                         |                       |      |       |       |        | 65.6  |       |       |        | 1.0   |      
|                                                                                                                | Other expense  net                                 |                                         |                       | 2.9   |       |       |        | (.2   | )     |       |        | (1.0  | )    
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|                                                                                                                |                                                     | Total other costs and expenses          |                       |       | 162.8 |       |        |       | 220.0 |       |        |       | 133.0 |      
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|Operating loss                                                                                                  |                                                     |                                         | (16.6                 | )     |       |       | (87.4  | )     |       |       | (13.8  | )    
|Interest                                                                                                        |                                                     |                                         |                       |       |       |       |        |       |       |       |        |      
|                                                                                                                | Income                                              |                                         |                       | 2.0   |       |       |        | 1.9   |       |       |        | 2.2   |      
|                                                                                                                | Expense                                             |                                         |                       | (39.3 | )     |       |        | (24.9 | )     |       |        | (25.5 | )    
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|                                                                                                                |                                                     | Interest  net                          |                       |       | (37.3 | )     |        |       | (23.0 | )     |        |       | (23.3 | )    
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|Loss from continuing operations before income taxes and
    cumulative effect of change in method of accounting |                                                     |                                         | (53.9                 | )     |       |       | (110.4 | )     |       |       | (37.1  | )    
|Provision (benefit) for income taxes                                                                            |                                                     |                                         | (2.6                  | )     |       |       | 73.3   |       |       |       | (18.4  | )    
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|Loss from continuing operations before cumulative effect of
    change in method of accounting                  |                                                     |                                         | (51.3                 | )     |       |       | (183.7 | )     |       |       | (18.7  | )    
|Discontinued operations net of income taxes                                                                     |                                                     |                                         |                       |       |       |       |        |       |       |       |        |      
|                                                                                                                | Loss from operations                                |                                         |                       | (1.3  | )     |       |        | (6.4  | )     |       |        | (25.2 | )    
|                                                                                                                | Net gain (loss) on divestitures                     |                                         |                       | .8    |       |       |        | (.8   | )     |       |        | 8.4   |      
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|                                                                                                                |                                                     | Total discontinued operations           |                       |       | (.5   | )     |        |       | (7.2  | )     |        |       | (16.8 | )    
|Cumulative effect of change in method of accounting                                                             |                                                     |                                         |                      |       |       |       |       |       |       |       | (187.7 | )    
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|Net loss                                                                                                        |                                                     | $                                       | (51.8                 | )     |       | $     | (190.9 | )     |       | $     | (223.2 | )    
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|Loss per common share  basic and diluted                                                                       |                                                     |                                         |                       |       |       |       |        |       |       |       |        |      
|                                                                                                                | Continuing operations                               |                                         | $                     | (1.72 | )     |       | $      | (5.02 | )     |       | $      | (.52  | )    
|                                                                                                                | Discontinued operations                             |                                         |                       | (.01  | )     |       |        | (.19  | )     |       |        | (.46  | )    
|                                                                                                                | Cumulative effect of change in method of accounting |                                         |                       |      |       |       |        |      |       |       |        | (5.15 | )    
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      
|Net loss                                                                                                        |                                                     | $                                       | (1.73                 | )     |       | $     | ( 5.21 | )     |       | $     | (6.13  | )    
|                                                                                                                |                                                     |                                         |                       |       |       |       |        |       |      



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##### Table of Contents



MILACRON INC. AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


December 31, 2004 and 2003


|                                                     |                                                                                                                    |                                              |                                         |        |       |       |       |        |       |       | 
|---------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | -------------------------------------------- | --------------------------------------- | ------ | ----- | ----- | ----- | ------ | ----- | ----- | 
|                                                     |                                                                                                                    | 2004                                         |                                         |        | 2003  |      
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|                                                     |                                                                                                                    | (In millions, except                         |                                        
|                                                     |                                                                                                                    | par value)                                   |                                        
|ASSETS                                              
|Current assets                                       |                                                                                                                    |                                              |                                         |        |       |       |       |       
|                                                     | Cash and cash equivalents                                                                                          |                                              | $                                       | 69.2   |       |       | $     | 92.8   |      
|                                                     | Notes and accounts receivable, less allowances of $12.1 in 2004
    and $15.1 in 2003                              |                                              |                                         | 134.6  |       |       |       | 93.8   |      
|                                                     | Inventories                                                                                                        |                                              |                                         |        |       |       |       |        |      
|                                                     |                                                                                                                    | Raw materials                                |                                         |        | 8.1   |       |       |        | 8.2   |      
|                                                     |                                                                                                                    | Work-in-process and finished parts           |                                         |        | 69.2  |       |       |        | 69.4  |      
|                                                     |                                                                                                                    | Finished products                            |                                         |        | 76.6  |       |       |        | 71.9  |      
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|                                                     |                                                                                                                    |                                              | Total inventories                       |        |       | 153.9 |       |        |       | 149.5 | 
|                                                     |                                                                                                                    | Other current assets                         |                                         |        | 49.1  |       |       |        | 45.2  |      
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|                                                     |                                                                                                                    |                                              | Current assets of continuing operations |        |       | 406.8 |       |        |       | 381.3 | 
|                                                     |                                                                                                                    | Assets of discontinued operations            |                                         |        |      |       |       |        | 7.2   |      
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|                                                     |                                                                                                                    |                                              | Total current assets                    |        |       | 406.8 |       |        |       | 388.5 | 
|Property, plant and equipment  net                  |                                                                                                                    |                                              | 128.4                                   |        |       |       | 140.8 |       
|Goodwill                                             |                                                                                                                    |                                              | 86.6                                    |        |       |       | 83.8  |       
|Other noncurrent assets                              |                                                                                                                    |                                              | 118.1                                   |        |       |       | 120.3 |       
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|Total assets                                         |                                                                                                                    | $                                            | 739.9                                   |        |       | $     | 733.4 |       
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|                                                    
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)      
|Current liabilities                                  |                                                                                                                    |                                              |                                         |        |       |       |       |       
|                                                     | Short-term borrowings                                                                                              |                                              | $                                       | 11.2   |       |       | $     | 42.6   |      
|                                                     | Long-term debt and capital lease obligations due within one year                                                   |                                              |                                         | 6.0    |       |       |       | 117.3  |      
|                                                     | Trade accounts payable                                                                                             |                                              |                                         | 80.3   |       |       |       | 67.9   |      
|                                                     | Advance billings and deposits                                                                                      |                                              |                                         | 18.6   |       |       |       | 15.2   |      
|                                                     | Accrued and other current liabilities                                                                              |                                              |                                         | 97.3   |       |       |       | 116.1  |      
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|                                                     |                                                                                                                    | Current liabilities of continuing operations |                                         |        | 213.4 |       |       |        | 359.1 |      
|                                                     | Liabilities of discontinued operations                                                                             |                                              |                                         |       |       |       |       | 1.8    |      
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|                                                     |                                                                                                                    | Total current liabilities                    |                                         |        | 213.4 |       |       |        | 360.9 |      
|Long-term accrued liabilities                        |                                                                                                                    |                                              | 240.2                                   |        |       |       | 232.6 |       
|Long-term debt                                       |                                                                                                                    |                                              | 235.9                                   |        |       |       | 163.5 |       
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|                                                     | Total liabilities                                                                                                  |                                              |                                         | 689.5  |       |       |       | 757.0  |      
|Commitments and contingencies                        |                                                                                                                    |                                              |                                        |        |       |       |      |       
|Shareholders equity (deficit)                       |                                                                                                                    |                                              |                                         |        |       |       |       |       
|                                                     | 4% Cumulative Preferred shares                                                                                     |                                              |                                         | 6.0    |       |       |       | 6.0    |      
|                                                     | 6% Series B Convertible Preferred Stock, $.01 par
    value (outstanding: .5 in 2004)                              |                                              |                                         | 112.9  |       |       |       |       |      
|                                                     | Common shares, $.01 par value in 2004 and $1.00 par
    value in 2003 (outstanding: 48.6 in 2004 and 34.8 in 2003) |                                              |                                         | .5     |       |       |       | 34.8   |      
|                                                     | Capital in excess of par value                                                                                     |                                              |                                         | 347.2  |       |       |       | 284.0  |      
|                                                     | Contingent warrants                                                                                                |                                              |                                         | .5     |       |       |       |       |      
|                                                     | Accumulated deficit                                                                                                |                                              |                                         | (312.7 | )     |       |       | (241.7 | )    
|                                                     | Accumulated other comprehensive loss                                                                               |                                              |                                         | (104.0 | )     |       |       | (106.7 | )    
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|                                                     |                                                                                                                    | Total shareholders equity (deficit)         |                                         |        | 50.4  |       |       |        | (23.6 | )    
|                                                     |                                                                                                                    |                                              |                                         |        |       |      
|Total liabilities and shareholders equity (deficit) |                                                                                                                    | $                                            | 739.9                                   |        |       | $     | 733.4 |       
|                                                     |                                                                                                                    |                                              |                                         |        |       |      



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##### Table of Contents



MILACRON INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND
SHAREHOLDERS


EQUITY (DEFICIT)


Years ended December 31, 2004, 2003 and 2002


|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |        |     |        |        |        |      |  
|------------------------------------------------------- | -------------------------------------------------------- | ----------------------------------------------------------------- | --------------------------------------- | ------ | ------ | ----- | ------ | ------ | ------ | --- | ------ | ------ | ------ | ---- | -
|                                                        |                                                          | 2004                                                              |                                         |        | 2003   |       |        | 2002   |       
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|                                                        |                                                          | (In millions)                                                     |                                        
|4% Cumulative Preferred shares                          |                                                          |                                                                   |                                         |        |        |       |        |        |        |     |        |       
|                                                        | Balance at beginning and end of period                   |                                                                   | $                                       | 6.0    |        |       | $      | 6.0    |        |     | $      | 6.0    |       
|6% Series B Convertible Preferred Stock                 |                                                          |                                                                   |                                         |        |        |       |        |        |        |     |        |       
|                                                        | Balance at beginning of period                           |                                                                   |                                         |       |        |       |        |       |        |     |        |       |       
|                                                        |                                                          | Net proceeds from issuance                                        |                                         |        | 97.0   |       |        |        |       |     |        |        |       |     
|                                                        |                                                          | Beneficial conversion feature                                     |                                         |        | 15.9   |       |        |        |       |     |        |        |       |     
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|                                                        | Balance at end of period                                 |                                                                   |                                         | 112.9  |        |       |        |       |        |     |        |       |       
|Common shares                                           |                                                          |                                                                   |                                         |        |        |       |        |        |        |     |        |       
|                                                        | Balance at beginning of period                           |                                                                   |                                         | 318.8  |        |       |        | 317.3  |        |     |        | 314.9  |       
|                                                        |                                                          | Stock options exercised and net restricted stock activity         |                                         |        | 3.1    |       |        |        | .2     |     |        |        | .5     |     
|                                                        |                                                          | Reissuance of treasury shares                                     |                                         |        | 1.6    |       |        |        | 1.3    |     |        |        | 1.9    |     
|                                                        |                                                          | Beneficial conversion feature related to Series A Notes           |                                         |        | 6.6    |       |        |        |       |     |        |        |       |     
|                                                        |                                                          | Conversion of Series A Notes to common stock                      |                                         |        | 28.1   |       |        |        |       |     |        |        |       |     
|                                                        |                                                          | Conversion to Series B Convertible Preferred Stock                |                                         |        | (34.6  | )     |        |        |       |     |        |        |       |     
|                                                        |                                                          | Net proceeds from rights offering                                 |                                         |        | 24.1   |       |        |        |       |     |        |        |       |     
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|                                                        | Balance at end of period                                 |                                                                   |                                         | 347.7  |        |       |        | 318.8  |        |     |        | 317.3  |       
|Contingent warrants                                     |                                                          |                                                                   |                                         |        |        |       |        |        |        |     |        |       
|                                                        | Balance at beginning of period                           |                                                                   |                                         |       |        |       |        |       |        |     |        |       |       
|                                                        |                                                          | Issuance of contingent warrants                                   |                                         |        | .5     |       |        |        |       |     |        |        |       |     
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|                                                        | Balance at end of period                                 |                                                                   |                                         | .5     |        |       |        |       |        |     |        |       |       
|Retained earnings (accumulated deficit)                 |                                                          |                                                                   |                                         |        |        |       |        |        |        |     |        |       
|                                                        | December 31, 2001 balance as originally reported         |                                                                   |                                         |        |        |       |        |        |        |     |        | 165.0  |       
|                                                        | Effect of restatement for change in method of accounting |                                                                   |                                         |        |        |       |        |        |        |     |        | 9.8    |       
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|                                                        | Balance at beginning of period                           |                                                                   |                                         | (241.7 | )      |       |        | (50.0  | )      |     |        | 174.8  |       
|                                                        |                                                          | Net loss for the period                                           |                                         |        | (51.8  | )     |        |        | (190.9 | )   |        |        | (223.2 | )   
|                                                        |                                                          | Dividends paid and declared                                       |                                         |        |        |       |        |        |        |     |        |        |        |     
|                                                        |                                                          |                                                                   | 4% Cumulative Preferred shares          |        |        | (.4   | )      |        |        | (.1 | )      |        |        | (.2  | )
|                                                        |                                                          |                                                                   | 6% Series B Convertible Preferred Stock |        |        | (2.9  | )      |        |        |    |        |        |        |     |  
|                                                        |                                                          |                                                                   | Common shares                           |        |        |      |        |        |        | (.7 | )      |        |        | (1.4 | )
|                                                        |                                                          | Beneficial conversion feature related to Series B
    Convertible |                                         |        |        |       |        |        |        |     |        |        |        |     
|                                                        |                                                          |                                                                   | Preferred Stock                         |        |        | (15.9 | )      |        |        |    |        |        |        |     |  
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|                                                        |                                                          | Balance at end of period                                          |                                         |        | (312.7 | )     |        |        | (241.7 | )   |        |        | (50.0  | )   
|Accumulated other comprehensive income (loss)           |                                                          |                                                                   |                                         |        |        |       |        |        |        |     |        |       
|                                                        | Balance at beginning of period                           |                                                                   |                                         | (106.7 | )      |       |        | (129.8 | )      |     |        | (51.0  | )     
|                                                        |                                                          | Foreign currency translation adjustments                          |                                         |        | 15.9   |       |        |        | 8.5    |     |        |        | 5.9    |     
|                                                        |                                                          | Minimum pension liability adjustment                              |                                         |        | (13.0  | )     |        |        | 14.6   |     |        |        | (95.4  | )   
|                                                        |                                                          | Other                                                             |                                         |        | (.2    | )     |        |        |       |     |        |        | 10.7   |     
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|                                                        | Balance at end of period                                 |                                                                   |                                         | (104.0 | )      |       |        | (106.7 | )      |     |        | (129.8 | )     
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|Total shareholders equity (deficit)                    |                                                          | $                                                                 | 50.4                                    |        |        | $     | (23.6  | )      |        | $   | 143.5  |       
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|Net loss for the period                                 |                                                          | $                                                                 | (51.8                                   | )      |        | $     | (190.9 | )      |        |     | (223.2 | )     
|Change in accumulated other comprehensive income (loss) |                                                          |                                                                   | 2.7                                     |        |        |       | 23.1   |        |        |     | (78.8  | )     
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       
|Total comprehensive loss                                |                                                          | $                                                                 | (49.1                                   | )      |        | $     | (167.8 | )      |        | $   | (302.0 | )     
|                                                        |                                                          |                                                                   |                                         |        |        |       |        |        |       



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##### Table of Contents



MILACRON INC. AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


Years ended December 31, 2004, 2003 and 2002


|                                                                      |                                 |                                                     |                                                  |                                                  |        |      |       |      |        |       |       |   |        |        |       |  
|--------------------------------------------------------------------- | ------------------------------- | --------------------------------------------------- | ------------------------------------------------ | ------------------------------------------------ | ------ | ---- | ----- | ---- | ------ | ----- | ----- | - | ------ | ------ | ----- | -
|                                                                      |                                 | 2004                                                |                                                  |                                                  | 2003   |      |       | 2002 |       
|                                                                      |                                 |                                                     |                                                  |                                                  |        |      |       |      |       
|                                                                      |                                 | (In millions)                                       |                                                 
|Increase (decrease) in cash and cash equivalents                      |                                 |                                                     |                                                  |                                                  |        |      |       |      |        |       |       |  
|                                                                      | Operating activities cash flows |                                                     |                                                  |                                                  |        |      |       |      |        |       |       |   |       
|                                                                      |                                 | Net loss                                            |                                                  | $                                                | (51.8  | )    |       | $    | (190.9 | )     |       | $ | (223.2 | )     
|                                                                      |                                 | Cumulative effect of change in method of accounting |                                                  |                                                  |       |      |       |      |       |       |       |   | 187.7  |       
|                                                                      |                                 | Operating activities providing (using) cash         |                                                  |                                                  |        |      |       |      |        |       |       |   |        |       
|                                                                      |                                 |                                                     | Loss from discontinued operations                |                                                  |        | 1.3  |       |      |        | 6.4   |       |   |        | 25.2   |      
|                                                                      |                                 |                                                     | Net (gain) loss on divestitures                  |                                                  |        | (.8  | )     |      |        | .8    |       |   |        | (8.4   | )    
|                                                                      |                                 |                                                     | Depreciation and amortization                    |                                                  |        | 20.3 |       |      |        | 21.7  |       |   |        | 23.0   |      
|                                                                      |                                 |                                                     | Restructuring costs                              |                                                  |        | 13.0 |       |      |        | 27.1  |       |   |        | 13.9   |      
|                                                                      |                                 |                                                     | Refinancing costs                                |                                                  |        | 21.4 |       |      |        | 1.8   |       |   |        |       |      
|                                                                      |                                 |                                                     | Goodwill impairment charge                       |                                                  |        |     |       |      |        | 65.6  |       |   |        | 1.0    |      
|                                                                      |                                 |                                                     | Deferred income taxes                            |                                                  |        | 8.7  |       |      |        | 73.9  |       |   |        | (16.9  | )    
|                                                                      |                                 |                                                     | Working capital changes                          |                                                  |        |      |       |      |        |       |       |   |        |        |      
|                                                                      |                                 |                                                     |                                                  | Notes and accounts receivable                    |        |      | (36.1 | )    |        |       | 6.6   |   |        |        | 9.7   |  
|                                                                      |                                 |                                                     |                                                  | Inventories                                      |        |      | (1.1  | )    |        |       | 22.3  |   |        |        | 36.4  |  
|                                                                      |                                 |                                                     |                                                  | Other current assets                             |        |      | 3.0   |      |        |       | 13.9  |   |        |        | 2.4   |  
|                                                                      |                                 |                                                     |                                                  | Trade accounts payable                           |        |      | 9.3   |      |        |       | (6.1  | ) |        |        | 6.9   |  
|                                                                      |                                 |                                                     |                                                  | Other current liabilities                        |        |      | (30.4 | )    |        |       | (31.3 | ) |        |        | (10.9 | )
|                                                                      |                                 |                                                     | Decrease (increase) in other noncurrent assets   |                                                  |        | 3.0  |       |      |        | (.6   | )     |   |        | (7.0   | )    
|                                                                      |                                 |                                                     | Decrease in long-term accrued liabilities        |                                                  |        | (1.9 | )     |      |        | (2.7  | )     |   |        | (4.2   | )    
|                                                                      |                                 |                                                     | Other  net                                      |                                                  |        | .4   |       |      |        | 1.5   |       |   |        | .3     |      
|                                                                      |                                 |                                                     |                                                  |                                                  |        |      |       |      |       
|                                                                      |                                 |                                                     |                                                  | Net cash provided (used) by operating activities |        |      | (41.7 | )    |        |       | 10.0  |   |        |        | 35.9  |  
|                                                                      | Investing activities cash flows |                                                     |                                                  |                                                  |        |      |       |      |        |       |       |   |       
|                                                                      |                                 | Capital expenditures                                |                                                  |                                                  | (8.8   | )    |       |      | (6.5   | )     |       |   | (6.2   | )     
|                                                                      |                                 | Net disposals of property, plant and equipment      |                                                  |                                                  | .6     |      |       |      | 2.5    |       |       |   | 7.5    |       
|                                                                      |                                 | Divestitures                                        |                                                  |                                                  | 8.0    |      |       |      | (20.3  | )     |       |   | 303.9  |       
|                                                                      |                                 | Acquisitions                                        |                                                  |                                                  |       |      |       |      | (6.5   | )     |       |   | (4.3   | )     
|                                                                      |                                 |                                                     |                                                  |                                                  |        |      |       |      |       
|                                                                      |                                 |                                                     | Net cash provided (used) by investing activities |                                                  |        | (.2  | )     |      |        | (30.8 | )     |   |        | 300.9  |      
|                                                                      | Financing activities cash flows |                                                     |                                                  |                                                  |        |      |       |      |        |       |       |   |       
|                                                                      |                                 | Issuance of long-term debt                          |                                                  |                                                  | 219.8  |      |       |      |       |       |       |   | 11.5   |       
|                                                                      |                                 | Repayments of long-term debt                        |                                                  |                                                  | (261.5 | )    |       |      | (2.2   | )     |       |   | (1.3   | )     
|                                                                      |                                 | Increase (decrease) in short-term borrowings        |                                                  |                                                  | 68.5   |      |       |      | (2.6   | )     |       |   | (311.6 | )     
|                                                                      |                                 | Issuance of common shares                           |                                                  |                                                  | 25.2   |      |       |      |       |       |       |   | .4     |       
|                                                                      |                                 | Debt issuance costs                                 |                                                  |                                                  | (27.8  | )    |       |      |       |       |       |   |       |       
|                                                                      |                                 | Dividends paid                                      |                                                  |                                                  | (3.3   | )    |       |      | (.8    | )     |       |   | (1.6   | )     
|                                                                      |                                 |                                                     |                                                  |                                                  |        |      |       |      |       
|                                                                      |                                 |                                                     | Net cash provided (used) by financing activities |                                                  |        | 20.9 |       |      |        | (5.6  | )     |   |        | (302.6 | )    
|Effect of exchange rate fluctuations on cash and cash
    equivalents |                                 |                                                     | 1.6                                              |                                                  |        |      | 8.8   |      |        |       | 5.6   |  
|Cash flows related to discontinued operations                         |                                 |                                                     | (4.2                                             | )                                                |        |      | (11.9 | )    |        |       | (7.6  | )
|                                                                      |                                 |                                                     |                                                  |                                                  |        |      |       |      |       
|Increase (decrease) in cash and cash equivalents                      |                                 |                                                     | (23.6                                            | )                                                |        |      | (29.5 | )    |        |       | 32.2  |  
|Cash and cash equivalents at beginning of year                        |                                 |                                                     | 92.8                                             |                                                  |        |      | 122.3 |      |        |       | 90.1  |  
|                                                                      |                                 |                                                     |                                                  |                                                  |        |      |       |      |       
|Cash and cash equivalents at end of year                              |                                 | $                                                   | 69.2                                             |                                                  |        | $    | 92.8  |      |        | $     | 122.3 |  
|                                                                      |                                 |                                                     |                                                  |                                                  |        |      |       |      |       



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Summary of Significant Accounting Policies




| |                      
| | ---------------------
| | Basis of Presentation





| |                 
| | ----------------
| | Use of Estimates





| |              
| | -------------
| | Consolidation





| |                             
| | ----------------------------
| | Foreign Currency Translation





| |                    
| | -------------------
| | Revenue Recognition









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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                  
| | -----------------
| | Advertising Costs





| |             
| | ------------
| | Income Taxes





| |                          
| | -------------------------
| | Earnings Per Common Share







| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                    
| | -------------------
| | Inventory Valuation





| |                              
| | -----------------------------
| | Property, Plant and Equipment



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                              |  |                   |               | 
|----------------------------- |  | ----------------- | ------------- | 
|                              |  | Range of          |              
|Asset                         |  | Depreciation Life |              
|                              |  |                   |              
|Buildings (new)               |  |                   | 25  45 years | 
|Buildings (used)              |  |                   | 20  30 years | 
|Land improvements             |  |                   | 10  20 years | 
|Building components           |  |                   | 5  45 years  | 
|Factory machinery             |  |                   | 6  12 years  | 
|Vehicles                      |  |                   | 3  6 years   | 
|Office furniture and fixtures |  |                   | 5  10 years  | 
|Computers                     |  |                   | 3  5 years   | 
|Personal computers            |  |                   | 3 years       | 





| |         
| | --------
| | Goodwill





| |                  
| | -----------------
| | Long-Lived Assets





| |                  
| | -----------------
| | Warranty Reserves





| |                        
| | -----------------------
| | Self-Insurance Reserves



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                         
| | ------------------------
| | Retirement Benefit Plans





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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Stock-Based Compensation





| |               
| | --------------
| | Pro Forma Loss

|                                                                          |             |                      |       |       |      |   |        |       |   |   |        |       |  
|------------------------------------------------------------------------- | ----------- | -------------------- | ----- | ----- | ---- | - | ------ | ----- | - | - | ------ | ----- | -
|                                                                          |             | 2004                 |       |       |      |   |       
|                                                                          |             | (as restated)        |       |       | 2003 |   |        | 2002  |  
|                                                                          |             |                      |       |       |      |   |        |       |  
|                                                                          |             | (In millions, except |      
|                                                                          |             | per-share amounts)   |      
|Net loss as reported                                                      |             | $                    | (51.8 | )     |      | $ | (190.9 | )     |   | $ | (223.2 | )    
|Effect on reported loss of accounting for stock options at fair
    value |             |                      | (1.2  | )     |      |   | (1.1   | )     |   |   | (2.2   | )    
|                                                                          |             |                      |       |       |      |   |        |       |  
|Pro forma net loss                                                        |             | $                    | (53.0 | )     |      | $ | (192.0 | )     |   | $ | (225.4 | )    
|                                                                          |             |                      |       |       |      |   |        |       |  
|Loss per common share  basic and diluted                                 |             |                      |       |       |      |   |        |       |   |   |        |      
|                                                                          | As reported |                      | $     | (1.73 | )    |   | $      | (5.21 | ) |   | $      | (6.13 | )
|                                                                          |             |                      |       |       |      |   |        |       |  
|                                                                          | Pro forma   |                      | $     | (1.76 | )    |   | $      | (5.24 | ) |   | $      | (6.19 | )
|                                                                          |             |                      |       |       |      |   |        |       |  









| |                                 
| | --------------------------------
| | Derivative Financial Instruments





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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                 
| | --------------------------------
| | Changes in Methods of Accounting









| |                               
| | ------------------------------
| | Recently Issued Pronouncements



Restatement of Financial Statements




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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Discontinued Operations











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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                  
| | ---------------------------------
| | Loss From Discontinued Operations

|                                                                  |  |               |      |   |      |   |      |      |  |   |       |  
|----------------------------------------------------------------- |  | ------------- | ---- | - | ---- | - | ---- | ---- |  | - | ----- | -
|                                                                  |  | 2004          |      |   | 2003 |   |      | 2002 | 
|                                                                  |  |               |      |   |      |   |      |      | 
|                                                                  |  | (In millions) |     
|Sales                                                             |  | $             | 9.6  |   |      | $ | 51.6 |      |  | $ | 325.0 |  
|                                                                  |  |               |      |   |      |   |      |      | 
|Operating loss including restructuring costs                      |  |               | (1.2 | ) |      |   | (5.1 | )    |  |   | (26.8 | )
|Allocated interest expense                                        |  |               | (.1  | ) |      |   | (1.3 | )    |  |   | (10.9 | )
|                                                                  |  |               |      |   |      |   |      |      | 
|Loss before income taxes and minority shareholders
    interests |  |               | (1.3 | ) |      |   | (6.4 | )    |  |   | (37.7 | )
|Benefit for income taxes                                          |  |               |     |   |      |   |     |      |  |   | (10.4 | )
|                                                                  |  |               |      |   |      |   |      |      | 
|Loss before minority shareholders interests                      |  |               | (1.3 | ) |      |   | (6.4 | )    |  |   | (27.3 | )
|Minority shareholders interests                                  |  |               |     |   |      |   |     |      |  |   | (2.1  | )
|                                                                  |  |               |      |   |      |   |      |      | 
|Loss from discontinued operations                                 |  | $             | (1.3 | ) |      | $ | (6.4 | )    |  | $ | (25.2 | )
|                                                                  |  |               |      |   |      |   |      |      | 







| |                                                          
| | ---------------------------------------------------------
| | Gain (Loss) on Divestiture of Discontinued
    Operations

|                                                                                 |  |               |     |   |      |   |      |      |  |   |       |  
|-------------------------------------------------------------------------------- |  | ------------- | --- | - | ---- | - | ---- | ---- |  | - | ----- | -
|                                                                                 |  | 2004          |     |   | 2003 |   |      | 2002 | 
|                                                                                 |  |               |     |   |      |   |      |      | 
|                                                                                 |  | (In millions) |    
|Gain on sale of Valenite                                                         |  | $             | (.4 | ) |      | $ | .4   |      |  | $ | 31.3  |  
|Loss on sale of Widia and Werkö                                                  |  |               | .5  |   |      |   | .9   |      |  |   | (14.9 | )
|Loss on sale of round metalcutting tools business                                |  |               | (.5 | ) |      |   | (2.2 | )    |  |   | (4.7  | )
|Loss on sale of grinding wheels business                                         |  |               | .6  |   |      |   | 1.0  |      |  |   | (5.2  | )
|Adjustment of reserves for the 1998 divestiture of the machine
    tools segment |  |               | .6  |   |      |   | (.9  | )    |  |   | 1.9   |  
|                                                                                 |  |               |     |   |      |   |      |      | 
|Net gain (loss) on divestitures                                                  |  | $             | .8  |   |      | $ | (.8  | )    |  | $ | 8.4   |  
|                                                                                 |  |               |     |   |      |   |      |      | 

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                                  
| | -------------------------------------------------
| | Assets and Liabilities of Discontinued Operations

|                                  |                   |               |     |     | 
|--------------------------------- | ----------------- | ------------- | --- | --- | 
|                                  |                   | 2003          |    
|                                  |                   |               |    
|                                  |                   | (In millions) |    
|Notes and accounts receivable     |                   | $             | .4  |    
|Inventories                       |                   |               | 4.1 |    
|Other current assets              |                   |               | .2  |    
|Property, plant and equipment-net |                   |               | 2.5 |    
|                                  |                   |               |    
|                                  | Total assets      |               |     | 7.2 | 
|Trade accounts payable            |                   |               | 1.1 |    
|Other current liabilities         |                   |               | .5  |    
|Long-term accrued liabilities     |                   |               | .2  |    
|                                  |                   |               |    
|                                  | Total liabilities |               |     | 1.8 | 
|                                  |                   |               |    
|Net assets                        |                   | $             | 5.4 |    
|                                  |                   |               |    

Goodwill Impairment Charge








Restructuring Costs






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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










48



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












| |                    
| | -------------------
| | Restructuring Costs

|                                                   |                                      |                                                               |                |     |      |     |      |      |     |     |      |     |     |     | 
|-------------------------------------------------- | ------------------------------------ | ------------------------------------------------------------- | -------------- | --- | ---- | --- | ---- | ---- | --- | --- | ---- | --- | --- | --- | 
|                                                   |                                      | 2004                                                          |                |     | 2003 |     |      | 2002 |    
|                                                   |                                      |                                                               |                |     |      |     |      |      |    
|                                                   |                                      | (In millions)                                                 |               
|Accruals for restructuring costs                   |                                      |                                                               |                |     |      |     |      |      |     |     |      |    
|                                                   | Termination benefits                 |                                                               | $              | 2.5 |      |     | $    | 8.7  |     |     | $    | 2.0 |    
|                                                   | Facility exit costs                  |                                                               |                | .2  |      |     |      | .4   |     |     |      | .9  |    
|                                                   |                                      |                                                               |                |     |      |     |      |      |    
|                                                   |                                      |                                                               | Total accruals |     |      | 2.7 |      |      |     | 9.1 |      |     |     | 2.9 | 
|Supplemental retirement benefits                   |                                      |                                                               |               |     |      |     | 3.2  |      |     |     | 2.9  |    
|Adjustment of assets to realizable values(a)       |                                      |                                                               | 6.3            |     |      |     | 4.1  |      |     |     | .4   |    
|Other restructuring costs                          |                                      |                                                               |                |     |      |     |      |      |     |     |      |    
|                                                   | Costs charged to expense as incurred |                                                               |                |     |      |     |      |      |     |     |      |     |    
|                                                   |                                      | Inventory adjustments related to product line discontinuation |                |     | 1.4  |     |      |      | 3.3 |     |      |     | 1.9 |    
|                                                   |                                      | Inventory and machinery relocation                            |                |     | 1.2  |     |      |      | 1.5 |     |      |     | .1  |    
|                                                   |                                      | Employee relocation and other move costs                      |                |     |     |     |      |      | 1.1 |     |      |     | .1  |    
|                                                   |                                      | Severance and facility exist costs                            |                |     | .8   |     |      |      | 3.7 |     |      |     | 1.3 |    
|                                                   |                                      | Other                                                         |                |     | .5   |     |      |      | 1.1 |     |      |     | .2  |    
|                                                   | Reserve adjustments                  |                                                               |                | (.2 | )    |     |      | (1.8 | )   |     |      | (.5 | )  
|                                                   |                                      |                                                               |                |     |      |     |      |      |    
|                                                   |                                      |                                                               | 12.7           |     |      |     | 25.3 |      |     |     | 9.3  |    
|Costs related to the EOC and Reform integration(a) |                                      |                                                               | .3             |     |      |     | 1.8  |      |     |     | 4.6  |    
|                                                   |                                      |                                                               |                |     |      |     |      |      |    
|Total restructuring costs                          |                                      | $                                                             | 13.0           |     |      | $   | 27.1 |      |     | $   | 13.9 |    
|                                                   |                                      |                                                               |                |     |      |     |      |      |    






|    |  |                                                                                                                                                                                                                           
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In 2004, the amounts presented on these lines include
    $6.2 million of non-cash charges recorded in the fourth
    quarter to adjust the carrying values of idle plant and
    equipment to expected realizable values.



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                       
| | ----------------------
| | Restructuring Reserves

|                                                |                      |               |     |     |           |   |           |       |  |        |         |      |   |   |     |     | 
|----------------------------------------------- | -------------------- | ------------- | --- | --- | --------- | - | --------- | ----- |  | ------ | ------- | ---- | - | - | --- | --- | 
|                                                |                      | 2004          |    
|                                                |                      |               |    
|                                                |                      | Beginning     |     |     |           |   | Usage and |       |  | Ending |        
|                                                |                      | Balance       |     |     | Additions |   |           | Other |  |        | Balance |     
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     
|                                                |                      | (In millions) |    
|EOC and Reform integration                      |                      |               |     |     |           |   |           |       |  |        |         |      |   |   |     |    
|                                                | Termination benefits |               | $   | 1.3 |           |   | $         |      |  |        | $       | (.3  | ) |   | $   | 1.0 | 
|                                                | Facility exit costs  |               |     | .3  |           |   |           |      |  |        |         |     |   |   |     | .3  | 
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     
|                                                |                      |               | 1.6 |     |           |   |          |       |  |        | (.3     | )    |   |   | 1.3 |    
|Restructuring costs                             |                      |               |     |     |           |   |           |       |  |        |         |      |   |   |     |    
|                                                | Termination benefits |               |     | 4.5 |           |   |           | 2.5   |  |        |         | (5.7 | ) |   |     | 1.3 | 
|                                                | Facility exit costs  |               |     | .4  |           |   |           | .2    |  |        |         | (.4  | ) |   |     | .2  | 
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     
|                                                |                      |               | 4.9 |     |           |   | 2.7       |       |  |        | (6.1    | )    |   |   | 1.5 |    
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     
|Total reserves related to continuing operations |                      | $             | 6.5 |     |           | $ | 2.7       |       |  | $      | (6.4    | )    |   | $ | 2.8 |    
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     

|                                                |                      |               |     |     |           |   |           |       |  |        |         |      |   |   |     |     | 
|----------------------------------------------- | -------------------- | ------------- | --- | --- | --------- | - | --------- | ----- |  | ------ | ------- | ---- | - | - | --- | --- | 
|                                                |                      | 2003          |    
|                                                |                      |               |    
|                                                |                      | Beginning     |     |     |           |   | Usage and |       |  | Ending |        
|                                                |                      | Balance       |     |     | Additions |   |           | Other |  |        | Balance |     
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     
|                                                |                      | (In millions) |    
|EOC and Reform integration                      |                      |               |     |     |           |   |           |       |  |        |         |      |   |   |     |    
|                                                | Termination benefits |               | $   | 1.7 |           |   | $         |      |  |        | $       | (.4  | ) |   | $   | 1.3 | 
|                                                | Facility exit costs  |               |     |    |           |   |           | .3    |  |        |         |     |   |   |     | .3  | 
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     
|                                                |                      |               | 1.7 |     |           |   | .3        |       |  |        | (.4     | )    |   |   | 1.6 |    
|Restructuring costs                             |                      |               |     |     |           |   |           |       |  |        |         |      |   |   |     |    
|                                                | Termination benefits |               |     | 3.1 |           |   |           | 8.7   |  |        |         | (7.3 | ) |   |     | 4.5 | 
|                                                | Facility exit costs  |               |     | .6  |           |   |           | .4    |  |        |         | (.6  | ) |   |     | .4  | 
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     
|                                                |                      |               | 3.7 |     |           |   | 9.1       |       |  |        | (7.9    | )    |   |   | 4.9 |    
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     
|Total reserves related to continuing operations |                      | $             | 5.4 |     |           | $ | 9.4       |       |  | $      | (8.3    | )    |   | $ | 6.5 |    
|                                                |                      |               |     |     |           |   |           |       |  |        |         |     



Refinancing Costs




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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


5 8


Acquisitions










| |                               
| | ------------------------------
| | Allocation of Acquisition Cost

|                              |                   |               |     |     |      |   |    |     | 
|----------------------------- | ----------------- | ------------- | --- | --- | ---- | - | -- | --- | 
|                              |                   | 2003          |     |     | 2002 |  
|                              |                   |               |     |     |      |  
|                              |                   | (In millions) |    
|Cash and cash equivalents     |                   | $             | .4  |     |      | $ |   |    
|Accounts receivable           |                   |               | 1.5 |     |      |   | .4 |    
|Inventories                   |                   |               | .3  |     |      |   | .7 |    
|Other current assets          |                   |               | .1  |     |      |   |   |    
|Property, plant and equipment |                   |               | .2  |     |      |   | .3 |    
|Goodwill                      |                   |               |    |     |      |   | .4 |    
|                              |                   |               |     |     |      |  
|                              | Total assets      |               |     | 2.5 |      |   |    | 1.8 | 
|Current liabilities           |                   |               | 1.4 |     |      |   | .8 |    
|Long-term debt                |                   |               |    |     |      |   | .1 |    
|                              |                   |               |     |     |      |  
|                              | Total liabilities |               |     | 1.4 |      |   |    | .9  | 
|                              |                   |               |     |     |      |  
|Total acquisition cost        |                   | $             | 1.1 |     |      | $ | .9 |    
|                              |                   |               |     |     |      |  



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Research and Development






| |                         
| | ------------------------
| | Research and Development

|                         |  |               |      |  |      |   |      |      |  |   |      | 
|------------------------ |  | ------------- | ---- |  | ---- | - | ---- | ---- |  | - | ---- | 
|                         |  | 2004          |      |  | 2003 |   |      | 2002 | 
|                         |  |               |      |  |      |   |      |      | 
|                         |  | (In millions) |     
|Research and development |  | $             | 19.8 |  |      | $ | 17.8 |      |  | $ | 15.8 | 
|                         |  |               |      |  |      |   |      |      | 

Retirement Benefit Plans






| |                         
| | ------------------------
| | Pension Expense (Income)

|                                                 |  |               |       |   |      |   |       |      |  |   |       |  
|------------------------------------------------ |  | ------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                 |  | 2004          |       |   | 2003 |   |       | 2002 | 
|                                                 |  |               |       |   |      |   |       |      | 
|                                                 |  | (In millions) |      
|Service cost (benefits earned during the period) |  | $             | 4.2   |   |      | $ | 4.5   |      |  | $ | 4.6   |  
|Interest cost on projected benefit obligation    |  |               | 33.8  |   |      |   | 33.4  |      |  |   | 34.5  |  
|Expected return on plan assets                   |  |               | (35.1 | ) |      |   | (38.8 | )    |  |   | (45.9 | )
|Supplemental retirement benefits(a)              |  |               |      |   |      |   | 3.2   |      |  |   | 4.7   |  
|Amortization of unrecognized prior service cost  |  |               | .8    |   |      |   | .8    |      |  |   | .8    |  
|Amortization of unrecognized gains and losses    |  |               | 7.0   |   |      |   | 3.1   |      |  |   | .5    |  
|                                                 |  |               |       |   |      |   |       |      | 
|Pension expense (income)                         |  | $             | 10.7  |   |      | $ | 6.2   |      |  | $ | (.8   | )
|                                                 |  |               |       |   |      |   |       |      | 






|    |  |                                                                                                                                                                                                                                                                                           
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In 2003, the entire amount is included in the line captioned
    Restructuring costs in the Consolidated Statement of
    Operations for that year. In 2002, $2.9 million is included
    in restructuring costs and $1.8 million is included in
    results of discontinued operations.





| |                             
| | ----------------------------
| | Projected Benefit Obligation

|                                         |  |               |        |   |      |   |        |  
|---------------------------------------- |  | ------------- | ------ | - | ---- | - | ------ | -
|                                         |  | 2004          |        |   | 2003 |  
|                                         |  |               |        |   |      |  
|                                         |  | (In millions) |       
|Balance at beginning of year             |  | $             | (537.3 | ) |      | $ | (527.2 | )
|Service cost                             |  |               | (4.2   | ) |      |   | (4.5   | )
|Interest cost                            |  |               | (33.8  | ) |      |   | (33.4  | )
|Benefits paid                            |  |               | 42.8   |   |      |   | 39.3   |  
|Actuarial gain (loss)                    |  |               | (6.1   | ) |      |   | 12.6   |  
|Merger of subsidiary plan                |  |               |       |   |      |   | (4.0   | )
|Supplemental retirement benefits         |  |               |       |   |      |   | (3.2   | )
|Changes in discount rates                |  |               | (16.6  | ) |      |   | (14.6  | )
|Foreign currency translation adjustments |  |               | (1.1   | ) |      |   | (2.3   | )
|                                         |  |               |        |   |      |  
|Balance at end of year                   |  | $             | (556.3 | ) |      | $ | (537.3 | )
|                                         |  |               |        |   |      |  

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |            
| | -----------
| | Plan Assets

|                              |  |               |       |   |      |   |       |  
|----------------------------- |  | ------------- | ----- | - | ---- | - | ----- | -
|                              |  | 2004          |       |   | 2003 |  
|                              |  |               |       |   |      |  
|                              |  | (In millions) |      
|Balance at beginning of year  |  | $             | 370.9 |   |      | $ | 342.7 |  
|Actual investment gain (loss) |  |               | 44.0  |   |      |   | 61.4  |  
|Benefits and expenses paid    |  |               | (40.3 | ) |      |   | (37.0 | )
|Contributions                 |  |               | 4.2   |   |      |   |      |  
|Merger of subsidiary plan     |  |               |      |   |      |   | 3.8   |  
|                              |  |               |       |   |      |  
|Balance at end of year        |  | $             | 378.8 |   |      | $ | 370.9 |  
|                              |  |               |       |   |      |  





| |                          
| | -------------------------
| | Allocation of Plan Assets

|                          |  |      |     |   |      |  |     |  
|------------------------- |  | ---- | --- | - | ---- |  | --- | -
|                          |  | 2004 |     |   | 2003 | 
|                          |  |      |     |   |      | 
|Equity securities         |  |      | 69  | % |      |  | 65  | %
|Debt securities           |  |      | 31  | % |      |  | 34  | %
|Cash and cash equivalents |  |      |    | % |      |  | 1   | %
|                          |  |      |     |   |      | 
|                          |  |      | 100 | % |      |  | 100 | %
|                          |  |      |     |   |      | 









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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                          
| | -------------------------
| | Funded Status at Year-End

|                                                                          |  |               |        |   |      |   |        |  
|------------------------------------------------------------------------- |  | ------------- | ------ | - | ---- | - | ------ | -
|                                                                          |  | 2004          |        |   | 2003 |  
|                                                                          |  |               |        |   |      |  
|                                                                          |  | (In millions) |       
|Vested benefit obligation                                                 |  | $             | (506.7 | ) |      | $ | (487.1 | )
|                                                                          |  |               |        |   |      |  
|Accumulated benefit obligation                                            |  | $             | (519.0 | ) |      | $ | (500.6 | )
|                                                                          |  |               |        |   |      |  
|Projected benefit obligation                                              |  | $             | (541.1 | ) |      | $ | (523.3 | )
|Plan assets at fair value                                                 |  |               | 378.8  |   |      |   | 370.9  |  
|                                                                          |  |               |        |   |      |  
|Deficiency of plan assets in relation to projected benefit
    obligation |  |               | (162.3 | ) |      |   | (152.4 | )
|Unrecognized net loss                                                     |  |               | 166.9  |   |      |   | 164.4  |  
|Unrecognized prior service cost                                           |  |               | 3.6    |   |      |   | 4.1    |  
|                                                                          |  |               |        |   |      |  
|Prepaid pension cost                                                      |  | $             | 8.2    |   |      | $ | 16.1   |  
|                                                                          |  |               |        |   |      |  





| |                           
| | --------------------------
| | Balance Sheet Presentation

|                                        |  |               |        |   |      |   |        |  
|--------------------------------------- |  | ------------- | ------ | - | ---- | - | ------ | -
|                                        |  | 2004          |        |   | 2003 |  
|                                        |  |               |        |   |      |  
|                                        |  | (In millions) |       
|Intangible asset                        |  | $             | 3.6    |   |      | $ | 3.5    |  
|Accrued pension cost                    |  |               | (140.5 | ) |      |   | (119.6 | )
|Accumulated other comprehensive loss(a) |  |               | 145.1  |   |      |   | 132.2  |  
|                                        |  |               |        |   |      |  
|                                        |  | $             | 8.2    |   |      | $ | 16.1   |  
|                                        |  |               |        |   |      |  






|    |  |                                                                                                                                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Represents the pretax amount of cumulative after-tax charges to
    accumulated other comprehensive loss of $93.8 million in
    2004 and $80.8 million in 2003.







| |                   
| | ------------------
| | Status at Year-End

|                               |  |               |       |   |      |   |       |  
|------------------------------ |  | ------------- | ----- | - | ---- | - | ----- | -
|                               |  | 2004          |       |   | 2003 |  
|                               |  |               |       |   |      |  
|                               |  | (In millions) |      
|Vested benefit obligation      |  | $             | (11.4 | ) |      | $ | (10.4 | )
|                               |  |               |       |   |      |  
|Accumulated benefit obligation |  | $             | (13.2 | ) |      | $ | (12.1 | )
|                               |  |               |       |   |      |  
|Projected benefit obligation   |  | $             | (15.2 | ) |      | $ | (14.0 | )
|Unrecognized net (gain) loss   |  |               | (.6   | ) |      |   | .3    |  
|                               |  |               |       |   |      |  
|Accrued pension cost           |  | $             | (15.8 | ) |      | $ | (13.7 | )
|                               |  |               |       |   |      |  

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                      
| | ---------------------
| | Actuarial Assumptions

|                                                 |  |      |      |   |      |  |      |      |  |  |      |  
|------------------------------------------------ |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                                 |  | 2004 |      |   | 2003 |  |      | 2002 | 
|                                                 |  |      |      |   |      |  |      |      | 
|Discount rate                                    |  |      | 6.24 | % |      |  | 6.49 | %    |  |  | 7.23 | %
|Expected long-term rate of return on plan assets |  |      | 9.00 | % |      |  | 9.00 | %    |  |  | 9.50 | %
|Rate of increase in future compensation levels   |  |      | 3.66 | % |      |  | 2.41 | %    |  |  | .73  | %





| |                      
| | ---------------------
| | Actuarial Assumptions

|                                               |  |      |      |   |      |  |      |  
|---------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | -
|                                               |  | 2004 |      |   | 2003 | 
|                                               |  |      |      |   |      | 
|Discount rate                                  |  |      | 6.00 | % |      |  | 6.24 | %
|Rate of increase on future compensation levels |  |      | 3.66 | % |      |  | 3.69 | %





| |                         
| | ------------------------
| | Pension Benefit Payments

|          |  |               |       | 
|--------- |  | ------------- | ----- | 
|          |  | (In millions) |      
|2005      |  | $             | 36.6  | 
|2006      |  |               | 36.1  | 
|2007      |  |               | 35.7  | 
|2008      |  |               | 35.6  | 
|2009      |  |               | 35.8  | 
|2010-2104 |  |               | 186.9 | 





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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                
| | -------------------------------
| | Postretirement Health Care Cost

|                                                               |  |               |     |   |      |   |     |      |  |   |     |  
|-------------------------------------------------------------- |  | ------------- | --- | - | ---- | - | --- | ---- |  | - | --- | -
|                                                               |  | 2004          |     |   | 2003 |   |     | 2002 | 
|                                                               |  |               |     |   |      |   |     |      | 
|                                                               |  | (In millions) |    
|Service cost (benefits earned during the period)               |  | $             | .1  |   |      | $ | .1  |      |  | $ | .1  |  
|Interest cost on accumulated postretirement benefit obligation |  |               | 1.4 |   |      |   | 1.5 |      |  |   | 1.7 |  
|Amortization of unrecognized gains                             |  |               | (.2 | ) |      |   | (.3 | )    |  |   | (.4 | )
|                                                               |  |               |     |   |      |   |     |      | 
|Postretirement health care cost                                |  | $             | 1.3 |   |      | $ | 1.3 |      |  | $ | 1.4 |  
|                                                               |  |               |     |   |      |   |     |      | 





| |                                              
| | ---------------------------------------------
| | Accumulated Postretirement Benefit Obligation

|                             |  |               |       |   |      |   |       |  
|---------------------------- |  | ------------- | ----- | - | ---- | - | ----- | -
|                             |  | 2004          |       |   | 2003 |  
|                             |  |               |       |   |      |  
|                             |  | (In millions) |      
|Balance at beginning of year |  | $             | (23.2 | ) |      | $ | (24.9 | )
|Service cost                 |  |               | (.1   | ) |      |   | (.1   | )
|Interest cost                |  |               | (1.4  | ) |      |   | (1.5  | )
|Participant contributions    |  |               | (5.7  | ) |      |   | (5.0  | )
|Benefits paid                |  |               | 8.4   |   |      |   | 7.9   |  
|Actuarial gain (loss)        |  |               | (.4   | ) |      |   | .8    |  
|Changes in discount rates    |  |               | (.4   | ) |      |   | (.4   | )
|                             |  |               |       |   |      |  
|Balance at end of year       |  | $             | (22.8 | ) |      | $ | (23.2 | )
|                             |  |               |       |   |      |  





| |                                            
| | -------------------------------------------
| | Accrued Postretirement Health Care Benefits

|                                              |                                    |               |       |       |      |   |       |       |  
|--------------------------------------------- | ---------------------------------- | ------------- | ----- | ----- | ---- | - | ----- | ----- | -
|                                              |                                    | 2004          |       |       | 2003 |  
|                                              |                                    |               |       |       |      |  
|                                              |                                    | (In millions) |      
|Accumulated postretirement benefit obligation |                                    |               |       |       |      |   |       |      
|                                              | Retirees                           |               | $     | (16.9 | )    |   | $     | (17.3 | )
|                                              | Fully eligible active participants |               |       | (1.6  | )    |   |       | (1.7  | )
|                                              | Other active participants          |               |       | (4.3  | )    |   |       | (4.2  | )
|                                              |                                    |               |       |       |      |  
|                                              |                                    |               | (22.8 | )     |      |   | (23.2 | )    
|Unrecognized net gain                         |                                    |               | (4.5  | )     |      |   | (5.5  | )    
|                                              |                                    |               |       |       |      |  
|Accrued postretirement health care benefits   |                                    | $             | (27.3 | )     |      | $ | (28.7 | )    
|                                              |                                    |               |       |       |      |  

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                      
| | ---------------------
| | Actuarial Assumptions

|                                              |  |      |      |   |      |  |      |      |  |  |      |  
|--------------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---- | -
|                                              |  | 2004 |      |   | 2003 |  |      | 2002 | 
|                                              |  |      |      |   |      |  |      |      | 
|Accumulated postretirement benefit obligation |  |      | 6.00 | % |      |  | 6.25 | %    |  |  | 6.50 | %
|Postretirement health care cost               |  |      | 6.25 | % |      |  | 6.50 | %    |  |  | 7.25 | %







| |                                    
| | -----------------------------------
| | Postretirement Health Care Benefits

|          |  |               |     | 
|--------- |  | ------------- | --- | 
|          |  | (In millions) |    
|2005      |  | $             | 2.6 | 
|2006      |  |               | 2.5 | 
|2007      |  |               | 2.3 | 
|2008      |  |               | 2.2 | 
|2009      |  |               | 2.1 | 
|2010-2014 |  |               | 8.7 | 



Income Taxes




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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
















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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                                  
| | -------------------------------------------------
| | Components of Deferred Tax Assets and Liabilities

|                         |                                                                                                             |                                |                                                 |       |        |      |      |      |        |      | 
|------------------------ | ----------------------------------------------------------------------------------------------------------- | ------------------------------ | ----------------------------------------------- | ----- | ------ | ---- | ---- | ---- | ------ | ---- | 
|                         |                                                                                                             | 2004                           |                                                 |       | 2003   |     
|                         |                                                                                                             |                                |                                                 |       |        |     
|                         |                                                                                                             | (In millions)                  |                                                
|Deferred tax assets      |                                                                                                             |                                |                                                 |       |        |      |      |     
|                         | Net operating loss carryforwards                                                                            |                                | $                                               | 111.2 |        |      | $    | 95.2 |       
|                         | Tax credit carryforwards                                                                                    |                                |                                                 | 14.2  |        |      |      | 12.4 |       
|                         | Accrued postretirement health care benefits                                                                 |                                |                                                 | 8.5   |        |      |      | 9.3  |       
|                         | Inventories, due principally to obsolescence reserves and
    additional costs inventoried for tax purposes |                                |                                                 | 4.8   |        |      |      | 6.3  |       
|                         | Accrued employee benefits other than pensions and retiree health
    care benefits                          |                                |                                                 | 1.7   |        |      |      | 3.4  |       
|                         | Accrued pension cost                                                                                        |                                |                                                 | 8.8   |        |      |      | 8.5  |       
|                         | Accrued warranty cost                                                                                       |                                |                                                 | 1.2   |        |      |      | 1.8  |       
|                         | Accrued taxes                                                                                               |                                |                                                 | 2.1   |        |      |      | 3.0  |       
|                         | Accounts receivable, due principally to allowances for doubtful
    accounts                                |                                |                                                 | 1.7   |        |      |      | 1.8  |       
|                         | Goodwill                                                                                                    |                                |                                                 | 39.2  |        |      |      | 46.0 |       
|                         | Deferred pension costs                                                                                      |                                |                                                 | 41.1  |        |      |      | 35.7 |       
|                         | Accrued liabilities and other                                                                               |                                |                                                 | 11.8  |        |      |      | 15.2 |       
|                         |                                                                                                             |                                |                                                 |       |        |     
|                         |                                                                                                             | Total deferred tax assets      |                                                 |       | 246.3  |      |      |      | 238.6  |     
|                         |                                                                                                             | Less valuation allowances      |                                                 |       | (157.1 | )    |      |      | (139.8 | )   
|                         |                                                                                                             |                                |                                                 |       |        |     
|                         |                                                                                                             |                                | Deferred tax assets net of valuation allowances |       |        | 89.2 |      |      |        | 98.8 | 
|Deferred tax liabilities |                                                                                                             |                                |                                                 |       |        |      |      |     
|                         | Property, plant and equipment, due principally to differences in
    depreciation methods                   |                                |                                                 | 8.5   |        |      |      | 8.2  |       
|                         | Inventories                                                                                                 |                                |                                                 | 9.5   |        |      |      | 12.8 |       
|                         |                                                                                                             |                                |                                                 |       |        |     
|                         |                                                                                                             | Total deferred tax liabilities |                                                 |       | 18.0   |      |      |      | 21.0   |     
|                         |                                                                                                             |                                |                                                 |       |        |     
|Net deferred tax assets  |                                                                                                             | $                              | 71.2                                            |       |        | $    | 77.8 |     
|                         |                                                                                                             |                                |                                                 |       |        |     





| |                         
| | ------------------------
| | Loss Before Income Taxes

|              |  |               |       |   |      |   |         |      |  |   |        |  
|------------- |  | ------------- | ----- | - | ---- | - | ------- | ---- |  | - | ------ | -
|              |  | 2004          |       |   | 2003 |   |         | 2002 | 
|              |  |               |       |   |      |   |         |      | 
|              |  | (In millions) |      
|United States |  | $             | (59.7 | ) |      | $ | (96.7   | )    |  | $ | (26.1  | )
|Non-U.S.      |  |               | 5.8   |   |      |   | (13.7   | )    |  |   | (11.0  | )
|              |  |               |       |   |      |   |         |      | 
|              |  | $             | (53.9 | ) |      | $ | ( 110.4 | )    |  | $ | ( 37.1 | )
|              |  |               |       |   |      |   |         |      | 



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                     
| | ------------------------------------
| | Provision (Benefit) for Income Taxes

|                            |                              |                 |       |   |       |   |      |      |      |   |       |   |       |  
|--------------------------- | ---------------------------- | --------------- | ----- | - | ----- | - | ---- | ---- | ---- | - | ----- | - | ----- | -
|                            |                              | 2004            |       |   | 2003  |   |      | 2002 |     
|                            |                              |                 |       |   |       |   |      |      |     
|                            |                              | (In millions)   |      
|Current provision (benefit) |                              |                 |       |   |       |   |      |      |      |   |       |  
|                            |                              | United States   |       | $ | (12.5 | ) |      | $    | (1.8 | ) |       | $ | (4.4  | )
|                            |                              | State and local |       |   | .1    |   |      |      |     |   |       |   | .2    |  
|                            |                              | Non-U.S.        |       |   | 1.1   |   |      |      | 1.2  |   |       |   | 2.7   |  
|                            |                              |                 |       |   |       |   |      |      |     
|                            |                              |                 | (11.3 | ) |       |   | (.6  | )    |      |   | (1.5  | )
|                            | Deferred provision (benefit) |                 |       |   |       |   |      |      |      |   |       |   |      
|                            |                              | United States   |       |   | 2.7   |   |      |      | 68.7 |   |       |   | (12.5 | )
|                            |                              | Non-U.S.        |       |   | 6.0   |   |      |      | 5.2  |   |       |   | (4.4  | )
|                            |                              |                 |       |   |       |   |      |      |     
|                            |                              |                 | 8.7   |   |       |   | 73.9 |      |      |   | (16.9 | )
|                            |                              |                 |       |   |       |   |      |      |     
|                            |                              | $               | (2.6  | ) |       | $ | 73.3 |      |      | $ | (18.4 | )
|                            |                              |                 |       |   |       |   |      |      |     



| |                                                                    
| | -------------------------------------------------------------------
| | Components of the Provision (Benefit) for Deferred Income
    Taxes

|                                                                                    |  |               |       |   |      |   |       |      |  |   |       |  
|----------------------------------------------------------------------------------- |  | ------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                                    |  | 2004          |       |   | 2003 |   |       | 2002 | 
|                                                                                    |  |               |       |   |      |   |       |      | 
|                                                                                    |  | (In millions) |      
|Change in valuation allowances                                                      |  | $             | 17.3  |   |      | $ | 104.6 |      |  | $ | 19.2  |  
|Change in deferred taxes related to operating loss and tax
    credit carryforwards |  |               | (17.8 | ) |      |   | (30.5 | )    |  |   | (31.7 | )
|Depreciation and amortization                                                       |  |               | 7.1   |   |      |   | 6.0   |      |  |   | 6.3   |  
|Inventories and accounts receivable                                                 |  |               | (1.7  | ) |      |   | 1.2   |      |  |   | (4.6  | )
|Accrued pension and other employee costs                                            |  |               | (4.0  | ) |      |   | 4.7   |      |  |   | 3.1   |  
|Other                                                                               |  |               | 7.8   |   |      |   | (12.1 | )    |  |   | (9.2  | )
|                                                                                    |  |               |       |   |      |   |       |      | 
|                                                                                    |  | $             | 8.7   |   |      | $ | 73.9  |      |  | $ | (16.9 | )
|                                                                                    |  |               |       |   |      |   |       |      | 



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                                                        
| | -----------------------------------------------------------------------
| | Reconciliation of the U.S. Statutory Rate to the Tax
    Provision Rate

|                                   |                                                      |      |       |       |      |  |       |      |  |  |       |       |  
|---------------------------------- | ---------------------------------------------------- | ---- | ----- | ----- | ---- |  | ----- | ---- |  |  | ----- | ----- | -
|                                   |                                                      | 2004 |       |       | 2003 |  |       | 2002 | 
|                                   |                                                      |      |       |       |      |  |       |      | 
|U.S. statutory tax rate            |                                                      |      | (35.0 | )%    |      |  | (35.0 | )%   |  |  | (35.0 | )%   
|Increase (decrease) resulting from |                                                      |      |       |       |      |  |       |      |  |  |       |      
|                                   | Effect of changes in valuation allowances            |      |       | 37.9  |      |  |       | 94.7 |  |  |       | 31.5  |  
|                                   | Losses without current tax benefits                  |      |       |      |      |  |       |     |  |  |       | (.2   | )
|                                   | Adjustment of tax reserves                           |      |       | (19.5 | )    |  |       |     |  |  |       | (4.6  | )
|                                   | Statutory tax rate changes                           |      |       | .9    |      |  |       |     |  |  |       |      |  
|                                   | Effect of operations outside the U.S.                |      |       |      |      |  |       |     |  |  |       | (37.7 | )
|                                   | State and local income taxes, net of federal benefit |      |       | .2    |      |  |       |     |  |  |       | (2.1  | )
|                                   | Foreign dividends                                    |      |       | 12.4  |      |  |       | 6.7  |  |  |       | 1.0   |  
|                                   | Other                                                |      |       | (1.7  | )    |  |       |     |  |  |       | (2.6  | )
|                                   |                                                      |      |       |       |      |  |       |      | 
|                                   |                                                      |      | (4.8  | )%    |      |  | 66.4  | %    |  |  | (49.7 | )%   
|                                   |                                                      |      |       |       |      |  |       |      | 



5 8




Earnings Per Common Share






| |                                           
| | ------------------------------------------
| | Earnings Applicable to Common Shareholders

|                                                                         |  |               |       |   |      |   |        |      |  |   |        |  
|------------------------------------------------------------------------ |  | ------------- | ----- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                         |  | 2004          |       |   |      |   |       
|                                                                         |  | (as restated) |       |   | 2003 |   |        | 2002 | 
|                                                                         |  |               |       |   |      |   |        |      | 
|                                                                         |  | (In millions) |      
|Net loss                                                                 |  | $             | (51.8 | ) |      | $ | (190.9 | )    |  | $ | (223.2 | )
|Dividends on preferred shares                                            |  |               | (3.1  | ) |      |   | (.2    | )    |  |   | (.2    | )
|Beneficial conversion feature related to Series B Preferred
    Stock(a) |  |               | (15.9 | ) |      |   |       |      |  |   |       |  
|                                                                         |  |               |       |   |      |   |        |      | 
|Loss applicable to common shareholders                                   |  | $             | (70.8 | ) |      | $ | (191.1 | )    |  | $ | (223.4 | )
|                                                                         |  |               |       |   |      |   |        |      | 






|    |  |                                                                                                                                                                                                                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Represents a beneficial conversion feature arising from the fact
    that holders of the Series B Preferred Stock are able to
    acquire common shares of the company at an effective conversion
    price that is less than their fair value on March 12, 2004
    (see Shareholders Equity).

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Reconciliation of Shares

|                                                       |  |                |        |  |      |  |        |      |  |  |        | 
|------------------------------------------------------ |  | -------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ | 
|                                                       |  | 2004           |        |  | 2003 |  |        | 2002 | 
|                                                       |  |                |        |  |      |  |        |      | 
|                                                       |  | (In thousands) |       
|Weighted-average common shares outstanding             |  |                | 40,955 |  |      |  | 36,660 |      |  |  | 36,465 | 
|Effect of dilutive stock options and restricted shares |  |                |       |  |      |  |       |      |  |  |       | 
|                                                       |  |                |        |  |      |  |        |      | 
|Weighted-average common shares assuming dilution       |  |                | 40,955 |  |      |  | 36,660 |      |  |  | 36,465 | 
|                                                       |  |                |        |  |      |  |        |      | 





Receivables








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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Inventories




Goodwill and Other Intangible Assets








| |                    
| | -------------------
| | Changes in Goodwill

|                                         |  |               |      |  |              |   |    |              |  |   |            |  |  |       |      |  |  |   |      | 
|---------------------------------------- |  | ------------- | ---- |  | ------------ | - | -- | ------------ |  | - | ---------- |  |  | ----- | ---- |  |  | - | ---- | 
|                                         |  | 2004          |     
|                                         |  |               |     
|                                         |  | Machinery     |      |  |             
|                                         |  | Technologies  |      |  | Machinery    |   |    |             
|                                         |  | North         |      |  | Technologies |   |    | Mold         |  |   | Industrial |  |  |      
|                                         |  | America       |      |  | Europe       |   |    | Technologies |  |   | Fluids     |  |  | Total |     
|                                         |  |               |      |  |              |   |    |              |  |   |            |  |  |       |     
|                                         |  | (In millions) |     
|Balance at beginning of year             |  | $             | 17.5 |  |              | $ | .7 |              |  | $ | 55.4       |  |  | $     | 10.2 |  |  | $ | 83.8 | 
|Foreign currency translation adjustments |  |               | .1   |  |              |   | .1 |              |  |   | 2.6        |  |  |       |     |  |  |   | 2.8  | 
|                                         |  |               |      |  |              |   |    |              |  |   |            |  |  |       |     
|Balance at end of year                   |  | $             | 17.6 |  |              | $ | .8 |              |  | $ | 58.0       |  |  | $     | 10.2 |  |  | $ | 86.6 | 
|                                         |  |               |      |  |              |   |    |              |  |   |            |  |  |       |     

|                                         |  |               |      |  |              |   |    |              |  |   |            |   |  |       |      |  |  |   |       |  
|---------------------------------------- |  | ------------- | ---- |  | ------------ | - | -- | ------------ |  | - | ---------- | - |  | ----- | ---- |  |  | - | ----- | -
|                                         |  | 2003          |     
|                                         |  |               |     
|                                         |  | Machinery     |      |  |             
|                                         |  | Technologies  |      |  | Machinery    |   |    |             
|                                         |  | North         |      |  | Technologies |   |    | Mold         |  |   | Industrial |   |  |      
|                                         |  | America       |      |  | Europe       |   |    | Technologies |  |   | Fluids     |   |  | Total |     
|                                         |  |               |      |  |              |   |    |              |  |   |            |   |  |       |     
|                                         |  | (In millions) |     
|Balance at beginning of year             |  | $             | 17.3 |  |              | $ | .5 |              |  | $ | 115.3      |   |  | $     | 10.2 |  |  | $ | 143.3 |  
|Goodwill acquired                        |  |               |     |  |              |   |   |              |  |   | .2         |   |  |       |     |  |  |   | .2    |  
|Impairment charges                       |  |               |     |  |              |   |   |              |  |   | (65.6      | ) |  |       |     |  |  |   | (65.6 | )
|Foreign currency translation adjustments |  |               | .2   |  |              |   | .2 |              |  |   | 5.5        |   |  |       |     |  |  |   | 5.9   |  
|                                         |  |               |      |  |              |   |    |              |  |   |            |   |  |       |     
|Balance at end of year                   |  | $             | 17.5 |  |              | $ | .7 |              |  | $ | 55.4       |   |  | $     | 10.2 |  |  | $ | 83.8  |  
|                                         |  |               |      |  |              |   |    |              |  |   |            |   |  |       |     

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Property, Plant and Equipment






| |                                  
| | ---------------------------------
| | Property, Plant and Equipment-Net

|                              |  |               |        |   |      |   |        |  
|----------------------------- |  | ------------- | ------ | - | ---- | - | ------ | -
|                              |  | 2004          |        |   | 2003 |  
|                              |  |               |        |   |      |  
|                              |  | (In millions) |       
|Land                          |  | $             | 11.3   |   |      | $ | 10.7   |  
|Buildings                     |  |               | 132.5  |   |      |   | 125.2  |  
|Machinery and equipment       |  |               | 218.2  |   |      |   | 211.6  |  
|                              |  |               |        |   |      |  
|                              |  |               | 362.0  |   |      |   | 347.5  |  
|Less accumulated depreciation |  |               | (233.6 | ) |      |   | (206.7 | )
|                              |  |               |        |   |      |  
|                              |  | $             | 128.4  |   |      | $ | 140.8  |  
|                              |  |               |        |   |      |  

Other Assets






| |                     
| | --------------------
| | Other Current Assets

|                                           |  |               |      |  |      |   |      | 
|------------------------------------------ |  | ------------- | ---- |  | ---- | - | ---- | 
|                                           |  | 2004          |      |  | 2003 |  
|                                           |  |               |      |  |      |  
|                                           |  | (In millions) |     
|Deferred income taxes                      |  | $             | 26.2 |  |      | $ | 27.9 | 
|Recoverable from excess liability carriers |  |               | 4.1  |  |      |   |     | 
|Refundable income taxes                    |  |               | 3.5  |  |      |   | 2.7  | 
|Other                                      |  |               | 15.3 |  |      |   | 14.6 | 
|                                           |  |               |      |  |      |  
|                                           |  | $             | 49.1 |  |      | $ | 45.2 | 
|                                           |  |               |      |  |      |  



| |                        
| | -----------------------
| | Other Noncurrent Assets

|                                                  |  |               |       |  |      |   |       | 
|------------------------------------------------- |  | ------------- | ----- |  | ---- | - | ----- | 
|                                                  |  | 2004          |       |  | 2003 |  
|                                                  |  |               |       |  |      |  
|                                                  |  | (In millions) |      
|Deferred income taxes net of valuation allowances |  | $             | 63.1  |  |      | $ | 70.9  | 
|Recoverable from excess liability carriers        |  |               | 9.7   |  |      |   | 4.7   | 
|Intangible assets other than goodwill             |  |               | 5.1   |  |      |   | 6.5   | 
|Other                                             |  |               | 40.2  |  |      |   | 38.2  | 
|                                                  |  |               |       |  |      |  
|                                                  |  | $             | 118.1 |  |      | $ | 120.3 | 
|                                                  |  |               |       |  |      |  

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Liabilities






| |                                      
| | -------------------------------------
| | Accrued and Other Current Liabilities

|                                                                                |  |               |      |  |      |   |       | 
|------------------------------------------------------------------------------- |  | ------------- | ---- |  | ---- | - | ----- | 
|                                                                                |  | 2004          |      |  | 2003 |  
|                                                                                |  |               |      |  |      |  
|                                                                                |  | (In millions) |     
|Accrued salaries, wages and other compensation                                  |  | $             | 24.0 |  |      | $ | 20.9  | 
|Taxes payable other than income taxes                                           |  |               | 9.9  |  |      |   | 10.8  | 
|Reserves for post-closing adjustments and transaction costs on
    divestitures |  |               | 4.9  |  |      |   | 9.4   | 
|Accrued and deferred income taxes                                               |  |               | 13.2 |  |      |   | 14.8  | 
|Accrued insurance and self-insurance reserves                                   |  |               | 14.1 |  |      |   | 11.7  | 
|Other accrued expenses                                                          |  |               | 31.2 |  |      |   | 48.5  | 
|                                                                                |  |               |      |  |      |  
|                                                                                |  | $             | 97.3 |  |      | $ | 116.1 | 
|                                                                                |  |               |      |  |      |  





| |                  
| | -----------------
| | Warranty Reserves

|                                         |  |               |      |   |      |   |      |  
|---------------------------------------- |  | ------------- | ---- | - | ---- | - | ---- | -
|                                         |  | 2004          |      |   | 2003 |  
|                                         |  |               |      |   |      |  
|                                         |  | (In millions) |     
|Balance at beginning of year             |  | $             | 8.1  |   |      | $ | 5.9  |  
|Accruals                                 |  |               | 4.2  |   |      |   | 4.9  |  
|Payments                                 |  |               | (5.6 | ) |      |   | (3.0 | )
|Warranty expirations                     |  |               | (.3  | ) |      |   | (.1  | )
|Foreign currency translation adjustments |  |               | .1   |   |      |   | .4   |  
|                                         |  |               |      |   |      |  
|Balance at end of year                   |  | $             | 6.5  |   |      | $ | 8.1  |  
|                                         |  |               |      |   |      |  





| |                              
| | -----------------------------
| | Long-Term Accrued Liabilities

|                                                                                |  |               |       |  |      |   |       | 
|------------------------------------------------------------------------------- |  | ------------- | ----- |  | ---- | - | ----- | 
|                                                                                |  | 2004          |       |  | 2003 |  
|                                                                                |  |               |       |  |      |  
|                                                                                |  | (In millions) |      
|Accrued pensions and other compensation                                         |  | $             | 39.9  |  |      | $ | 42.5  | 
|Minimum pension liability                                                       |  |               | 119.8 |  |      |   | 104.3 | 
|Accrued postretirement health care benefits                                     |  |               | 28.7  |  |      |   | 31.2  | 
|Self-insurance reserves(a)                                                      |  |               | 26.8  |  |      |   | 23.0  | 
|Accrued and deferred income taxes                                               |  |               | 11.4  |  |      |   | 21.5  | 
|Reserves for post-closing adjustments and transaction costs on
    divestitures |  |               | 7.1   |  |      |   | 2.4   | 
|Other                                                                           |  |               | 6.5   |  |      |   | 7.7   | 
|                                                                                |  |               |       |  |      |  
|                                                                                |  | $             | 240.2 |  |      | $ | 232.6 | 
|                                                                                |  |               |       |  |      |  






|    |  |                                                                                                                                                                                                                                                                                               
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | As presented in the above table, self-insurance reserves exclude
    expected recoveries from excess liability carriers and other
    third parties of $13.8 million in 2004 and
    $4.7 million in 2003. These amounts are included in other
    current assets and other noncurrent assets.

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Refinancing Transactions

3 8




1 2




1 2




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | purchase 114,990,000
    of
    the 115 million
    aggregate outstanding principal amount of Milacron Capital
    Holdings B.V.s
    75/8%
    Guaranteed Bonds due in April 2005 at the settlement of a tender
    offer therefor;                                                                                                                                                                                                                                           
|
| |  | terminate and repay $19 million of borrowings outstanding
    under the revolving A facility of the Credit Suisse First Boston
    facility, which included additional amounts borrowed subsequent
    to March 12, 2004. The company also used $17.4 million
    in availability under the asset based facility to replace or
    provide credit support for the outstanding letters of credit
    under the revolving A facility of the Credit Suisse First Boston
    facility;
|
| |  | repay the $75 million term loan B facility of the
    Credit Suisse First Boston facility; and                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | pay transaction expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                         



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Short-Term Borrowings






| |                      
| | ---------------------
| | Short-Term Borrowings

|                                       |  |               |      |  |      |   |      | 
|-------------------------------------- |  | ------------- | ---- |  | ---- | - | ---- | 
|                                       |  | 2004          |      |  | 2003 |  
|                                       |  |               |      |  |      |  
|                                       |  | (In millions) |     
|Asset based credit facility due 2008   |  | $             | 11.0 |  |      | $ |     | 
|Revolving credit facility due 2004     |  |               |     |  |      |   | 42.0 | 
|Borrowings under other lines of credit |  |               | .2   |  |      |   | .6   | 
|                                       |  |               |      |  |      |  
|                                       |  | $             | 11.2 |  |      | $ | 42.6 | 
|                                       |  |               |      |  |      |  

1 2






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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




1 2 1 2 1 2




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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










Long-Term Debt






| |               
| | --------------
| | Long-Term Debt

|                                         |  |               |       |   |      |   |        |  
|---------------------------------------- |  | ------------- | ----- | - | ---- | - | ------ | -
|                                         |  | 2004          |       |   | 2003 |  
|                                         |  |               |       |   |      |  
|                                         |  | (In millions) |      
|111/2% Senior
    Secured Notes due 2011 |  | $             | 220.1 |   |      | $ |       |  
|83/8% Notes
    due 2004                 |  |               |      |   |      |   | 115.0  |  
|75/8% Eurobonds
    due 2005             |  |               |      |   |      |   | 142.6  |  
|Capital lease obligations                |  |               | 15.9  |   |      |   | 17.1   |  
|Other                                    |  |               | 5.9   |   |      |   | 6.1    |  
|                                         |  |               |       |   |      |  
|                                         |  |               | 241.9 |   |      |   | 280.8  |  
|Less current maturities                  |  |               | (6.0  | ) |      |   | (117.3 | )
|                                         |  |               |       |   |      |  
|                                         |  | $             | 235.9 |   |      | $ | 163.5  |  
|                                         |  |               |       |   |      |  

3 8  5 8


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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


1 2


1 2


1 2


1 2




1 2




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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                             
| | ----------------------------
| | Maturities of Long-Term Debt

|     |  |               |     | 
|---- |  | ------------- | --- | 
|     |  | (In millions) |    
|2005 |  | $             | 4.2 | 
|2006 |  |               | .9  | 
|2007 |  |               | .2  | 
|2008 |  |               | .2  | 
|2009 |  |               | .2  | 





| |                       
| | ----------------------
| | Capital Lease Payments

|                             |  |               |      |  
|---------------------------- |  | ------------- | ---- | -
|                             |  | (In millions) |     
|2005                         |  | $             | 2.9  |  
|2006                         |  |               | 2.8  |  
|2007                         |  |               | 2.7  |  
|2008                         |  |               | 2.8  |  
|2009                         |  |               | 4.6  |  
|After 2010                   |  |               | 3.8  |  
|                             |  |               |     
|Total capital lease payments |  |               | 19.6 |  
|Less interest component(a)   |  |               | (3.7 | )
|                             |  |               |     
|Capital lease obligations    |  | $             | 15.9 |  
|                             |  |               |     






|    |  |                                          
|--- |  | -----------------------------------------
|(a) |  | Includes $1.0 million applicable to 2005.





| |                
| | ---------------
| | Rental Payments

|           |  |               |      | 
|---------- |  | ------------- | ---- | 
|           |  | (In millions) |     
|2005       |  | $             | 11.8 | 
|2006       |  |               | 8.6  | 
|2007       |  |               | 5.7  | 
|2008       |  |               | 3.4  | 
|2009       |  |               | 1.7  | 
|After 2009 |  |               | 1.0  | 

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Shareholders Equity








| |   |                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an increase in the number of authorized common shares from
    50.0 million to 165.0 million;                                                                 
|
| |  | a decrease in the par value of each common share from
    $1.00 per share to $.01 per share;                                                                  
|
| |  | the issuance of a new series of Series B Preferred Stock
    that is convertible into common shares; and                                                      
|
| |  | the issuance of contingent warrants which will be exercisable to
    purchase additional shares of the companys common stock
    under certain circumstances.





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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












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NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)














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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                                       
| | ------------------------------------------------------
| | Shareholders Equity  Preferred and Common
    Shares

|                                                                                                                                                                                       |  |               |     |  |      |   |      | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --- |  | ---- | - | ---- | 
|                                                                                                                                                                                       |  | 2004          |     |  | 2003 |  
|                                                                                                                                                                                       |  |               |     |  |      |  
|                                                                                                                                                                                       |  | (In millions) |    
|4% Cumulative Preferred shares authorized, issued and
    outstanding, 60,000 shares at $100 par value,
    redeemable at $105 a share                                                 |  | $             | 6.0 |  |      | $ | 6.0  | 
|6% Series B Convertible Preferred Stock authorized, issued
    and outstanding, 500,000 shares at $.01 par value                                                                       |  |               |    |  |      |   |     | 
|Common shares, $.01 par value in 2004 and $1.00 par
    value in 2003, authorized 165,000,000 shares, issued and
    outstanding,
    2004: 48,559,474 shares, 2003: 34,824,025 shares |  |               | .5  |  |      |   | 34.8 | 







| |                                     
| | ------------------------------------
| | Changes in Common Shares Outstanding

|                                                                              |  |      |             |   |      |  |            |      |  |  |            | 
|----------------------------------------------------------------------------- |  | ---- | ----------- | - | ---- |  | ---------- | ---- |  |  | ---------- | 
|                                                                              |  | 2004 |             |   | 2003 |  |            | 2002 | 
|                                                                              |  |      |             |   |      |  |            |      | 
|Outstanding at beginning of year                                              |  |      | 34,824,025  |   |      |  | 33,753,781 |      |  |  | 33,467,506 | 
|Net restricted stock activity                                                 |  |      | 760,440     |   |      |  | 826,013    |      |  |  | 109,552    | 
|Stock options exercised                                                       |  |      |            |   |      |  |           |      |  |  | 29,250     | 
|Reissuance of treasury shares for employee benefit and incentive
    programs |  |      | 295,434     |   |      |  | 244,231    |      |  |  | 147,473    | 
|Conversion of Series A Notes to common stock                                  |  |      | 15,000,000  |   |      |  |           |      |  |  |           | 
|Conversion of common stock to Series B Preferred Stock                        |  |      | (15,000,000 | ) |      |  |           |      |  |  |           | 
|Net common shares issued in rights offering                                   |  |      | 12,679,575  |   |      |  |           |      |  |  |           | 
|                                                                              |  |      |             |   |      |  |            |      | 
|Outstanding at end of year                                                    |  |      | 48,559,474  |   |      |  | 34,824,025 |      |  |  | 33,753,781 | 
|                                                                              |  |      |             |   |      |  |            |      | 





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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Comprehensive Loss






| |                   
| | ------------------
| | Comprehensive Loss

|                                                                                             |  |               |       |   |      |   |        |      |  |   |        |  
|-------------------------------------------------------------------------------------------- |  | ------------- | ----- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                                                             |  | 2004          |       |   | 2003 |   |        | 2002 | 
|                                                                                             |  |               |       |   |      |   |        |      | 
|                                                                                             |  | (In millions) |      
|Net loss                                                                                     |  | $             | (51.8 | ) |      | $ | (190.9 | )    |  | $ | (223.2 | )
|Foreign currency translation adjustments                                                     |  |               | 15.9  |   |      |   | 8.5    |      |  |   | 5.9    |  
|Reclassification of foreign currency translation adjustments to
    net gain on divestitures |  |               |      |   |      |   |       |      |  |   | 10.6   |  
|Minimum pension liability adjustment(a)                                                      |  |               | (13.0 | ) |      |   | 14.6   |      |  |   | (95.4  | )
|Change in fair value of foreign currency exchange contracts                                  |  |               | (.2   | ) |      |   |       |      |  |   | .1     |  
|                                                                                             |  |               |       |   |      |   |        |      | 
|Total comprehensive loss                                                                     |  | $             | (49.1 | ) |      | $ | (167.8 | )    |  | $ | (302.0 | )
|                                                                                             |  |               |       |   |      |   |        |      | 






|    |  |                                                                                                
|--- |  | -----------------------------------------------------------------------------------------------
|(a) |  | In 2004 and 2003, includes no tax effect. In 2002, includes a
    tax benefit of $51.4 million.

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                     
| | ------------------------------------
| | Accumulated Other Comprehensive Loss

|                                                  |  |               |        |   |      |   |        |  
|------------------------------------------------- |  | ------------- | ------ | - | ---- | - | ------ | -
|                                                  |  | 2004          |        |   | 2003 |  
|                                                  |  |               |        |   |      |  
|                                                  |  | (In millions) |       
|Foreign currency translation adjustments          |  | $             | (10.2  | ) |      | $ | (26.1  | )
|Minimum pension liability adjustment              |  |               | (93.8  | ) |      |   | (80.8  | )
|Fair value of foreign currency exchange contracts |  |               |       |   |      |   | .2     |  
|                                                  |  |               |        |   |      |  
|                                                  |  | $             | (104.0 | ) |      | $ | (106.7 | )
|                                                  |  |               |        |   |      |  

Contingencies






Foreign Exchange Contracts




Stock-Based Compensation




79



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                      
| | ---------------------
| | Stock Option Activity

|                             |           |        |           |           |       |   |       |       | 
|---------------------------- | --------- | ------ | --------- | --------- | ----- | - | ----- | ----- | 
|                             |           |        |           | Weighted- |      
|                             |           |        |           | Average   |      
|                             |           |        |           | Exercise  |      
|                             |           | Shares |           |           | Price |  
|                             |           |        |           |           |       |  
|Outstanding at year-end 2001 |           |        | 4,214,775 |           |       | $ | 21.06 |      
|                             | Granted   |        |           | 829,500   |       |   |       | 13.19 | 
|                             | Exercised |        |           | (29,250   | )     |   |       | 13.97 | 
|                             | Cancelled |        |           | (397,075  | )     |   |       | 17.15 | 
|                             |           |        |           |           |       |  
|Outstanding at year-end 2002 |           |        | 4,617,950 |           |       |   | 20.03 |      
|                             | Granted   |        |           | 18,000    |       |   |       | 5.43  | 
|                             | Cancelled |        |           | (314,100  | )     |   |       | 18.65 | 
|                             | Waived    |        |           | (465,900  | )     |   |       | 22.75 | 
|                             |           |        |           |           |       |  
|Outstanding at year-end 2003 |           |        | 3,855,950 |           |       |   | 19.75 |      
|                             | Granted   |        |           | 14,000    |       |   |       | 4.30  | 
|                             | Cancelled |        |           | (345,050  | )     |   |       | 22.97 | 
|                             |           |        |           |           |       |  
|Outstanding at year-end 2004 |           |        | 3,524,900 |           |       |   | 19.37 |      
|                             |           |        |           |           |       |  





| |                                      
| | -------------------------------------
| | Exercisable Stock Options at Year-End

|     |  |         |           | 
|---- |  | ------- | --------- | 
|     |  | Stock   |          
|     |  | Options |          
|     |  |         |          
|2002 |  |         | 2,653,163 | 
|2003 |  |         | 2,723,088 | 
|2004 |  |         | 2,887,288 | 



| |                                              
| | ---------------------------------------------
| | Shares Available for Future Grant at Year-End

|     |  |        |           | 
|---- |  | ------ | --------- | 
|     |  | Shares |          
|     |  |        |          
|2002 |  |        | 969,524   | 
|2003 |  |        | 276,737   | 
|2004 |  |        | 7,127,180 | 

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                        
| | ---------------------------------------
| | Components of Outstanding Stock Options

|                         |  |             |           |           |          |  |           |          |  |   |       | 
|------------------------ |  | ----------- | --------- | --------- | -------- |  | --------- | -------- |  | - | ----- | 
|                         |  |             |           | Average   |          |  | Weighted- |         
|                         |  |             |           | Remaining |          |  | Average   |         
|                         |  | Number      |           |           | Contract |  |           | Exercise | 
|Range of Exercise Prices |  | Outstanding |           |           | Life     |  |           | Price    | 
|                         |  |             |           |           |          |  |           |          | 
|$ 4.30-19.53             |  |             | 1,359,075 |           |          |  | 3.5       |          |  | $ | 13.23 | 
|20.09-27.91              |  |             | 2,165,825 |           |          |  | 2.8       |          |  |   | 23.22 | 
|                         |  |             |           |           |          |  |           |          | 
|                         |  |             | 3,524,900 |           |          |  |           |          |  |   |       | 
|                         |  |             |           |           |          |  |           |          | 



| |                                        
| | ---------------------------------------
| | Components of Exercisable Stock Options

|                         |  |             |           |           |          |   |       | 
|------------------------ |  | ----------- | --------- | --------- | -------- | - | ----- | 
|                         |  |             |           | Weighted- |         
|                         |  |             |           | Average   |         
|                         |  | Number      |           |           | Exercise |  
|Range of Exercise Prices |  | Exercisable |           |           | Price    |  
|                         |  |             |           |           |          |  
|$ 4.30-19.56             |  |             | 827,463   |           |          | $ | 13.47 | 
|20.09-27.91              |  |             | 2,059,825 |           |          |   | 23.38 | 
|                         |  |             |           |           |          |  
|                         |  |             | 2,887,288 |           |          |   |       | 
|                         |  |             |           |           |          |  





| |                       
| | ----------------------
| | Fair Value Assumptions

|                                      |  |      |      |   |      |  |      |      |  |  |            |  
|------------------------------------- |  | ---- | ---- | - | ---- |  | ---- | ---- |  |  | ---------- | -
|                                      |  | 2004 |      |   | 2003 |  |      | 2002 | 
|                                      |  |      |      |   |      |  |      |      | 
|Dividend yield                        |  |      | 0.0  | % |      |  | 1.6  | %    |  |  | .3-.7      | %
|Expected volatility                   |  |      | 74   | % |      |  | 54   | %    |  |  | 46-50      | %
|Risk free interest rate at grant date |  |      | 4.00 | % |      |  | 2.97 | %    |  |  | 2.98- 4.28 | %
|Expected life in years                |  |      | 5    |   |      |  | 5    |      |  |  | 2-5        |  



81



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                          
| | -------------------------
| | Restricted Stock Activity

|                                               |  |      |           |  |      |   |         |      |  |   |         | 
|---------------------------------------------- |  | ---- | --------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                                               |  | 2004 |           |  | 2003 |   |         | 2002 | 
|                                               |  |      |           |  |      |   |         |      | 
|Restricted stock granted                       |  |      | 1,192,572 |  |      |   | 924,300 |      |  |   | 192,000 | 
|                                               |  |      |           |  |      |   |         |      | 
|Weighted-average market value on date of grant |  | $    | 4.25      |  |      | $ | 2.74    |      |  | $ | 13.09   | 
|                                               |  |      |           |  |      |   |         |      | 







Organization










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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                       
| | ----------------------
| | Total Sales by Segment

|                      |                                      |                             |       |       |       |   |       |       |       |   |       |       |       | 
|--------------------- | ------------------------------------ | --------------------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                      |                                      | 2004                        |       |       | 2003  |   |       | 2002  |      
|                      |                                      |                             |       |       |       |   |       |       |      
|                      |                                      | (In millions)               |      
|Plastics technologies |                                      |                             |       |       |       |   |       |       |       |   |       |      
|                      | Machinery technologies-North America |                             | $     | 334.4 |       |   | $     | 321.2 |       |   | $     | 313.6 |      
|                      | Machinery technologies-Europe        |                             |       | 167.0 |       |   |       | 151.0 |       |   |       | 117.4 |      
|                      | Mold technologies                    |                             |       | 167.1 |       |   |       | 168.7 |       |   |       | 174.7 |      
|                      | Eliminations                         |                             |       | (3.3  | )     |   |       | (5.4  | )     |   |       | (8.5  | )    
|                      |                                      |                             |       |       |       |   |       |       |      
|                      |                                      | Total plastics technologies |       |       | 665.2 |   |       |       | 635.5 |   |       |       | 597.2 | 
|Industrial fluids     |                                      |                             | 109.0 |       |       |   | 104.2 |       |       |   | 96.0  |      
|                      |                                      |                             |       |       |       |   |       |       |      
|Total sales           |                                      | $                           | 774.2 |       |       | $ | 739.7 |       |       | $ | 693.2 |      
|                      |                                      |                             |       |       |       |   |       |       |      



| |                          
| | -------------------------
| | Customer Sales by Segment

|                      |                                      |                             |       |       |       |   |       |       |       |   |       |       |       | 
|--------------------- | ------------------------------------ | --------------------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                      |                                      | 2004                        |       |       | 2003  |   |       | 2002  |      
|                      |                                      |                             |       |       |       |   |       |       |      
|                      |                                      | (In millions)               |      
|Plastics technologies |                                      |                             |       |       |       |   |       |       |       |   |       |      
|                      | Machinery technologies-North America |                             | $     | 333.9 |       |   | $     | 319.6 |       |   | $     | 312.5 |      
|                      | Machinery technologies-Europe        |                             |       | 164.2 |       |   |       | 147.2 |       |   |       | 110.0 |      
|                      | Mold technologies                    |                             |       | 167.1 |       |   |       | 168.7 |       |   |       | 174.7 |      
|                      |                                      |                             |       |       |       |   |       |       |      
|                      |                                      | Total plastics technologies |       |       | 665.2 |   |       |       | 635.5 |   |       |       | 597.2 | 
|Industrial fluids     |                                      |                             | 109.0 |       |       |   | 104.2 |       |       |   | 96.0  |      
|                      |                                      |                             |       |       |       |   |       |       |      
|Total sales           |                                      | $                           | 774.2 |       |       | $ | 739.7 |       |       | $ | 693.2 |      
|                      |                                      |                             |       |       |       |   |       |       |      

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                 
| | --------------------------------
| | Operating Information by Segment

|                         |                                    |                                      |                             |       |       |       |        |       |       |       |       |       |       |       | 
|------------------------ | ---------------------------------- | ------------------------------------ | --------------------------- | ----- | ----- | ----- | ------ | ----- | ----- | ----- | ----- | ----- | ----- | ----- | 
|                         |                                    | 2004                                 |                             |       | 2003  |       |        | 2002  |      
|                         |                                    |                                      |                             |       |       |       |        |       |      
|                         |                                    | (In millions)                        |                            
|Operating profit (loss)  |                                    |                                      |                             |       |       |       |        |       |       |       |       |      
|                         | Plastics technologies(a)           |                                      |                             |       |       |       |        |       |       |       |       |       |      
|                         |                                    | Machinery technologies-North America |                             | $     | 16.0  |       |        | $     | 8.1   |       |       | $     | 7.5   |      
|                         |                                    | Machinery technologies-Europe        |                             |       | 1.9   |       |        |       | (1.4  | )     |       |       | (8.1  | )    
|                         |                                    | Mold technologies                    |                             |       | 4.3   |       |        |       | 1.8   |       |       |       | 5.3   |      
|                         |                                    |                                      |                             |       |       |       |        |       |      
|                         |                                    |                                      | Total plastics technologies |       |       | 22.2  |        |       |       | 8.5   |       |       |       | 4.7   | 
|                         | Industrial fluids                  |                                      |                             | 9.2   |       |       |        | 15.7  |       |       |       | 14.4  |      
|                         | Goodwill impairment charge(b)      |                                      |                             |      |       |       |        | (65.6 | )     |       |       |      |      
|                         | Restructuring costs(c)             |                                      |                             | (13.0 | )     |       |        | (27.1 | )     |       |       | (13.9 | )    
|                         | Refinancing costs                  |                                      |                             | (21.4 | )     |       |        | (1.8  | )     |       |       |      |      
|                         | Corporate expenses                 |                                      |                             | (11.9 | )     |       |        | (14.3 | )     |       |       | (15.4 | )    
|                         | Other unallocated expenses(d)      |                                      |                             | (1.7  | )     |       |        | (2.8  | )     |       |       | (3.6  | )    
|                         |                                    |                                      |                             |       |       |       |        |       |      
|Operating loss           |                                    |                                      | (16.6                       | )     |       |       | (87.4  | )     |       |       | (13.8 | )    
|Interest expense-net     |                                    |                                      | (37.3                       | )     |       |       | (23.0  | )     |       |       | (23.3 | )    
|                         |                                    |                                      |                             |       |       |       |        |       |      
|Loss before income taxes |                                    | $                                    | (53.9                       | )     |       | $     | (110.4 | )     |       | $     | (37.1 | )    
|                         |                                    |                                      |                             |       |       |       |        |       |      
|Segment assets(e)        |                                    |                                      |                             |       |       |       |        |       |       |       |       |      
|                         | Plastics technologies              |                                      |                             |       |       |       |        |       |       |       |       |       |      
|                         |                                    | Machinery technologies-North America |                             | $     | 183.9 |       |        | $     | 181.3 |       |       | $     | 202.5 |      
|                         |                                    | Machinery technologies-Europe        |                             |       | 116.4 |       |        |       | 110.2 |       |       |       | 97.7  |      
|                         |                                    | Mold technologies                    |                             |       | 152.9 |       |        |       | 156.4 |       |       |       | 227.6 |      
|                         |                                    | Other                                |                             |       | (.9   | )     |        |       | .7    |       |       |       | 1.1   |      
|                         |                                    |                                      |                             |       |       |       |        |       |      
|                         |                                    |                                      | Total plastics technologies |       |       | 452.3 |        |       |       | 448.6 |       |       |       | 528.9 | 
|                         | Industrial fluids                  |                                      |                             | 49.2  |       |       |        | 50.2  |       |       |       | 48.1  |      
|                         | Cash and cash equivalents          |                                      |                             | 69.2  |       |       |        | 92.8  |       |       |       | 122.3 |      
|                         | Receivables sold                   |                                      |                             |      |       |       |        | (33.0 | )     |       |       | (34.6 | )    
|                         | Deferred income taxes              |                                      |                             | 89.2  |       |       |        | 98.8  |       |       |       | 173.0 |      
|                         | Assets of discontinued operations  |                                      |                             |      |       |       |        | 7.2   |       |       |       | 16.0  |      
|                         | Unallocated corporate and other(f) |                                      |                             | 80.0  |       |       |        | 68.8  |       |       |       | 93.6  |      
|                         |                                    |                                      |                             |       |       |       |        |       |      
|Total assets             |                                    | $                                    | 739.9                       |       |       | $     | 733.4  |       |       | $     | 947.3 |      
|                         |                                    |                                      |                             |       |       |       |        |       |      

84



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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                 
| | --------------------------------
| | Operating Information by Segment

|                                    |                       |                                      |                             |     |      |      |      |      |     |      |      |     |     |      | 
|----------------------------------- | --------------------- | ------------------------------------ | --------------------------- | --- | ---- | ---- | ---- | ---- | --- | ---- | ---- | --- | --- | ---- | 
|                                    |                       | 2004                                 |                             |     | 2003 |      |      | 2002 |    
|                                    |                       |                                      |                             |     |      |      |      |      |    
|                                    |                       | (In millions)                        |                            
|Capital expenditures                |                       |                                      |                             |     |      |      |      |      |     |      |      |    
|                                    | Plastics technologies |                                      |                             |     |      |      |      |      |     |      |      |     |    
|                                    |                       | Machinery technologies-North America |                             | $   | 4.0  |      |      | $    | 1.7 |      |      | $   | 2.6 |     
|                                    |                       | Machinery technologies-Europe        |                             |     | 1.6  |      |      |      | 1.1 |      |      |     | .3  |     
|                                    |                       | Mold technologies                    |                             |     | 1.7  |      |      |      | 1.6 |      |      |     | 1.7 |     
|                                    |                       |                                      |                             |     |      |      |      |      |    
|                                    |                       |                                      | Total plastics technologies |     |      | 7.3  |      |      |     | 4.4  |      |     |     | 4.6  | 
|                                    | Industrial fluids     |                                      |                             | 1.4 |      |      |      | 2.1  |     |      |      | 1.5 |    
|                                    | Unallocated corporate |                                      |                             | .1  |      |      |      |     |     |      |      | .1  |    
|                                    |                       |                                      |                             |     |      |      |      |      |    
|Total capital expenditures          |                       | $                                    | 8.8                         |     |      | $    | 6.5  |      |     | $    | 6.2  |    
|                                    |                       |                                      |                             |     |      |      |      |      |    
|Depreciation and amortization       |                       |                                      |                             |     |      |      |      |      |     |      |      |    
|                                    | Plastics technologies |                                      |                             |     |      |      |      |      |     |      |      |     |    
|                                    |                       | Machinery technologies-North America |                             | $   | 7.3  |      |      | $    | 8.7 |      |      | $   | 9.9 |     
|                                    |                       | Machinery technologies-Europe        |                             |     | 4.2  |      |      |      | 3.9 |      |      |     | 3.5 |     
|                                    |                       | Mold technologies                    |                             |     | 6.7  |      |      |      | 6.7 |      |      |     | 7.4 |     
|                                    |                       |                                      |                             |     |      |      |      |      |    
|                                    |                       |                                      | Total plastics technologies |     |      | 18.2 |      |      |     | 19.3 |      |     |     | 20.8 | 
|                                    | Industrial fluids     |                                      |                             | 1.8 |      |      |      | 2.0  |     |      |      | 1.5 |    
|                                    | Unallocated corporate |                                      |                             | .3  |      |      |      | .4   |     |      |      | .7  |    
|                                    |                       |                                      |                             |     |      |      |      |      |    
|Total depreciation and amortization |                       | $                                    | 20.3                        |     |      | $    | 21.7 |      |     | $    | 23.0 |    
|                                    |                       |                                      |                             |     |      |      |      |      |    






|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | In 2002, operating profit of the machinery
    technologies  North America segment includes
    $4.5 million of royalty income from the licensing of
    patented technology and the operating profit of the mold
    technologies segment includes a $1.0 million goodwill
    impairment charge.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(b) |  | Relates to the mold technologies segment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   
|(c) |  | In 2004, $8.0 million relates to machinery
    technologies  North America, $.2 million relates
    to machinery technologies  Europe and
    $4.8 million relates to mold technologies. In 2003,
    $7.7 million relates to machinery technologies 
    North America, $6.5 million relates to machinery
    technologies  Europe, $12.6 million relates to
    mold technologies and $.3 million relates to corporate
    expenses. In 2002, $6.7 million relates to machinery
    technologies  North America, $(.4) million
    relates to machinery technologies  Europe
    $6.4 million relates to mold technologies and
    $1.2 million relates to corporate expenses. In 2004, 2003
    and 2002, $1.4, $3.3 and $1.9 million, respectively,
    relates to product line discontinuation and is therefore
    included in cost of products sold in the Consolidated Statements
    of Operations for those years.
|   
|(d) |  | Represents financing costs, including those related to the sale
    of accounts receivable prior to March 12, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(e) |  | Segment assets consist principally of accounts receivable,
    inventories, goodwill and property, plant and equipment which
    are considered controllable assets for management reporting
    purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|(f) |  | Consists principally of corporate assets, nonconsolidated
    investments, certain intangible assets, expected recoveries from
    excess insurance carriers, cash surrender value of company-owned
    life insurance, prepaid expenses and deferred charges.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                       
| | ----------------------
| | Geographic Information

|                  |                                                   |                      |       |       |       |   |       |       |       |   |       |       |       | 
|----------------- | ------------------------------------------------- | -------------------- | ----- | ----- | ----- | - | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                  |                                                   | 2004                 |       |       | 2003  |   |       | 2002  |      
|                  |                                                   |                      |       |       |       |   |       |       |      
|                  |                                                   | (In millions)        |      
|Sales(a)          |                                                   |                      |       |       |       |   |       |       |       |   |       |      
|                  | United States                                     |                      | $     | 466.6 |       |   | $     | 450.8 |       |   | $     | 444.4 |      
|                  | Non-U.S. operations                               |                      |       |       |       |   |       |       |       |   |       |       |      
|                  |                                                   | Germany              |       |       | 104.5 |   |       |       | 102.3 |   |       |       | 84.3  | 
|                  |                                                   | Other Western Europe |       |       | 134.2 |   |       |       | 121.9 |   |       |       | 105.8 | 
|                  |                                                   | Asia                 |       |       | 36.4  |   |       |       | 31.0  |   |       |       | 31.7  | 
|                  |                                                   | Other                |       |       | 32.5  |   |       |       | 33.7  |   |       |       | 27.0  | 
|                  |                                                   |                      |       |       |       |   |       |       |      
|Total sales       |                                                   | $                    | 774.2 |       |       | $ | 739.7 |       |       | $ | 693.2 |      
|                  |                                                   |                      |       |       |       |   |       |       |      
|Noncurrent assets |                                                   |                      |       |       |       |   |       |       |       |   |       |      
|                  | United States                                     |                      | $     | 103.8 |       |   | $     | 103.3 |       |   | $     | 125.1 |      
|                  | Non-U.S. operations                               |                      |       |       |       |   |       |       |       |   |       |       |      
|                  |                                                   | Germany              |       |       | 45.4  |   |       |       | 46.7  |   |       |       | 45.8  | 
|                  |                                                   | Other Western Europe |       |       | 18.7  |   |       |       | 21.5  |   |       |       | 19.6  | 
|                  |                                                   | Asia                 |       |       | 6.6   |   |       |       | 5.7   |   |       |       | 5.9   | 
|                  |                                                   | Other                |       |       | 1.8   |   |       |       | 4.9   |   |       |       | 5.6   | 
|                  |                                                   |                      |       |       |       |   |       |       |      
|                  |                                                   |                      | 176.3 |       |       |   | 182.1 |       |       |   | 202.0 |      
|                  | Investments not consolidated                      |                      |       | 2.0   |       |   |       | 1.6   |       |   |       | 1.2   |      
|                  | Goodwill                                          |                      |       | 86.6  |       |   |       | 83.8  |       |   |       | 143.3 |      
|                  | Other intangible assets                           |                      |       | 5.1   |       |   |       | 6.5   |       |   |       | 7.8   |      
|                  | Deferred income taxes net of valuation allowances |                      |       | 63.1  |       |   |       | 70.9  |       |   |       | 132.4 |      
|                  |                                                   |                      |       |       |       |   |       |       |      
|                  | Total noncurrent assets                           |                      | $     | 333.1 |       |   | $     | 344.9 |       |   | $     | 486.7 |      
|                  |                                                   |                      |       |       |       |   |       |       |      






|    |  |                                                                                                        
|--- |  | -------------------------------------------------------------------------------------------------------
|(a) |  | Sales are attributed to specific countries or geographic areas
    based on the origin of the shipment.





Subsequent Events




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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












1 2




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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                              
| | ---------------------------------------------
| | Condensed Consolidating Financial Information

1 2 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.


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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Statement of Operations


|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |       |       |       |   |       |       |       | 
|------------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------------------------ | ----- | --------- | ------------ | - | ------------ | ------------ | ---- | -------------- | ----- | ----- | ---- | ------------ | ----- | ----- | ----- | - | ----- | ----- | ----- | 
|                                                                                |                                                | Year Ended December 31, 2004               |      
|                                                                                |                                                |                                            |      
|                                                                                |                                                |                                            |       | Guarantor |              |   | Nonguarantor |              |      | Eliminations & |       |       |     
|                                                                                |                                                | Milacron Inc.                              |       |           | Subsidiaries |   |              | Subsidiaries |      |                | Other |       |      | Consolidated |      
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|                                                                                |                                                | (In millions)                              |      
|Sales                                                                           |                                                | $                                          |      |           |              | $ | 498.0        |              |      | $              | 300.7 |       |      | $            | (24.5 | )     |       | $ | 774.2 |      
|                                                                                | Cost of products sold                          |                                            |       | 5.3       |              |   |              | 408.1        |      |                |       | 237.7 |      |              |       | (24.5 | )     |   |       | 626.6 |      
|                                                                                | Cost of products sold related to restructuring |                                            |       |          |              |   |              | 1.4          |      |                |       |      |      |              |       |      |       |   |       | 1.4   |      
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|                                                                                | Total cost of products sold                    |                                            |       | 5.3       |              |   |              | 409.5        |      |                |       | 237.7 |      |              |       | (24.5 | )     |   |       | 628.0 |      
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|                                                                                |                                                | Manufacturing margins                      |       |           | (5.3         | ) |              |              | 88.5 |                |       |       | 63.0 |              |       |       |      |   |       |       | 146.2 | 
|Other costs and expenses                                                        |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |       |       |       |   |       |      
|                                                                                | Selling and administrative                     |                                            |       | 17.6      |              |   |              | 52.0         |      |                |       | 57.3  |      |              |       |      |       |   |       | 126.9 |      
|                                                                                | Restructuring costs                            |                                            |       | .1        |              |   |              | 6.5          |      |                |       | 5.0   |      |              |       |      |       |   |       | 11.6  |      
|                                                                                | Refinancing costs                              |                                            |       | 15.8      |              |   |              | 5.6          |      |                |       |      |      |              |       |      |       |   |       | 21.4  |      
|                                                                                | Other expense  net                            |                                            |       | 2.0       |              |   |              | .2           |      |                |       | .7    |      |              |       |      |       |   |       | 2.9   |      
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|                                                                                |                                                | Total other costs and expenses             |       |           | 35.5         |   |              |              | 64.3 |                |       |       | 63.0 |              |       |       |      |   |       |       | 162.8 | 
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|Operating earnings (loss)                                                       |                                                |                                            | (40.8 | )         |              |   | 24.2         |              |      |                |      |       |      |              |      |       |       |   | (16.6 | )    
|Other non-operating expense (income) Intercompany management fees               |                                                |                                            | (10.9 | )         |              |   | 10.9         |              |      |                |      |       |      |              |      |       |       |   |      |      
|                                                                                | Intercompany interest                          |                                            |       | (15.4     | )            |   |              | 16.3         |      |                |       | (.9   | )    |              |       |      |       |   |       |      |      
|                                                                                | Equity in (earnings) losses of subsidiaries    |                                            |       | 14.8      |              |   |              | (4.1         | )    |                |       |      |      |              |       | (10.7 | )     |   |       |      |      
|                                                                                | Other intercompany transactions                |                                            |       | (1.2      | )            |   |              | 1.1          |      |                |       | .1    |      |              |       |      |       |   |       |      |      
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|                                                                                |                                                | Total other non-operating expense (income) |       |           | (12.7        | ) |              |              | 24.2 |                |       |       | (.8  | )            |       |       | (10.7 | ) |       |       |      | 
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|Earnings (loss) from continuing operations before interest
    and income taxes |                                                |                                            | (28.1 | )         |              |   |             |              |      |                | .8    |       |      |              | 10.7  |       |       |   | (16.6 | )    
|Interest expense  net                                                          |                                                |                                            | (32.3 | )         |              |   | (4.4         | )            |      |                | (.6   | )     |      |              |      |       |       |   | (37.3 | )    
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|Earnings (loss) from continuing operations before income
    taxes              |                                                |                                            | (60.4 | )         |              |   | (4.4         | )            |      |                | .2    |       |      |              | 10.7  |       |       |   | (53.9 | )    
|Provision (benefit) for income taxes                                            |                                                |                                            | (7.8  | )         |              |   | .8           |              |      |                | 4.4   |       |      |              |      |       |       |   | (2.6  | )    
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|Earnings (loss) from continuing operations                                      |                                                |                                            | (52.6 | )         |              |   | (5.2         | )            |      |                | (4.2  | )     |      |              | 10.7  |       |       |   | (51.3 | )    
|Discontinued operations net of income taxes                                     |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |       |       |       |   |       |      
|                                                                                | Loss from operations                           |                                            |       |          |              |   |              | (1.3         | )    |                |       |      |      |              |       |      |       |   |       | (1.3  | )    
|                                                                                | Net gain on divestitures                       |                                            |       | .8        |              |   |              |             |      |                |       |      |      |              |       |      |       |   |       | .8    |      
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|Total discontinued operations                                                   |                                                |                                            | .8    |           |              |   | (1.3         | )            |      |                |      |       |      |              |      |       |       |   | (.5   | )    
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      
|                                                                                | Net earnings (loss)                            |                                            | $     | (51.8     | )            |   | $            | (6.5         | )    |                | $     | (4.2  | )    |              | $     | 10.7  |       |   | $     | (51.8 | )    
|                                                                                |                                                |                                            |       |           |              |   |              |              |      |                |       |       |      |              |      

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MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Statement of Operations


|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |       |       |       |   |        |        |       | 
|------------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------------------------ | ------ | --------- | ------------ | - | ------------ | ------------ | ----- | -------------- | ----- | ----- | ---- | ------------ | ----- | ----- | ----- | - | ------ | ------ | ----- | 
|                                                                                |                                                | Year Ended December 31, 2003               |       
|                                                                                |                                                |                                            |       
|                                                                                |                                                |                                            |        | Guarantor |              |   | Nonguarantor |              |       | Eliminations & |       |       |     
|                                                                                |                                                | Milacron Inc.                              |        |           | Subsidiaries |   |              | Subsidiaries |       |                | Other |       |      | Consolidated |      
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|                                                                                |                                                | (In millions)                              |       
|Sales                                                                           |                                                | $                                          |       |           |              | $ | 482.7        |              |       | $              | 275.8 |       |      | $            | (18.8 | )     |       | $ | 739.7  |       
|                                                                                | Cost of products sold                          |                                            |        | (.9       | )            |   |              | 405.4        |       |                |       | 218.1 |      |              |       | (18.8 | )     |   |        | 603.8  |      
|                                                                                | Cost of products sold related to restructuring |                                            |        |          |              |   |              |             |       |                |       | 3.3   |      |              |       |      |       |   |        | 3.3    |      
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|                                                                                | Total cost of products sold                    |                                            |        | (.9       | )            |   |              | 405.4        |       |                |       | 221.4 |      |              |       | (18.8 | )     |   |        | 607.1  |      
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|                                                                                |                                                | Manufacturing margins                      |        |           | .9           |   |              |              | 77.3  |                |       |       | 54.4 |              |       |       |      |   |        |        | 132.6 | 
|Other costs and expenses                                                        |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |       |       |       |   |        |       
|                                                                                | Selling and administrative                     |                                            |        | 14.5      |              |   |              | 58.1         |       |                |       | 56.4  |      |              |       |      |       |   |        | 129.0  |      
|                                                                                | Goodwill impairment charge                     |                                            |        |          |              |   |              | 65.6         |       |                |       |      |      |              |       |      |       |   |        | 65.6   |      
|                                                                                | Restructuring costs                            |                                            |        | .7        |              |   |              | 8.8          |       |                |       | 14.3  |      |              |       |      |       |   |        | 23.8   |      
|                                                                                | Refinancing costs                              |                                            |        | 1.8       |              |   |              |             |       |                |       |      |      |              |       |      |       |   |        | 1.8    |      
|                                                                                | Other expense (income)  net                   |                                            |        | 1.6       |              |   |              | (2.1         | )     |                |       | .3    |      |              |       |      |       |   |        | (.2    | )    
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|                                                                                |                                                | Total other costs and expenses             |        |           | 18.6         |   |              |              | 130.4 |                |       |       | 71.0 |              |       |       |      |   |        |        | 220.0 | 
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|Operating loss                                                                  |                                                |                                            | (17.7  | )         |              |   | (53.1        | )            |       |                | (16.6 | )     |      |              |      |       |       |   | (87.4  | )     
|Other non-operating expense (income)                                            |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |       |       |       |   |        |       
|                                                                                | Intercompany management fees                   |                                            |        | (11.9     | )            |   |              | 11.9         |       |                |       |      |      |              |       |      |       |   |        |       |      
|                                                                                | Intercompany interest                          |                                            |        | (5.3      | )            |   |              | 6.1          |       |                |       | (.8   | )    |              |       |      |       |   |        |       |      
|                                                                                | Equity in (earnings) losses of subsidiaries    |                                            |        | 107.9     |              |   |              | (25.6        | )     |                |       |      |      |              |       | (82.3 | )     |   |        |       |      
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|                                                                                |                                                | Total other non-operating expense (income) |        |           | 90.7         |   |              |              | (7.6  | )              |       |       | (.8  | )            |       |       | (82.3 | ) |        |        |      | 
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|Earnings (loss) from continuing operations before interest
    and income taxes |                                                |                                            | (108.4 | )         |              |   | (45.5        | )            |       |                | (15.8 | )     |      |              | 82.3  |       |       |   | (87.4  | )     
|Interest expense  net                                                          |                                                |                                            | (13.4  | )         |              |   | (9.2         | )            |       |                | (.4   | )     |      |              |      |       |       |   | (23.0  | )     
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|Earnings (loss) from continuing operations before income
    taxes              |                                                |                                            | (121.8 | )         |              |   | (54.7        | )            |       |                | (16.2 | )     |      |              | 82.3  |       |       |   | (110.4 | )     
|Provision (benefit) for income taxes                                            |                                                |                                            | 68.3   |           |              |   | (.9          | )            |       |                | 5.9   |       |      |              |      |       |       |   | 73.3   |       
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|Earnings (loss) from continuing operations                                      |                                                |                                            | (190.1 | )         |              |   | (53.8        | )            |       |                | (22.1 | )     |      |              | 82.3  |       |       |   | (183.7 | )     
|Discontinued operations net of income taxes                                     |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |       |       |       |   |        |       
|                                                                                | Loss from operations                           |                                            |        |          |              |   |              | (6.4         | )     |                |       |      |      |              |       |      |       |   |        | (6.4   | )    
|                                                                                | Net loss on divestitures                       |                                            |        | (.8       | )            |   |              |             |       |                |       |      |      |              |       |      |       |   |        | (.8    | )    
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|Total discontinued operations                                                   |                                                |                                            | (.8    | )         |              |   | (6.4         | )            |       |                |      |       |      |              |      |       |       |   | (7.2   | )     
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      
|                                                                                | Net earnings (loss)                            |                                            | $      | (190.9    | )            |   | $            | (60.2        | )     |                | $     | (22.1 | )    |              | $     | 82.3  |       |   | $      | (190.9 | )    
|                                                                                |                                                |                                            |        |           |              |   |              |              |       |                |       |       |      |              |      

90



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##### Table of Contents



MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Statement of Operations


|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |       |        |   |   |        |        |       | 
|------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------------ | ------ | --------- | ------------ | - | ------------ | ------------ | ---- | -------------- | ----- | ------ | ---- | ------------ | ----- | ------ | - | - | ------ | ------ | ----- | 
|                                                                                                              |                                                | Year Ended December 31, 2002   |       
|                                                                                                              |                                                |                                |       
|                                                                                                              |                                                |                                |        | Guarantor |              |   | Nonguarantor |              |      | Eliminations & |       |        |     
|                                                                                                              |                                                | Milacron Inc.                  |        |           | Subsidiaries |   |              | Subsidiaries |      |                | Other |        |      | Consolidated |      
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|                                                                                                              |                                                | (In millions)                  |       
|Sales                                                                                                         |                                                | $                              |       |           |              | $ | 480.6        |              |      | $              | 236.4 |        |      | $            | (23.8 | )      |   | $ | 693.2  |       
|                                                                                                              | Cost of products sold                          |                                |        | (.3       | )            |   |              | 403.5        |      |                |       | 192.7  |      |              |       | (23.8  | ) |   |        | 572.1  |      
|                                                                                                              | Cost of products sold related to restructuring |                                |        |          |              |   |              | 1.9          |      |                |       |       |      |              |       |       |   |   |        | 1.9    |      
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|                                                                                                              | Total cost of products sold                    |                                |        | (.3       | )            |   |              | 405.4        |      |                |       | 192.7  |      |              |       | (23.8  | ) |   |        | 574.0  |      
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|                                                                                                              |                                                | Manufacturing margins          |        |           | .3           |   |              |              | 75.2 |                |       |        | 43.7 |              |       |        |  |   |        |        | 119.2 | 
|Other costs and expenses                                                                                      |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |       |        |   |   |        |       
|                                                                                                              | Selling and administrative                     |                                |        | 13.9      |              |   |              | 55.8         |      |                |       | 51.3   |      |              |       |       |   |   |        | 121.0  |      
|                                                                                                              | Goodwill impairment charge                     |                                |        |          |              |   |              | 1.0          |      |                |       |       |      |              |       |       |   |   |        | 1.0    |      
|                                                                                                              | Restructuring costs                            |                                |        | .7        |              |   |              | 6.8          |      |                |       | 4.5    |      |              |       |       |   |   |        | 12.0   |      
|                                                                                                              | Other expense (income)  net                   |                                |        | 3.1       |              |   |              | (3.2         | )    |                |       | (.9    | )    |              |       |       |   |   |        | (1.0   | )    
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|                                                                                                              |                                                | Total other costs and expenses |        |           | 17.7         |   |              |              | 60.4 |                |       |        | 54.9 |              |       |        |  |   |        |        | 133.0 | 
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|Operating earnings (loss)                                                                                     |                                                |                                | (17.4  | )         |              |   | 14.8         |              |      |                | (11.2 | )      |      |              |      |        |   |   | (13.8  | )     
|Other non-operating expense (income)                                                                          |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |       |        |   |   |        |       
|                                                                                                              | Intercompany management fees                   |                                |        | (14.1     | )            |   |              | 12.4         |      |                |       | 1.7    |      |              |       |       |   |   |        |       |      
|                                                                                                              | Intercompany royalties                         |                                |        |          |              |   |              | 3.6          |      |                |       | (3.6   | )    |              |       |       |   |   |        |       |      
|                                                                                                              | Intercompany interest                          |                                |        | (6.6      | )            |   |              | 7.9          |      |                |       | (1.3   | )    |              |       |       |   |   |        |       |      
|                                                                                                              | Equity in (earnings) losses of subsidiaries    |                                |        | 242.1     |              |   |              | 29.8         |      |                |       | 31.7   |      |              |       | (303.6 | ) |   |        |       |      
|Other intercompany transactions                                                                               |                                                |                                | .9     |           |              |   | .4           |              |      |                | (.4   | )      |      |              | (.9   | )      |   |   |       |       
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|                                                                                                              | Total other non-operating expense (income)     |                                |        | 222.3     |              |   |              | 54.1         |      |                |       | 28.1   |      |              |       | (304.5 | ) |   |        |       |      
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|Earnings (loss) from continuing operations before interest
    and income taxes                               |                                                |                                | (239.7 | )         |              |   | (39.3        | )            |      |                | (39.3 | )      |      |              | 304.5 |        |   |   | (13.8  | )     
|Interest expense  net                                                                                        |                                                |                                | (13.9  | )         |              |   | (8.6         | )            |      |                | (.8   | )      |      |              |      |        |   |   | (23.3  | )     
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|Earnings (loss) from continuing operations before income
    taxes and cumulative effect of accounting change |                                                |                                | (253.6 | )         |              |   | (47.9        | )            |      |                | (40.1 | )      |      |              | 304.5 |        |   |   | (37.1  | )     
|Benefit for income taxes                                                                                      |                                                |                                | (8.2   | )         |              |   | (6.2         | )            |      |                | (4.0  | )      |      |              |      |        |   |   | (18.4  | )     
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|Earnings (loss) from continuing operations before cumulative
    effect of accounting change                  |                                                |                                | (245.4 | )         |              |   | (41.7        | )            |      |                | (36.1 | )      |      |              | 304.5 |        |   |   | (18.7  | )     
|Discontinued operations net of income taxes                                                                   |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |       |        |   |   |        |       
|                                                                                                              | Loss from operations                           |                                |        |          |              |   |              | (7.7         | )    |                |       | (17.5  | )    |              |       |       |   |   |        | (25.2  | )    
|                                                                                                              | Net gain (loss) on divestitures                |                                |        | 22.2      |              |   |              | (5.2         | )    |                |       | (8.6   | )    |              |       |       |   |   |        | 8.4    |      
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|Total discontinued operations                                                                                 |                                                |                                | 22.2   |           |              |   | (12.9        | )            |      |                | (26.1 | )      |      |              |      |        |   |   | (16.8  | )     
|Cumulative effect of change in method of accounting                                                           |                                                |                                |       |           |              |   | (141.3       | )            |      |                | (46.4 | )      |      |              |      |        |   |   | (187.7 | )     
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      
|                                                                                                              | Net earnings (loss)                            |                                | $      | (223.2    | )            |   | $            | (195.9       | )    |                | $     | (108.6 | )    |              | $     | 304.5  |   |   | $      | (223.2 | )    
|                                                                                                              |                                                |                                |        |           |              |   |              |              |      |                |       |        |      |              |      

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##### Table of Contents



MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Balance Sheet


|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |        |        |        |   |       |        |       | 
|---------------------------------------------------- | ---------------------------------------------------------------------- | ------------------------------------ | ----- | --------- | ------------ | - | ------------ | ------------ | ----- | -------------- | ----- | ----- | ----- | ------------ | ------ | ------ | ------ | - | ----- | ------ | ----- | 
|                                                     |                                                                        | December 31, 2004                    |      
|                                                     |                                                                        |                                      |      
|                                                     |                                                                        |                                      |       | Guarantor |              |   | Nonguarantor |              |       | Eliminations & |       |       |      
|                                                     |                                                                        | Milacron Inc.                        |       |           | Subsidiaries |   |              | Subsidiaries |       |                | Other |       |       | Consolidated |       
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                     |                                                                        | (In millions)                        |      
|ASSETS                                              
|Current assets                                       |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |        |        |        |   |       |       
|                                                     | Cash and cash equivalents                                              |                                      | $     | 23.0      |              |   | $            | 7.9          |       |                | $     | 38.3  |       |              | $      |       |        |   | $     | 69.2   |      
|                                                     | Notes and accounts receivable (excluding intercompany
    receivables) |                                      |       | 1.3       |              |   |              | 75.7         |       |                |       | 57.6  |       |              |        |       |        |   |       | 134.6  |      
|                                                     | Inventories                                                            |                                      |       | (.2       | )            |   |              | 90.2         |       |                |       | 63.9  |       |              |        |       |        |   |       | 153.9  |      
|                                                     | Other current assets                                                   |                                      |       | 12.7      |              |   |              | 16.6         |       |                |       | 19.8  |       |              |        |       |        |   |       | 49.1   |      
|                                                     | Intercompany receivables (payables)                                    |                                      |       | (331.7    | )            |   |              | 218.9        |       |                |       | 115.1 |       |              |        | (2.3   | )      |   |       |       |      
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                     |                                                                        | Total current assets                 |       |           | (294.9       | ) |              |              | 409.3 |                |       |       | 294.7 |              |        |        | (2.3   | ) |       |        | 406.8 | 
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|Property, plant and equipment  net                  |                                                                        |                                      | 1.1   |           |              |   | 58.9         |              |       |                | 68.4  |       |       |              |       |        |        |   | 128.4 |       
|Goodwill                                             |                                                                        |                                      |      |           |              |   | 52.7         |              |       |                | 33.9  |       |       |              |       |        |        |   | 86.6  |       
|Investment in subsidiaries                           |                                                                        |                                      | 301.0 |           |              |   | 173.8        |              |       |                | (15.8 | )     |       |              | (459.0 | )      |        |   |      |       
|Intercompany advances  net                          |                                                                        |                                      | 461.6 |           |              |   | (499.3       | )            |       |                | 37.7  |       |       |              |       |        |        |   |      |       
|Other noncurrent assets                              |                                                                        |                                      | 37.8  |           |              |   | 59.7         |              |       |                | 20.6  |       |       |              |       |        |        |   | 118.1 |       
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                     |                                                                        | Total assets                         |       | $         | 506.6        |   |              | $            | 255.1 |                |       | $     | 439.5 |              |        | $      | (461.3 | ) |       | $      | 739.9 | 
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                    
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)      
|Current liabilities                                  |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |        |        |        |   |       |       
|                                                     | Short-term borrowings                                                  |                                      | $     | 11.0      |              |   | $            |             |       |                | $     | .2    |       |              | $      |       |        |   | $     | 11.2   |      
|                                                     | Long-term debt and capital lease obligations due within one year       |                                      |       | 1.0       |              |   |              |             |       |                |       | 5.0   |       |              |        |       |        |   |       | 6.0    |      
|                                                     | Trade accounts payable                                                 |                                      |       | 6.8       |              |   |              | 39.2         |       |                |       | 34.3  |       |              |        |       |        |   |       | 80.3   |      
|                                                     | Advance billings and deposits                                          |                                      |       |          |              |   |              | 12.5         |       |                |       | 6.1   |       |              |        |       |        |   |       | 18.6   |      
|                                                     | Accrued and other current liabilities                                  |                                      |       | 29.4      |              |   |              | 26.9         |       |                |       | 41.0  |       |              |        |       |        |   |       | 97.3   |      
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                     |                                                                        | Total current liabilities            |       |           | 48.2         |   |              |              | 78.6  |                |       |       | 86.6  |              |        |        |       |   |       |        | 213.4 | 
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|Long-term accrued liabilities                        |                                                                        |                                      | 179.7 |           |              |   | 7.7          |              |       |                | 52.8  |       |       |              |       |        |        |   | 240.2 |       
|Long-term debt                                       |                                                                        |                                      | 228.3 |           |              |   |             |              |       |                | 7.6   |       |       |              |       |        |        |   | 235.9 |       
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                     | Total liabilities                                                      |                                      |       | 456.2     |              |   |              | 86.3         |       |                |       | 147.0 |       |              |        |       |        |   |       | 689.5  |      
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|Commitments and contingencies                        |                                                                        |                                      |      |           |              |   |             |              |       |                |      |       |       |              |       |        |        |   |      |       
|Shareholders equity (deficit)                       |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |        |        |        |   |       |       
|                                                     | 4% Cumulative Preferred shares                                         |                                      |       | 6.0       |              |   |              |             |       |                |       |      |       |              |        |       |        |   |       | 6.0    |      
|                                                     | 6% Series B Convertible Preferred Stock                                |                                      |       | 112.9     |              |   |              |             |       |                |       |      |       |              |        |       |        |   |       | 112.9  |      
|                                                     | Common shares, $.01 par value                                          |                                      |       | .5        |              |   |              | 25.4         |       |                |       | 12.8  |       |              |        | (38.2  | )      |   |       | .5     |      
|                                                     | Capital in excess of par value                                         |                                      |       | 347.2     |              |   |              | 316.4        |       |                |       | 78.7  |       |              |        | (395.1 | )      |   |       | 347.2  |      
|                                                     | Contingent warrants                                                    |                                      |       | .5        |              |   |              |             |       |                |       |      |       |              |        |       |        |   |       | .5     |      
|                                                     | Reinvested earnings (accumulated deficit)                              |                                      |       | (312.7    | )            |   |              | (146.2       | )     |                |       | 180.3 |       |              |        | (34.1  | )      |   |       | (312.7 | )    
|                                                     | Other comprehensive income (accumulated other comprehensive loss)      |                                      |       | (104.0    | )            |   |              | (26.8        | )     |                |       | 20.7  |       |              |        | 6.1    |        |   |       | (104.0 | )    
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                     |                                                                        | Total shareholders equity (deficit) |       |           | 50.4         |   |              |              | 168.8 |                |       |       | 292.5 |              |        |        | (461.3 | ) |       |        | 50.4  | 
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       
|Total liabilities and shareholders equity (deficit) |                                                                        | $                                    | 506.6 |           |              | $ | 255.1        |              |       | $              | 439.5 |       |       | $            | (461.3 | )      |        | $ | 739.9 |       
|                                                     |                                                                        |                                      |       |           |              |   |              |              |       |                |       |       |       |              |       

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##### Table of Contents



MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Balance Sheet


|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |        |        |        |   |       |        |       |  
|----------------------------------------------------------------- | ---------------------------------------------------------------------- | -------------------------------------------- | ----- | --------- | ------------ | - | ------------ | ------------ | ----- | -------------- | ----- | ----- | ----- | ------------ | ------ | ------ | ------ | - | ----- | ------ | ----- | -
|                                                                  |                                                                        | December 31, 2003                            |      
|                                                                  |                                                                        |                                              |      
|                                                                  |                                                                        |                                              |       | Guarantor |              |   | Nonguarantor |              |       | Eliminations & |       |       |      
|                                                                  |                                                                        | Milacron Inc.                                |       |           | Subsidiaries |   |              | Subsidiaries |       |                | Other |       |       | Consolidated |       
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                                  |                                                                        | (In millions)                                |      
|ASSETS                                                           
|Current assets                                                    |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |        |        |        |   |       |       
|                                                                  | Cash and cash equivalents                                              |                                              | $     | 26.7      |              |   | $            | 14.3         |       |                | $     | 51.8  |       |              | $      |       |        |   | $     | 92.8   |      
|                                                                  | Notes and accounts receivable (excluding intercompany
    receivables) |                                              |       | 1.7       |              |   |              | 35.3         |       |                |       | 56.8  |       |              |        |       |        |   |       | 93.8   |      
|                                                                  | Inventories                                                            |                                              |       | .9        |              |   |              | 88.8         |       |                |       | 59.8  |       |              |        |       |        |   |       | 149.5  |      
|                                                                  | Other current assets                                                   |                                              |       | 13.9      |              |   |              | 11.0         |       |                |       | 20.3  |       |              |        |       |        |   |       | 45.2   |      
|                                                                  | Intercompany receivables (payables)                                    |                                              |       | (326.4    | )            |   |              | 233.9        |       |                |       | 94.8  |       |              |        | (2.3   | )      |   |       |       |      
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                                  |                                                                        | Current assets of continuing operations      |       |           | (283.2       | ) |              |              | 383.3 |                |       |       | 283.5 |              |        |        | (2.3   | ) |       |        | 381.3 |  
|                                                                  | Assets of discontinued operations                                      |                                              |       |          |              |   |              | 7.2          |       |                |       |      |       |              |        |       |        |   |       | 7.2    |      
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                                  |                                                                        | Total current assets                         |       |           | (283.2       | ) |              |              | 390.5 |                |       |       | 283.5 |              |        |        | (2.3   | ) |       |        | 388.5 |  
|Property, plant and equipment  net                               |                                                                        |                                              | 1.3   |           |              |   | 69.5         |              |       |                | 70.0  |       |       |              |       |        |        |   | 140.8 |       
|Goodwill                                                          |                                                                        |                                              |      |           |              |   | 52.3         |              |       |                | 31.5  |       |       |              |       |        |        |   | 83.8  |       
|Investment in subsidiaries                                        |                                                                        |                                              | 310.9 |           |              |   | 198.0        |              |       |                | (15.8 | )     |       |              | (493.1 | )      |        |   |      |       
|Intercompany advances  net                                       |                                                                        |                                              | 297.8 |           |              |   | (332.4       | )            |       |                | 34.6  |       |       |              |       |        |        |   |      |       
|Other noncurrent assets                                           |                                                                        |                                              | 32.7  |           |              |   | 72.9         |              |       |                | 14.7  |       |       |              |       |        |        |   | 120.3 |       
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                                  |                                                                        | Total assets                                 |       | $         | 359.5        |   |              | $            | 450.8 |                |       | $     | 418.5 |              |        | $      | (495.4 | ) |       | $      | 733.4 |  
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                                 
|LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)                   
|Current liabilities                                               |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |        |        |        |   |       |       
|                                                                  | Short-term borrowings                                                  |                                              | $     | 42.0      |              |   | $            |             |       |                | $     | .6    |       |              | $      |       |        |   | $     | 42.6   |      
|                                                                  | Long-term debt and capital lease obligations due within one year       |                                              |       | 115.9     |              |   |              |             |       |                |       | 1.4   |       |              |        |       |        |   |       | 117.3  |      
|                                                                  | Trade accounts payable                                                 |                                              |       | 2.6       |              |   |              | 31.9         |       |                |       | 33.4  |       |              |        |       |        |   |       | 67.9   |      
|                                                                  | Advance billings and deposits                                          |                                              |       |          |              |   |              | 9.6          |       |                |       | 5.6   |       |              |        |       |        |   |       | 15.2   |      
|                                                                  | Accrued and other current liabilities                                  |                                              |       | 35.5      |              |   |              | 62.3         |       |                |       | 18.3  |       |              |        |       |        |   |       | 116.1  |      
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                                  |                                                                        | Current liabilities of continuing operations |       |           | 196.0        |   |              |              | 103.8 |                |       |       | 59.3  |              |        |        |       |   |       |        | 359.1 |  
|                                                                  | Liabilities of discontinued operations                                 |                                              |       |          |              |   |              | 1.8          |       |                |       |      |       |              |        |       |        |   |       | 1.8    |      
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                                  |                                                                        | Total current liabilities                    |       |           | 196.0        |   |              |              | 105.6 |                |       |       | 59.3  |              |        |        |       |   |       |        | 360.9 |  
|Long-term accrued liabilities                                     |                                                                        |                                              | 177.8 |           |              |   | 10.3         |              |       |                | 44.5  |       |       |              |       |        |        |   | 232.6 |       
|Long-term debt                                                    |                                                                        |                                              | 9.3   |           |              |   | 142.6        |              |       |                | 11.6  |       |       |              |       |        |        |   | 163.5 |       
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                                  | Total liabilities                                                      |                                              |       | 383.1     |              |   |              | 258.5        |       |                |       | 115.4 |       |              |        |       |        |   |       | 757.0  |      
|Commitments and contingencies                                     |                                                                        |                                              |      |           |              |   |             |              |       |                |      |       |       |              |       |        |        |   |      |       
|Shareholders equity (deficit)
    4% Cumulative Preferred shares |                                                                        |                                              | 6.0   |           |              |   |             |              |       |                |      |       |       |              |       |        |        |   | 6.0   |       
|                                                                  | Common shares, $1.00 par value                                         |                                              |       | 34.8      |              |   |              | 34.4         |       |                |       | 12.8  |       |              |        | (47.2  | )      |   |       | 34.8   |      
|                                                                  | Capital in excess of par value                                         |                                              |       | 284.0     |              |   |              | 294.1        |       |                |       | 78.2  |       |              |        | (372.3 | )      |   |       | 284.0  |      
|                                                                  | Reinvested earnings (accumulated deficit)                              |                                              |       | (241.7    | )            |   |              | (111.9       | )     |                |       | 200.3 |       |              |        | (88.4  | )      |   |       | (241.7 | )    
|                                                                  | Other comprehensive income (accumulated other comprehensive loss)      |                                              |       | (106.7    | )            |   |              | (24.3        | )     |                |       | 11.8  |       |              |        | 12.5   |        |   |       | (106.7 | )    
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|                                                                  |                                                                        | Total shareholders equity (deficit)         |       |           | (23.6        | ) |              |              | 192.3 |                |       |       | 303.1 |              |        |        | (495.4 | ) |       |        | (23.6 | )
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       
|Total liabilities and shareholders equity (deficit)              |                                                                        | $                                            | 359.5 |           |              | $ | 450.8        |              |       | $              | 418.5 |       |       | $            | (495.4 | )      |        | $ | 733.4 |       
|                                                                  |                                                                        |                                              |       |           |              |   |              |              |       |                |       |       |       |              |       

93



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##### Table of Contents



MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Statement of Cash Flows


|                                                                      |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |   |      |       |   |       |        |       |       |  
|--------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------------- | ------------------------------------------------ | --------- | ------------ | ----- | ------------ | ------------ | ------ | -------------- | ----- | ---- | ----- | ------------ | - | ---- | ----- | - | ----- | ------ | ----- | ----- | -
|                                                                      |                                                                                   | Year Ended December 31, 2004                              |                                                 
|                                                                      |                                                                                   |                                                           |                                                 
|                                                                      |                                                                                   |                                                           |                                                  | Guarantor |              |       | Nonguarantor |              |        | Eliminations & |       |      |      
|                                                                      |                                                                                   | Milacron Inc.                                             |                                                  |           | Subsidiaries |       |              | Subsidiaries |        |                | Other |      |       | Consolidated |  
|                                                                      |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |  
|                                                                      |                                                                                   | (In millions)                                             |                                                 
|Increase (decrease) in cash and cash equivalents                      |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |   |      |       |   |       |       
|                                                                      | Operating activities cash flows                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |   |      |       |   |       |        |      
|                                                                      | Net earnings (loss)                                                               |                                                           | $                                                | (51.8     | )            |       | $            | (6.5         | )      |                | $     | (4.2 | )     |              | $ | 10.7 |       |   | $     | (51.8  | )    
|                                                                      | Operating activities providing (using) cash
    Loss from discontinued operations |                                                           |                                                  |          |              |       |              | 1.3          |        |                |       |     |       |              |   |     |       |   |       | 1.3    |      
|                                                                      |                                                                                   | Net (gain) loss on divestiture                            |                                                  |           | (.8          | )     |              |              |       |                |       |      |      |              |   |      |      |   |       |        | (.8   | )    
|                                                                      |                                                                                   | Depreciation                                              |                                                  |           | .2           |       |              |              | 11.2   |                |       |      | 7.5   |              |   |      |      |   |       |        | 18.9  |      
|                                                                      |                                                                                   | Amortization of intangibles                               |                                                  |           |             |       |              |              | 1.4    |                |       |      |      |              |   |      |      |   |       |        | 1.4   |      
|                                                                      |                                                                                   | Refinancing costs                                         |                                                  |           | 15.8         |       |              |              | 5.6    |                |       |      |      |              |   |      |      |   |       |        | 21.4  |      
|                                                                      |                                                                                   | Restructuring costs                                       |                                                  |           | .1           |       |              |              | 7.9    |                |       |      | 5.0   |              |   |      |      |   |       |        | 13.0  |      
|                                                                      |                                                                                   | Equity in (earnings) losses of subsidiaries               |                                                  |           | 26.8         |       |              |              | 11.6   |                |       |      |      |              |   |      | (38.4 | ) |       |        |      |      
|                                                                      |                                                                                   | Distributions from equity subsidiaries                    |                                                  |           |             |       |              |              | (12.0  | )              |       |      | (15.7 | )            |   |      | 27.7  |   |       |        |      |      
|                                                                      |                                                                                   | Deferred income taxes                                     |                                                  |           | .9           |       |              |              | 5.0    |                |       |      | 2.8   |              |   |      |      |   |       |        | 8.7   |      
|                                                                      |                                                                                   | Working capital changes
    Notes and accounts receivable |                                                  |           | .6           |       |              |              | (40.1  | )              |       |      | 3.4   |              |   |      |      |   |       |        | (36.1 | )    
|                                                                      |                                                                                   |                                                           | Inventories                                      |           |              | 1.1   |              |              |        | (2.7           | )     |      |       | .5           |   |      |       |  |       |        |       | (1.1  | )
|                                                                      |                                                                                   |                                                           | Other current assets                             |           |              | 4.7   |              |              |        | (3.3           | )     |      |       | 1.6          |   |      |       |  |       |        |       | 3.0   |  
|                                                                      |                                                                                   |                                                           | Trade accounts payable                           |           |              | 3.1   |              |              |        | 7.2            |       |      |       | (1.0         | ) |      |       |  |       |        |       | 9.3   |  
|                                                                      |                                                                                   |                                                           | Other current liabilities                        |           |              | (11.4 | )            |              |        | (9.8           | )     |      |       | (9.2         | ) |      |       |  |       |        |       | (30.4 | )
|                                                                      |                                                                                   | Decrease in other noncurrent assets                       |                                                  |           | 2.3          |       |              |              |       |                |       |      | .7    |              |   |      |      |   |       |        | 3.0   |      
|                                                                      |                                                                                   | Increase (decrease) in long-term accrued liabilities      |                                                  |           | (2.9         | )     |              |              | (.8    | )              |       |      | 1.8   |              |   |      |      |   |       |        | (1.9  | )    
|                                                                      |                                                                                   | Other  net                                               |                                                  |           | (.5          | )     |              |              |       |                |       |      | .9    |              |   |      |      |   |       |        | .4    |      
|                                                                      |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |  
|                                                                      |                                                                                   |                                                           | Net cash provided (used) by operating activities |           |              | (11.8 | )            |              |        | (24.0          | )     |      |       | (5.9         | ) |      |       |  |       |        |       | (41.7 | )
|Investing activities cash flows                                       |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |   |      |       |   |       |       
|                                                                      | Capital expenditures                                                              |                                                           |                                                  |          |              |       |              | (4.6         | )      |                |       | (4.2 | )     |              |   |     |       |   |       | (8.8   | )    
|                                                                      | Net disposals of plant, property and equipment                                    |                                                           |                                                  |          |              |       |              | .3           |        |                |       | .3   |       |              |   |     |       |   |       | .6     |      
|                                                                      | Divestitures                                                                      |                                                           |                                                  | 8.0       |              |       |              |             |        |                |       |     |       |              |   |     |       |   |       | 8.0    |      
|                                                                      |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |  
|                                                                      |                                                                                   | Net cash provided (used) by investing activities          |                                                  |           | 8.0          |       |              |              | (4.3   | )              |       |      | (3.9  | )            |   |      |      |   |       |        | (.2   | )    
|Financing activities cash flows                                       |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |   |      |       |   |       |       
|                                                                      | Issuance of long-term debt                                                        |                                                           |                                                  | 219.8     |              |       |              |             |        |                |       |     |       |              |   |     |       |   |       | 219.8  |      
|                                                                      | Repayments of long-term debt                                                      |                                                           |                                                  | (115.7    | )            |       |              | (144.7       | )      |                |       | (1.1 | )     |              |   |     |       |   |       | (261.5 | )    
|                                                                      | Increase (decrease) in short-term borrowings                                      |                                                           |                                                  | 69.0      |              |       |              |             |        |                |       | (.5  | )     |              |   |     |       |   |       | 68.5   |      
|                                                                      | Issuance of common shares                                                         |                                                           |                                                  | 25.2      |              |       |              |             |        |                |       |     |       |              |   |     |       |   |       | 25.2   |      
|                                                                      | Debt issuance costs                                                               |                                                           |                                                  | (27.8     | )            |       |              |             |        |                |       |     |       |              |   |     |       |   |       | (27.8  | )    
|                                                                      | Dividends paid                                                                    |                                                           |                                                  | (3.3      | )            |       |              |             |        |                |       |     |       |              |   |     |       |   |       | (3.3   | )    
|                                                                      |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |  
|                                                                      |                                                                                   | Net cash provided (used) by financing activities          |                                                  |           | 167.2        |       |              |              | (144.7 | )              |       |      | (1.6  | )            |   |      |      |   |       |        | 20.9  |      
|Intercompany receivables and payables                                 |                                                                                   |                                                           | (8.1                                             | )         |              |       | 6.3          |              |        |                | 1.8   |      |       |              |  |      |       |   |      |       
|Intercompany advances                                                 |                                                                                   |                                                           | (150.7                                           | )         |              |       | 156.0        |              |        |                | (5.3  | )    |       |              |  |      |       |   |      |       
|Effect of exchange rate fluctuations on cash and cash
    equivalents |                                                                                   |                                                           |                                                 |           |              |       | .2           |              |        |                | 1.4   |      |       |              |  |      |       |   | 1.6   |       
|Cash flows related to discontinued operations                         |                                                                                   |                                                           | (8.3                                             | )         |              |       | 4.1          |              |        |                |      |      |       |              |  |      |       |   | (4.2  | )     
|                                                                      |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |  
|Decrease in cash and cash equivalents                                 |                                                                                   |                                                           | (3.7                                             | )         |              |       | (6.4         | )            |        |                | (13.5 | )    |       |              |  |      |       |   | (23.6 | )     
|Cash and cash equivalents at beginning of year                        |                                                                                   |                                                           | 26.7                                             |           |              |       | 14.3         |              |        |                | 51.8  |      |       |              |  |      |       |   | 92.8  |       
|                                                                      |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |  
|Cash and cash equivalents at end of year                              |                                                                                   | $                                                         | 23.0                                             |           |              | $     | 7.9          |              |        | $              | 38.3  |      |       | $            |  |      |       | $ | 69.2  |       
|                                                                      |                                                                                   |                                                           |                                                  |           |              |       |              |              |        |                |       |      |       |              |  

94



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##### Table of Contents



MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Statement of Cash Flows


|                                                                      |                                 |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |      |   |        |   |       |   |        |       |       |  
|--------------------------------------------------------------------- | ------------------------------- | ---------------------------------------------------- | ------------------------------------------------ | ------------------------------------- | ------------ | ----- | ------------ | ------------ | ----- | -------------- | ----- | - | ----- | ------------ | ---- | - | ------ | - | ----- | - | ------ | ----- | ----- | -
|                                                                      |                                 | Year Ended December 31, 2003                         |                                                 
|                                                                      |                                 |                                                      |                                                 
|                                                                      |                                 |                                                      |                                                  | Guarantor                             |              |       | Nonguarantor |              |       | Eliminations & |       |   |      
|                                                                      |                                 | Milacron Inc.                                        |                                                  |                                       | Subsidiaries |       |              | Subsidiaries |       |                | Other |   |       | Consolidated |     
|                                                                      |                                 |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |     
|                                                                      |                                 | (In millions)                                        |                                                 
|Increase (decrease) in cash and cash equivalents                      |                                 |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |      |   |        |   |       |  
|                                                                      | Operating activities cash flows |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |      |   |        |   |       |   |       
|                                                                      |                                 | Net loss                                             |                                                  | $                                     | (190.9       | )     |              | $            | (60.2 | )              |       | $ | (22.1 | )            |      | $ | 82.3   |   |       | $ | (190.9 | )    
|                                                                      |                                 | Operating activities providing (using) cash          |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |      |   |        |   |       |   |        |      
|                                                                      |                                 | Loss from discontinued operations                    |                                                  |                                       |             |       |              |              | 6.4   |                |       |   |      |              |      |   |       |   |       |   | 6.4    |      
|                                                                      |                                 | Net loss on divestitures                             |                                                  |                                       | .8           |       |              |              |      |                |       |   |      |              |      |   |       |   |       |   | .8     |      
|                                                                      |                                 | Depreciation                                         |                                                  |                                       | .4           |       |              |              | 12.4  |                |       |   | 7.5   |              |      |   |       |   |       |   | 20.3   |      
|                                                                      |                                 | Amortization of intangibles                          |                                                  |                                       |             |       |              |              | 1.4   |                |       |   |      |              |      |   |       |   |       |   | 1.4    |      
|                                                                      |                                 | Refinancing costs                                    |                                                  |                                       | 1.8          |       |              |              |      |                |       |   |      |              |      |   |       |   |       |   | 1.8    |      
|                                                                      |                                 | Restructuring costs                                  |                                                  |                                       | .7           |       |              |              | 8.8   |                |       |   | 17.6  |              |      |   |       |   |       |   | 27.1   |      
|                                                                      |                                 | Equity in (earnings) losses of subsidiaries          |                                                  |                                       | 119.8        |       |              |              | (4.9  | )              |       |   |      |              |      |   | (114.9 | ) |       |   |       |      
|                                                                      |                                 | Distributions from equity subsidiaries               |                                                  |                                       |             |       |              |              | (11.9 | )              |       |   | (20.7 | )            |      |   | 32.6   |   |       |   |       |      
|                                                                      |                                 | Goodwill impairment charge                           |                                                  |                                       |             |       |              |              | 65.6  |                |       |   |      |              |      |   |       |   |       |   | 65.6   |      
|                                                                      |                                 | Deferred income taxes                                |                                                  |                                       | 81.3         |       |              |              | (15.7 | )              |       |   | 8.3   |              |      |   |       |   |       |   | 73.9   |      
|                                                                      |                                 | Working capital changes                              |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |      |   |        |   |       |   |        |      
|                                                                      |                                 |                                                      | Notes and accounts receivable                    |                                       |              | (.5   | )            |              |       | 2.9            |       |   |       | 4.2          |      |   |        |  |       |   |        | 6.6   |      
|                                                                      |                                 |                                                      | Inventories                                      |                                       |              |      |              |              |       | 13.4           |       |   |       | 8.9          |      |   |        |  |       |   |        | 22.3  |      
|                                                                      |                                 |                                                      | Other current assets                             |                                       |              | 9.0   |              |              |       | 2.8            |       |   |       | 2.1          |      |   |        |  |       |   |        | 13.9  |      
|                                                                      |                                 |                                                      | Trade accounts payable                           |                                       |              | .4    |              |              |       | (7.3           | )     |   |       | .8           |      |   |        |  |       |   |        | (6.1  | )    
|                                                                      |                                 |                                                      | Other current liabilities                        |                                       |              | (10.6 | )            |              |       | (17.7          | )     |   |       | (3.0         | )    |   |        |  |       |   |        | (31.3 | )    
|                                                                      |                                 | Decrease (increase) in other noncurrent assets       |                                                  |                                       | (3.0         | )     |              |              | 1.6   |                |       |   | .8    |              |      |   |       |   |       |   | (.6    | )    
|                                                                      |                                 | Increase (decrease) in long-term accrued liabilities |                                                  |                                       | .3           |       |              |              | (.8   | )              |       |   | (2.2  | )            |      |   |       |   |       |   | (2.7   | )    
|                                                                      |                                 | Other  net                                          |                                                  |                                       | 7.7          |       |              |              | (3.5  | )              |       |   | (2.7  | )            |      |   |       |   |       |   | 1.5    |      
|                                                                      |                                 |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |     
|                                                                      |                                 |                                                      | Net cash provided (used) by operating activities |                                       |              | 17.2  |              |              |       | (6.7           | )     |   |       | (.5          | )    |   |        |  |       |   |        | 10.0  |      
|                                                                      | Investing activities cash flows |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |      |   |        |   |       |   |       
|                                                                      |                                 | Capital expenditures                                 |                                                  |                                       |             |       |              |              | (4.5  | )              |       |   | (2.0  | )            |      |   |       |   |       |   | (6.5   | )    
|                                                                      |                                 | Net disposals of plant, property and equipment       |                                                  |                                       | .5           |       |              |              | 1.7   |                |       |   | .3    |              |      |   |       |   |       |   | 2.5    |      
|                                                                      |                                 | Divestitures                                         |                                                  |                                       | (20.3        | )     |              |              |      |                |       |   |      |              |      |   |       |   |       |   | (20.3  | )    
|                                                                      |                                 | Acquisitions                                         |                                                  |                                       |             |       |              |              | (2.9  | )              |       |   | (3.6  | )            |      |   |       |   |       |   | (6.5   | )    
|                                                                      |                                 |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |     
|                                                                      |                                 |                                                      |                                                  | Net cash used by investing activities |              |       | (19.8        | )            |       |                | (5.7  | ) |       |              | (5.3 | ) |        |   |      |   |        |       | (30.8 | )
|                                                                      | Financing activities cash flows |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |      |   |        |   |       |   |       
|                                                                      |                                 | Repayments of long-term debt                         |                                                  |                                       | (.9          | )     |              |              |      |                |       |   | (1.3  | )            |      |   |       |   |       |   | (2.2   | )    
|                                                                      |                                 | Decrease in short-term borrowings                    |                                                  |                                       |             |       |              |              |      |                |       |   | (2.6  | )            |      |   |       |   |       |   | (2.6   | )    
|                                                                      |                                 | Dividends paid                                       |                                                  |                                       | (.8          | )     |              |              |      |                |       |   |      |              |      |   |       |   |       |   | (.8    | )    
|                                                                      |                                 |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |     
|                                                                      |                                 |                                                      |                                                  | Net cash used by financing activities |              |       | (1.7         | )            |       |                |      |   |       |              | (3.9 | ) |        |   |      |   |        |       | (5.6  | )
|Intercompany receivables and payables                                 |                                 |                                                      | 14.3                                             |                                       |              |       | 32.9         |              |       |                | (47.2 | ) |       |              |     |   |        |   |      |  
|Intercompany advances                                                 |                                 |                                                      | .7                                               |                                       |              |       | (7.5         | )            |       |                | 6.8   |   |       |              |     |   |        |   |      |  
|Effect of exchange rate fluctuations on cash and cash
    equivalents |                                 |                                                      |                                                 |                                       |              |       | .4           |              |       |                | 8.4   |   |       |              |     |   |        |   | 8.8   |  
|Cash flows related to discontinued operations                         |                                 |                                                      | (5.4                                             | )                                     |              |       | (6.5         | )            |       |                |      |   |       |              |     |   |        |   | (11.9 | )
|                                                                      |                                 |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |     
|Increase (decrease) in cash and cash equivalents                      |                                 |                                                      | 5.3                                              |                                       |              |       | 6.9          |              |       |                | (41.7 | ) |       |              |     |   |        |   | (29.5 | )
|Cash and cash equivalents at beginning of year                        |                                 |                                                      | 21.4                                             |                                       |              |       | 7.4          |              |       |                | 93.5  |   |       |              |     |   |        |   | 122.3 |  
|                                                                      |                                 |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |     
|Cash and cash equivalents at end of year                              |                                 | $                                                    | 26.7                                             |                                       |              | $     | 14.3         |              |       | $              | 51.8  |   |       | $            |     |   |        | $ | 92.8  |  
|                                                                      |                                 |                                                      |                                                  |                                       |              |       |              |              |       |                |       |   |       |              |     

95



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##### Table of Contents



MILACRON INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Consolidating Statement of Cash Flows


|                                                                      |                                 |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |       |   |       |        |       |   |        |       |        |  
|--------------------------------------------------------------------- | ------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------------------------------ | ------------ | ----- | ------------ | ------------ | ------ | -------------- | ----- | - | ------ | ------------ | ----- | - | ----- | ------ | ----- | - | ------ | ----- | ------ | -
|                                                                      |                                 | Year Ended December 31, 2002                                                      |                                                     
|                                                                      |                                 |                                                                                   |                                                     
|                                                                      |                                 |                                                                                   |                                                      | Guarantor                                        |              |       | Nonguarantor |              |        | Eliminations & |       |   |       
|                                                                      |                                 | Milacron Inc.                                                                     |                                                      |                                                  | Subsidiaries |       |              | Subsidiaries |        |                | Other |   |        | Consolidated |      
|                                                                      |                                 |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |      
|                                                                      |                                 | (In millions)                                                                     |                                                     
|Increase (decrease) in cash and cash equivalents                      |                                 |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |       |   |       |        |       |  
|                                                                      | Operating activities cash flows |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |       |   |       |        |       |   |       
|                                                                      |                                 | Net earnings (loss)                                                               |                                                      | $                                                | (223.2       | )     |              | $            | (195.9 | )              |       | $ | (108.6 | )            |       | $ | 304.5 |        |       | $ | (223.2 | )    
|                                                                      |                                 | Operating activities providing (using) cash Loss from
    discontinued operations |                                                      |                                                  |             |       |              |              | 7.7    |                |       |   | 17.5   |              |       |   |      |        |       |   | 25.2   |      
|                                                                      |                                 |                                                                                   | Net gain (loss) on divestitures                      |                                                  |              | (22.2 | )            |              |        | 5.2            |       |   |        | 8.6          |       |   |       |       |       |   |        | (8.4  | )     
|                                                                      |                                 |                                                                                   | Cumulative effect on change in method of accounting  |                                                  |              |      |              |              |        | 141.3          |       |   |        | 46.4         |       |   |       |       |       |   |        | 187.7 |       
|                                                                      |                                 |                                                                                   | Depreciation                                         |                                                  |              | .7    |              |              |        | 14.3           |       |   |        | 7.0          |       |   |       |       |       |   |        | 22.0  |       
|                                                                      |                                 |                                                                                   | Amortization of intangibles                          |                                                  |              |      |              |              |        | 1.0            |       |   |        |             |       |   |       |       |       |   |        | 1.0   |       
|                                                                      |                                 |                                                                                   | Goodwill impairment charge                           |                                                  |              |      |              |              |        | 1.0            |       |   |        |             |       |   |       |       |       |   |        | 1.0   |       
|                                                                      |                                 |                                                                                   | Restructuring costs                                  |                                                  |              | .7    |              |              |        | 8.7            |       |   |        | 4.5          |       |   |       |       |       |   |        | 13.9  |       
|                                                                      |                                 |                                                                                   | Equity in (earnings) losses of subsidiaries          |                                                  |              | 300.4 |              |              |        | 30.5           |       |   |        | 32.5         |       |   |       | (363.4 | )     |   |        |      |       
|                                                                      |                                 |                                                                                   | Distributions from equity subsidiaries               |                                                  |              |      |              |              |        | (12.4          | )     |   |        | (47.4        | )     |   |       | 59.8   |       |   |        |      |       
|                                                                      |                                 |                                                                                   | Deferred income taxes                                |                                                  |              | (10.9 | )            |              |        | (.4            | )     |   |        | (5.6         | )     |   |       |       |       |   |        | (16.9 | )     
|                                                                      |                                 |                                                                                   | Working capital changes                              |                                                  |              |       |              |              |        |                |       |   |        |              |       |   |       |        |       |   |        |       |       
|                                                                      |                                 |                                                                                   |                                                      | Notes and accounts receivable                    |              |       | 1.6          |              |        |                | 1.2   |   |        |              | 6.9   |   |       |        |      |   |        |       | 9.7    |  
|                                                                      |                                 |                                                                                   |                                                      | Inventories                                      |              |       | .1           |              |        |                | 23.8  |   |        |              | 12.5  |   |       |        |      |   |        |       | 36.4   |  
|                                                                      |                                 |                                                                                   |                                                      | Other current assets                             |              |       |             |              |        |                | 2.4   |   |        |              |      |   |       |        |      |   |        |       | 2.4    |  
|                                                                      |                                 |                                                                                   |                                                      | Trade accounts payable                           |              |       | (1.4         | )            |        |                | 8.2   |   |        |              | .1    |   |       |        |      |   |        |       | 6.9    |  
|                                                                      |                                 |                                                                                   |                                                      | Other current liabilities                        |              |       | 39.8         |              |        |                | (16.0 | ) |        |              | (34.7 | ) |       |        |      |   |        |       | (10.9  | )
|                                                                      |                                 |                                                                                   | Decrease (increase) in other noncurrent assets       |                                                  |              | (3.3  | )            |              |        | (4.8           | )     |   |        | 1.1          |       |   |       |       |       |   |        | (7.0  | )     
|                                                                      |                                 |                                                                                   | Increase (decrease) in long-term accrued liabilities |                                                  |              | (4.7  | )            |              |        |               |       |   |        | .5           |       |   |       |       |       |   |        | (4.2  | )     
|                                                                      |                                 |                                                                                   | Other  net                                          |                                                  |              | 2.4   |              |              |        | (2.5           | )     |   |        | 1.3          |       |   |       | (.9    | )     |   |        | .3    |       
|                                                                      |                                 |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |      
|                                                                      |                                 |                                                                                   |                                                      | Net cash provided (used) by operating activities |              |       | 80.0         |              |        |                | 13.3  |   |        |              | (57.4 | ) |       |        |      |   |        |       | 35.9   |  
|                                                                      | Investing activities cash flows |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |       |   |       |        |       |   |       
|                                                                      |                                 | Capital expenditures                                                              |                                                      |                                                  |             |       |              |              | (4.6   | )              |       |   | (1.6   | )            |       |   |      |        |       |   | (6.2   | )    
|                                                                      |                                 | Net disposals of plant, property and equipment                                    |                                                      |                                                  |             |       |              |              | 5.6    |                |       |   | 1.9    |              |       |   |      |        |       |   | 7.5    |      
|                                                                      |                                 | Acquisitions                                                                      |                                                      |                                                  |             |       |              |              |       |                |       |   | (4.3   | )            |       |   |      |        |       |   | (4.3   | )    
|                                                                      |                                 | Divestitures                                                                      |                                                      |                                                  | 125.6        |       |              |              |       |                |       |   | 178.3  |              |       |   |      |        |       |   | 303.9  |      
|                                                                      |                                 |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |      
|                                                                      |                                 |                                                                                   |                                                      | Net cash used by investing activities            |              |       | 125.6        |              |        |                | 1.0   |   |        |              | 174.3 |   |       |        |      |   |        |       | 300.9  |  
|                                                                      | Financing activities cash flows |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |       |   |       |        |       |   |       
|                                                                      |                                 | Issuance of long-term debt                                                        |                                                      |                                                  | 11.5         |       |              |              |       |                |       |   |       |              |       |   |      |        |       |   | 11.5   |      
|                                                                      |                                 | Repayments of long-term debt                                                      |                                                      |                                                  | (.3          | )     |              |              |       |                |       |   | (1.0   | )            |       |   |      |        |       |   | (1.3   | )    
|                                                                      |                                 | Decrease in short-term borrowings                                                 |                                                      |                                                  | (232.0       | )     |              |              |       |                |       |   | (79.6  | )            |       |   |      |        |       |   | (311.6 | )    
|                                                                      |                                 | Issuance of common shares                                                         |                                                      |                                                  | .4           |       |              |              |       |                |       |   |       |              |       |   |      |        |       |   | .4     |      
|                                                                      |                                 | Dividends paid                                                                    |                                                      |                                                  | (1.6         | )     |              |              |       |                |       |   |       |              |       |   |      |        |       |   | (1.6   | )    
|                                                                      |                                 |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |      
|                                                                      |                                 |                                                                                   |                                                      | Net cash provided (used) by financing activities |              |       | (222.0       | )            |        |                |      |   |        |              | (80.6 | ) |       |        |      |   |        |       | (302.6 | )
|Intercompany receivables and payables                                 |                                 |                                                                                   | 30.1                                                 |                                                  |              |       | (64.4        | )            |        |                | 34.3  |   |        |              |      |   |       |        |      |  
|Intercompany advances                                                 |                                 |                                                                                   | (44.0                                                | )                                                |              |       | 15.4         |              |        |                | 28.6  |   |        |              |      |   |       |        |      |  
|Effect of exchange rate fluctuations on cash and cash
    equivalents |                                 |                                                                                   |                                                     |                                                  |              |       | .1           |              |        |                | 5.5   |   |        |              |      |   |       |        | 5.6   |  
|Cash flows related to discontinued operations                         |                                 |                                                                                   |                                                     |                                                  |              |       | 32.3         |              |        |                | (39.9 | ) |        |              |      |   |       |        | (7.6  | )
|                                                                      |                                 |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |      
|Increase (decrease) in cash and cash equivalents                      |                                 |                                                                                   | (30.3                                                | )                                                |              |       | (2.3         | )            |        |                | 64.8  |   |        |              |      |   |       |        | 32.2  |  
|Cash and cash equivalents at beginning of year                        |                                 |                                                                                   | 51.7                                                 |                                                  |              |       | 9.7          |              |        |                | 28.7  |   |        |              |      |   |       |        | 90.1  |  
|                                                                      |                                 |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |      
|Cash and cash equivalents at end of year                              |                                 | $                                                                                 | 21.4                                                 |                                                  |              | $     | 7.4          |              |        | $              | 93.5  |   |        | $            |      |   |       | $      | 122.3 |  
|                                                                      |                                 |                                                                                   |                                                      |                                                  |              |       |              |              |        |                |       |   |        |              |      

96



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




















| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP











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SUPPLEMENTARY FINANCIAL INFORMATION


Operating
Results by Quarter (Unaudited)


|                                   |                                            |                                         |       |      |       |   |       |       |   |   |       |      |   |   |       |      |  
|---------------------------------- | ------------------------------------------ | --------------------------------------- | ----- | ---- | ----- | - | ----- | ----- | - | - | ----- | ---- | - | - | ----- | ---- | -
|                                   |                                            | 2004                                    |      
|                                   |                                            |                                         |      
|                                   |                                            | (as restated)                           |      
|                                   |                                            | Qtr 1                                   |       |      | Qtr 2 |   |       | Qtr 3 |   |   | Qtr 4 |     
|                                   |                                            |                                         |       |      |       |   |       |       |   |   |       |     
|                                   |                                            | (In millions, except per-share amounts) |      
|Sales                              |                                            | $                                       | 188.9 |      |       | $ | 191.7 |       |   | $ | 180.5 |      |   | $ | 213.1 |     
|Manufacturing margins              |                                            |                                         | 32.8  |      |       |   | 35.5  |       |   |   | 34.2  |      |   |   | 43.7  |     
|                                   | Percent of sales                           |                                         |       | 17.4 | %     |   |       | 18.5  | % |   |       | 18.9 | % |   |       | 20.5 | %
|Loss from continuing operations(a) |                                            |                                         | (16.0 | )    |       |   | (27.9 | )     |   |   | (5.5  | )    |   |   | (1.9  | )   
|                                   | Per common share  basic and diluted(b)(c) |                                         |       | (.43 | )     |   |       | (.99  | ) |   |       | (.18 | ) |   |       | (.03 | )
|Discontinued operations            |                                            |                                         | (.6   | )    |       |   | .1    |       |   |   |      |      |   |   |      |     
|                                   | Per common share  basic and diluted(b)    |                                         |       | (0.2 | )     |   |       |      |   |   |       |     |   |   |       |     |  
|Net loss                           |                                            |                                         | (16.6 | )    |       |   | (27.8 | )     |   |   | (5.5  | )    |   |   | (1.9  | )   
|                                   | Per common share  basic and diluted(b)(c) |                                         |       | (.45 | )     |   |       | (.99  | ) |   |       | (.18 | ) |   |       | (.03 | )

|                                   |                                         |       |       |      |       |   |       |       |   |   |       |       |   |   |       |      |  
|---------------------------------- | --------------------------------------- | ----- | ----- | ---- | ----- | - | ----- | ----- | - | - | ----- | ----- | - | - | ----- | ---- | -
|                                   |                                         | 2003  |      
|                                   |                                         |       |      
|                                   |                                         | Qtr 1 |       |      | Qtr 2 |   |       | Qtr 3 |   |   | Qtr 4 |      
|                                   |                                         |       |       |      |       |   |       |       |   |   |       |      
|Sales                              |                                         | $     | 190.2 |      |       | $ | 181.6 |       |   | $ | 170.2 |       |   | $ | 197.7 |     
|Manufacturing margins              |                                         |       | 32.0  |      |       |   | 28.2  |       |   |   | 31.6  |       |   |   | 40.8  |     
|                                   | Percent of sales(d)                     |       |       | 16.8 | %     |   |       | 15.5  | % |   |       | 18.6  | % |   |       | 20.6 | %
|Loss from continuing operations(e) |                                         |       | (7.6  | )    |       |   | (88.1 | )     |   |   | (65.3 | )     |   |   | (22.7 | )   
|                                   | Per common share  basic and diluted(b) |       |       | (.21 | )     |   |       | (2.41 | ) |   |       | (1.78 | ) |   |       | (.62 | )
|Discontinued operations            |                                         |       | (.7   | )    |       |   | (3.0  | )     |   |   | (2.0  | )     |   |   | (1.5  | )   
|                                   | Per common share  basic and diluted(b) |       |       | (.02 | )     |   |       | (.08  | ) |   |       | (.05  | ) |   |       | (.04 | )
|Net loss(d)                        |                                         |       | (8.3  | )    |       |   | (91.1 | )     |   |   | (67.3 | )     |   |   | (24.2 | )   
|                                   | Per common share  basic and diluted(b) |       |       | (.23 | )     |   |       | (2.49 | ) |   |       | (1.83 | ) |   |       | (.66 | )






|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Includes restructuring costs of $1.1 million in
    quarter 1, $1.7 million in quarter 2,
    $2.3 million in quarter 3 and $7.9 million in
    quarter 4, in all cases with no tax benefit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(b) |  | As discussed more fully in the notes to the Consolidated
    Financial Statements that are included elsewhere herein, the
    number of shares used to compute earnings (loss) per common
    share data for all periods prior to the fourth quarter of 2004
    has been restated to reflect the effects of a bonus
    element inherent in a rights offering that was completed
    in that quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(c) |  | As discussed more fully in the notes to the Consolidated
    Financial Statements that are included elsewhere herein, the
    Series B Preferred Stock that was issued in the second
    quarter of 2004 includes a beneficial conversion feature arising
    from the fact that the holders thereof are able to acquire
    common shares of the company at an effective conversion price
    that is less than their fair value as of March 12, 2004.
    The beneficial conversion feature was initially assigned a value
    of approximately $18.0 million in the second quarter. This
    amount has been added to the loss from continuing operations and
    net loss for the second quarter in calculating the related loss
    per common share amounts. The value of the beneficial conversion
    feature was subsequently adjusted to $15.9 million in the
    fourth quarter based on an independent appraisal of contingent
    warrants that were issued to the holders of the Series B
    Preferred Stock. The $2.1 million reduction in value has
    been applied to reduce the loss amounts for the
    fourth quarter of 2004 in calculating the applicable
    per-share amounts.
|   
|(d) |  | In the fourth quarter of 2004, the company elected to change its
    method of accounting for certain U.S. plastics machinery
    inventories from the last-in, first-out (LIFO) method to the
    first-in, first-out (FIFO) method, retroactive to the beginning
    of the year. The Consolidated Financial Statements for all prior
    periods have been restated to conform to the 2004 presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   
|(e) |  | Includes restructuring costs of $6.0 million
    ($4.8 million after tax) in quarter 1,
    $6.3 million with no tax benefit in quarter 2,
    $6.4 million ($6.3 million after tax) in
    quarter 3 and $8.4 million ($8.1 million after
    tax) in quarter 4. Also includes goodwill impairment
    charges of $52.3 million in quarter 3 and
    $13.3 million in quarter 4, in both cases with no tax
    benefit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

98



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PART III







|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Managements report on internal control over financial
reporting and the companys independent registered
accounting firms report thereon have each been amended in
this Form 10-K/A to add reference to the restatement as an
effect of the companys material weakness in internal
control over financial reporting related to review of complex
and judgemental accounting issues, but have not been otherwise
updated or modified.


Disclosure Controls and Procedures




Managements Report on Internal Control over Financial
Reporting








| |   |                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | pertain to the maintenance of records that, in reasonable
    detail, accurately and fairly reflect the transactions and
    dispositions of the assets of the issuer;                                                                                                                                                                                         
|
| |  | provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of the company are being made
    only in accordance with authorizations of management and
    directors of the company; and
|
| |  | provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    companys assets that could have a material effect on the
    financial statements.                                                                                                                                       







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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Review of Complex and Judgmental Accounting Issues 
    There are inadequate levels of review of complex and judgmental
    accounting issues. Various audit adjustments were needed to
    correct errors resulting from this internal control deficiency,
    which manifested itself in the determination of deferred tax
    valuation allowances as well as litigation reserves and
    recoverables from third-party insurers. These adjustments are
    reflected in the companys audited financial statements for
    the year ended December 31, 2004. In addition, during the
    fourth quarter of 2005, the company became aware of the need to
    restate its consolidated financial statements due to the failure
    to consider the effect of a beneficial conversion feature on the
    calculation of basic and diluted loss from continuing operations
    per common share and net loss per common share. This error also
    represents an effect of the material weakness in review of
    complex and judgemental accounting issues.





| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The company implemented increased levels of review of complex
    and judgmental accounting issues.                                                     
|
| |  | The company initiated a plan to add personnel with technical
    accounting expertise and began a search for qualified candidates.                      
|
| |  | The company implemented a new policy and guidelines for
    increased, individualized professional development for finance
    and accounting personnel.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Segregation of Duties  There is inadequate
    segregation of incompatible duties with respect to the
    companys manual and computer-based business processes at
    the corporate and operating levels. Such inadequacy in
    segregation of incompatible duties significantly reduced or
    eliminated the effectiveness of many of the companys
    internal controls over the accounts which comprise the
    consolidated financial statements. This material weakness has
    been caused primarily by two factors:



| |   |                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Instances in which, as a result of the companys effort to
    stream-line business processes, individuals are in various
    conflicting roles; and
|
| |  | The use of older computer systems which are not always capable
    of limiting users access to certain transactions.                                



| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | No audit adjustments to the companys audited financial
    statements for the year ended December 31, 2004 resulted
    from this material weakness.
|
| | To address this material weakness, the company will implement,
    based on specific circumstances, one or more measures, which
    will include:    



| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | Reassignment of certain responsibilities in order to eliminate
    incompatible roles;
|
| |  | Implementation of independent reviews of certain completed
    transactions; and      
|
| |  | Further restriction of access to certain sensitive, conflicting
    transactions.     



| |                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Additionally, the company is in the process of implementing a
    company-wide, state-of-the-art enterprise resource system to
    upgrade its overall operating systems. In addition to the many
    operating benefits, the new system will also be capable of
    adequate segregation of duties. The conversion over to this new
    computer system is scheduled to begin in early 2006.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Inventory Valuation  There are insufficient controls
    with respect to the accounting for inventories primarily at one
    major North American manufacturing location. Specifically, the
    Company did not have effective controls to ensure inventory was
    properly valued and to ensure inventory was properly relieved at
    the time of sale. No significant audit adjustments to the
    companys audited financial statements as of
    December 31, 2004 were necessary as a result of this
    condition. In addition, management believes that inventory
    values at that date and the related cost of sales for the year
    ended December 31, 2004 are fairly stated in all material
    respects.

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| |                                                                                                                                                                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | To address this material weakness, the company is implementing
    procedures to improve its inventory controls and documentation
    surrounding inventory valuation. These controls and
    documentation will also be considered as part of the design and
    implementation of the companys new enterprise resource
    system.





Changes in Internal Control




101



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


ON INTERNAL CONTROL OVER FINANCIAL REPORTING














Review of Complex and Judgmental Accounting
Issues




Segregation of Duties


102



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##### Table of Contents



Accounting for Inventories










| |                          
| | -------------------------
| | /s/ Ernst & Young
    LLP









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PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

Item 15(a) (1) & (2)  List of
Financial Statements and Financial Statement Schedules




|                                                                                                                 |  |      |    | 
|---------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                 |  | Page |   
|                                                                                                                 |  |      |   
|Consolidated Statements of Operations  2004, 2003 and
    2002                                                  |  |      | 35 | 
|Consolidated Balance Sheets  2004 and 2003                                                                      |  |      | 36 | 
|Consolidated Statements of Comprehensive Income and
    Shareholders Equity (Deficit)  2004, 2003 and
    2002 |  |      | 37 | 
|Consolidated Statements of Cash Flows  2004, 2003 and
    2002                                                  |  |      | 38 | 
|Notes to Consolidated Financial Statements                                                                       |  |      | 39 | 
|Report of Independent Registered Public Accounting Firm                                                          |  |      | 97 | 
|Supplementary Financial Information                                                                              |  |      | 98 | 







Item 15 (b)  Index to Certain Exhibits and
Financial Statement Schedules




|             |  |                                                                                                                            
|------------ |  | ---------------------------------------------------------------------------------------------------------------------------
|Exhibit 11.1 |  | Statement Regarding Computation of Per-Share Earnings                                                                      
|Exhibit 23.2 |  | Consent of Experts and Counsel                                                                                             
|Exhibit 31.5 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act                                                        
|Exhibit 31.6 |  | Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act                                                        
|Exhibit 32.2 |  | Certification pursuant to 18. U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES






| |              
| | -------------
| | Milacron Inc.



| |     |                     
| | --- | --------------------
| | By: | /s/ Ross A. Anderson

| |                             
| | ----------------------------
| |                             
| | Ross A. Anderson;           
| | Vice President  Finance and
| | Chief Financial Officer     



105