TABLE OF CONTENTS




|           |                                                                                               |  |  |  |  |  |  | 
|---------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I    
|           | Item 1. Business                                                                             
|           | Executive Officers of the Registrant                                                         
|           | Item 2. Properties                                                                           
|           | Item 3. Legal Proceedings                                                                    
|           | Item 4. Submission of Matters to a Vote of Security Holders                                  
|PART II   
|           | Item 5. Market for the Registrants Common Equity and Related Stockholder Matters            
|           | Item 6. Selected Financial Data                                                              
|           | Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
|           | Item 7A. Quantitative and Qualitative Disclosures about Market Risk                          
|           | Item 8. Financial Statements and Supplementary Data                                          
|           | Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|PART III  
|           | Item 10. Directors and Executive Officers of the Registrant                                  
|           | Item 11. Executive Compensation                                                              
|           | Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|           | Item 13. Certain Relationships and Related Transactions                                      
|PART IV   
|           | Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K                     
|           | Item 14 (a) (3) -- List of Exhibits                                                          
|           | Item 14(b) -- Reports on Form 8-K                                                            
|           | Item 14 (c) & (d) -- Index to Certain Exhibits and Financial Statement Schedules             
|           | Schedule II  Valuation and Qualifying Accounts and Reserves                                 
|           | Signatures                                                                                   
|           | Item14 (c)and (d) Index to Certain Exhibits and Financial Statement Schedules               
|Exhibit 11
|Exhibit 21
|Exhibit 23



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##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-K

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

|                          |  |                       
|------------------------- |  | ----------------------
|For the Fiscal Year Ended |  | Commission File Number
|December 31, 2001         |  | 1-8485                

MILACRON INC.

2090 Florence Avenue


Cincinnati, Ohio 45206


(513) 487-5000


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



---

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

|                                                      |  |                                                                           
|----------------------------------------------------- |  | --------------------------------------------------------------------------
|Title of Each Class:
	Common Shares  Par Value $1.00 |  | Name of Each Exchange
	on Which Registered:
	New York Stock Exchange, Inc.

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



| |                          | 
| | ------------------------ | 
| | Yes x               No o | 

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

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

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

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

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



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##### Table of Contents



Milacron Inc.

2001 Form 10-K


Table of Contents


|         |  |                                                                                        |  |      |    | 
|-------- |  | -------------------------------------------------------------------------------------- |  | ---- | -- | 
|         |  |                                                                                        |  | Page
|         |  |                                                                                        |  |     
|        
|PART I   |  |                                                                                        |  |     
|Item 1.  |  | Business                                                                               |  |      | 3  | 
|         |  | Executive Officers of the Registrant                                                   |  |      | 9  | 
|Item 2.  |  | Properties                                                                             |  |      | 10 | 
|Item 3.  |  | Legal Proceedings                                                                      |  |      | 10 | 
|Item 4.  |  | Submission of Matters to a Vote of Security
	Holders                                   |  |      | 10 | 
|PART II  |  |                                                                                        |  |     
|Item 5.  |  | Market for the Registrants Common Equity
	and Related Stockholder Matters             |  |      | 10 | 
|Item 6.  |  | Selected Financial Data                                                                |  |      | 11 | 
|Item 7.  |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |  |      | 12 | 
|Item 7A. |  | Quantitative and Qualitative Disclosures About
	Market Risk                            |  |      | 24 | 
|Item 8.  |  | Financial Statements and Supplementary Data                                            |  |      | 24 | 
|Item 9.  |  | Changes in and Disagreements with Accountants on
	Accounting and Financial Disclosure  |  |      | 49 | 
|PART III |  |                                                                                        |  |     
|Item 10. |  | Directors and Executive Officers of the Registrant                                     |  |      | 49 | 
|Item 11. |  | Executive Compensation                                                                 |  |      | 49 | 
|Item 12. |  | Security Ownership of Certain Beneficial Owners
	and Management                        |  |      | 49 | 
|Item 13. |  | Certain Relationships and Related Transactions                                         |  |      | 49 | 
|PART IV  |  |                                                                                        |  |     
|Item 14. |  | Exhibits, Financial Statement Schedules and
	Reports on Form 8-K                       |  |      | 49 | 
|         |  | Schedule II  Valuation and Qualifying
	Accounts and Reserves                          |  |      | 53 | 
|         |  | Signatures                                                                             |  |      | 54 | 
|         |  | Index to Certain Exhibits and Financial Statement
	Schedules                           |  |      | 55 | 

2



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PART I




Item 1.      Business

General

Milacron is a global manufacturer and distributor
of tools, supplies, machinery and systems to produce plastic and
metal products. We operate in two business segments: plastics
technologies and metalworking technologies. To processors of
plastic products, we sell a broad range of machinery, mold
tooling and ancillary supplies; and to metalworking industries,
we sell a wide variety of cutting tools, abrasives and fluids.


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

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

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

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

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

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

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

Strategic Acquisitions and
Divestitures

Over the past nine years in an effort to expand
our product offering and global presence in both plastics and
metalworking technologies, Milacron has made a series of
acquisitions in both segments. In plastics, we have made a
strong effort to diversify from capital goods into durable goods
and consumables. In metalworking, which is almost entirely
consumables and durables, we expanded our annual revenues of
$108 million from metalworking fluids and abrasives in 1992
to $710 million in 2000 through the addition of several cutting
tool businesses.


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|                          |  |      |  |                              
|------------------------- |  | ---- |  | -----------------------------
|                         
|                         
|Acquisition               |  | Date |  | Product Lines                
|                         
|                         
|Valenite                  |  | 1993 |  | Carbide inserts, tool holders
|Ferromatik                |  | 1993 |  | Injection molding machines   
|Widia                     |  | 1995 |  | Carbide inserts, tool holders
|Talbot Holdings           |  | 1995 |  | Drills, end mills, taps      
|D-M-E                     |  | 1996 |  | Mold bases, mold tooling     
|Data Flute CNC            |  | 1997 |  | Solid carbide end mills      
|Minnesota Twist           |  | 1997 |  | High-speed steel drills      
|Northern Supply           |  | 1998 |  | Plastics processing supplies 
|Wear Technology           |  | 1998 |  | Extruder barrels and screws  
|Autojectors               |  | 1998 |  | Vertical injection machines  
|Uniloy                    |  | 1998 |  | Blow molding systems         
|Master Unit Die           |  | 1998 |  | Mold bases, tooling          
|Werkö                     |  | 1998 |  | High-speed steel drills      
|Nickerson                 |  | 1999 |  | Plastics tooling and supplies
|Producto Chemicals        |  | 1999 |  | Metalworking cleaning fluids 
|Oak International         |  | 1999 |  | Metalforming fluids          
|Akron Extruders           |  | 2000 |  | Single-screw extruders       
|Rite-Tek Canada           |  | 2000 |  | Plastics MRO supplies        
|Ontario Heater and Supply |  | 2000 |  | Plastics MRO supplies        
|Progress Precision        |  | 2001 |  | Extruder barrels and screws  
|Reform Flachstahl         |  | 2001 |  | Mold bases and components    
|EOC Normalien             |  | 2001 |  | Mold bases and components    
|                         

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

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

|                         |  |      |      |               |  |                            |  | 
|------------------------ |  | ---- | ---- | ------------- |  | -------------------------- |  | 
|                        
|                        
|Divestiture              |  | Date |      | Product Lines
|                        
|                        
|Sano                     |  |      | 1994 |               |  | Plastic blown film systems
|American Mine Tool       |  |      | 1995 |               |  | Carbide mining tools      
|Electronic Systems       |  |      | 1995 |               |  | Machine controls          
|Machine Tools            |  |      | 1998 |               |  | Metalworking machinery    
|European Extrusion       |  |      | 1999 |               |  | Plastics extrusion systems
|Widia Magnet Engineering |  |      | 2000 |               |  | Industrial magnets        
|                        

Cost Cutting and Efficiency
Initiatives

In the normal course of business, we continually
search for opportunities to reduce costs and improve efficiency.
In 2000 and 2001, we concentrated on two major efforts in this
area: company-wide efficiency programs and the consolidation of
our European blow molding and mold component operations.


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

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

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

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

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of this restructuring were approximately
$10 million. To complete this ongoing restructuring
program, in the first half of 2002 we expect to eliminate
another 600 positions, while recording approximately
$5 million, or $.30 per share, in after-tax charges. Net
cash costs of the restructuring in 2002 are expected to be
approximately $20 million with anticipated annual benefits
of more than $40 million.


Research and Development, New Product 
 Development and Capital Expenditures

At Milacron, we emphasize efficient investment in
research and development and in new capital equipment in support
of rapid new product introductions to enhance our growth and
global competitive position. To this end, we invested
$30.8 million, or 2.4% of sales, in R&D in 2001,
compared to $34.4 million, or 2.2% of sales, in 2000.


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

Patents

Milacron holds a number of patents pertaining to
both plastics and metalworking technologies, none of which is
material to either business segment.


Employees

The average number of employees at Milacron was
10,416 people in 2001. Of these, 5,520 were outside the
U.S. As of year-end 2001, our employment was 9,996 people.


Backlog

The backlog of unfilled orders was
$130 million at the end of 2001 and $181 million at
the end of 2000. The decrease is due primarily to lower order
levels for all types of plastics machinery in North America. The
backlog at year-end 2001, substantially all of which is firm, is
expected to be delivered in 2002.


Segment Information

Segment and geographic information for the years
ended December 31, 2001, 2000 and 1999 is included in the
notes to Milacrons consolidated financial statements on
pages 45 through 47 of this Form 10-K.


Plastics Technologies Business

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

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

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

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

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

|                      |  |                               
|--------------------- |  | ------------------------------
|                     
|                     
|Business              |  | Product Lines                 
|                     
|                     
|Ferromatik Milacron   |  | Injection molding systems     
|Uniloy Milacron       |  | Blow molding systems and molds
|ExtrusionTek Milacron |  | Extrusion systems             
|D-M-E                 |  | Mold bases and related tooling
|MRO                   |  | Aftermarket parts and supplies
|                     

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

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

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

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

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

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

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

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

|                                  |  |                                                                                                       
|--------------------------------- |  | ------------------------------------------------------------------------------------------------------
|                                 
|                                 
|Facility Location                 |  | Products                                                                                              
|                                 
|                                 
|Ahmedabad, India                  |  | Injection molding machines                                                                            
|Batavia, Ohio                     |  | Injection machines, all-electric injection
	molding machines, blow molding machines, extrusion systems
|Charlevoix, Michigan              |  | Mold components                                                                                       
|Corby, England                    |  | Injection molding components                                                                          
|Fulda, Germany                    |  | Mold components                                                                                       
|Greenville, Michigan*             |  | Mold base manufacturing                                                                               
|Lewistown, Pennsylvania           |  | Mold components                                                                                       
|Madison Heights, Michigan         |  | Mold base components                                                                                  
|Magenta, Italy*                   |  | Blow molding machines                                                                                 
|Mahlberg, Germany                 |  | Mold components                                                                                       
|Malterdingen, Germany             |  | Injection molding machines                                                                            
|Manchester, Michigan              |  | Blow molding machines                                                                                 
|McPherson, Kansas*                |  | Extrusion screws and barrels                                                                          
|Mechelen, Belgium                 |  | Mold components                                                                                       
|Melrose Park, Illinois            |  | Special mold base components                                                                          
|Mississauga, Ontario, Canada      |  | Extrusion screws                                                                                      
|Monterey Park, California         |  | Special mold base components                                                                          
|Mt. Orab, Ohio                    |  | Plastics machinery parts                                                                              
|Neuenstadt am Kocher, Germany (1) |  | Special mold base components                                                                          
|Policka, Czech Republic           |  | Blow molding machines                                                                                 
|Windsor, Ontario, Canada          |  | Machinery for mold bases                                                                              
|Youngwood, Pennsylvania           |  | Mold bases and components                                                                             
|                                 



|    |                           
|--- | --------------------------
|(1) | Closing in Quarter 1, 2002

|  |       
|- | ------
|* | Leased

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

Metalworking Technologies Business

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

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

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

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

|                                  |  |                                                                                         
|--------------------------------- |  | ----------------------------------------------------------------------------------------
|                                 
|                                 
|Business                          |  | Product Lines                                                                           
|                                 
|                                 
|Widia, Valenite                   |  | Carbide inserts, tool holders, die and wear
	parts, carbide rods                        
|Round tools
	(many brands)        |  | Carbide and high-speed steel drills, taps and end
	mills                                
|Metalworking fluids (many brands) |  | Oil-based, water-soluble and synthetic
	metalcutting fluids, cleaning and forming fluids
|Abrasives
	(many brands)          |  | Resinoid, vitrified, super abrasive and synthetic
	grinding wheels                      
|                                 

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

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cants, use of ceramic and super abrasives,
high-performance cutting tool coatings, and product designs
using computer modeling. More than two thirds of this
segments 2001 sales were consumable products, which are
depleted during the metalworking process, offering us a
continuous opportunity to sell replacement products to our
customers.


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

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

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

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

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

|                                                         |  |                                                                          
|-------------------------------------------------------- |  | -------------------------------------------------------------------------
|                                                        
|                                                        
|Facility Location                                        |  | Products                                                                 
|                                                        
|                                                        
|Altenburg, Germany *                                     |  | Taps                                                                     
|Andrezieux, France                                       |  | Carbide inserts                                                          
|Bangalore, India                                         |  | Carbide inserts, tool holders, carbide wear
	parts, special machine tools
|Chisholm, Minnesota                                      |  | High-speed steel drills                                                  
|Cincinnati, Ohio                                         |  | Metalworking fluids, precision grinding wheels                           
|Corby, England *                                         |  | Metalforming fluids                                                      
|Detroit, Michigan
	(5 plants in metro area, of which 3*) |  | Carbide inserts, special steel products, gaging
	systems                 
|Essen, Germany
	(2 plants)                               |  | Carbide inserts, metallurgical powders, carbide
	rods                    
|Gainesville, Texas *                                     |  | Tool holding systems for turning, milling and
	boring                    
|Grenada, Mississippi *                                   |  | Metalforming fluids                                                      
|Hardenberg, The Netherlands                              |  | Carbide wear parts                                                       
|Königsee, Germany *                                      |  | High-speed steel drills and taps                                         
|Lichtenau, Germany                                       |  | Tool holders                                                             
|Livonia, Michigan *                                      |  | Process cleaners, corrosion inhibitors, specialty
	products              
|Millersburg, Pennsylvania
	(2 plants)                    |  | End mills, taps, counterbores                                            
|Nogales, Mexico *                                        |  | Resin grinding wheels                                                    
|Patancheru, India                                        |  | Mine tools                                                               
|Pittsfield, Massachusetts
	(2 plants)                    |  | Carbide end mills                                                        
|Sinsheim, Germany *                                      |  | Special steel tooling                                                    
|Sturgis, Michigan                                        |  | Metalforming fluids                                                      
|Ulsan, South Korea                                       |  | Metalworking fluids                                                      
|Vitoria, Spain                                           |  | Brazed and insert carbide tooling                                        
|Vlaardingen, The Netherlands                             |  | Metalworking fluids                                                      

8



---



##### Table of Contents



|                                                       |  |                                                         
|------------------------------------------------------ |  | --------------------------------------------------------
|                                                      
|                                                      
|Facility Location                                      |  | Products                                                
|                                                      
|                                                      
|West Branch, Michigan
	(2 plants)                      |  | Metallurgical powders, carbide rods, carbide wear
	parts
|Westminster and Seneca, South Carolina
	(6 plants) (1) |  | Carbide and diamond inserts                             
|                                                      



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

|  |       
|- | ------
|* | Leased

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




Executive Officers of the Registrant

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

|                         |  |                                                            |  |                                                                                                                                                                                                                                                                                                                                  
|------------------------ |  | ---------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                        
|                        
|                         |  | Positions Held During                                     
|Name and Age             |  | Position                                                   |  | Last Five Years                                                                                                                                                                                                                                                                                                                  
|                        
|                        
|Ronald D. Brown
	(48)    |  | Chairman, President and Chief Executive Officer,
	Director |  | Elected Chairman, President and Chief Executive
	Officer in 2001. Prior thereto was President and Chief Operating
	Officer from 1999, Vice President  Finance and
	Administration and Chief Financial Officer from 1997 and Vice
	President  Finance and Chief Financial Officer from
	1993. Has served as Director since 1999.
|James R. Christie
	(56)  |  | Group Vice President  Metalworking
	Technologies          |  | Elected Group Vice President 
	Metalworking Technologies in February, 2000. Prior thereto was
	Vice President  Metalworking Technologies from 1997
	and President of Valenite from 1993.                                                                                                                                       
|Harold J. Faig
	(53)     |  | Group Vice President  Plastics
	Technologies              |  | Elected Group Vice President  Plastics
	Technologies in 1994.                                                                                                                                                                                                                                                                   
|Barbara G. Kasting
	(49) |  | Vice President  Human Resources                           |  | Elected Vice President  Human
	Resources in 1997. Prior thereto was Assistant Treasurer from
	1995 and Director of Treasury Operations from 1994.                                                                                                                                                                               
|Robert P. Lienesch
	(56) |  | Vice President  Finance and Chief
	Financial Officer      |  | Elected Vice President  Finance and
	Chief Financial Officer in 1999. Also served as Treasurer until
	2001. Elected Vice President and Treasurer in 1998. Prior
	thereto was Controller from 1989.                                                                                                                              
|Hugh C. ODonnell
	(50)  |  | Vice President, General Counsel and Secretary              |  | Elected Vice President, General Counsel and
	Secretary in 1999. Prior thereto was Corporate Counsel from 1992.                                                                                                                                                                                                                   
|Jerome L. Fedders
	(58)  |  | Controller                                                 |  | Elected Controller in 1998. Prior thereto was
	Group Controller, Plastics Technologies from 1994.                                                                                                                                                                                                                                
|John C. Francy
	(37)     |  | Treasurer                                                  |  | Elected Treasurer in 2001. Prior thereto was
	Assistant Treasurer from 1998, Director of Treasury Operations
	from 1997 and Controller of Machine Tool Marketing Worldwide
	from 1995.                                                                                                                                           
|                        

Notes:


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

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

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

9



---



##### Table of Contents






Item 2.   Properties

We lease our corporate headquarters building from
a third party. This building is located in Cincinnati, Ohio.


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




Item 3.   Legal Proceedings

In the opinion of management and counsel, there
are no material pending legal proceedings to which the company
or any of its subsidiaries is a party or of which any of its
property is the subject.







|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of
security holders during the fourth quarter of 2001.







PART II







|        |                                                                           
|------- | --------------------------------------------------------------------------
|Item 5. | Market for the Registrants Common Equity and Related
	Stockholder Matters

The companys common shares are listed on
the New York Stock Exchange. Such shares are also traded on the
Cincinnati Stock Exchange, Boston Stock Exchange, Pacific Stock
Exchange, Philadelphia Stock Exchange and Midwest Stock
Exchange, with options traded on the Philadelphia Stock
Exchange. As of February 28, 2002, there were approximately
4,495 holders of record of the companys common shares. The
companys Preferred shares are not actively traded.


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

|                              |              |      |       |       |  |   |       |       | 
|----------------------------- | ------------ | ---- | ----- | ----- |  | - | ----- | ----- | 
|                             
|                             
|Common Stock Price Range      |              |     
|                             
|                             
|                              |              | High |       | Low  
|                             
|                             
|2000, quarter ended
	March 31 |              | $    | 15.78 |       |  | $ | 12.06 |      
|                              | June 30      |      |       | 18.25 |  |   |       | 13.50 | 
|                              | September 30 |      |       | 17.25 |  |   |       | 13.31 | 
|                              | December 31  |      |       | 16.56 |  |   |       | 13.44 | 
|2001, quarter ended
	March 31 |              | $    | 22.94 |       |  | $ | 15.25 |      
|                              | June 30      |      |       | 19.35 |  |   |       | 15.67 | 
|                              | September 30 |      |       | 19.00 |  |   |       | 11.75 | 
|                              | December 31  |      |       | 16.85 |  |   |       | 10.82 | 
|                             

10



---



##### Table of Contents






Item 6.   Selected Financial Data

|                                                                             |                                         |         |         |       |       |      |         |       |      |      |         |       |      |      |         |       |      |      |         |       |      |   |         |       |      |   |         |      |      |   |       |      |      |   |        |      |       |      |       |      |     | 
|---------------------------------------------------------------------------- | --------------------------------------- | ------- | ------- | ----- | ----- | ---- | ------- | ----- | ---- | ---- | ------- | ----- | ---- | ---- | ------- | ----- | ---- | ---- | ------- | ----- | ---- | - | ------- | ----- | ---- | - | ------- | ---- | ---- | - | ----- | ---- | ---- | - | ------ | ---- | ----- | ---- | ----- | ---- | --- | 
|                                                                            
|                                                                            
|(Dollars in millions,                                                        |                                         |        
|except per-share amounts)                                                    |                                         | 2001    |         | 2000  |       | 1999 |         | 1998  |      | 1997 |         | 1996  |      | 1995 |         | 1994  |      | 1993 |         | 1992 
|                                                                            
|                                                                            
|Summary of Operations                                                        |                                         |         |         |       |       |      |         |       |      |      |         |       |      |      |         |       |      |      |         |       |      |   |         |       |      |   |         |      |      |   |       |      |      |   |        |      |       |      |       |     
|Sales                                                                        |                                         | $       | 1,262.7 |       |       | $    | 1,584.2 |       |      | $    | 1,624.7 |       |      | $    | 1,514.7 |       |      | $    | 1,438.7 |       |      | $ | 1,357.9 |       |      | $ | 1,240.3 |      |      | $ | 858.6 |      |      | $ | 674.4  |      |       | $    | 409.5 |     
|Earnings (loss) from continuing operations before
        nonrecurring items |                                         |         | (16.6   | )     |       |      | 73.4    |       |      |      | 70.9    |       |      |      | 75.4    |       |      |      | 69.1    |       |      |   | 53.8    |       |      |   | 49.2    |      |      |   | 31.2  |      |      |   | 16.7   |      |       |      | 6.9   |     
|                                                                             | Percent of sales                        |         |         | -1.3  | %     |      |         | 4.6   | %    |      |         | 4.4   | %    |      |         | 5.0   | %    |      |         | 4.8   | %    |   |         | 4.0   | %    |   |         | 4.0  | %    |   |       | 3.6  | %    |   |        | 2.5  | %     |      |       | 1.7  | %  
|                                                                             | Percent of average shareholders equity |         |         | -3.6  | %     |      |         | 15.1  | %    |      |         | 14.7  | %    |      |         | 15.9  | %    |      |         | 15.1  | %    |   |         | 15.0  | %    |   |         | 23.0 | %    |   |       | 22.1 | %    |   |        | 12.9 | %     |      |       | 5.2  | %  
|Nonrecurring items after tax                                                 |                                         |         | (19.1   | )(a)  |       |      | (1.1    | )(b)  |      |      | (.8     | )(c)  |      |      |        |       |      |      |        |       |      |   |        |       |      |   | (3.8    | )(d) |      |   |      |      |      |   | (22.8  | )(e) |       |      |      |     
|Earnings (loss) from continuing operations                                   |                                         |         | (35.7   | )     |       |      | 72.3    |       |      |      | 70.1    |       |      |      | 75.4    |       |      |      | 69.1    |       |      |   | 53.8    |       |      |   | 45.4    |      |      |   | 31.2  |      |      |   | (6.1   | )    |       |      | 6.9   |     
|                                                                             | Per common share                        |         |         |       |       |      |         |       |      |      |         |       |      |      |         |       |      |      |         |       |      |   |         |       |      |   |         |      |      |   |       |      |      |   |        |      |       |      |       |      |    
|                                                                             |                                         | Basic   |         |       | (1.08 | )    |         |       | 2.06 |      |         |       | 1.90 |      |         |       | 1.93 |      |         |       | 1.74 |   |         |       | 1.42 |   |         |      | 1.33 |   |       |      | .93  |   |        |      | (.20  | )    |       |      | .24 | 
|                                                                             |                                         | Diluted |         |       | (1.08 | )(f) |         |       | 2.06 |      |         |       | 1.89 |      |         |       | 1.91 |      |         |       | 1.72 |   |         |       | 1.41 |   |         |      | 1.32 |   |       |      | .92  |   |        |      | (.20  | )(f) |       |      | .24 | 
|Earnings (loss) from discontinued operations                                 |                                         |         |        |       |       |      |        |       |      |      |        |       |      |      | (33.9   | )(g)  |      |      | 11.5    |       |      |   | 12.5    |       |      |   | 60.2    | (g)  |      |   | 6.5   |      |      |   | (39.3  | )(g) |       |      | 9.2   |     
|                                                                             | Per common share                        |         |         |       |       |      |         |       |      |      |         |       |      |      |         |       |      |      |         |       |      |   |         |       |      |   |         |      |      |   |       |      |      |   |        |      |       |      |       |      |    
|                                                                             |                                         | Basic   |         |       |      |      |         |       |     |      |         |       |     |      |         |       | (.87 | )    |         |       | .29  |   |         |       | .33  |   |         |      | 1.78 |   |       |      | .19  |   |        |      | (1.26 | )    |       |      | .34 | 
|                                                                             |                                         | Diluted |         |       |      |      |         |       |     |      |         |       |     |      |         |       | (.86 | )    |         |       | .29  |   |         |       | .33  |   |         |      | 1.75 |   |       |      | .19  |   |        |      | (1.26 | )(f) |       |      | .33 | 
|Net earnings (loss)                                                          |                                         |         | (35.7   | )     |       |      | 72.3    |       |      |      | 70.1    |       |      |      | 41.5    |       |      |      | 80.6    |       |      |   | 66.3    |       |      |   | 105.6   |      |      |   | 37.7  |      |      |   | (101.9 | )(h) |       |      | 21.5  | (h) 
|                                                                             | Per common share                        |         |         |       |       |      |         |       |      |      |         |       |      |      |         |       |      |      |         |       |      |   |         |       |      |   |         |      |      |   |       |      |      |   |        |      |       |      |       |      |    
|                                                                             |                                         | Basic   |         |       | (1.08 | )    |         |       | 2.06 |      |         |       | 1.90 |      |         |       | 1.06 |      |         |       | 2.03 |   |         |       | 1.75 |   |         |      | 3.11 |   |       |      | 1.12 |   |        |      | (3.26 | )    |       |      | .78 | 
|                                                                             |                                         | Diluted |         |       | (1.08 | )(f) |         |       | 2.06 |      |         |       | 1.89 |      |         |       | 1.05 |      |         |       | 2.01 |   |         |       | 1.74 |   |         |      | 3.07 |   |       |      | 1.11 |   |        |      | (3.26 | )(f) |       |      | .77 | 
|                                                                            
|Financial Position at Year-End                                               |                                         |         |         |       |       |      |         |       |      |      |         |       |      |      |         |       |      |      |         |       |      |   |         |       |      |   |         |      |      |   |       |      |      |   |        |      |       |      |       |     
|Working capital                                                              |                                         |         | 306.2   |       |       |      | 249.9   |       |      |      | 160.7   |       |      |      | 179.6   |       |      |      | 325.7   |       |      |   | 318.3   |       |      |   | 392.7   |      |      |   | 151.4 |      |      |   | 114.3  |      |       |      | 191.8 |     
|Property, plant and equipment-net                                            |                                         |         | 295.5   |       |       |      | 305.5   |       |      |      | 323.2   |       |      |      | 350.9   |       |      |      | 343.1   |       |      |   | 319.1   |       |      |   | 265.5   |      |      |   | 198.8 |      |      |   | 184.0  |      |       |      | 121.1 |     
|Total assets                                                                 |                                         |         | 1,512.3 |       |       |      | 1,464.9 |       |      |      | 1,536.7 |       |      |      | 1,557.1 |       |      |      | 1,392.5 |       |      |   | 1,336.3 |       |      |   | 1,173.7 |      |      |   | 787.6 |      |      |   | 729.6  |      |       |      | 578.9 |     
|Long-term debt                                                               |                                         |         | 513.3   |       |       |      | 382.6   |       |      |      | 298.1   |       |      |      | 335.7   |       |      |      | 304.2   |       |      |   | 301.9   |       |      |   | 332.2   |      |      |   | 143.0 |      |      |   | 107.6  |      |       |      | 154.4 |     
|Total debt                                                                   |                                         |         | 603.6   |       |       |      | 476.6   |       |      |      | 522.8   |       |      |      | 520.9   |       |      |      | 371.7   |       |      |   | 372.8   |       |      |   | 355.8   |      |      |   | 226.9 |      |      |   | 185.2  |      |       |      | 175.6 |     
|Shareholders equity                                                         |                                         |         | 434.9   |       |       |      | 484.4   |       |      |      | 490.9   |       |      |      | 476.6   |       |      |      | 471.9   |       |      |   | 446.2   |       |      |   | 270.7   |      |      |   | 157.8 |      |      |   | 124.1  |      |       |      | 134.4 |     
|                                                                             | Per common share                        |         |         | 12.80 |       |      |         | 14.37 |      |      |         | 13.18 |      |      |         | 12.45 |      |      |         | 11.77 |      |   |         | 11.06 |      |   |         | 7.72 |      |   |       | 4.50 |      |   |        | 3.53 |       |      |       | 4.67 |    
|                                                                            
|Other Data                                                                   |                                         |         |         |       |       |      |         |       |      |      |         |       |      |      |         |       |      |      |         |       |      |   |         |       |      |   |         |      |      |   |       |      |      |   |        |      |       |      |       |     
|Dividends paid to common shareholders                                        |                                         |         | 12.4    |       |       |      | 16.8    |       |      |      | 17.9    |       |      |      | 18.8    |       |      |      | 16.8    |       |      |   | 13.4    |       |      |   | 12.3    |      |      |   | 12.2  |      |      |   | 11.6   |      |       |      | 10.0  |     
|                                                                             | Per common share                        |         |         | .37   |       |      |         | .48   |      |      |         | .48   |      |      |         | .48   |      |      |         | .42   |      |   |         | .36   |      |   |         | .36  |      |   |       | .36  |      |   |        | .36  |       |      |       | .36  |    
|Capital expenditures                                                         |                                         |         | 31.6    |       |       |      | 47.0    |       |      |      | 47.3    |       |      |      | 81.4    |       |      |      | 79.5    |       |      |   | 65.2    |       |      |   | 52.3    |      |      |   | 43.0  |      |      |   | 23.4   |      |       |      | 17.6  |     
|Depreciation and amortization                                                |                                         |         | 59.2    |       |       |      | 58.4    |       |      |      | 58.3    |       |      |      | 57.4    |       |      |      | 53.7    |       |      |   | 50.9    |       |      |   | 43.6    |      |      |   | 28.6  |      |      |   | 26.1   |      |       |      | 20.9  |     
|Backlog of unfilled orders at year-end                                       |                                         |         | 129.8   |       |       |      | 181.3   |       |      |      | 242.9   |       |      |      | 246.5   |       |      |      | 195.6   |       |      |   | 212.2   |       |      |   | 226.7   |      |      |   | 169.7 |      |      |   | 118.7  |      |       |      | 69.7  |     
|Employees (average)                                                          |                                         |         | 10,416  |       |       |      | 10,922  |       |      |      | 11,758  |       |      |      | 10,993  |       |      |      | 10,450  |       |      |   | 10,466  |       |      |   | 8,840   |      |      |   | 5,812 |      |      |   | 4,427  |      |       |      | 3,042 |     
|                                                                            

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Represents restructuring costs of $30.4 million
        ($19.1 million after tax).                                                                                                                                                                                                                                                                                                                                                                 
|(b) | Represents a gain of $1.5 million ($.8 million
        after tax) on the sale of the companys industrial magnets
        business and restructuring costs of $2.7 million ($1.9 million
        after tax).                                                                                                                                                                                                                                       
|(c) | Represents a gain of $13.1 million ($10.1 million
        after tax) on the sale of the companys European plastics
        extrusion systems business and restructuring costs of $16.2
        million ($10.9 million after tax).                                                                                                                                                                                                                 
|(d) | Represents a gain of $5.0 million ($4.0 million
        after tax) on the sale of the companys American Mine Tool
        business and a charge of $9.8 million ($7.8 million after tax)
        for the integration of certain Widia and Valenite operations.                                                                                                                                                                                    
|(e) | Represents a charge of $22.8 million (with no
        current tax effect) for the disposition of the companys
        Sano business.                                                                                                                                                                                                                                                                                                              
|(f) | For 2001 and 1993, diluted earnings per common
        share is equal to basic earnings per share because the inclusion
        of potentially dilutive securities would result in a smaller
        loss per common share.                                                                                                                                                                                                                        
|(g) | In 1998, includes a loss of $45.9 million ($35.2
        million after tax) on the sale of the companys machine
        tools segment. In 1995, includes a gain of $66.0 million ($52.4
        million after tax) on the sale of the companys Electronic
        Systems Division. In 1993, includes a charge of $47.1 million
        (with no current tax effect) for the consolidation of U.S.
        machine tool manufacturing operations.
|(h) | In 1993, includes an after-tax extraordinary
        charge of $4.4 million, or $.14 per common share, for loss on
        early extinguishment of debt and an after-tax charge of $52.1
        million, or $1.66 per common share, for the cumulative effect of
        changes in methods of accounting. In 1992, includes an
        extraordinary tax benefit from loss carryforward of $5.4
        million, or $.20 per common share.       

11



---



##### Table of Contents








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

Results of Operations

Milacron operates in two business segments:
plastics technologies and metalworking technologies.


Acquisitions

In July, 1999, we acquired Nickerson Machinery
Inc., Pliers International Inc., and Plastic Moulding Supply
Ltd. (collectively, Nickerson). With annual sales of
$7 million as of the acquisition date, Nickerson sells
supplies and equipment for plastics processing through two
catalog distribution centers in the U.S. and one in the U.K. The
operation in the U.K. also manufactures and refurbishes screws
and barrels for small injection molding machines.


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

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

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

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

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

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

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

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

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

Divestitures of Businesses

In December, 1999, we completed the sale of our
European extrusion machinery business, which was headquartered
in Vienna, Austria, for cash proceeds of $44 million
including post-closing adjustments. The pretax gain on the sale
was $13.1 million ($10.1 million after tax). The
European extrusion business had sales to unaffiliated customers
of $62 million in 1999, principally to markets in Europe,
Asia and South America. The business was sold to redeploy assets
to other more strategic businesses.


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

Presence Outside the U.S.

In recent years, Milacrons growth outside
the U.S. has allowed it to become more globally balanced. For
2001, markets outside the U.S. represented the following
percentages of our consolidated sales: Europe 28%; Asia 8%;
Canada and Mexico 7%; and the rest of the world 3%. As a result
of this geographic mix, foreign currency exchange rate
fluctuations affect the translation of our sales and earnings,
as well as consolidated shareholders equity. During 2001,
the weighted-average exchange rate of the euro


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was weaker in relation to the U.S. dollar than in
2000. As a result, Milacron experienced unfavorable translation
effects on new orders and sales of $21 million. The
strength of the euro also adversely affected consolidated
earnings before interest and taxes by $2 million in 2001
and more than $3 million in 2000.


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

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

Significant Accounting Policies and Judgments

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

Deferred Tax Assets and Valuation
Allowances

At December 31, 2001, Milacron had
significant deferred tax assets related principally to U.S. and
non-U.S. net operating loss and tax credit carryforwards and to
expenses that have been deducted for financial reporting
purposes but which are not yet deductible for income tax
reporting. At December 31, 2001, we had provided valuation
allowances against certain of these assets. Valuation allowances
serve to reduce the recorded deferred tax assets to amounts
reasonably expected to be realized as tax savings in the future.
The establishment of valuation allowances and their subsequent
adjustment requires a significant amount of judgment because the
realization of deferred tax assets  particularly
those assets related to net operating loss
carryforwards  is generally contingent on the
generation of taxable income and the reversal of deferred tax
liabilities in the future. In determining the need for valuation
allowances, management considers its three year internal
operating plans, which are based on the current economic
environment, managements best estimate of future economic
conditions in the countries in which the company operates, and
the effect of potential economic changes on the companys
various operations. If managements current estimates and
the related assumptions change in the future, Milacron may be
required to record new valuation allowances or increase the
allowances that are already recorded which would result in
additional income tax expense in the period of the change.
Conversely, reductions of valuation allowances as a result of
changes in estimates or assumptions would have a beneficial
effect on Milacrons provision for income taxes.


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

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

Accounts Receivable and Inventory
Reserves

Milacrons internal accounting policies
require that each of its operations maintain appropriate
reserves for uncollectible receivables and inventory
obsolescence in accordance with generally accepted accounting
principles. Because of the diversity of Milacrons
customers and product lines, the specific procedures used to
calculate these reserves vary by location but must conform to
company


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guidelines. Reserves are required to be reviewed
and adjusted as necessary on a quarterly basis.


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

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

Impairment of Property, Plant and Equipment
and Goodwill

Milacron reviews the carrying values of its
long-lived assets and goodwill annually. In 2001 and prior
years, these reviews were conducted by comparing the estimates
of undiscounted future cash flows that are included in
Milacrons three year internal operating plans to the
carrying values of the related assets. No growth in operating
cash flows beyond the third year is assumed. Under this
methodology, impairment would be deemed to exist if the carrying
values exceeded the expected future cash flow amounts.


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

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

Insurance Reserves

Through its wholly-owned insurance subsidiary,
Milacron Assurance Ltd. (MAL), Milacron is primarily
self-insured for many types of risks, including general
liability, product liability, environmental claims and
workers compensation for certain domestic employees. MAL,
which is incorporated in Bermuda and is subject to the insurance
laws and regulations of that jurisdiction, establishes reserves
commensurate with known or estimated exposures under the
policies it issues to Milacron. Exposure for general and product
liability claims is subject to reinsurance coverage and excess
liability coverage. Workers compensation claims in excess
of certain limits are insured with commercial carriers. At
December 31, 2001, MAL had reserves for known claims and
incurred but not reported claims under all coverages totaling
$25.5 million. This amount is included in long-term accrued
liabilities in the Consolidated Balance Sheet at that date.


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

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incurred but not reported claims. For certain
types of exposures, MAL and the company utilize actuarially
calculated estimates prepared by outside consultants to ensure
the adequacy of the reserves. Reserves are reviewed and adjusted
quarterly based on all evidence available as of the respective
balance sheet dates. While the ultimate amount of MALs
exposure to claims is dependent on future events that cannot be
predicted with certainty, management believes that the recorded
reserves are adequate in the circumstances. However, claims in
excess of the recorded amounts may adversely affect earnings in
the future when additional evidence becomes available.


Pensions

Milacron maintains defined benefit and defined
contribution pension plans that provide retirement benefits to
substantially all U.S. employees and certain non-U.S. employees.
The most significant of these plans is the principal defined
benefit plan for U.S. employees, which is also the only major
plan that is funded. In 2001, Milacron recorded pension income
of $10.1 million related to this plan and expense of
$12.0 million for the other plans.


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

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

2001 Compared to 2000

New Orders and Backlog

Consolidated new orders in 2001 were
$1,224 million, a decrease of $329 million, or 21%, in
relation to orders of $1,553 million in 2000. Unfavorable
currency effects and the sale of the industrial magnets business
(see Divestitures of Businesses) contributed $46 million to
the decrease. Excluding these factors, consolidated orders
decreased by more than 18%. Orders for both segments were
penalized by low rates of industrial production in North
America. Orders for plastics processing machinery were also
penalized by depressed levels of capital spending, a trend that
can be expected to continue for all or most of 2002. While order
levels in Europe generally decreased to a lesser degree than in
North America, economic conditions in that region began to
soften in the latter part of the year.


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

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

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European orders for metalworking fluids
approximated the level achieved in 2000.


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

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

Sales

Consolidated sales in 2001 were
$1,263 million, a decrease of $321 million, or 20%, in
relation to $1,584 million of sales in 2000. Adverse
currency effects of $21 million and the sale of the
industrial magnets business accounted for approximately 15% of
the decrease. The remainder resulted principally from the low
levels of industrial production in North America, the related
decrease in capital spending and, to a lesser degree, a
softening in economic conditions in Europe in the latter part of
the year.


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

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

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

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

Margins, Costs and Expenses

Excluding restructuring costs related to product
line discontinuation and other adjustments of inventory carrying
values totaling $3.6 million, our consolidated
manufacturing margin in 2001 was 19.6% compared to 25.9% in
2000. Including restructuring costs, manufacturing margins for
2001 were 19.3%. Low sales volume and the related
underabsorption of manufacturing costs penalized the margins of
both segments, especially in the second half of the year. As
discussed below, problems arising from the reorganization of
Uniloys Italian operations also penalized the margins of
the plastics technologies segment. In addition, increases in the
prices of certain raw materials used in the production of
carbide metalcutting tools adversely affected the margins and
profitability of the metalworking technologies segment for much
of 2001. However, prices for these materials decreased somewhat
late in the year.


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

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demand and implemented increasingly stringent
cost reduction measures throughout our operations. In the first
two quarters of 2001, we eliminated approximately
750 positions in North America in response to low order and
shipment levels. During the third and fourth quarters, we
announced plans to further reduce our cost structure and
break-even point by consolidating a number of smaller
manufacturing facilities and further reduce general overhead
levels (see Restructuring Costs). These actions in 2001 are in
addition to the programs to improve operating efficiency that
were initiated in 1999 and substantially completed in 2000. We
are also making structural improvements in the way we run our
businesses, including the use of Six Sigma and lean
manufacturing techniques throughout our operations to reduce
cycle times and working capital requirements.


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

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

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

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

Restructuring Costs

In 1999, we initiated two separate programs to
improve operating efficiency and strengthen synergies between
certain recently acquired businesses and our previously existing
operations. These actions had the effect of reducing pretax
earnings in 2000 by $2.7 million ($1.9 million after
tax).


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

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

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

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

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

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

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

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

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

For 2001, Milacrons loss before income
taxes and minority shareholders interests was
$80.3 million compared to earnings of $100.7 million
in 2000. The amount for 2001 includes restructuring costs of
$30.4 million compared to $2.7 million in 2000.
Excluding restructuring, Milacrons 2001 pretax loss was
$49.9 million. The same factors that caused the significant
reductions in order levels and sales  low levels of
industrial production and significantly lower levels of capital
spending in the plastics processing industry  were
the principal reasons for the adverse comparison to 2000.


Income Taxes

During 2001, Milacron recorded a net benefit
related to income taxes due to the combined effects of operating
losses in the U.S. and a favorable effective tax rate for
non-U.S. operations. The losses incurred by our U.S. operations
resulted in tax benefits based on the federal statutory rate and
the companys effective tax rate for state and local tax
purposes, in both cases adjusted for permanent differences and
applicable credits. The favorable tax rate for non-U.S.
operations was due in part to adjustments of valuation
allowances in Germany (as discussed below). Such adjustments
offset provisions for income taxes at statutory rates in other
profitable non-U.S. jurisdictions. The consolidated effective
tax rate also benefited from a favorable ruling from a non-U.S.
taxing authority and the resolution of tax contingencies in
other jurisdictions.


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

Net Earnings (Loss)

For 2001, Milacron had a net loss of
$35.7 million, or $1.08 per share (diluted), compared to
net earnings of $72.3 million, or $2.06 per share
(diluted), in 2000. The 2001 loss includes after-tax
restructuring costs of $19.1 million, or $.57 per share. In
2000, after-tax restructuring costs were $1.9 million, or $.05
per share. Excluding restructuring, Milacrons loss for
2001 was $16.6 million, or $.51 per share, compared to
earnings of $74.2 million, or $2.11 per share, in 2000.


Future Change in Method of
Accounting

As described more fully in the notes to the
consolidated financial statements, Milacron will adopt Statement
of Financial Accounting Standards No. 142, Goodwill
and Other Intangible Assets (SFAS No. 142), effective
January 1, 2002. Under SFAS No. 142, goodwill and
certain other intangible assets are not amortized but rather are
reviewed annually for impairment. Application of the
standards nonamortization provisions is expected to result
in an in-


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crease in annual pretax earnings of approximately
$13 million ($9 million after tax) beginning in 2002.


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

2000 Compared to 1999

New Orders and Backlog

Consolidated new orders in 2000 were
$1,553 million, a decrease of $56 million, or 3.5%, in
relation to 1999. In 1999, consolidated new orders included
$63 million related to our European extrusion systems
business that was sold in December of that year. The sale of our
German-based industrial magnets business in September, 2000,
also had the effect of reducing new orders by $5 million in
relation to 1999, while acquisitions contributed an incremental
$17 million. Excluding acquisitions and divestitures,
consolidated orders were essentially flat in relation to 1999.
Foreign currency exchange rate fluctuations had the effect of
reducing orders for the year by $60 million. Excluding
currency and the acquisition and divestiture effects, orders for
the year increased by more than 3%.


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

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

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

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

Sales

Consolidated sales in 2000 were
$1,584 million, representing a $41 million, or 2.5%,
decrease in relation to 1999 sales of $1,625 million.
Unfavorable currency effects reduced consolidated sales by
$76 million. In 1999, consolidated sales included
$62 million related to the European extrusion systems
business. Excluding the effects of the sales of this business
and the industrial magnets business as well as acquisitions,
consolidated sales increased by 1%. However, excluding currency
effects in addition to acquisitions and divestitures, sales
increased by more than 5% in relation to 1999.


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

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

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the Widia industrial magnets business in
September, 2000. Excluding these factors and the contribution of
the segments 1999 acquisitions, sales for the year
increased by more than 4%. Sales of metalworking fluids
increased worldwide while sales of Valenite metalcutting
products in North America and round tools worldwide approximated
the levels achieved in 1999. Sales of Widia products in Europe
increased in local currencies but decreased as measured in U.S.
dollars due to the strength of the dollar in relation to the
euro and other currencies.


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

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

Margins, Costs and Expenses

The consolidated manufacturing margin was 25.9%
in 2000 compared to 26.0% in 1999, as both segments approximated
the results achieved in 1999. In the plastics technologies
segment, lower margins for Uniloy products, particularly in
Europe, offset the effect of margin improvements for injection
molding machines and extrusion systems. The overall margin for
the metalworking technologies segment decreased modestly due to
lower margins for grinding wheels and metalworking fluids, the
latter being due in part to higher oil prices.


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

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

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

Restructuring Costs

In 1999, we initiated two separate programs to
improve operating efficiency and strengthen synergies between
certain recently acquired businesses and our previously existing
operations.


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

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

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

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

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plan involved the closure of four smaller
manufacturing facilities, the operations of which were
transferred to other locations, and the elimination of
approximately 310 manufacturing and administrative
positions worldwide, substantially all of which had been
eliminated as of December 31, 2000. The cost of
implementing the plan was originally expected to be
$20.8 million. However, as a result of lower than expected
costs for employee, inventory and equipment relocation
and  to a significantly lesser degree 
lower severance and other termination benefits, the total cost
was $18.2 million, including $16.0 million in 1999 and
$2.2 million in 2000. Of the 1999 amount,
$14.1 million was included in a reserve for employee
termination benefits and facility exit costs that was recorded
in the fourth quarter. Charges against this reserve in 2000
totaled $11.4 million. Foreign currency exchange rate
fluctuations had the effect of reducing the reserve by an
additional $.8 million. In addition, excess reserves for
employee termination benefits and facility exit costs totaling
$.3 million were reversed in the third and fourth quarters of
2000. The total cost of the plan also included 1999 charges of
$1.7 million for supplemental early retirement benefits for
certain employees that are being funded through pension plans
and $2.7 million for additional costs that were charged to
expense as incurred. Of the latter amount, $2.5 million was
expensed in 2000.


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

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

Earnings before income taxes and minority
shareholders interests were $100.7 million in 2000
compared to $98.9 million in 1999. The 2000 amount includes
a pretax gain of $1.5 million on the sale of the industrial
magnets business and restructuring costs of $2.7 million
related to the programs that were initiated in 1999. Pretax
earnings for 1999 includes a gain of $13.1 million on the
sale of the European extrusion systems business and
restructuring costs of $16.2 million. Excluding these
items, pretax earnings in 2000 approximated the results achieved
in 1999.


Income Taxes

The provision for income taxes in 2000 and 1999
includes U.S. federal and state and local income taxes and
income taxes in other jurisdictions outside the U.S.


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

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

Net Earnings

For 2000, net earnings were $72.3 million,
or $2.06 per share (diluted), compared to $70.1 million, or
$1.89 per share (diluted), for 1999. The percentage increase in
per-share earnings exceeds the percentage increase in net
earnings due to fewer common shares outstanding in 2000 as a
result of our common share repurchase program which is discussed
below. The net earnings and earnings per share amounts for 2000
include after-tax restructuring costs of $1.9 million, or
$.05 per share, and the after-tax gain on the sale of the
industrial magnets business of $.8 million, or $.02 per
share. The amounts for 1999 include restructuring costs of
$10.9 million, or $.29 per share, and the gain on the sale
of the European extrusion business of $10.1 million, or
$.27 per share. Excluding all of the aforementioned items, net
earnings increased from $70.9 million in 1999 to
$73.4 million in 2000.


Market Risk

Foreign Currency Exchange Rate Risk

Milacron uses foreign currency forward exchange
contracts to hedge its exposure to adverse changes in foreign
currency exchange rates related to firm commitments arising from
international transactions. The company does not hold or issue
derivative instruments for trading purposes. At
December 31, 2001, Milacron had outstanding forward
contracts totaling $2.8 million compared to
$14.3 million at December 31, 2000. The annual
potential loss from a hypothetical 10% adverse change in foreign
currency exchange


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rates on Milacrons foreign exchange
contracts at December 31, 2001 or December 31, 2000,
would not materially affect the companys consolidated
financial position, results of operations, or cash flows.


Interest Rate Risk

At December 31, 2001, Milacron had fixed
interest rate debt of $228 million, including
$115 million of 8 3/8% Notes due May 15, 2004,
and
115 million
($104 million) of 7 5/8% Eurobonds due April 6,
2005. We also had floating rate debt totaling $376 million,
with interest fluctuating based primarily on changes in LIBOR.
At December 31, 2000, fixed rate debt totaled
$227 million, and floating rate debt totaled
$250 million. We also sell up to $75 million of
accounts receivable under our receivables purchase agreement,
which results in financing fees that fluctuate based on changes
in commercial paper rates. As a result, annual interest expense
and financing fees fluctuate based on changes in short-term
borrowing rates. The potential loss on floating rate debt from a
hypothetical 10% increase in interest rates would be
approximately $2.1 million at December 31, 2001, and
$2.4 million at December 31, 2000.


Liquidity and Sources of Capital

At December 31, 2001, Milacron had cash and
cash equivalents of $110 million, representing an increase
of $69 million in relation to December 31, 2000.


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

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

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

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

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

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

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



---

Debt and Lease Obligations





|                                 |  |      |      |      |  |      |      |      |  |       |       |  |  |   |       |  |  |   |      | 
|-------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  | ----- | ----- |  |  | - | ----- |  |  | - | ---- | 
|                                 |  |      |      |      |  |      |      |      |  | After
|(In millions)                    |  | 2002 |      | 2003 |  | 2004 |      | 2005 |  | 2005 
|                                
|                                
|Long-term debt                   |  | $    | 4.8  |      |  | $    | 3.3  |      |  | $     | 116.5 |  |  | $ | 104.7 |  |  | $ | 14.5 | 
|Revolving credit facility        |  |      | 23.2 |      |  |      |     |      |  |       |      |  |  |   | 303.1 |  |  |   |     | 
|Other lines of credit            |  |      | 17.0 |      |  |      |     |      |  |       |      |  |  |   |      |  |  |   |     | 
|                                 |  |      |      |      |  |      |      |      |  |       |       |  |  |   |       |  |  |   |      | 
|Total debt obligations           |  |      | 45.0 |      |  |      | 3.3  |      |  |       | 116.5 |  |  |   | 407.8 |  |  |   | 14.5 | 
|Operating leases                 |  |      | 18.6 |      |  |      | 14.7 |      |  |       | 12.5  |  |  |   | 7.9   |  |  |   | 33.3 | 
|                                 |  |      |      |      |  |      |      |      |  |       |       |  |  |   |       |  |  |   |      | 
|Total debt and lease obligations |  | $    | 63.6 |      |  | $    | 18.0 |      |  | $     | 129.0 |  |  | $ | 415.7 |  |  | $ | 47.8 | 
|                                 |  |      |      |      |  |      |      |      |  |       |       |  |  |   |       |  |  |   |      | 
|                                

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

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2002. These amounts are included in current
liabilities in the Consolidated Balance Sheet at
December 31, 2001. The table also excludes contingent
liabilities of up to $25.9 million related to sales of
receivables and loan guarantees.


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

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

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

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

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

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

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

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

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

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meet the companys operating and capital
requirements in 2002.


Cautionary Statement

Milacron wishes to caution readers about all of
the forward-looking statements in the Managements
Discussion and Analysis section and elsewhere. These
include all statements that speak about the future or are based
on our interpretation of factors that might affect our
businesses. Milacron believes the following important factors,
among others, could affect its actual results in 2002 and beyond
and cause them to differ materially from those expressed in any
of our forward-looking statements:




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






|         |                                                           
|-------- | ----------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures about Market Risk

The Information required by Item 7A is
included in Item 7 on pages 21 and 22 of this
Form 10-K.







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

Beginning on page 26 and continuing through
page 48 are the consolidated financial statements with
applicable notes and the related Report of Independent Auditors,
and the supplementary financial information specified by
Item 302 of Regulation S-K.


24



---



##### Table of Contents



Responsibility for Financial Reporting

Financial Statements

The management of Milacron Inc. has prepared the
accompanying financial statements and is responsible for their
integrity and objectivity. The statements, which include amounts
that are based on managements best estimates and
judgments, have been prepared in conformity with generally
accepted accounting principles and are free of material
misstatement. Management also prepared the other information in
this Form 10-K and is responsible for its accuracy and
consistency with the financial statements.


Internal Control System

Milacron Inc. maintains a system of internal
control over financial reporting and over safeguarding of assets
against unauthorized acquisition, use or disposition that is
designed to provide reasonable assurance to the companys
management and Board of Directors regarding the preparation of
reliable published annual and quarterly financial statements and
such asset safeguarding. The system contains self-monitoring
mechanisms, and actions are taken to correct deficiencies as
they are identified. Even an effective internal control system,
no matter how well designed, has inherent
limitations  including the possibility of the
circumvention or overriding of controls  and
therefore can provide only reasonable assurance with respect to
financial statement preparation and such asset safeguarding.
Further, because of changes in conditions, internal control
system effectiveness may vary over time.


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

|                    |  |  |                             | 
|------------------- |  |  | --------------------------- | 
|Ronald D. Brown     |  |  | Robert P. Lienesch          | 
|Chairman, President |  |  | Vice President - Finance    | 
|and Chief Executive |  |  | and Chief Financial Officer | 
|Officer             |  |  |                             | 

March 14, 2002

25



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##### Table of Contents



Consolidated Statements of Earnings

Milacron Inc. and Subsidiaries


Fiscal years ended December 31, 2001, 2000
and 1999.


|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |         |         |       | 
|------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------------ | --------------------- | ------- | ------- | ----- | ------- | ------- | ------- | ----- | ------- | ------- | ------- | ----- | 
|                                                                         
|                                                                         
|(In millions, except per-share amounts)                                   |                                                | 2001                           |                       | 2000    |         | 1999 
|                                                                         
|                                                                         
|Sales                                                                     |                                                | $                              | 1,262.7               |         |         | $     | 1,584.2 |         |         | $     | 1,624.7 |        
|                                                                          | Cost of products sold                          |                                |                       | 1,014.8 |         |       |         | 1,174.1 |         |       |         | 1,201.6 |        
|                                                                          | Cost of products sold related to restructuring |                                |                       | 3.6     |         |       |         |        |         |       |         |        |        
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|                                                                          |                                                | Total cost of products sold    |                       |         | 1,018.4 |       |         |         | 1,174.1 |       |         |         | 1,201.6 |      
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|                                                                          |                                                |                                | Manufacturing margins |         |         | 244.3 |         |         |         | 410.1 |         |         |         | 423.1 | 
|Other costs and expenses                                                  |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|                                                                          | Selling and administrative                     |                                |                       | 247.7   |         |       |         | 262.9   |         |       |         | 272.9   |        
|                                                                          | Restructuring costs                            |                                |                       | 26.8    |         |       |         | 2.7     |         |       |         | 16.2    |        
|                                                                          | Gains on divestitures of businesses            |                                |                       |        |         |       |         | (1.5    | )       |       |         | (13.1   | )      
|                                                                          | Other-net                                      |                                |                       | 10.8    |         |       |         | 5.8     |         |       |         | 10.0    |        
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|                                                                          |                                                | Total other costs and expenses |                       |         | 285.3   |       |         |         | 269.9   |       |         |         | 286.0   |      
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|Operating earnings (loss)                                                 |                                                |                                | (41.0                 | )       |         |       | 140.2   |         |         |       | 137.1   |        
|Interest                                                                  |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|                                                                          | Income                                         |                                |                       | 1.9     |         |       |         | 1.8     |         |       |         | 1.6     |        
|                                                                          | Expense                                        |                                |                       | (41.2   | )       |       |         | (41.3   | )       |       |         | (39.8   | )      
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|                                                                          |                                                | Interest-net                   |                       |         | (39.3   | )     |         |         | (39.5   | )     |         |         | (38.2   | )    
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|Earnings (loss) before income taxes and
	minority shareholders interests |                                                |                                | (80.3                 | )       |         |       | 100.7   |         |         |       | 98.9    |        
|Provision (benefit) for income taxes                                      |                                                |                                | (46.1                 | )       |         |       | 25.4    |         |         |       | 26.4    |        
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|Earnings (loss) before minority
	shareholders interests                  |                                                |                                | (34.2                 | )       |         |       | 75.3    |         |         |       | 72.5    |        
|Minority shareholders interests in earnings
	of subsidiaries             |                                                |                                | 1.5                   |         |         |       | 3.0     |         |         |       | 2.4     |        
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|Net earnings (loss)                                                       |                                                | $                              | (35.7                 | )       |         | $     | 72.3    |         |         | $     | 70.1    |        
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|Earnings (loss) per common share                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|                                                                          | Basic                                          |                                | $                     | (1.08   | )       |       | $       | 2.06    |         |       | $       | 1.90    |        
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|                                                                          | Diluted                                        |                                | $                     | (1.08   | )       |       | $       | 2.06    |         |       | $       | 1.89    |        
|                                                                          |                                                |                                |                       |         |         |       |         |         |         |       |         |        
|                                                                         

See notes to consolidated financial statements.


26



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##### Table of Contents



Consolidated Balance Sheets

Milacron Inc. and Subsidiaries


December 31, 2001 and 2000.


|                                            |                                                                                     |                                    |                      |         |       |       |         |       |       |       | 
|------------------------------------------- | ----------------------------------------------------------------------------------- | ---------------------------------- | -------------------- | ------- | ----- | ----- | ------- | ----- | ----- | ----- | 
|                                           
|                                           
|(In millions, except par value)             |                                                                                     | 2001                               |                      | 2000   
|                                           
|                                           
|Assets                                      |                                                                                     |                                    |                      |         |       |       |         |      
|Current assets                              |                                                                                     |                                    |                      |         |       |       |         |      
|                                            | Cash and cash equivalents                                                           |                                    | $                    | 110.4   |       |       | $       | 41.2  |      
|                                            | Notes and accounts receivable (less allowances of
	$14.1 in 2001 and $12.9 in 2000) |                                    |                      | 155.1   |       |       |         | 199.5 |      
|                                            | Inventories                                                                         |                                    |                      |         |       |       |         |       |      
|                                            |                                                                                     | Raw materials                      |                      |         | 40.2  |       |         |       | 42.9  |      
|                                            |                                                                                     | Work-in-process and finished parts |                      |         | 141.3 |       |         |       | 192.0 |      
|                                            |                                                                                     | Finished products                  |                      |         | 137.0 |       |         |       | 132.2 |      
|                                            |                                                                                     |                                    |                      |         |       |       |         |      
|                                            |                                                                                     |                                    | Total inventories    |         |       | 318.5 |         |       |       | 367.1 | 
|                                            | Other current assets                                                                |                                    |                      | 76.0    |       |       |         | 48.2  |      
|                                            |                                                                                     |                                    |                      |         |       |       |         |      
|                                            |                                                                                     |                                    | Total current assets |         |       | 660.0 |         |       |       | 656.0 | 
|Property, plant and equipment-net           |                                                                                     |                                    | 295.5                |         |       |       | 305.5   |      
|Goodwill                                    |                                                                                     |                                    | 410.8                |         |       |       | 413.7   |      
|Other noncurrent assets                     |                                                                                     |                                    | 146.0                |         |       |       | 89.7    |      
|                                            |                                                                                     |                                    |                      |         |       |       |         |      
|Total assets                                |                                                                                     | $                                  | 1,512.3              |         |       | $     | 1,464.9 |      
|                                            |                                                                                     |                                    |                      |         |       |       |         |      
|Liabilities and Shareholders
	Equity       |                                                                                     |                                    |                      |         |       |       |         |      
|Current liabilities                         |                                                                                     |                                    |                      |         |       |       |         |      
|                                            | Borrowings under lines of credit                                                    |                                    | $                    | 85.5    |       |       | $       | 85.6  |      
|                                            | Long-term debt due within one year                                                  |                                    |                      | 4.8     |       |       |         | 8.4   |      
|                                            | Trade accounts payable                                                              |                                    |                      | 92.7    |       |       |         | 127.3 |      
|                                            | Advance billings and deposits                                                       |                                    |                      | 17.4    |       |       |         | 25.9  |      
|                                            | Accrued and other current liabilities                                               |                                    |                      | 153.4   |       |       |         | 158.9 |      
|                                            |                                                                                     |                                    |                      |         |       |       |         |      
|                                            |                                                                                     | Total current liabilities          |                      |         | 353.8 |       |         |       | 406.1 |      
|Long-term accrued liabilities               |                                                                                     |                                    | 210.3                |         |       |       | 191.8   |      
|Long-term debt                              |                                                                                     |                                    | 513.3                |         |       |       | 382.6   |      
|                                            |                                                                                     |                                    |                      |         |       |       |         |      
|                                            | Total liabilities                                                                   |                                    |                      | 1,077.4 |       |       |         | 980.5 |      
|Commitments and contingencies               |                                                                                     |                                    |                     |         |       |       |        |      
|Shareholders equity                        |                                                                                     |                                    |                      |         |       |       |         |      
|                                            | 4% Cumulative Preferred shares                                                      |                                    |                      | 6.0     |       |       |         | 6.0   |      
|                                            | Common shares, $1 par value (outstanding: 33.5 in
	2001 and 33.3 in 2000)           |                                    |                      | 33.5    |       |       |         | 33.3  |      
|                                            | Capital in excess of par value                                                      |                                    |                      | 281.4   |       |       |         | 281.5 |      
|                                            | Reinvested earnings                                                                 |                                    |                      | 165.0   |       |       |         | 213.3 |      
|                                            | Accumulated other comprehensive loss                                                |                                    |                      | (51.0   | )     |       |         | (49.7 | )    
|                                            |                                                                                     |                                    |                      |         |       |       |         |      
|                                            |                                                                                     | Total shareholders equity         |                      |         | 434.9 |       |         |       | 484.4 |      
|                                            |                                                                                     |                                    |                      |         |       |       |         |      
|Total liabilities and shareholders
	equity |                                                                                     | $                                  | 1,512.3              |         |       | $     | 1,464.9 |      
|                                            |                                                                                     |                                    |                      |         |       |       |         |      
|                                           

See notes to consolidated financial statements.


27



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##### Table of Contents



Consolidated Statements of Comprehensive Income and
Shareholders Equity

Milacron Inc. and Subsidiaries


Fiscal years ended December 31, 2001, 2000
and 1999.


|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |       |  
|---------------------------------------------------------- | ---------------------------------- | ------- | ----- | ------- |  | --------- | ----- | ------ |  | ---------- | --- | -------- |  | -------- | ---- | - |  | - | ----- | - |  | - | ----- | ----- | - | - | ----- | ----- | -
|                                                          
|                                                          
|                                                           |                                    | Other   |       | 4%      |  |          
|                                                           |                                    | Compre- |       | Compre- |  | Cumu-     |       | Common |  |            |     | Total   
|                                                           |                                    | hensive |       | hensive |  | lative    |       | Shares |  | Capital in |     | Rein-    |  | Share-  
|                                                           |                                    | Income  |       | Income  |  | Preferred |       | $1 Par |  | Excess of  |     | vested   |  | holders
|(In millions, except per-share amounts)                    |                                    | (Loss)  |       | (Loss)  |  | Shares    |       | Value  |  | Par Value  |     | Earnings |  | Equity  
|                                                          
|                                                          
|Balance at year-end 1998                                   |                                    |         |       |         |  | $         | (14.4 | )      |  | $          | 6.0 |          |  | $        | 37.8 |   |  | $ | 341.2 |   |  | $ | 106.0 |       |   | $ | 476.6 |      
|Stock options exercised and net restricted stock
	activity |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          | .1   |   |  |   | 1.5   |   |  |   |       |       |   |   | 1.6   |      
|Purchases of treasury and other common shares              |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          | (1.1 | ) |  |   | (17.2 | ) |  |   |       |       |   |   | (18.3 | )    
|Net earnings for the year                                  |                                    | $       | 70.1  |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   | 70.1  |       |   |   | 70.1  |      
|Other comprehensive loss                                   |                                    |         | (21.0 | )       |  |           | (21.0 | )      |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   | (21.0 | )    
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|Total comprehensive income                                 |                                    | $       | 49.1  |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|Cash dividends                                             |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|                                                           | Preferred shares ($4.00 per share) |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       | (.2   | ) |   |       | (.2   | )
|                                                           | Common shares ($.48 per share)     |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       | (17.9 | ) |   |       | (17.9 | )
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|Balance at year-end 1999                                   |                                    |         |       |         |  |           | (35.4 | )      |  |            | 6.0 |          |  |          | 36.8 |   |  |   | 325.5 |   |  |   | 158.0 |       |   |   | 490.9 |      
|Stock options exercised and net restricted stock
	activity |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          | (.1  | ) |  |   | 2.0   |   |  |   |       |       |   |   | 1.9   |      
|Purchases of treasury and other common shares              |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          | (3.4 | ) |  |   | (46.0 | ) |  |   |       |       |   |   | (49.4 | )    
|Net earnings for the year                                  |                                    | $       | 72.3  |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   | 72.3  |       |   |   | 72.3  |      
|Other comprehensive loss                                   |                                    |         | (14.3 | )       |  |           | (14.3 | )      |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   | (14.3 | )    
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|Total comprehensive income                                 |                                    | $       | 58.0  |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|Cash dividends                                             |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|                                                           | Preferred shares ($4.00 per share) |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       | (.2   | ) |   |       | (.2   | )
|                                                           | Common shares ($.48 per share)     |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       | (16.8 | ) |   |       | (16.8 | )
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|Balance at year-end 2000                                   |                                    |         |       |         |  |           | (49.7 | )      |  |            | 6.0 |          |  |          | 33.3 |   |  |   | 281.5 |   |  |   | 213.3 |       |   |   | 484.4 |      
|Stock options exercised and net restricted stock
	activity |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          | .5   |   |  |   | 6.7   |   |  |   |       |       |   |   | 7.2   |      
|Purchases of treasury and other common shares              |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          | (.3  | ) |  |   | (6.8  | ) |  |   |       |       |   |   | (7.1  | )    
|Net loss for the year                                      |                                    | $       | (35.7 | )       |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   | (35.7 | )     |   |   | (35.7 | )    
|Other comprehensive loss                                   |                                    |         | (1.3  | )       |  |           | (1.3  | )      |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   | (1.3  | )    
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|Total comprehensive loss                                   |                                    | $       | (37.0 | )       |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|Cash dividends                                             |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|                                                           | Preferred shares ($4.00 per share) |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       | (.2   | ) |   |       | (.2   | )
|                                                           | Common shares ($.37 per share)     |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       | (12.4 | ) |   |       | (12.4 | )
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|Balance at year-end 2001                                   |                                    |         |       |         |  | $         | (51.0 | )      |  | $          | 6.0 |          |  | $        | 33.5 |   |  | $ | 281.4 |   |  | $ | 165.0 |       |   | $ | 434.9 |      
|                                                           |                                    |         |       |         |  |           |       |        |  |            |     |          |  |          |      |   |  |   |       |   |  |   |       |       |   |   |       |      
|                                                          

See notes to consolidated financial statements.


28



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##### Table of Contents



Consolidated Statements of Cash Flows

Milacron Inc. and Subsidiaries


Fiscal years ended December 31, 2001, 2000
and 1999.


|                                                                   |                                 |                                                          |                                                   |                                           |       |       |       |   |        |        |       |   |       |       |       |  
|------------------------------------------------------------------ | ------------------------------- | -------------------------------------------------------- | ------------------------------------------------- | ----------------------------------------- | ----- | ----- | ----- | - | ------ | ------ | ----- | - | ----- | ----- | ----- | -
|                                                                  
|                                                                  
|(In millions)                                                      |                                 | 2001                                                     |                                                   | 2000                                      |       | 1999 
|                                                                  
|                                                                  
|Increase (decrease) in cash and cash
	equivalents                  |                                 |                                                          |                                                   |                                           |       |       |       |   |        |        |       |  
|                                                                   | Operating activities cash flows |                                                          |                                                   |                                           |       |       |       |   |        |        |       |   |      
|                                                                   |                                 | Net earnings (loss)                                      |                                                   | $                                         | (35.7 | )     |       | $ | 72.3   |        |       | $ | 70.1  |      
|                                                                   |                                 | Operating activities providing (using) cash              |                                                   |                                           |       |       |       |   |        |        |       |   |       |      
|                                                                   |                                 |                                                          | Depreciation and amortization                     |                                           |       | 59.2  |       |   |        | 58.4   |       |   |       | 58.3  |      
|                                                                   |                                 |                                                          | Restructuring costs                               |                                           |       | 30.4  |       |   |        |       |       |   |       | 16.2  |      
|                                                                   |                                 |                                                          | Gains on divestitures of businesses               |                                           |       |      |       |   |        | (1.5   | )     |   |       | (13.1 | )    
|                                                                   |                                 |                                                          | Deferred income taxes                             |                                           |       | (33.6 | )     |   |        | 9.1    |       |   |       | 10.1  |      
|                                                                   |                                 |                                                          | Working capital changes                           |                                           |       |       |       |   |        |        |       |   |       |       |      
|                                                                   |                                 |                                                          |                                                   | Notes and accounts receivable             |       |       | 51.3  |   |        |        | 6.3   |   |       |       | (19.0 | )
|                                                                   |                                 |                                                          |                                                   | Inventories                               |       |       | 54.7  |   |        |        | (14.5 | ) |       |       | (9.9  | )
|                                                                   |                                 |                                                          |                                                   | Other current assets                      |       |       | .7    |   |        |        | (7.9  | ) |       |       | (2.6  | )
|                                                                   |                                 |                                                          |                                                   | Trade accounts payable                    |       |       | (39.4 | ) |        |        | 1.6   |   |       |       | (9.2  | )
|                                                                   |                                 |                                                          |                                                   | Other current liabilities                 |       |       | (58.8 | ) |        |        | (11.2 | ) |       |       | (4.7  | )
|                                                                   |                                 |                                                          | Decrease (increase) in other noncurrent
	assets   |                                           |       | (19.6 | )     |   |        | (13.1  | )     |   |       | 1.7   |      
|                                                                   |                                 |                                                          | Decrease in long-term accrued liabilities         |                                           |       | (1.7  | )     |   |        | (.1    | )     |   |       | (6.0  | )    
|                                                                   |                                 |                                                          | Other-net                                         |                                           |       | 5.3   |       |   |        | (3.6   | )     |   |       | (2.5  | )    
|                                                                   |                                 |                                                          |                                                   |                                           |       |       |       |   |        |        |       |  
|                                                                   |                                 |                                                          |                                                   | Net cash provided by operating activities |       |       | 12.8  |   |        |        | 95.8  |   |       |       | 89.4  |  
|                                                                   | Investing activities cash flows |                                                          |                                                   |                                           |       |       |       |   |        |        |       |   |      
|                                                                   |                                 | Capital expenditures                                     |                                                   |                                           | (31.6 | )     |       |   | (47.0  | )      |       |   | (47.3 | )    
|                                                                   |                                 | Net disposals of property, plant and equipment           |                                                   |                                           | 5.9   |       |       |   | 10.0   |        |       |   | 5.9   |      
|                                                                   |                                 | Acquisitions                                             |                                                   |                                           | (28.6 | )     |       |   | (7.0   | )      |       |   | (47.0 | )    
|                                                                   |                                 | Divestitures                                             |                                                   |                                           |      |       |       |   | 11.2   |        |       |   | 49.2  |      
|                                                                   |                                 |                                                          |                                                   |                                           |       |       |       |   |        |        |       |  
|                                                                   |                                 |                                                          | Net cash used by investing activities             |                                           |       | (54.3 | )     |   |        | (32.8  | )     |   |       | (39.2 | )    
|                                                                   | Financing activities cash flows |                                                          |                                                   |                                           |       |       |       |   |        |        |       |   |      
|                                                                   |                                 | Dividends paid                                           |                                                   |                                           | (12.6 | )     |       |   | (17.0  | )      |       |   | (18.1 | )    
|                                                                   |                                 | Issuance of long-term debt                               |                                                   |                                           | 7.1   |       |       |   | 115.4  |        |       |   | 2.0   |      
|                                                                   |                                 | Repayments of long-term debt                             |                                                   |                                           | (10.2 | )     |       |   | (146.1 | )      |       |   | (6.3  | )    
|                                                                   |                                 | Increase (decrease) in borrowings under
	lines of credit |                                                   |                                           | 130.6 |       |       |   | (5.2   | )      |       |   | 28.3  |      
|                                                                   |                                 | Issuance of common shares                                |                                                   |                                           | 4.0   |       |       |   |       |        |       |   | .1    |      
|                                                                   |                                 | Purchase of treasury and other common shares             |                                                   |                                           | (7.7  | )     |       |   | (48.4  | )      |       |   | (22.0 | )    
|                                                                   |                                 |                                                          |                                                   |                                           |       |       |       |   |        |        |       |  
|                                                                   |                                 |                                                          | Net cash provided (used) by financing
	activities |                                           |       | 111.2 |       |   |        | (101.3 | )     |   |       | (16.0 | )    
|Effect of exchange rate fluctuations on cash
	and cash equivalents |                                 |                                                          | (.5                                               | )                                         |       |       | (1.8  | ) |        |        | (1.8  | )
|                                                                   |                                 |                                                          |                                                   |                                           |       |       |       |   |        |        |       |  
|Increase (decrease) in cash and cash
	equivalents                  |                                 |                                                          | 69.2                                              |                                           |       |       | (40.1 | ) |        |        | 32.4  |  
|Cash and cash equivalents at beginning of year                     |                                 |                                                          | 41.2                                              |                                           |       |       | 81.3  |   |        |        | 48.9  |  
|                                                                   |                                 |                                                          |                                                   |                                           |       |       |       |   |        |        |       |  
|Cash and cash equivalents at end of
	year                          |                                 | $                                                        | 110.4                                             |                                           |       | $     | 41.2  |   |        | $      | 81.3  |  
|                                                                   |                                 |                                                          |                                                   |                                           |       |       |       |   |        |        |       |  
|                                                                  

See notes to consolidated financial statements.


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Notes to Consolidated Financial Statements

Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those
estimates.


Consolidation

The consolidated financial statements include the
accounts of the company and its subsidiaries. All significant
intercompany transactions are eliminated.


Foreign Currency Translation

Assets and liabilities of the companys
non-U.S. operations are translated into U.S. dollars at
period-end exchange rates. Net exchange gains or losses
resulting from such translation are excluded from net earnings
and accumulated in a separate component of shareholders
equity. Income and expense accounts are translated at
weighted-average exchange rates for the period. Gains and losses
from foreign currency transactions are included in other costs
and expenses-net in the Consolidated Statements of Earnings.
Such amounts were as follows: 2001  $1.1 million
gain; 2000  $.3 million gain; 1999  $1.0
million gain.


Revenue Recognition

The company recognizes sales revenue when
products are shipped to unaffiliated customers, legal title has
passed and all significant contractual obligations of the
company have been satisfied. The company provides for estimated
post-sale warranty costs as revenue is recognized. Appropriate
provisions are also made for returns for credit and
uncollectible accounts.


Income Taxes

The company provides deferred income taxes for
cumulative temporary differences between the financial reporting
basis and income tax basis of its assets and liabilities.
Provisions are made for all currently payable federal and state
and local income taxes at applicable tax rates. Provisions are
also made for any additional taxes on anticipated distributions
from subsidiaries.


Earnings Per Common Share

Basic earnings per common share data are based on
the weighted-average number of common shares outstanding during
the respective periods. Diluted earnings per common share data
are based on the weighted-average number of common shares
outstanding adjusted to include the effects of potentially
dilutive stock options and certain restricted shares.


Cash and Cash Equivalents

The company considers all highly liquid
investments with a maturity of three months or less to be cash
equivalents.


Inventory Valuation

Inventories are stated at the lower of cost or
market, including provisions for obsolescence commensurate with
known or estimated exposures. The principal methods of
determining costs are last-in, first-out (LIFO) for certain
U.S. inventories and average or standard cost, which
approximates first-in, first-out (FIFO), for other inventories.


Property, Plant and Equipment

Property, plant and equipment are stated at cost
or, for assets acquired through business combinations, at fair
value at the dates of the respective acquisitions. For financial
reporting purposes, depreciation is generally determined on the
straight-line method using estimated useful lives of the assets.
Depreciation expense was $46.1 million, $45.6 million and $47.0
million for 2001, 2000 and 1999, respectively.


Property, plant and equipment that are idle and
held for sale are valued at the lower of historical cost less
accumulated depreciation or fair value less cost to sell.
Carrying costs through the expected disposal dates of such
assets are accrued at the time expected losses are recognized
or, in the case of assets to be sold at a gain, charged to
expense as incurred.

Goodwill

In 2001 and prior years, goodwill, which
represents the excess of acquisition cost over the net assets
acquired in business combinations, has been amortized on the
straight-line method over periods ranging from 10 to 40 years.
Amortization expense charged to earnings, amounted to $12.6
million, $12.8 million and $11.3 million in 2001, 2000, and
1999, respectively. Beginning in 2002, goodwill will no longer
be amortized but will be reviewed annually for impairment (see
Recently Issued Pronouncements).


Under the companys current policy, the
carrying amount of goodwill is reviewed periodically using
estimated undiscounted cash flows for the businesses acquired
over the remaining amortization periods. If, based on these

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Notes to Consolidated Financial Statements


analyses, the goodwill arising from a particular
acquisition were found to be not recoverable, its carrying value
would be reduced by the amount of the discounted cash flow
deficit through a charge to earnings. The company also evaluates
long-lived assets for impairment when facts and circumstances
suggest that the carrying amounts of these assets may not be
recoverable. Through 2001, goodwill associated with assets
acquired in business combinations has been included in these
impairment evaluations when appropriate. Beginning in 2002,
goodwill will no longer be included but rather will be reviewed
on a stand-alone basis (see Recently Issued Pronouncements).

Retirement Benefit Plans

The company maintains various defined benefit and
defined contribution pension plans covering substantially all
U.S. employees and certain non-U.S. employees. For defined
benefit plans, pension benefits are based primarily on length of
service and compensation. The companys policy is to fund
the plans in accordance with applicable laws and regulations.


Stock-Based Compensation

The company accounts for stock-based compensation
under the provisions of Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to
Employees, and the related interpretations as permitted by
Statement of Financial Accounting Standards No. 123
Accounting for Stock-Based Compensation.


Derivative Financial Instruments

Effective January 1, 2001, the company
adopted Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Financial
Instruments and Hedging Activities (SFAS No. 133), as
amended, which requires that all derivative financial
instruments be measured at fair value and recognized in the
balance sheet. This standard also establishes criteria for the
designation of derivative financial instruments as hedges of
known or estimated exposures, measuring the effectiveness of
hedging relationships, and accounting for derivatives used as
hedges.


The company enters into foreign currency forward
exchange contracts, which are a form of derivative financial
instrument, on an ongoing basis commensurate with known or
expected exposures. The purpose of this practice is to minimize
the potentially adverse effect of foreign currency exchange rate
fluctuations on the companys operating results. The
company does not currently hold other types of derivative
financial instruments and does not engage in speculation.
Because of the companys limited use of derivatives, the
adoption of SFAS No. 133 did not have a significant effect
on its financial position or results of operations during the
year 2001.

Recently Issued Pronouncements

In June, 2001, the Financial Accounting Standards
Board issued Statements of Financial Accounting Standards
No. 141, Business Combinations (SFAS
No. 141) and No. 142, Goodwill and Other
Intangible Assets (SFAS No. 142). SFAS No. 141
requires that all business combinations be accounted for using
the purchase method and specifies the types of acquired
intangible assets that are to be reported separately from
goodwill. Under SFAS No. 142, goodwill and certain other
intangible assets that are deemed to have indefinite lives are
not amortized but are reviewed annually for impairment. If,
based on these reviews, the related assets are found to be
impaired, their carrying value is adjusted through a charge to
earnings. Intangible assets that are not deemed to have
indefinite lives will continue to be amortized over their
expected useful lives.


The company will apply the new accounting rules
for goodwill and other intangible assets beginning in the first
quarter of 2002. Application of the nonamortization provisions
of SFAS No. 142 is expected to result in an increase in
annual pretax earnings of approximately $13 million ($9 million
after tax). During 2002, the company will also complete the
transitional impairment reviews of goodwill and indefinite-lived
intangible assets that are required by SFAS No. 142. These
transitional reviews will be made based on recorded balances as
of January 1, 2002 and must be completed by June 30,
2002. If, based on these reviews, the assets are found to be
impaired, it will be necessary to calculate the amount of the
required adjustments of their carrying values. That process must
be completed no later than December 31, 2002. Any
adjustments that are identified through the transitional reviews
will be recorded as the cumulative effect of a change in method
of accounting. The company will also conduct the first of the
required annual reviews of goodwill and other indefinite-lived
intangibles as of a later date in 2002. Any additional
adjustments identified through these reviews will be recorded as
charges to operating earnings.

The company is in the process of evaluating the
possible effects of the required transitional reviews as they
relate to goodwill. Based on its preliminary evaluation, the
company currently expects to record a pretax goodwill impairment
charge of between $180 million and $210 million ($140 million to
$165 million after tax). This charge will be recorded as the
cumulative effect of a change in method of

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Notes to Consolidated Financial Statements


accounting when the actual amount is determined
around the middle of 2002, retroactive to January 1, 2002.

In August, 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets (SFAS No. 144), which
provides revised guidelines for testing long-lived assets other
than intangibles for impairment. SFAS No. 144 also includes
revised accounting and reporting requirements for assets and
groups of assets that are determined to be held for sale,
including their classification in the balance sheet and the
reporting of their results of operations and gains and losses on
their disposal in the statement of earnings. The company will
adopt SFAS No. 144 effective January 1, 2002 but does
not expect any immediate effect on its financial position or
results of operations.

Restructuring Costs

In 1999, the company initiated two separate
programs to improve operating efficiency and strengthen
synergies between certain recently acquired businesses and its
previously existing operations.


In September, 1999, the company announced a
formal plan to consolidate Uniloys European blow molding
operations in a new manufacturing facility located near Milan,
Italy. The total cost of the plan, which was initiated in the
fourth quarter of 1999 and which was completed in 2001, was
originally expected to be approximately $6.7 million. However,
foreign currency exchange rate fluctuations subsequent to
acquisition date and lower than expected costs to relocate
inventory and equipment had the effect of reducing the total
cost as measured in U.S. dollars to approximately $5.5 million,
including $.7 million that was charged to expense as incurred.
The remainder of the total cost of the consolidation was
included in a reserve for employee termination benefits and
facility exit costs that was established in the allocation of
the Uniloy acquisition cost. The original amount of the reserve
was $5.7 million but foreign currency exchange rate fluctuations
had the effect of reducing it by $.9 million. Charges against
the reserve in 2000 and 2001 were $2.5 million and $.8 million,
respectively. The total cash cost of the consolidation is
ultimately expected to be approximately $3 million, which is net
of the proceeds from the sale of two facilities in Italy, one of
which was sold in 2000.

In December, 1999, the company initiated a second
plan to improve operating efficiency and reduce costs at
additional businesses. The actions included in the plan involve
both segments operations in North America and Europe. The
plan involved the closure of four smaller manufacturing
facilities, the operations of which were transferred to other
locations, and the elimination of approximately 310
manufacturing and administrative positions worldwide. The total
cost of implementing the plan was $18.2 million, including $16.0
million in 1999 and $2.2 million in 2000. Of the 1999 amount,
$14.1 million was included in a reserve for employee termination
benefits and facility exit costs that was recorded in the fourth
quarter. The total cost of the plan also included 1999 charges
of $1.7 million for supplemental early retirement benefits for
certain employees that are being funded through pension plans
and $2.7 million for additional costs that were charged to
expense as incurred. The total cash cost of the plan, including
capital expenditures of $3.6 million, was approximately $15.3
million, most of which was expended in 2000.

In the third and fourth quarters of 2001, the
companys management formally approved plans to consolidate
additional operations and further reduce the companys cost
structure. Implementation of these plans is expected to result
in pretax charges to earnings of approximately $33.2 million. Of
the total expected cost of the plans, $27.0 million was recorded
in 2001, including reserves of $16.3 million for employee
termination benefits and $2.4 million for facility exit costs.
The amount for 2001 also includes $.5 million for supplemental
early retirement benefits that will be funded through the
companys principal U.S. pension plan. Charges against the
reserves established in connection with the 2001 consolidation
and cost reduction plans have totaled $3.7 million and excess
reserves totaling $.5 million have been reversed. The total cost
of the plans also includes amounts for the discontinuation of a
number of product lines and certain other inventory write-downs
in both segments, of which $3.6 million was recorded in 2001.
This amount is presented as a component of cost of products sold
in the Consolidated Statement of Earnings for that year. The
remaining $10.9 million of the expected total cost of the plans
is being charged to expense as incurred, including $4.7 million
in 2001.

As approved by management, the 2001 plans involve
the closure of twelve manufacturing facilities in North America,
including five smaller South Carolina facilities that will be
consolidated in a new leased facility. The plans also entail the
elimination of several warehousing, sales and administrative
locations worldwide. The consolidations and overhead reductions
will result in the elimination of approximately 1,000
manufacturing and administrative positions, principally in the
U.S. and Europe. As of December 31, 2001, approximately 460
positions had been eliminated. The net cash cost of implementing
the plans, including capital

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Notes to Consolidated Financial Statements


expenditures of $4.6 million, will be
approximately $25.5 million, of which $9.4 million was spent in
2001. Substantially all of the remainder will be spent in the
first half of 2002.

During 2001, the companys management also
approved a plan to integrate the operations of EOC and Reform
(see Acquisitions) with D-M-Es existing European mold base
and components business at a total cost of approximately $6.6
million. Of this amount, $3.2 million relates to EOC and Reform
and $3.4 million relates to D-M-E. The plan involves the
consolidation of the manufacturing operations of five facilities
located in Germany and Belgium into three facilities, the
reorganization of warehousing and distribution activities in
Europe, and the elimination of approximately 160 manufacturing
and administrative positions, of which approximately 25 have
been eliminated through December 31, 2001. Of the $3.2
million total cost related to EOC and Reform, $1.2 million is
included in reserves for employee termination benefits and
facility exit costs that were established in the preliminary
allocations of the respective acquisition costs. Additional
reserves of $.9 million will be recorded early in 2002 when the
affected employees have been formally notified. The remainder is
being charged to expense as incurred, including $.6 million in
2001. As it relates to D-M-E, the cost of the plan includes $2.5
million for reserves for termination benefits and facility exit
costs that were recorded in 2001. Additional D-M-E related costs
totaled $.3 million in 2001. Charges against the D-M-E reserves
in 2001 totaled $.1 million.

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

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

As presented in the Consolidated Statements of
Earnings for 2001, 2000 and 1999, the line captioned
Restructuring costs includes the following
components:



---

Restructuring Costs


|                                                            |                                      |      |      |      |   |      |     |     |   |   |      |    | 
|----------------------------------------------------------- | ------------------------------------ | ---- | ---- | ---- | - | ---- | --- | --- | - | - | ---- | -- | 
|(In millions)                                               |                                      | 2001 |      | 2000 |   | 1999
|                                                           
|                                                           
|Accruals for termination benefits and facility
	exit costs  |                                      | $    | 18.7 |      |   | $    |    |     |   | $ | 14.1 |   
|Supplemental retirement benefits                            |                                      |      | .5   |      |   |      |    |     |   |   | 1.7  |   
|Other restructuring costs                                   |                                      |      |      |      |   |      |     |     |   |   |      |   
|                                                            | Costs charged to expense as incurred |      |      | 8.3  |   |      |     | 2.5 |   |   |      | .2 | 
|                                                            | Reserve adjustments                  |      |      | (.5  | ) |      |     | (.3 | ) |   |      |   | 
|                                                            |                                      |      |      |      |   |      |     |     |   |   |      |   
|                                                            |                                      |      | 27.0 |      |   |      | 2.2 |     |   |   | 16.0 |   
|Costs related to the Uniloy, EOC and Reform
	consolidations |                                      |      | 3.4  |      |   |      | .5  |     |   |   | .2   |   
|                                                            |                                      |      |      |      |   |      |     |     |   |   |      |   
|                                                            |                                      | $    | 30.4 |      |   | $    | 2.7 |     |   | $ | 16.2 |   
|                                                            |                                      |      |      |      |   |      |     |     |   |   |      |   
|                                                           

The status of the reserves for the initiatives
discussed above is summarized in the following tables. To the
extent that any unused reserves that were established in the
allocation of acquisition cost remain after the completion of
the Uniloy, EOC and Reform consolidations, those amounts will be
applied as reductions of the goodwill arising from the
respective acquisitions.



---

Restructuring Reserves





|                                      |                      |           |     |           |  |           |      |         |  |   |      |      |   |   |      |      | 
|------------------------------------- | -------------------- | --------- | --- | --------- |  | --------- | ---- | ------- |  | - | ---- | ---- | - | - | ---- | ---- | 
|                                      |                      |           |     |          
|2001                                 
|                                     
|                                      |                      | Beginning |     |           |  | Usage     |      | Ending 
|(In millions)                         |                      | Balance   |     | Additions |  | and other |      | Balance
|                                     
|                                     
|Uniloy, EOC and Reform consolidations |                      |           |     |           |  |           |      |         |  |   |      |      |   |   |      |     
|                                      | Termination benefits |           | $   | 1.4       |  |           | $    | 3.7     |  |   | $    | (.9  | ) |   | $    | 4.2  | 
|                                      | Facility exit costs  |           |     | .2        |  |           |      |        |  |   |      |     |   |   |      | .2   | 
|                                      |                      |           |     |           |  |           |      |         |  |   |      |      |   |   |      |     
|                                      |                      |           | 1.6 |           |  |           | 3.7  |         |  |   | (.9  | )    |   |   | 4.4  |     
|Restructuring costs                   |                      |           |     |           |  |           |      |         |  |   |      |      |   |   |      |     
|                                      | Termination benefits |           |     | .3        |  |           |      | 16.0    |  |   |      | (3.0 | ) |   |      | 13.3 | 
|                                      | Facility exit costs  |           |     | .4        |  |           |      | 2.7     |  |   |      | (1.6 | ) |   |      | 1.5  | 
|                                      |                      |           |     |           |  |           |      |         |  |   |      |      |   |   |      |     
|                                      |                      |           | .7  |           |  |           | 18.7 |         |  |   | (4.6 | )    |   |   | 14.8 |     
|                                      |                      |           |     |           |  |           |      |         |  |   |      |      |   |   |      |     
|Total reserves                        |                      | $         | 2.3 |           |  | $         | 22.4 |         |  | $ | (5.5 | )    |   | $ | 19.2 |     
|                                      |                      |           |     |           |  |           |      |         |  |   |      |      |   |   |      |     

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Notes to Consolidated Financial Statements


|                                      |                      |           |      |           |  |           |   |         |  |   |       |      |   |   |     |     | 
|------------------------------------- | -------------------- | --------- | ---- | --------- |  | --------- | - | ------- |  | - | ----- | ---- | - | - | --- | --- | 
|                                     
|                                     
|                                      |                      |           |      |          
|                                     
|2000                                 
|                                     
|                                      |                      | Beginning |      |           |  | Usage     |   | Ending 
|(In millions)                         |                      | Balance   |      | Additions |  | and other |   | Balance
|                                     
|                                     
|Uniloy, EOC and Reform consolidations |                      |           |      |           |  |           |   |         |  |   |       |      |   |   |     |    
|                                      | Termination benefits |           | $    | 3.6       |  |           | $ |        |  |   | $     | (2.2 | ) |   | $   | 1.4 | 
|                                      | Facility exit costs  |           |      | .7        |  |           |   |        |  |   |       | (.5  | ) |   |     | .2  | 
|                                      |                      |           |      |           |  |           |   |         |  |   |       |      |   |   |     |    
|                                      |                      |           | 4.3  |           |  |           |  |         |  |   | (2.7  | )    |   |   | 1.6 |    
|Restructuring costs                   |                      |           |      |           |  |           |   |         |  |   |       |      |   |   |     |    
|                                      | Termination benefits |           |      | 9.4       |  |           |   |        |  |   |       | (9.1 | ) |   |     | .3  | 
|                                      | Facility exit costs  |           |      | 3.8       |  |           |   |        |  |   |       | (3.4 | ) |   |     | .4  | 
|                                      |                      |           |      |           |  |           |   |         |  |   |       |      |   |   |     |    
|                                      |                      |           | 13.2 |           |  |           |  |         |  |   | (12.5 | )    |   |   | .7  |    
|                                      |                      |           |      |           |  |           |   |         |  |   |       |      |   |   |     |    
|Total reserves                        |                      | $         | 17.5 |           |  | $         |  |         |  | $ | (15.2 | )    |   | $ | 2.3 |    
|                                      |                      |           |      |           |  |           |   |         |  |   |       |      |   |   |     |    
|                                     

Divestitures of Businesses

In September, 2000, the company completed the
sale of its German-based industrial magnets business, Widia
Magnet Engineering, for approximately $14 million and recorded a
pretax gain of $1.5 million ($.8 million after tax). With 1999
annual sales of approximately $30 million, Widia Magnet
Engineering had approximately 280 employees and manufactured and
sold both soft and permanent magnets used in automotive and
other applications. The business was included in the acquisition
of Widia GmbH in 1995 and was sold to redeploy assets to other
businesses.


In December, 1999, the company sold its European
plastics extrusion systems business for approximately $44
million including post-closing adjustments and recorded a pretax
gain of $13.1 million ($10.1 million after tax). Headquartered
in Vienna, Austria, the business had 1999 sales to unaffiliated
customers of $62 million, principally to markets in Europe, Asia
and South America, and employed approximately 325 people. The
business was sold to redeploy assets to other businesses.

Acquisitions

In July, 1999, the company acquired Nickerson
Machinery Inc., Pliers International Inc., and Plastic Moulding
Supply Ltd. (collectively, Nickerson). With annual sales of $7
million as of the acquisition date, Nickerson sells supplies and
equipment for plastics processing through two catalog
distribution centers in the U.S. and one in the U.K. The
operation in the U.K. also manufactures and refurbishes screws
and barrels for small injection molding machines.


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

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

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

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

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

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

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

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

All of the acquisitions were accounted for under
the purchase method and were financed through the use of
available cash and bank borrowings. The aggregate cost of the
acquisitions, including professional fees and other related
costs, is expected to total $32.4 million for 2001 and

34



---



##### Table of Contents



Notes to Consolidated Financial Statements


was $4.7 million for 2000 and $33.2 million for
1999. The allocation of the aggregate cost of the acquisitions
to the assets acquired and liabilities assumed is presented in
the table that follows.



---

Allocation of Acquisition Cost





|                                                              |  |      |      |      |  |      |     |  |  |   |      | 
|------------------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | --- |  |  | - | ---- | 
|(In millions)                                                 |  | 2001 |      | 2000 |  | 1999
|                                                             
|                                                             
|Cash and cash equivalents                                     |  | $    | 1.9  |      |  | $    | .2  |  |  | $ | .7   | 
|Accounts receivable                                           |  |      | 6.9  |      |  |      | .8  |  |  |   | 4.0  | 
|Inventories                                                   |  |      | 10.3 |      |  |      | 1.0 |  |  |   | 5.0  | 
|Other current assets                                          |  |      | .5   |      |  |      | .1  |  |  |   | .3   | 
|Property, plant and equipment                                 |  |      | 14.7 |      |  |      | .1  |  |  |   | 4.5  | 
|Goodwill                                                      |  |      | 10.0 |      |  |      | 3.5 |  |  |   | 21.6 | 
|Other noncurrent assets                                       |  |      |     |      |  |      |    |  |  |   | .5   | 
|                                                              |  |      |      |      |  |      |     |  |  |   |      | 
|Total assets                                                  |  |      | 44.3 |      |  |      | 5.7 |  |  |   | 36.6 | 
|Short term borrowings and long-term debt due
	within one year |  |      |     |      |  |      |    |  |  |   | 1.0  | 
|Other current liabilities                                     |  |      | 11.9 |      |  |      | 1.0 |  |  |   | 1.6  | 
|Long-term debt                                                |  |      |     |      |  |      |    |  |  |   | .8   | 
|                                                              |  |      |      |      |  |      |     |  |  |   |      | 
|Total liabilities                                             |  |      | 11.9 |      |  |      | 1.0 |  |  |   | 3.4  | 
|                                                              |  |      |      |      |  |      |     |  |  |   |      | 
|Total acquisition cost                                        |  | $    | 32.4 |      |  | $    | 4.7 |  |  | $ | 33.2 | 
|                                                              |  |      |      |      |  |      |     |  |  |   |      | 
|                                                             

In the 2001 allocation of acquisition cost, other
current liabilities includes $2.1 million for the integration of
EOC and Reform with the companys existing D-M-E mold
components business in Europe (see Restructuring Costs).

Unaudited pro forma sales and earnings
information for 2001, 2000 and 1999 is not presented because the
amounts would not vary materially from the comparable amounts
reflected in the companys historical Consolidated
Statements of Earnings.

Research and Development

Charges to operations for research and
development activities are summarized below.




---

Research and Development





|                         |  |      |      |      |  |      |      |  |  |   |      | 
|------------------------ |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|(In millions)            |  | 2001 |      | 2000 |  | 1999
|                        
|                        
|Research and development |  | $    | 30.8 |      |  | $    | 34.4 |  |  | $ | 34.5 | 
|                         |  |      |      |      |  |      |      |  |  |   |      | 
|                        

Retirement Benefit Plans

Pension cost for all defined benefit plans is
summarized in the following table. For all years presented, the
table includes amounts for plans for certain employees in the
U.S. and Germany.




---

Pension (Income) Expense





|                                                           |  |      |       |      |  |      |       |   |  |   |       |  
|---------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|(In millions)                                              |  | 2001 |       | 2000 |  | 1999
|                                                          
|                                                          
|Service cost (benefits earned during the period)           |  | $    | 4.7   |      |  | $    | 5.3   |   |  | $ | 6.4   |  
|Interest cost on projected benefit obligation              |  |      | 35.9  |      |  |      | 35.1  |   |  |   | 33.5  |  
|Expected return on plan assets                             |  |      | (45.1 | )    |  |      | (43.5 | ) |  |   | (40.1 | )
|Supplemental retirement benefits                           |  |      | .8    |      |  |      |      |   |  |   | 1.5   |  
|Amortization of unrecognized prior service cost            |  |      | .5    |      |  |      | .5    |   |  |   | .5    |  
|Amortization of unrecognized gains and losses              |  |      | (.2   | )    |  |      | .3    |   |  |   | 1.0   |  
|Amortization of unrecognized transition
	(asset) liability |  |      |      |      |  |      | .1    |   |  |   | (1.5  | )
|                                                           |  |      |       |      |  |      |       |   |  |   |       |  
|Pension (income) expense                                   |  | $    | (3.4  | )    |  | $    | (2.2  | ) |  | $ | 1.3   |  
|                                                           |  |      |       |      |  |      |       |   |  |   |       |  
|                                                          

The following table summarizes changes in the
projected benefit obligation for all defined benefit plans.



---

Projected Benefit Obligation





|                                         |                        |      |        |        |   |   |        |        |  
|---------------------------------------- | ---------------------- | ---- | ------ | ------ | - | - | ------ | ------ | -
|(In millions)                            |                        | 2001 |        | 2000  
|                                        
|                                        
|Balance at beginning of year             |                        | $    | (464.0 | )      |   | $ | (455.3 | )     
|Service cost                             |                        |      | (4.7   | )      |   |   | (5.3   | )     
|Interest cost                            |                        |      | (35.9  | )      |   |   | (35.1  | )     
|Benefits paid                            |                        |      | 37.5   |        |   |   | 37.4   |       
|Actuarial loss                           |                        |      | (6.4   | )      |   |   | (11.1  | )     
|Plan amendment                           |                        |      | (3.6   | )      |   |   |       |       
|Supplemental retirement benefits         |                        |      | (.8    | )      |   |   |       |       
|Change in discount rate                  |                        |      | (24.3  | )      |   |   |       |       
|Sale of industrial magnets business      |                        |      |       |        |   |   | 1.5    |       
|Foreign currency translation adjustments |                        |      | .4     |        |   |   | 3.9    |       
|                                         |                        |      |        |        |   |   |        |       
|                                         | Balance at end of year |      | $      | (501.8 | ) |   | $      | (464.0 | )
|                                         |                        |      |        |        |   |   |        |       
|                                        

The following table summarizes the changes in
plan assets for the U.S. plans. Consistent with customary
practice in Germany, the plans for employees in that country
have not been funded.

35



---



##### Table of Contents



Notes to Consolidated Financial Statements




---

Plan Assets





|                                |  |      |       |      |  |   |       |  
|------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|(In millions)                   |  | 2001 |       | 2000
|                               
|                               
|Balance at beginning of year    |  | $    | 482.3 |      |  | $ | 501.5 |  
|Actual investment return (loss) |  |      | (16.1 | )    |  |   | 15.0  |  
|Benefits paid                   |  |      | (34.2 | )    |  |   | (34.2 | )
|                                |  |      |       |      |  |   |       |  
|Balance at end of year          |  | $    | 432.0 |      |  | $ | 482.3 |  
|                                |  |      |       |      |  |   |       |  
|                               

The following table sets forth the funded status
of the plans for U.S. employees at year-end 2001 and 2000.



---

Funded Status at Year-End





|                                                                                |  |      |        |      |  |   |        |  
|------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|(In millions)                                                                   |  | 2001 |        | 2000
|                                                                               
|                                                                               
|Vested benefit obligation                                                       |  | $    | (419.3 | )    |  | $ | (373.0 | )
|                                                                                |  |      |        |      |  |   |        |  
|Accumulated benefit obligation                                                  |  | $    | (431.5 | )    |  | $ | (390.1 | )
|                                                                                |  |      |        |      |  |   |        |  
|Projected benefit obligation                                                    |  | $    | (463.7 | )    |  | $ | (426.9 | )
|Plan assets at fair value                                                       |  |      | 432.0  |      |  |   | 482.3  |  
|                                                                                |  |      |        |      |  |   |        |  
|Excess (deficiency) of plan assets in
	relation to projected benefit obligation |  |      | (31.7  | )    |  |   | 55.4   |  
|Unrecognized net loss (gain)                                                    |  |      | 40.4   |      |  |   | (51.5  | )
|Unrecognized prior service cost                                                 |  |      | 5.7    |      |  |   | 2.7    |  
|                                                                                |  |      |        |      |  |   |        |  
|Prepaid pension cost                                                            |  | $    | 14.4   |      |  | $ | 6.6    |  
|                                                                                |  |      |        |      |  |   |        |  
|                                                                               

The assets of the principal U.S. plan consist
primarily of stocks, debt securities and mutual funds. The plan
also includes common shares of the company with a market value
of $38.3 million in 2001 and $37.2 million in 2000.

The following table sets forth the status of the
companys defined benefit pension plans for certain
employees in Germany.



---

Status at Year-End





|                               |  |      |       |      |  |   |       |  
|------------------------------ |  | ---- | ----- | ---- |  | - | ----- | -
|(In millions)                  |  | 2001 |       | 2000
|                              
|                              
|Vested benefit obligation      |  | $    | (32.8 | )    |  | $ | (32.3 | )
|                               |  |      |       |      |  |   |       |  
|Accumulated benefit obligation |  | $    | (35.1 | )    |  | $ | (34.5 | )
|                               |  |      |       |      |  |   |       |  
|Projected benefit obligation   |  | $    | (38.1 | )    |  | $ | (37.1 | )
|Unrecognized net loss          |  |      | 1.6   |      |  |   | 1.3   |  
|                               |  |      |       |      |  |   |       |  
|Accrued pension cost           |  | $    | (36.5 | )    |  | $ | (35.8 | )
|                               |  |      |       |      |  |   |       |  
|                              

The following table presents the weighted-average
actuarial assumptions used for all defined benefit plans in
2001, 2000 and 1999.



---

Actuarial Assumptions





|                                                 |  |      |     |      |  |      |     |   |  |  |     |  
|------------------------------------------------ |  | ---- | --- | ---- |  | ---- | --- | - |  |  | --- | -
|                                                 |  | 2001 |     | 2000 |  | 1999
|                                                
|                                                
|Discount rate                                    |  |      | 7.2 | %    |  |      | 7.6 | % |  |  | 7.6 | %
|Expected long-term rate of return on plan assets |  |      | 9.5 | %    |  |      | 9.5 | % |  |  | 9.5 | %
|Rate of increase in future compensation levels   |  |      | 4.1 | %    |  |      | 5.0 | % |  |  | 5.0 | %
|                                                

The company also maintains certain defined
contribution and 401(k) plans. Participation in these plans is
available to certain U.S. employees. Costs for these plans were
$5.3 million, $9.9 million and $10.0 million in 2001, 2000 and
1999, respectively.

In addition to pension benefits, the company also
provides varying levels of postretirement health care benefits
to certain U.S. employees. Substantially all such employees are
covered by the companys principal plan, under which
benefits are provided to employees who retire from active
service after having attained age 55 and ten years of service.
The plan is contributory in nature. For employees retiring prior
to 1980, such contributions are based on varying percentages of
the current per-contract cost of benefits, with the company
funding any excess over these amounts. For employees retiring
after 1979, the dollar amount of the companys current and
future contributions is frozen.

The following table presents the components of
the companys postretirement health care cost under the
principal U.S. plan.



---

Postretirement Health Care Cost





|                                                                |  |      |     |      |  |      |     |   |  |   |     |  
|--------------------------------------------------------------- |  | ---- | --- | ---- |  | ---- | --- | - |  | - | --- | -
|(In millions)                                                   |  | 2001 |     | 2000 |  | 1999
|                                                               
|                                                               
|Service cost (benefits earned during the period)                |  | $    | .1  |      |  | $    | .1  |   |  | $ | .2  |  
|Interest cost on accumulated postretirement
	benefit obligation |  |      | 1.9 |      |  |      | 2.0 |   |  |   | 1.9 |  
|Amortization of unrecognized gains                              |  |      | (.5 | )    |  |      | (.5 | ) |  |   | (.4 | )
|                                                                |  |      |     |      |  |      |     |   |  |   |     |  
|Postretirement health care cost                                 |  | $    | 1.5 |      |  | $    | 1.6 |   |  | $ | 1.7 |  
|                                                                |  |      |     |      |  |      |     |   |  |   |     |  
|                                                               

36



---



##### Table of Contents



Notes to Consolidated Financial Statements


The following table summarizes changes in the
accumulated postretirement benefit obligation for the principal
U.S. plan.



---

Accumulated Postretirement Benefit
Obligation





|                                   |  |      |       |      |  |   |       |  
|---------------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|(In millions)                      |  | 2001 |       | 2000
|                                  
|                                  
|Balance at beginning of year       |  | $    | (25.6 | )    |  | $ | (25.9 | )
|Service cost                       |  |      | (.1   | )    |  |   | (.1   | )
|Interest cost                      |  |      | (1.9  | )    |  |   | (2.0  | )
|Benefits paid net of contributions |  |      | 3.3   |      |  |   | 3.3   |  
|Actuarial loss                     |  |      | (.4   | )    |  |   | (.9   | )
|Change in discount rate            |  |      | (1.8  | )    |  |   |      |  
|                                   |  |      |       |      |  |   |       |  
|Balance at end of year             |  | $    | (26.5 | )    |  | $ | (25.6 | )
|                                   |  |      |       |      |  |   |       |  
|                                  

The following table presents the components of
the companys liability for postretirement health care
benefits under the principal U.S. plan.



---

Accrued Postretirement Health Care
Benefits





|                                              |                                    |      |       |       |   |   |       |       |  
|--------------------------------------------- | ---------------------------------- | ---- | ----- | ----- | - | - | ----- | ----- | -
|(In millions)                                 |                                    | 2001 |       | 2000 
|                                             
|                                             
|Accumulated postretirement benefit obligation |                                    |      |       |       |   |   |       |      
|                                              | Retirees                           |      | $     | (20.5 | ) |   | $     | (20.2 | )
|                                              | Fully eligible active participants |      |       | (2.4  | ) |   |       | (2.3  | )
|                                              | Other active participants          |      |       | (3.6  | ) |   |       | (3.1  | )
|                                              |                                    |      |       |       |   |   |       |      
|                                              |                                    |      | (26.5 | )     |   |   | (25.6 | )    
|Unrecognized net gain                         |                                    |      | (5.5  | )     |   |   | (8.1  | )    
|                                              |                                    |      |       |       |   |   |       |      
|Accrued postretirement health care benefits   |                                    | $    | (32.0 | )     |   | $ | (33.7 | )    
|                                              |                                    |      |       |       |   |   |       |      
|                                             

The discount rate used in calculating the
accumulated postretirement benefit obligation was 7.25% for 2001
and 7.75% for 2000. For 2002, the assumed rate of increase in
health care costs used to calculate the accumulated
postretirement benefit obligation is 6.7%. This rate is assumed
to decrease to varying degrees annually to 5.0% for years after
2005. Because the dollar amount of the companys
contributions for most employees is frozen, a one percent change
in each year in relation to the above assumptions would not
significantly change the accumulated postretirement benefit
obligation or the total cost of the plan.

Income Taxes

Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts
used for income tax purposes. The significant components of the
companys deferred tax assets and liabilities as of
year-end 2001 and 2000 are as follows:




---

Components of Deferred Tax Assets and
Liabilities





|                         |                                                                                                          |                                                 |   |       |       |  |   |       |      | 
|------------------------ | -------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | - | ----- | ----- |  | - | ----- | ---- | 
|(In millions)            |                                                                                                          | 2001                                            |   | 2000 
|                        
|                        
|Deferred tax assets      |                                                                                                          |                                                 |   |       |       |  |   |      
|                         | Net operating loss carryforwards                                                                         |                                                 | $ | 68.5  |       |  | $ | 41.9  |     
|                         | Tax credit carryforwards                                                                                 |                                                 |   | 6.4   |       |  |   |      |     
|                         | Accrued postretirement health care benefits                                                              |                                                 |   | 12.0  |       |  |   | 11.3  |     
|                         | Inventories, principally due to obsolescence
	reserves and additional costs inventoried for tax purposes |                                                 |   | 10.6  |       |  |   | 6.2   |     
|                         | Accrued employee benefits other than pensions and
	retiree health care benefits                          |                                                 |   | 7.5   |       |  |   | 9.5   |     
|                         | Accrued pension cost                                                                                     |                                                 |   | 10.5  |       |  |   | 10.3  |     
|                         | Accrued warranty cost                                                                                    |                                                 |   | 2.6   |       |  |   | 2.7   |     
|                         | Accrued taxes                                                                                            |                                                 |   | 2.9   |       |  |   | 3.3   |     
|                         | Accounts receivable, principally due to
	allowances for doubtful accounts                                |                                                 |   | 2.9   |       |  |   | 3.8   |     
|                         | Accrued liabilities and other                                                                            |                                                 |   | 25.2  |       |  |   | 23.8  |     
|                         |                                                                                                          |                                                 |   |       |       |  |   |      
|                         | Total deferred tax assets                                                                                |                                                 |   | 149.1 |       |  |   | 112.8 |     
|                         | Less valuation allowances                                                                                |                                                 |   | (18.6 | )     |  |   | (23.7 | )   
|                         |                                                                                                          |                                                 |   |       |       |  |   |      
|                         |                                                                                                          | Deferred tax assets net of valuation allowances |   |       | 130.5 |  |   |       | 89.1 | 
|Deferred tax liabilities |                                                                                                          |                                                 |   |       |       |  |   |      
|                         | Property, plant and equipment, principally due to
	differences in depreciation methods                   |                                                 |   | 24.3  |       |  |   | 23.4  |     
|                         | Inventories                                                                                              |                                                 |   | 9.0   |       |  |   | 11.7  |     
|                         | Goodwill                                                                                                 |                                                 |   | 21.4  |       |  |   | 15.0  |     
|                         | Prepaid pension costs                                                                                    |                                                 |   | 9.7   |       |  |   | 6.6   |     
|                         |                                                                                                          |                                                 |   |       |       |  |   |      
|                         | Total deferred tax liabilities                                                                           |                                                 |   | 64.4  |       |  |   | 56.7  |     
|                         |                                                                                                          |                                                 |   |       |       |  |   |      
|                         |                                                                                                          | Net deferred tax assets                         |   | $     | 66.1  |  |   | $     | 32.4 | 
|                         |                                                                                                          |                                                 |   |       |       |  |   |      
|                        

Summarized in the following tables are the
companys earnings before income taxes, its provision for
income taxes, the components of the provision for deferred
income taxes and a reconciliation of the U.S. statutory rate to
the tax provision rate.

37



---



##### Table of Contents



Notes to Consolidated Financial Statements




---

Earnings (Loss) Before Income Taxes





|              |  |      |       |      |  |      |       |  |  |   |      | 
|------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ---- | 
|(In millions) |  | 2001 |       | 2000 |  | 1999
|             
|             
|United States |  | $    | (64.5 | )    |  | $    | 63.2  |  |  | $ | 61.9 | 
|Non-U.S       |  |      | (15.8 | )    |  |      | 37.5  |  |  |   | 37.0 | 
|              |  |      |       |      |  |      |       |  |  |   |      | 
|              |  | $    | (80.3 | )    |  | $    | 100.7 |  |  | $ | 98.9 | 
|              |  |      |       |      |  |      |       |  |  |   |      | 
|             

As presented in the above table, earnings
(loss) from U.S. operations in 2001 includes restructuring
costs of $15.1 million, while earnings from non-U.S. operations
includes $15.3 million of such costs. Earnings from U.S. and
non-U.S. operations in 2000 include restructuring costs $1.5
million and $1.2 million, respectively. Non-U.S. operations for
2000 also includes a gain of $1.5 million on the sale of the
companys industrial magnets business. In 1999, earnings
from U.S. operations includes restructuring costs of $5.2
million. Earnings from non-U.S. operations in 1999 includes
restructuring costs of $11.0 million and the gain on the sale of
the companys European extrusion systems business of $13.1
million.



---

Provision (Benefit) for Income Taxes





|                             |                 |      |       |       |   |      |      |      |   |   |      |      |  
|---------------------------- | --------------- | ---- | ----- | ----- | - | ---- | ---- | ---- | - | - | ---- | ---- | -
|(In millions)                |                 | 2001 |       | 2000  |   | 1999
|                            
|                            
|Current provision (benefit)  |                 |      |       |       |   |      |      |      |   |   |      |     
|                             | United States   |      | $     | (16.7 | ) |      | $    | 12.1 |   |   | $    | 2.0  |  
|                             | State and local |      |       | (.2   | ) |      |      | (4.6 | ) |   |      | 2.3  |  
|                             | Non-U.S         |      |       | 4.4   |   |      |      | 8.8  |   |   |      | 12.0 |  
|                             |                 |      |       |       |   |      |      |      |   |   |      |     
|                             |                 |      | (12.5 | )     |   |      | 16.3 |      |   |   | 16.3 |     
|Deferred provision (benefit) |                 |      |       |       |   |      |      |      |   |   |      |     
|                             | United States   |      |       | (13.7 | ) |      |      | 10.7 |   |   |      | 10.6 |  
|                             | Non-U.S         |      |       | (19.9 | ) |      |      | (1.6 | ) |   |      | (.5  | )
|                             |                 |      |       |       |   |      |      |      |   |   |      |     
|                             |                 |      | (33.6 | )     |   |      | 9.1  |      |   |   | 10.1 |     
|                             |                 |      |       |       |   |      |      |      |   |   |      |     
|                             |                 | $    | (46.1 | )     |   | $    | 25.4 |      |   | $ | 26.4 |     
|                             |                 |      |       |       |   |      |      |      |   |   |      |     
|                            



---

Components of the Provision
(Benefit)


for Deferred Income Taxes





|                                                                                        |  |      |       |      |  |      |       |   |  |   |      |  
|--------------------------------------------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ---- | -
|(In millions)                                                                           |  | 2001 |       | 2000 |  | 1999
|                                                                                       
|                                                                                       
|Change in valuation allowances                                                          |  | $    | (5.1  | )    |  | $    | (11.6 | ) |  | $ | (1.7 | )
|Change in deferred taxes related to operating
        loss and tax credit carryforwards |  |      | (33.0 | )    |  |      | 10.6  |   |  |   | 13.2 |  
|Depreciation and amortization                                                           |  |      | 7.3   |      |  |      | 4.7   |   |  |   | 4.0  |  
|Inventories and accounts receivable                                                     |  |      | (6.2  | )    |  |      | (1.6  | ) |  |   | (0.5 | )
|Accrued pension and other employee costs                                                |  |      | 4.2   |      |  |      | 2.4   |   |  |   | 0.5  |  
|Other                                                                                   |  |      | (.8   | )    |  |      | 4.6   |   |  |   | (5.4 | )
|                                                                                        |  |      |       |      |  |      |       |   |  |   |      |  
|                                                                                        |  | $    | (33.6 | )    |  | $    | 9.1   |   |  | $ | 10.1 |  
|                                                                                        |  |      |       |      |  |      |       |   |  |   |      |  
|                                                                                       



---

Reconciliation of the U.S. Statutory
Rate


to the Tax Provision Rate





|                                   |                                                                |      |       |       |   |      |      |       |   |  |      |      |  
|---------------------------------- | -------------------------------------------------------------- | ---- | ----- | ----- | - | ---- | ---- | ----- | - |  | ---- | ---- | -
|                                   |                                                                | 2001 |       | 2000  |   | 1999
|                                  
|                                  
|U.S. statutory tax rate            |                                                                |      | (35.0 | )%    |   |      | 35.0 | %     |   |  | 35.0 | %   
|Increase (decrease) resulting from |                                                                |      |       |       |   |      |      |       |   |  |      |     
|                                   | Tax benefits from net reversal of valuation
        allowances |      |       | (14.2 | ) |      |      | (15.6 | ) |  |      | (1.2 | )
|                                   | Losses without current tax benefits                            |      |       | 7.8   |   |      |      | 4.0   |   |  |      | 1.7  |  
|                                   | Adjustment of tax reserves                                     |      |       | (11.0 | ) |      |      | (5.8  | ) |  |      | (7.1 | )
|                                   | Statutory tax rate changes                                     |      |       | 1.2   |   |      |      | 4.3   |   |  |      | 5.3  |  
|                                   | U.S. federal income tax credits                                |      |       |      |   |      |      | (.7   | ) |  |      | (3.0 | )
|                                   | Effect of operations outside the U.S                           |      |       | (1.0  | ) |      |      | 1.3   |   |  |      | (4.2 | )
|                                   | State and local income taxes, net of federal
        benefit   |      |       | (3.1  | ) |      |      | 3.1   |   |  |      | 1.5  |  
|                                   | Other                                                          |      |       | (2.1  | ) |      |      | (.4   | ) |  |      | (1.3 | )
|                                   |                                                                |      |       |       |   |      |      |       |   |  |      |     
|                                   |                                                                |      | (57.4 | )%    |   |      | 25.2 | %     |   |  | 26.7 | %   
|                                   |                                                                |      |       |       |   |      |      |       |   |  |      |     
|                                  

At year-end 2001 the company had a U.S. net
operating loss carryforward of approximately $23.8 million that
expires in 2021. In addition, certain of the companys
non-U.S. subsidiaries had net operating loss carryforwards
aggregating approximately $169.7 million, substantially all of
which have no expiration dates. Approximately 36% of these loss
carryforwards are subject to restrictive covenants under a five
year contractual agreement through 2004 with the tax authorities
in Germany.

38



---



##### Table of Contents



Notes to Consolidated Financial Statements


Undistributed earnings of foreign subsidiaries
which are intended to be indefinitely reinvested aggregated
$126.4 million at the end of 2001. No deferred income taxes have
been recorded with respect to this amount.

Income taxes of $11.1 million, $14.7 million and
$3.0 million were paid in 2001, 2000 and 1999, respectively.

Earnings Per Common Share

The following tables present the calculation of
earnings available to common shareholders and a reconciliation
of the shares used to calculate basic and diluted earnings per
common share.




---

Earnings Applicable to Common
Shareholders





|                                                   |  |      |       |      |  |      |      |   |  |   |      |  
|-------------------------------------------------- |  | ---- | ----- | ---- |  | ---- | ---- | - |  | - | ---- | -
|(In millions)                                      |  | 2001 |       | 2000 |  | 1999
|                                                  
|                                                  
|Net earnings (loss)                                |  | $    | (35.7 | )    |  | $    | 72.3 |   |  | $ | 70.1 |  
|Dividends on Preferred shares                      |  |      | (.2   | )    |  |      | (.2  | ) |  |   | (.2  | )
|                                                   |  |      |       |      |  |      |      |   |  |   |      |  
|Earnings (loss) applicable to common
	shareholders |  | $    | (35.9 | )    |  | $    | 72.1 |   |  | $ | 69.9 |  
|                                                   |  |      |       |      |  |      |      |   |  |   |      |  



---

Reconciliation of Shares





|                                                        |  |      |        |      |  |      |        |  |  |  |        | 
|------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|(In thousands)                                          |  | 2001 |        | 2000 |  | 1999
|                                                       
|                                                       
|Weighted-average common shares outstanding              |  |      | 33,222 |      |  |      | 34,935 |  |  |  | 36,847 | 
|Effect of dilutive stock options and restricted
	shares |  |      |       |      |  |      | 111    |  |  |  | 202    | 
|                                                        |  |      |        |      |  |      |        |  |  |  |        | 
|Weighted-average common shares assuming dilution        |  |      | 33,222 |      |  |      | 35,046 |  |  |  | 37,049 | 
|                                                        |  |      |        |      |  |      |        |  |  |  |        | 
|                                                       

In 2001, weighted-average shares assuming
dilution excludes the effect of potentially dilutive stock
options and restricted shares because their inclusion would
result in a smaller loss per common share. Had they been
included, weighted-average shares assuming dilution would have
been 33,340 thousand. The weighted-average shares assuming
dilution amounts presented and discussed above exclude
restricted shares subject to contingent vesting based on the
attainment of specified earnings objectives (see Stock-Based
Compensation).

Receivables

The company maintains a receivables purchase
agreement with a third party financial institution. As accounts
receivable are generated from customer sales made by certain of
the companys U.S. consolidated subsidiaries, those
receivables are sold to Milacron Commercial Corp. (MCC), a
wholly-owned, consolidated subsidiary. MCC then sells, on a
revolving basis, an undivided percentage interest in designated
pools of accounts receivable to the financial institution. As
existing receivables are collected, MCC sells undivided
percentage interests in new eligible receivables. Accounts that
become 90 days past due are no longer eligible to be sold
and the company is at risk for credit losses for which the
company maintains an allowance for doubtful accounts.


The current agreement allows the company to
receive up to $75 million at a cost of funds linked to
commercial paper rates. The receivables purchase agreement
expires in 2004; the related liquidity facility backed by the
financial institution and three other commercial banks currently
requires annual renewals, at their option.

At December 31, 2001, 2000 and 1999, the
undivided interest in the companys gross accounts
receivable that had been sold to the purchaser aggregated $59.8
million, $85.0 million, and $75.0 million, respectively. The
amounts sold are reflected as reductions of accounts receivable
in the Consolidated Balance Sheets as of the respective dates.
Increases and decreases in the amount sold are reported as
operating cash flows in the consolidated Statements of Cash
Flows. Costs related to the sales were $3.5 million in
2001, $5.6 million in 2000 and $4.1 million in 1999.
These amounts are included in other costs and expenses-net in
the Consolidated Statements of Earnings.

Certain of the companys operations also
sell accounts receivable on an ongoing basis. In some cases,
these sales are made with recourse, in which case appropriate
reserves for potential losses are recorded at the sale date. At
December 31, 2001 and December 31, 2000, the gross
amount of accounts receivable that had been sold under these
arrangements totaled $11.1 million and $15.2 million,
respectively.

The company also periodically sells with recourse
notes receivable arising from customer purchases of plastics
processing machinery and, in a limited number of cases,
guarantees the repayment of notes from its customers to third
party lenders. At December 31, 2001, the companys
maximum exposure under these arrangements totaled $14.8 million.
In the event a customer were to fail to repay a note, the
company would generally regain title to the machinery for later
resale as used equipment. Costs related to sales of notes and
guarantees have not been material in the past.

Inventories

Inventories amounting to $76.3 million in 2001
and $111.3 million in 2000 are stated at LIFO cost. If stated at


39



---



##### Table of Contents



Notes to Consolidated Financial Statements


FIFO cost, such inventories would be greater by
approximately $16.4 million in 2001 and $16.5 million in 2000.

As presented in the Consolidated Balance Sheets,
inventories are net of reserves for obsolescence of $44.0
million and $36.2 million in 2001 and 2000, respectively.

Property, Plant and Equipment

The components of property, plant and equipment
are shown in the following table.




---

Property, Plant and Equipment 
Net





|                              |  |      |        |      |  |   |        |  
|----------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|(In millions)                 |  | 2001 |        | 2000
|                             
|                             
|Land                          |  | $    | 13.1   |      |  | $ | 12.7   |  
|Buildings                     |  |      | 149.6  |      |  |   | 143.2  |  
|Machinery and equipment       |  |      | 478.9  |      |  |   | 443.7  |  
|                              |  |      |        |      |  |   |        |  
|                              |  |      | 641.6  |      |  |   | 599.6  |  
|Less accumulated depreciation |  |      | (346.1 | )    |  |   | (294.1 | )
|                              |  |      |        |      |  |   |        |  
|                              |  | $    | 295.5  |      |  | $ | 305.5  |  
|                              |  |      |        |      |  |   |        |  
|                             

Liabilities

The components of accrued and other current
liabilities and long-term accrued liabilities are shown in the
following tables.




---

Accrued and Other Current
Liabilities





|                                               |  |      |       |      |  |   |       | 
|---------------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|(In millions)                                  |  | 2001 |       | 2000
|                                              
|                                              
|Accrued salaries, wages and other compensation |  | $    | 45.7  |      |  | $ | 48.1  | 
|Accrued and deferred income taxes              |  |      | 10.3  |      |  |   | 17.9  | 
|Other accrued expenses                         |  |      | 97.4  |      |  |   | 92.9  | 
|                                               |  |      |       |      |  |   |       | 
|                                               |  | $    | 153.4 |      |  | $ | 158.9 | 
|                                               |  |      |       |      |  |   |       | 
|                                              




Long-Term Accrued Liabilities





|                                            |  |      |       |      |  |   |       | 
|------------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|(In millions)                               |  | 2001 |       | 2000
|                                           
|                                           
|Accrued pensions and other compensation     |  | $    | 61.6  |      |  | $ | 63.1  | 
|Accrued postretirement health care benefits |  |      | 35.1  |      |  |   | 37.3  | 
|Accrued and deferred income taxes           |  |      | 59.5  |      |  |   | 34.8  | 
|Minority shareholders interests            |  |      | 21.1  |      |  |   | 23.3  | 
|Other                                       |  |      | 33.0  |      |  |   | 33.3  | 
|                                            |  |      |       |      |  |   |       | 
|                                            |  | $    | 210.3 |      |  | $ | 191.8 | 
|                                            |  |      |       |      |  |   |       | 
|                                           

Long-Term Debt

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




---

Long-Term Debt





|                          |  |      |       |      |  |   |       |  
|------------------------- |  | ---- | ----- | ---- |  | - | ----- | -
|(In millions)             |  | 2001 |       | 2000
|                         
|                         
|8 3/8% Notes due 2004     |  | $    | 115.0 |      |  | $ | 115.0 |  
|7 5/8% Eurobonds due 2005 |  |      | 103.5 |      |  |   | 104.6 |  
|Revolving credit facility |  |      | 274.3 |      |  |   | 146.1 |  
|Other                     |  |      | 25.3  |      |  |   | 25.3  |  
|                          |  |      |       |      |  |   |       |  
|                          |  |      | 518.1 |      |  |   | 391.0 |  
|Less current maturities   |  |      | (4.8  | )    |  |   | (8.4  | )
|                          |  |      |       |      |  |   |       |  
|                          |  | $    | 513.3 |      |  | $ | 382.6 |  
|                          |  |      |       |      |  |   |       |  
|                         

As of December 31, 2001, borrowings under
the companys revolving credit facility (see Lines of
Credit) totaled $326.3 million, of which $274.3 million is
included in long-term debt and $52.0 million is included in
borrowings under lines of credit in the Consolidated Balance
Sheet. At December 31, 2000, long-term debt included $146.1
million of the total of $204.1 million borrowed under the
facility. The amounts included in long-term debt are based on
the expectation that these borrowings will remain outstanding
for more than one year. The borrowings are at variable interest
rates, which had a weighted average of 5.3% per year at
December 31, 2001 and 7.4% per year at December 31,
2000.

Except for the 8 3/8% Notes due 2004 and the
7 5/8% Eurobonds due 2005, the carrying amount of the
companys long-term debt approximates fair value. At
year-end 2001, the fair value of the 8 3/8% Notes due 2004
was approximately $90.8 million and the fair value of the
7 5/8% Eurobonds due 2005 was approximately $77.4 million.

40



---



##### Table of Contents



Notes to Consolidated Financial Statements


These amounts are based on quoted prices as of
December 31, 2001.

Certain of the above long-term debt obligations
contain various restrictions and financial covenants. Amounts
borrowed under the revolving credit facility are collateralized.
Except for minor amounts borrowed under Industrial Revenue
Development Bonds and similar financings and certain non-U.S.
bank borrowings, none of the companys other indebtedness
is secured.

Interest paid was $40.5 million in 2001, $33.1
million in 2000 and $38.1 million in 1999.

Maturities of long-term debt for the five years
after 2001 are shown in the following table.



---

Maturities of Long-Term Debt





|              |  |   |       | 
|------------- |  | - | ----- | 
|(In millions) |  |  
|             
|             
|2002          |  | $ | 4.8   | 
|2003          |  |   | 3.3   | 
|2004          |  |   | 116.5 | 
|2005          |  |   | 379.0 | 
|2006          |  |   | 1.4   | 
|             

The company leases certain equipment and
facilities under operating leases, some of which include varying
renewal and purchase options. Future minimum rental payments
applicable to noncancellable operating leases during the next
five years and in the aggregate thereafter are shown in the
following table.



---

Rental Payments





|              |  |   |      | 
|------------- |  | - | ---- | 
|(In millions) |  |  
|             
|             
|2002          |  | $ | 18.6 | 
|2003          |  |   | 14.7 | 
|2004          |  |   | 12.5 | 
|2005          |  |   | 7.9  | 
|2006          |  |   | 5.9  | 
|After 2006    |  |   | 27.4 | 
|             

Rent expense was $21.2 million, $23.6 million and
$22.3 million in 2001, 2000 and 1999, respectively.

Lines of Credit

At year-end 2001, the company had lines of credit
with various U.S. and non-U.S. banks totaling approximately $476
million, including a $335 million committed revolving credit
facility which expires in June, 2005. These credit facilities
support letters of credit and leases in addition to providing
borrowings under varying terms. At December 31, 2001, $333
million was drawn against the revolving credit facility
including outstanding letters of credit of $7 million. The
revolving credit facility, which includes certain financial
covenants, was amended in 2001. As amended, the facility limits
the payment of cash dividends and imposes certain restrictions
on share repurchases, capital expenditures and cash
acquisitions. In connection with the amendment, the company
pledged as collateral the capital stock of its principal direct
domestic subsidiaries as well as the inventories of the company
and all of its domestic subsidiaries and certain other domestic
tangible and intangible assets.


The company uses a net debt capacity
concept for internal liquidity management purposes and
calculates it as the sum of (i) the additional amount that
can be borrowed in compliance with its net debt to EBITDA
(earnings before interest, taxes, depreciation and amortization)
financial covenant in the revolving credit facility and
(ii) the amount of cash and cash equivalents on hand.
Increases in cash and cash equivalents serve to increase the
amount of net debt capacity as of any given time whereas
decreases in cash and cash equivalents serve to reduce the net
debt capacity. As of December 31, 2001, the companys
net debt capacity totaled approximately $116 million, which
consisted of $110 million in cash and an additional $6 million
in borrowing ability from all otherwise available lines of
credit.

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

The weighted-average interest rate on borrowings
under lines of credit outstanding as of year-end was 5.4% for
2001 and 7.5% for 2000.

41



---



##### Table of Contents



Notes to Consolidated Financial Statements


Shareholders Equity

On October 2, 1998, the company announced
its intention to repurchase up to two million of its outstanding
common shares on the open market, of which 1,239,700 were
repurchased during the fourth quarter of 1998. The remaining
760,300 shares were repurchased in the first quarter of 1999.
For all of 1999, the company repurchased a total of 960,300
treasury shares at a cost of $16.3 million. During 1999, 948
treasury shares were reissued. Additional shares totaling
103,168 were repurchased in 1999 in connection with current
exercises of stock options and restricted share grants in lieu
of the use of authorized but unissued shares or treasury shares.


On February 4, 2000, the companys
Board of Directors approved an additional share repurchase
program authorizing the repurchase of up to four million common
shares on the open market, of which 3,271,800 were repurchased
during 2000. An additional 200,000 shares were repurchased in
the first quarter of 2001 in connection with this authorization.
Under the terms of the amended revolving credit facility (see
Lines of Credit) the company agreed that no additional
repurchases will be made. In total, the company purchased
3,349,938 treasury shares in 2000 at a cost of $48.7 million. An
additional 43,516 shares were purchased on the open market for
management incentive and employee benefit programs. A total of
78,000 treasury shares were reissued in 2000 in connection with
restricted share grants.

For all of 2001, the company repurchased a total
of 260,000 treasury shares at a cost of $5.2 million. An
additional 109,440 shares were repurchased on the open market in
connection with stock option exercises, restricted stock grants
and employee benefit programs. Stock option exercises also
resulted in the issuance of 28,500 previously unissued shares. A
total of 426,543 treasury shares were reissued in 2001 in
connection with management incentive and employee benefit
programs.



---

Shareholders Equity 
Preferred and Common Shares





|                                                                                                                                      |  |      |      |      |  |  |      | 
|------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ---- | ---- |  |  | ---- | 
|(In millions, except per-share                                                                                                        |  |      |      |     
|amounts)                                                                                                                              |  | 2001 |      | 2000
|                                                                                                                                     
|                                                                                                                                     
|4% Cumulative Preferred shares authorized, issued
	and outstanding, 60,000 shares at $100 par value, redeemable at
	$105 a share      |  |      | $6.0 |      |  |  | $6.0 | 
|Common shares, $1 par value, authorized
	50,000,000 shares, issued and outstanding, 2001: 33,467,506
	shares; 2000: 33,346,596 shares |  |      | 33.5 |      |  |  | 33.3 | 
|                                                                                                                                     

As presented in the previous table, common shares
outstanding are net of treasury shares of 6,140,582 in 2001 and
6,307,125 in 2000.

The company has authorized ten million serial
preference shares with $1 par value. None of these shares have
been issued.

Holders of company common shares have one vote
per share until they have held their shares at least 36
consecutive months, after which they are entitled to ten votes
per share.

The company has a stockholder rights plan which
provides for the issuance of one nonvoting preferred stock right
for each common share issued as of February 5, 1999 or
issued subsequent thereto. Each right, if activated, will
entitle the holder to purchase 1/1000 of a share of
Series A Participating Cumulative Preferred Stock at an
initial exercise price of $70.00. Each 1/1000 of a preferred
share will be entitled to participate in dividends and vote on
an equivalent basis with one whole common share. Initially, the
rights are not exercisable. The rights will become exercisable
if any person or group acquires, or makes a tender offer for,
more than 15% of the companys outstanding common shares.
In the event that any party should acquire more than 15% of the
companys common shares without the approval of the Board
of Directors, the rights entitle all other shareholders to
purchase the preferred shares at a substantial discount. In
addition, if a merger occurs with any potential acquirer owning
more than 15% of the shares outstanding, holders of rights other
than the potential acquirer will be able to purchase the
acquirers common stock at a substantial discount. The
rights plan expires in February, 2009.

Comprehensive Income (Loss)

Total comprehensive income or loss represents the
net change in shareholders equity during a period from


42



---



##### Table of Contents



Notes to Consolidated Financial Statements


sources other than transactions with shareholders
and, as such, includes net earnings or loss for the period. For
the company, the only other components of total comprehensive
income are the change in cumulative foreign currency translation
adjustments and, beginning in 2001, the change in the fair value
of foreign currency exchange contracts accounted for as cash
flow hedges. The components of total comprehensive income
(loss) are as follows:



---

Comprehensive Income (Loss)





|                                                             |  |      |       |      |  |      |       |   |  |   |       |  
|------------------------------------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|(In millions)                                                |  | 2001 |       | 2000 |  | 1999
|                                                            
|                                                            
|Net earnings (loss)                                          |  | $    | (35.7 | )    |  | $    | 72.3  |   |  | $ | 70.1  |  
|Foreign currency translation adjustments                     |  |      | (1.3  | )    |  |      | (14.3 | ) |  |   | (21.0 | )
|Cumulative effect of change in method of
	accounting         |  |      | (.3   | )    |  |      |      |   |  |   |      |  
|Change in fair value of foreign currency exchange
	contracts |  |      | .3    |      |  |      |      |   |  |   |      |  
|                                                             |  |      |       |      |  |      |       |   |  |   |       |  
|Total comprehensive income (loss)                            |  | $    | (37.0 | )    |  | $    | 58.0  |   |  | $ | 49.1  |  
|                                                             |  |      |       |      |  |      |       |   |  |   |       |  
|                                                            

At December 31, 2001, the companys
accumulated other comprehensive loss consisted almost entirely
of foreign currency translation adjustments. The amount related
to foreign currency exchange contracts was insignificant.

Contingencies

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


Various lawsuits arising during the normal course
of business are pending against the company and its consolidated
subsidiaries.

In the opinion of management, the ultimate
liability, if any, resulting from these matters will have no
significant effect on the companys consolidated financial
position or results of operations.

Foreign Exchange Contracts

At December 31, 2001, the company had
outstanding forward contracts totaling $2.8 million, which
generally mature in periods of six months or less. These
contracts require the company and its subsidiaries to exchange
currencies on the maturity dates at exchange rates agreed upon
at inception. Substantially all of these contracts have been
designated as cash flow hedges with any gains or losses
resulting from changes in their fair value being recorded as a
component of other comprehensive income or loss pending
completion of the transaction being hedged.


Stock-Based Compensation

The 1997 Long-Term Incentive Plan (1997 Plan)
permits the company to grant its common shares in the form of
non-qualified stock options, incentive stock options, restricted
stock and performance awards.


Under the 1997 Plan, non-qualified and incentive
stock options are granted at market value, vest in increments
over a four or five year period, and expire ten years subsequent
to the award. Of the 4,214,775 stock options outstanding at
year-end 2001, 331,000 are incentive stock options.

Summaries of stock options granted under the 1997
Plan and prior plans are presented in the following tables.



---

Stock Option Activity





|                             |           |        |           |           |   |   |       |       | 
|---------------------------- | --------- | ------ | --------- | --------- | - | - | ----- | ----- | 
|                             |           |        |           | Weighted-
|                             |           |        |           | Average  
|                             |           |        |           | Exercise 
|                             |           | Shares |           | Price    
|                            
|                            
|Outstanding at year-end 1998 |           |        | 3,409,403 |           |   | $ | 22.34 |      
|                             | Granted   |        |           | 455,500   |   |   |       | 19.67 | 
|                             | Exercised |        |           | (8,440    | ) |   |       | 15.21 | 
|                             | Cancelled |        |           | (106,184  | ) |   |       | 22.78 | 
|                             |           |        |           |           |   |   |       |      
|Outstanding at year-end 1999 |           |        | 3,750,279 |           |   |   | 22.02 |      
|                             | Granted   |        |           | 717,800   |   |   |       | 13.51 | 
|                             | Exercised |        |           | (28,500   | ) |   |       | 9.50  | 
|                             | Cancelled |        |           | (358,304  | ) |   |       | 20.71 | 
|                             |           |        |           |           |   |   |       |      
|Outstanding at year-end 2000 |           |        | 4,081,275 |           |   |   | 20.65 |      
|                             | Granted   |        |           | 603,000   |   |   |       | 19.79 | 
|                             | Exercised |        |           | (311,350  | ) |   |       | 13.26 | 
|                             | Cancelled |        |           | (158,150  | ) |   |       | 20.91 | 
|                             |           |        |           |           |   |   |       |      
|Outstanding at year-end 2001 |           |        | 4,214,775 |           |   |   | 21.06 |      
|                             |           |        |           |           |   |   |       |      
|                            

43



---



##### Table of Contents



Notes to Consolidated Financial Statements




---

Exercisable Stock Options at
Year-End





|     |  |         |           | 
|---- |  | ------- | --------- | 
|     |  | Stock  
|     |  | Options
|    
|    
|1999 |  |         | 1,871,467 | 
|2000 |  |         | 2,134,700 | 
|2001 |  |         | 2,261,538 | 
|    



---

Shares Available for Future Grant at
Year-End





|     |  |        |           | 
|---- |  | ------ | --------- | 
|     |  | Shares
|    
|    
|1999 |  |        | 141,552   | 
|2000 |  |        | 2,130,595 | 
|2001 |  |        | 1,658,721 | 
|    

The following tables summarize information about
stock options outstanding at December 31, 2001.



---

Components of Outstanding Stock
Options





|         |             |             |  |           |           |           |  |  |     |  |  |   |       | 
|-------- | ----------- | ----------- |  | --------- | --------- | --------- |  |  | --- |  |  | - | ----- | 
|         |             |             |  | Average   |           | Weighted-
|Range of |             |             |  | Remaining |           | Average  
|Exercise |             | Number      |  | Contract  |           | Exercise 
|Prices   |             | Outstanding |  | Life      |           | Price    
|        
|        
|$        | 13.00-19.56 |             |  |           | 961,950   |           |  |  | 6.7 |  |  | $ | 13.87 | 
|         | 20.00-27.91 |             |  |           | 3,252,825 |           |  |  | 5.3 |  |  |   | 23.19 | 
|         |             |             |  |           |           |           |  |  |     |  |  |   |       | 
|         | 14.50-27.91 |             |  |           | 4,214,775 |           |  |  | 5.7 |  |  |   | 21.06 | 
|         |             |             |  |           |           |           |  |  |     |  |  |   |       | 
|        



---

Components of Exercisable Stock
Options





|         |             |             |  |           |           |  |  |   |       | 
|-------- | ----------- | ----------- |  | --------- | --------- |  |  | - | ----- | 
|         |             |             |  | Weighted-
|Range of |             |             |  | Average  
|Exercise |             | Number      |  | Exercise 
|Prices   |             | Exercisable |  | Price    
|        
|        
|$        | 14.50-19.56 |             |  |           | 186,750   |  |  | $ | 14.87 | 
|         | 20.00-27.91 |             |  |           | 2,074,788 |  |  |   | 23.80 | 
|         |             |             |  |           |           |  |  |   |       | 
|         | 14.50-27.91 |             |  |           | 2,261,538 |  |  |   | 23.06 | 
|         |             |             |  |           |           |  |  |   |       | 
|        

Because the company accounts for stock-based
compensation in accordance with Accounting Principles Board
Opinion No. 25 and because stock options outstanding under
the 1997 Plan and prior plans have exercise prices equal to the
market price of the companys common shares at the grant
dates, no compensation expense is recognized. Pro forma earnings
amounts prepared under the assumption that the stock options
granted in years 1995 through 2001 had been accounted for based
on their fair value as determined under Statement of Financial
Accounting Standards No. 123, Accounting for
Stock-Based Compensation, are presented in the following
table.



---

Pro Forma Earnings (Loss)





|                                        |         |      |       |       |   |      |      |      |  |   |      |      | 
|--------------------------------------- | ------- | ---- | ----- | ----- | - | ---- | ---- | ---- |  | - | ---- | ---- | 
|(In millions, except per-share amounts) |         | 2001 |       | 2000  |   | 1999
|                                       
|                                       
|Net earnings (loss)                     |         | $    | (37.7 | )     |   | $    | 70.7 |      |  | $ | 67.1 |     
|                                        |         |      |       |       |   |      |      |      |  |   |      |     
|Net earnings (loss) per common share    |         |      |       |       |   |      |      |      |  |   |      |     
|                                        | Basic   |      | $     | (1.14 | ) |      | $    | 2.02 |  |   | $    | 1.81 | 
|                                        |         |      |       |       |   |      |      |      |  |   |      |     
|                                        | Diluted |      | $     | (1.14 | ) |      | $    | 2.01 |  |   | $    | 1.81 | 
|                                        |         |      |       |       |   |      |      |      |  |   |      |     
|                                       

The weighted-average per-share fair value of
stock options granted during 2001, 2000 and 1999 was $7.61,
$4.15 and $6.02, respectively. The fair values of the options
were calculated as of the grant dates using the Black-Scholes
option pricing model using the following assumptions:



---

Fair Value Assumptions





|                                      |  |      |            |      |  |      |            |   |  |  |          |  
|------------------------------------- |  | ---- | ---------- | ---- |  | ---- | ---------- | - |  |  | -------- | -
|                                      |  | 2001 |            | 2000 |  | 1999
|                                     
|                                     
|Dividend yield                        |  |      | .8-1.2     | %    |  |      | 3.7        | % |  |  | 2.4      | %
|Expected volatility                   |  |      | 39-50      | %    |  |      | 38-48      | % |  |  | 35-41    | %
|Risk free interest rate at grant date |  |      | 4.74- 5.15 | %    |  |      | 6.61- 6.63 | % |  |  | 4.9- 5.6 | %
|Expected life in years                |  |      | 2-7        |      |  |      | 2-7        |   |  |  | 2-7      |  
|                                     

Under the 1997 Plan, performance awards are
granted in the form of restricted stock awards which vest based
on the achievement of specified earnings objectives over a three
year period. The 1997 Plan also permits the granting of other
restricted stock awards, which also vest three years from the
date of grant. During the restriction period, restricted stock
awards entitle the holder to all the rights of a holder of
common shares, including dividend and voting rights. Unvested
shares are restricted as to disposition and subject to
forfeiture under certain circumstances. In 2001, reversals of
prior years accruals for performance grants of $.3 million
offset charges to expense totaling $.3 million for other
restricted stock awards. The amount of compensation expense
recognized in 2000 for restricted stock, including performance
awards, was $.5 million. In 1999, reversals of prior years
accruals for performance grants resulted in a

44



---



##### Table of Contents



Notes to Consolidated Financial Statements


net benefit from restricted stock of $5.8
million. Restricted stock award activity is as follows:



---

Restricted Stock Activity





|                                               |  |      |        |      |  |      |        |  |  |   |        | 
|---------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  | - | ------ | 
|                                               |  | 2001 |        | 2000 |  | 1999
|                                              
|                                              
|Restricted stock granted                       |  |      | 90,500 |      |  |      | 86,000 |  |  |   | 81,974 | 
|                                               |  |      |        |      |  |      |        |  |  |   |        | 
|Weighted-average market value on date of grant |  | $    | 19.21  |      |  | $    | 13.13  |  |  | $ | 20.09  | 
|                                               |  |      |        |      |  |      |        |  |  |   |        | 
|                                              

Restricted shares awarded as performance awards
subject to contingent vesting totaled 51,000 in 2001, 68,000 in
2000 and 68,174 in 1999. Outstanding restricted shares subject
to contingent vesting totaled 159,493, 173,075 and 267,808 at
year-end 2001, 2000 and 1999, respectively. The amount
outstanding at year-end 2001 includes 52,806 shares that will be
cancelled in February, 2002 because the basic earnings per
common share objective for 2001 was not attained. In February,
2001 and 2000, restricted shares subject to contingent vesting
of 42,345 and 153,488, respectively, were also cancelled.

Cancellations of restricted stock, including
shares cancelled to pay employee withholding taxes at maturity,
totaled 73,133 in 2001, 190,434 in 2000 and 38,262 in 1999.

Issuances of shares related to performance awards
earned under a prior plan and to deferred directors fees
totaled 18,525 in 2001, 7,016 in 2000 and 12,754 in 1999.

Organization

The company operates in two business segments:
plastics technologies and metalworking technologies. The company
has operations in the United States, Canada, Mexico and other
countries located principally in western Europe and Asia.


The companys business segments are
determined based on the nature of the products produced and the
markets served. The plastics technologies segment includes the
production of injection molding machines, mold bases, systems
for extrusion and blow molding and various other specialty
equipment. The market is driven by the consumer economy and the
automotive and construction industries. The metalworking
technologies segment serves a variety of industries, including
the automotive industry. It produces four basic types of
industrial products: metalcutting tools (carbide inserts and
round tools), metalworking fluids, precision grinding wheels and
carbide wear parts. The markets for both business segments are
highly competitive and can be cyclical in nature.

Financial data for the past three years for the
companys business segments are shown in the following
tables. The accounting policies followed by the segments are
identical to those used in the preparation of the companys
consolidated financial statements. The effects of intersegment
transactions, which are not material in amount, have been
eliminated. The company incurs costs and expenses and holds
certain assets at the corporate level which relate to its
business as a whole. Certain of these amounts have been
allocated to the companys business segments by various
methods, largely on the basis of usage. Management believes that
all such allocations are reasonable.

45



---



##### Table of Contents



Notes to Consolidated Financial Statements




---

Sales by Segment





|                          |  |      |         |      |  |      |         |  |  |   |         | 
|------------------------- |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|(In millions)             |  | 2001 |         | 2000 |  | 1999
|                         
|                         
|Plastics technologies     |  | $    | 662.4   |      |  | $    | 873.8   |  |  | $ | 904.2   | 
|Metalworking technologies |  |      | 600.3   |      |  |      | 710.4   |  |  |   | 720.5   | 
|                          |  |      |         |      |  |      |         |  |  |   |         | 
|Total sales               |  | $    | 1,262.7 |      |  | $    | 1,584.2 |  |  | $ | 1,624.7 | 
|                          |  |      |         |      |  |      |         |  |  |   |         | 
|                         



---

Operating Information by Segment





|                                                                                 |                                         |      |         |       |   |      |         |       |   |   |         |       |  
|-------------------------------------------------------------------------------- | --------------------------------------- | ---- | ------- | ----- | - | ---- | ------- | ----- | - | - | ------- | ----- | -
|(In millions)                                                                    |                                         | 2001 |         | 2000  |   | 1999
|                                                                                
|                                                                                
|Operating earnings (loss)                                                        |                                         |      |         |       |   |      |         |       |   |   |         |      
|                                                                                 | Plastics technologies                   |      | $       | (9.9  | ) |      | $       | 97.0  |   |   | $       | 89.3  |  
|                                                                                 | Metalworking technologies               |      |         | 19.9  |   |      |         | 70.7  |   |   |         | 72.8  |  
|                                                                                 | Restructuring costs (a)                 |      |         | (30.4 | ) |      |         | (2.7  | ) |   |         | (16.2 | )
|                                                                                 | Gains on divestitures of businesses (b) |      |         |      |   |      |         | 1.5   |   |   |         | 13.1  |  
|                                                                                 | Corporate expenses                      |      |         | (16.3 | ) |      |         | (18.7 | ) |   |         | (16.5 | )
|                                                                                 | Other unallocated expenses (c)          |      |         | (4.3  | ) |      |         | (7.6  | ) |   |         | (5.4  | )
|                                                                                 |                                         |      |         |       |   |      |         |       |   |   |         |      
|Operating earnings (loss)                                                        |                                         |      | (41.0   | )     |   |      | 140.2   |       |   |   | 137.1   |      
|Interest expense-net                                                             |                                         |      | (39.3   | )     |   |      | (39.5   | )     |   |   | (38.2   | )    
|                                                                                 |                                         |      |         |       |   |      |         |       |   |   |         |      
|Earnings (loss) before income taxes and
        minority shareholders interests |                                         | $    | (80.3   | )     |   | $    | 100.7   |       |   | $ | 98.9    |      
|                                                                                 |                                         |      |         |       |   |      |         |       |   |   |         |      
|                                                                                
|Segment assets (d)                                                               |                                         |      |         |       |   |      |         |       |   |   |         |      
|                                                                                 | Plastics technologies                   |      | $       | 773.8 |   |      | $       | 850.5 |   |   | $       | 850.8 |  
|                                                                                 | Metalworking technologies               |      |         | 464.1 |   |      |         | 517.7 |   |   |         | 552.8 |  
|                                                                                 |                                         |      |         |       |   |      |         |       |   |   |         |      
|                                                                                 |                                         |      | 1,237.9 |       |   |      | 1,368.2 |       |   |   | 1,403.6 |      
|                                                                                 | Cash and cash equivalents               |      |         | 110.4 |   |      |         | 41.2  |   |   |         | 81.3  |  
|                                                                                 | Receivables sold                        |      |         | (59.8 | ) |      |         | (85.0 | ) |   |         | (75.0 | )
|                                                                                 | Deferred income taxes                   |      |         | 125.3 |   |      |         | 52.4  |   |   |         | 52.4  |  
|                                                                                 | Unallocated corporate and other (e)     |      |         | 98.5  |   |      |         | 88.1  |   |   |         | 74.4  |  
|                                                                                 |                                         |      |         |       |   |      |         |       |   |   |         |      
|Total assets                                                                     |                                         | $    | 1,512.3 |       |   | $    | 1,464.9 |       |   | $ | 1,536.7 |      
|                                                                                 |                                         |      |         |       |   |      |         |       |   |   |         |      
|                                                                                



---

Operating Information by Segment





|                                                            |                           |      |      |      |  |      |      |      |  |   |      |      | 
|----------------------------------------------------------- | ------------------------- | ---- | ---- | ---- |  | ---- | ---- | ---- |  | - | ---- | ---- | 
|(In millions)                                               |                           | 2001 |      | 2000 |  | 1999
|                                                           
|                                                           
|Capital expenditures                                        |                           |      |      |      |  |      |      |      |  |   |      |     
|                                                            | Plastics technologies     |      | $    | 12.4 |  |      | $    | 22.1 |  |   | $    | 18.9 | 
|                                                            | Metalworking technologies |      |      | 19.0 |  |      |      | 23.7 |  |   |      | 26.7 | 
|                                                            | Unallocated corporate     |      |      | .2   |  |      |      | 1.2  |  |   |      | 1.7  | 
|                                                            |                           |      |      |      |  |      |      |      |  |   |      |     
|Total capital expenditures                                  |                           | $    | 31.6 |      |  | $    | 47.0 |      |  | $ | 47.3 |     
|                                                            |                           |      |      |      |  |      |      |      |  |   |      |     
|                                                           
|Depreciation and amortization
        Plastics technologies |                           | $    | 31.6 |      |  | $    | 30.8 |      |  | $ | 32.8 |     
|                                                            | Metalworking technologies |      |      | 26.8 |  |      |      | 26.9 |  |   |      | 24.9 | 
|                                                            | Unallocated corporate     |      |      | .8   |  |      |      | .7   |  |   |      | .6   | 
|                                                            |                           |      |      |      |  |      |      |      |  |   |      |     
|Total depreciation and amortization                         |                           | $    | 59.2 |      |  | $    | 58.4 |      |  | $ | 58.3 |     
|                                                            |                           |      |      |      |  |      |      |      |  |   |      |     
|                                                           



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In 2001, $17.2 million relates to the plastics
        technologies segment and $13.2 million relates to the
        metalworking technologies segment. In 2000, $1.1 million
        relates to the plastics technologies segment and
        $1.6 million relates to the metalworking technologies
        segment. In 1999, $6.7 million relates to the plastics
        technologies segment and $9.5 million relates to the
        metalworking technologies segment.
|   
|(b) | The 2000 amount relates to the metalworking
        technologies segment and the 1999 amount relates to the plastics
        technologies segment.                                                                                                                                                                                                                                                                                                                         
|   
|(c) | Includes financing costs related to the sale of
        accounts receivable.                                                                                                                                                                                                                                                                                                                                                                                               
|   
|(d) | Segment assets consist principally of accounts
        receivable, inventories, goodwill and property, plant and
        equipment which are considered controllable assets for
        management reporting purposes.                                                                                                                                                                                                                                                     
|   
|(e) | Consists principally of corporate assets,
        nonconsolidated investments, certain intangible assets, cash
        surrender value of company-owned life insurance, prepaid
        expenses and deferred charges.                                                                                                                                                                                                                                                     

46



---



##### Table of Contents



Notes to Consolidated Financial Statements




---

Geographic Information





|                        |                             |                      |         |       |       |      |         |         |       |   |         |         |       | 
|----------------------- | --------------------------- | -------------------- | ------- | ----- | ----- | ---- | ------- | ------- | ----- | - | ------- | ------- | ----- | 
|(In millions)           |                             | 2001                 |         | 2000  |       | 1999
|                       
|                       
|Sales (a)               |                             |                      |         |       |       |      |         |         |       |   |         |        
|                        | United States               |                      | $       | 737.2 |       |      | $       | 1,038.8 |       |   | $       | 1,002.9 |      
|                        | Non-U.S. operations Germany |                      |         | 205.4 |       |      |         | 217.5   |       |   |         | 234.5   |      
|                        |                             | Other western Europe |         |       | 182.0 |      |         |         | 176.4 |   |         |         | 252.2 | 
|                        |                             | Asia                 |         |       | 85.0  |      |         |         | 90.5  |   |         |         | 83.3  | 
|                        |                             | Other                |         |       | 53.1  |      |         |         | 61.0  |   |         |         | 51.8  | 
|                        |                             |                      |         |       |       |      |         |         |       |   |         |        
|Total sales             |                             | $                    | 1,262.7 |       |       | $    | 1,584.2 |         |       | $ | 1,624.7 |        
|                        |                             |                      |         |       |       |      |         |         |       |   |         |        
|                       
|Noncurrent assets       |                             |                      |         |       |       |      |         |         |       |   |         |        
|                        | United States               |                      | $       | 554.1 |       |      | $       | 574.4   |       |   | $       | 579.3   |      
|                        | Non-U.S. operations Germany |                      |         | 122.3 |       |      |         | 102.7   |       |   |         | 112.6   |      
|                        |                             | Other western Europe |         |       | 73.6  |      |         |         | 76.9  |   |         |         | 75.7  | 
|                        |                             | Asia                 |         |       | 21.8  |      |         |         | 19.2  |   |         |         | 20.3  | 
|                        |                             | Other                |         |       | 7.9   |      |         |         | 7.4   |   |         |         | 6.2   | 
|                        |                             |                      |         |       |       |      |         |         |       |   |         |        
|Total noncurrent assets |                             | $                    | 779.7   |       |       | $    | 780.6   |         |       | $ | 794.1   |        
|                        |                             |                      |         |       |       |      |         |         |       |   |         |        
|                       



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

Sales of U.S. operations include export sales of
$108.7 million in 2001, $132.9 million in 2000 and
$148.4 million in 1999.

Total sales of the companys U.S. and
non-U.S. operations to unaffiliated customers outside the U.S.
were $582.9 million, $612.7 million and
$714.7 million in 2001, 2000 and 1999, respectively.

47



---



##### Table of Contents



Report of Independent Auditors

Board of Directors

Milacron Inc.


We have audited the accompanying Consolidated
Balance Sheets of Milacron Inc. and subsidiaries as of
December 31, 2001 and 2000, and the related Consolidated
Statements of Earnings, Comprehensive Income and
Shareholders Equity, and Cash Flows for each of the three
years in the period ended December 31, 2001. Our audits
also included the financial statement schedule listed in the
Index at Item 14 (a). These financial statements and
schedule are the responsibility of the Companys
management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with
auditing standards generally accepted in the United States.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Milacron Inc. and
subsidiaries at December 31, 2001 and 2000, and the
consolidated results of their operations and their cash flows
for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion,
the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.



| |                                          
| | -----------------------------------------
| | /s/ Ernst & Young LLP 
	 Cincinnati, Ohio
| | March 14, 2002                           

Supplementary Financial Information



| |                                         
| | ----------------------------------------
| |                                         
| | Operating Results by Quarter (Unaudited)
| |                                         

|                                             |                  |         |       |       |     |       |       |       |     |   |       |      |      |   |       |      |      |  
|-------------------------------------------- | ---------------- | ------- | ----- | ----- | --- | ----- | ----- | ----- | --- | - | ----- | ---- | ---- | - | ----- | ---- | ---- | -
|                                            
|(In millions, except per-share amounts) 2001
|                                            
|                                             |                  | Qtr 1   |       | Qtr 2 |     | Qtr 3 |       | Qtr 4
|                                            
|                                            
|Sales                                        |                  | $       | 339.1 |       |     | $     | 323.2 |       |     | $ | 294.9 |      |      | $ | 305.5 |     
|Manufacturing margins                        |                  |         | 79.5  |       |     |       | 69.4  |       |     |   | 46.6  |      |      |   | 48.8  |     
|                                             | Percent of sales |         |       | 23.4  | %   |       |       | 21.5  | %   |   |       | 15.8 | %    |   |       | 16.0 | %   
|Net earnings (loss) (a)                      |                  |         | 3.5   |       |     |       | 1.1   |       |     |   | (18.4 | )    |      |   | (21.9 | )   
|                                             | Per common share |         |       |       |     |       |       |       |     |   |       |      |      |   |       |      |     
|                                             |                  | Basic   |       |       | .10 |       |       |       | .03 |   |       |      | (.55 | ) |       |      | (.66 | )
|                                             |                  | Diluted |       |       | .10 |       |       |       | .03 |   |       |      | (.55 | ) |       |      | (.66 | )
|                                            
|                                             |                  | 2000   
|                                            
|Sales                                        |                  | $       | 396.9 |       |     | $     | 404.5 |       |     | $ | 394.0 |      |      | $ | 388.8 |     
|Manufacturing margins                        |                  |         | 102.9 |       |     |       | 105.4 |       |     |   | 102.0 |      |      |   | 99.8  |     
|                                             | Percent of sales |         |       | 25.9  | %   |       |       | 26.1  | %   |   |       | 25.9 | %    |   |       | 25.7 | %   
|Net earnings (b)                             |                  |         | 15.1  |       |     |       | 16.7  |       |     |   | 18.5  |      |      |   | 22.0  |     
|                                             | Per common share |         |       |       |     |       |       |       |     |   |       |      |      |   |       |      |     
|                                             |                  | Basic   |       |       | .42 |       |       |       | .47 |   |       |      | .53  |   |       |      | .65  |  
|                                             |                  | Diluted |       |       | .41 |       |       |       | .47 |   |       |      | .53  |   |       |      | .65  |  
|                                            



|    |                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Includes restructuring costs of
	$12.6 million ($7.8 million after tax) in
	quarter 3 and $17.8 million ($11.3 million after
	tax) in quarter 4.                                                                                                                                                                                                                                        
|   
|(b) | Includes restructuring costs of $1.2 million
	($.8 million after tax) in quarter 1, $.3 million
	($.2 million after tax) in quarter 2, $.6 million
	($.4 million after tax) in quarter 3, and
	$.6 million ($.5 million after tax) in quarter 4.
	In quarter 3, also includes a gain of $1.5 million
	($.8 million after tax) on the sale of the companys
	industrial magnets business.

48



---



##### Table of Contents








|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on Accounting
	and Financial Disclosure

Not applicable.




PART III






|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant

The information required by the first part of
Item 10 is (i) incorporated herein by reference to the
Election of Directors section of the companys
proxy statement dated March 29, 2002 and (ii) included
in Part I Executive Officers of the Registrant,
on page 9 of this Form 10-K.

The information required by the second part of
Item 10 is incorporated herein by reference to the
Section 16(a) Beneficial Ownership Reporting
Compliance section of the companys proxy statement
dated March 29, 2002.






Item 11. Executive Compensation


The following sections of the companys
proxy statement dated March 29, 2002 are incorporated
herein by reference:



| |                                                                                                                                                                                                                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Board of Directors and Board
	Committees  Compensation and Benefits,
	Retirement, Executive Severance
	Agreements, Personnel and Compensation Committee
	Report on Executive Compensation, Summary
	Compensation Table, Option Grants in Last Fiscal
	Year, Aggregated Option Exercises in Last Year and
	Fiscal Year-End Option Values, and Performance
	Graph.






|         |                                                                
|-------- | ---------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
	Management

The Principal Holders of Voting
Securities section and the Share Ownership of
Directors and Executive Officers section of the
companys proxy statement dated March 29, 2002 is
incorporated herein by reference.






|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions

The Certain Transactions and
Stock Loan Programs sections of the companys
proxy statement dated March 29, 2002 is incorporated herein
by reference.




PART IV






|         |                                                                 
|-------- | ----------------------------------------------------------------
|Item 14. | Exhibits, Financial Statement Schedules and Reports on
	Form 8-K

Item 14(a) (1) & (2)  List
of Financial Statements and Financial Statement
Schedules.

The following consolidated financial statements
of Milacron Inc. and subsidiaries are included in Item 8:

|                                                                                                |  |      |    | 
|----------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                |  | Page
|                                                                                                |  |     
|Consolidated Statements of Earnings 
	2001, 2000 and 1999                                      |  |      | 26 | 
|Consolidated Balance Sheets  2001 and
	2000                                                    |  |      | 27 | 
|Consolidated Statements of Comprehensive Income
	and Shareholders Equity  2001, 2000 and 1999 |  |      | 28 | 
|Consolidated Statements of Cash Flows 
	2001, 2000 and 1999                                    |  |      | 29 | 
|Notes to Consolidated Financial Statements                                                      |  |      | 30 | 
|Report of Independent Auditors                                                                  |  |      | 48 | 
|Supplementary Financial Information                                                             |  |      | 48 | 

The following consolidated financial statement
schedule of Milacron Inc. and subsidiaries for the years ended
2001, 2000 and 1999 is filed herewith pursuant to
Item 14(d):

|                                                              |  |      |    | 
|------------------------------------------------------------- |  | ---- | -- | 
|                                                              |  | Page
|                                                              |  |     
|Schedule II  Valuation and
	Qualifying Accounts and Reserves |  |      | 53 | 

49



---



##### Table of Contents



All other schedules for which provision is made
in the applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been
omitted.




Item 14 (a) (3)  List of
Exhibits



|   |                                                                                                
|-- | -----------------------------------------------------------------------------------------------
|2. | Plan of Acquisition, Reorganization, Arrangement,
	Liquidation, or Succession  not applicable.
|  
|3. | Articles of Incorporation and By-Laws.                                                         



| |     |                                                                                                                        
| | --- | -----------------------------------------------------------------------------------------------------------------------
| | 3.1 | Restated Certificate of Incorporation filed with
	the Secretary of State of the State of Delaware on
	November 17, 1998



| |   |                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Registration Statement on Form S-8
	(Registration No. 333-70733).



| |     |                    
| | --- | -------------------
| | 3.2 | By-Laws, as amended



| |   |                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Registration Statement on Form S-8
	(Registration No. 333-70733).



|   |                                                                            
|-- | ---------------------------------------------------------------------------
|4. | Instruments Defining the Rights of Security
	Holders, Including Indentures:



| |     |                      
| | --- | ---------------------
| | 4.1 | 8 3/8% Notes due 2004



| |   |                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Amendment No. 3 to Form S-4
	Registration Statement dated July 7, 1994 (File
	No. 33-53009).



| |     |                                                                                                                                                                                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 4.2 | Milacron Inc. hereby agrees to furnish to the
	Securities and Exchange Commission, upon its request, the
	instruments with respect to long-term debt for securities
	authorized thereunder which do not exceed 10% of the
	registrants total consolidated assets.



|   |                                        
|-- | ---------------------------------------
|9. | Voting Trust Agreement  not applicable



|    |                    
|--- | -------------------
|10. | Material Contracts:



| |      |                                       
| | ---- | --------------------------------------
| | 10.1 | Milacron 1991 Long-Term Incentive Plan



| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Proxy Statement dated March 22, 1991.



| |      |                                       
| | ---- | --------------------------------------
| | 10.2 | Milacron 1994 Long-Term Incentive Plan



| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Proxy Statement dated March 24, 1994.



| |      |                                                   
| | ---- | --------------------------------------------------
| | 10.3 | Milacron 1997 Long-Term Incentive Plan, as amended



| |   |                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Form 10-Q for the quarter ended
	March 31, 2001.



| |      |                                                   
| | ---- | --------------------------------------------------
| | 10.4 | Milacron 1996 Short-Term Management Incentive Plan



| |   |                                                                                                           
| | - | ----------------------------------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Form 10-K for the fiscal year ended
	December 28, 1996.



| |      |                                               
| | ---- | ----------------------------------------------
| | 10.5 | Milacron Supplemental Pension Plan, as amended



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1999.



| |      |                                                  
| | ---- | -------------------------------------------------
| | 10.6 | Milacron Supplemental Retirement Plan, as amended



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1999.



| |      |                                                                            
| | ---- | ---------------------------------------------------------------------------
| | 10.7 | Milacron Inc. Plan for the Deferral of
	Directors Compensation, as amended



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1998.



| |      |                                                                      
| | ---- | ---------------------------------------------------------------------
| | 10.8 | Milacron Inc. Retirement Plan for Non-Employee
	Directors, as amended



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1998.



| |      |                                                             
| | ---- | ------------------------------------------------------------
| | 10.9 | Milacron Supplemental Executive Retirement Plan,
	as amended



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1999.



| |       |                                                                                                                                                                                                                           
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.10 | Amended and Restated Revolving Credit Agreement
	dated as of November 30, 1998 among Milacron Inc.,
	Cincinnati Milacron Kunststoffmaschinen Europe GmbH, the lenders
	listed therein and Bankers Trust Company, as agent.



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1998.



| |       |                                                
| | ----- | -----------------------------------------------
| | 10.11 | Milacron Compensation Deferral Plan, as amended



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1999.

50



---



##### Table of Contents





| |       |                                                                                                                                      
| | ----- | -------------------------------------------------------------------------------------------------------------------------------------
| | 10.12 | Rights Agreement dated as of February 5,
	1999, between Milacron Inc. and Chase Mellon Shareholder
	Services, L.L.C., as Rights Agent



| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Registration Statement on Form 8-A (File
	No. 001-08485).



| |       |                                                                                                                                                                     
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.13 | Purchase and Sale Agreement between UNOVA, Inc.,
	UNOVA Industrial Automation Systems, Inc., UNOVA U.K. Limited
	and Cincinnati Milacron Inc. dated August 20, 1998.



| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Form 8-K dated October 2, 1998.



| |       |                                                                                                                                         
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------
| | 10.14 | Purchase and Sale Agreement between Johnson
	Controls, Inc., Hoover Universal, Inc. and Cincinnati Milacron
	Inc., dated August 3, 1998.



| |   |                                                                                      
| | - | -------------------------------------------------------------------------------------
| |  | Incorporated herein by reference to the
	companys Form 8-K dated September 30, 1998.



| |       |                                                                                                                                                                                                                                                                                   
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.15 | Amendment Number One dated as of March 31,
	1999 to the Amended and Restated Revolving Credit Agreement
	dated as of November 30, 1998 among Milacron Inc.,
	Cincinnati Milacron Kunststoffmaschinen Europe GmbH, the lenders
	listed therein and Bankers Trust Company, as agent.



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1999.



| |       |                                              
| | ----- | ---------------------------------------------
| | 10.16 | Milacron Supplemental Executive Pension Plan.



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1999.



| |       |                                                                                                               
| | ----- | --------------------------------------------------------------------------------------------------------------
| | 10.17 | Milacron Compensation Deferral Plan Trust
	Agreement by and between Milacron Inc. and Reliance Trust
	Company.



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1999.



| |       |                                                                                                                 
| | ----- | ----------------------------------------------------------------------------------------------------------------
| | 10.18 | Milacron Supplemental Retirement Plan Trust
	Agreement by and between Milacron Inc. and Reliance Trust
	Company.



| |   |                                                                                                   
| | - | --------------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-K for the fiscal year ended December 31, 1999.



| |       |                                                                                                                                                                                                                                                                                                                 
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.19 | Amendment Number Two dated as of January 31,
	2000 to the Amended and Restated Revolving Credit Agreement
	dated as of November 30, 1998 among Milacron Inc.,
	Cincinnati Grundstucksverwaltung GmbH, Milacron
	Kunststoffmaschinen Europe GmbH, the lenders listed therein and
	Bankers Trust Company as Agent.



| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-Q for the quarter ended March 31, 2000.



| |       |                                                                                                                                                                                                                                                                                                                                         
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.20 | Amendment Number Three dated as of July 13,
	2000 to the Amended and Restated Revolving Credit Agreement
	dated as of November 30, 1998 among Milacron Inc., Milacron
	Kunststoffmaschinen Europe GmbH, Milacron Metalworking
	Technologies Holding GmbH, Milacron B.V., the lenders listed
	therein and Bankers Trust Company as Agent.



| |   |                                                                                           
| | - | ------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-Q for the quarter ended June 30, 2000.



| |       |                                                                                                                                                                                                                                                                                                                                         
| | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.21 | Amendment Number Four dated as of August 8,
	2001 to the Amended and Restated Revolving Credit Agreement
	dated as of November 30, 1998 among Milacron Inc., Milacron
	Kunststoffmaschinen Europe GmbH, Milacron Metalworking
	Technologies Holding GmbH, Milacron B.V., the lenders listed
	therein and Bankers Trust Company as Agent.



| |   |                                                                                           
| | - | ------------------------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 10-Q for the quarter ended June 30, 2001.



| |       |                                                                                                                                                                                                                                                                                                                                             
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 10.22 | Amendment Number Five dated as of
	September 30, 2001 to the Amended and Restated Revolving
	Credit Agreement dated as of November 30, 1998 among
	Milacron Inc., Milacron Kunststoffmaschinen Europe GmbH,
	Milacron Metalworking Technologies Holding GmbH, Milacron B.V.,
	the lenders listed therein and Bankers Trust Company as Agent.



| |   |                                                                             
| | - | ----------------------------------------------------------------------------
| |  | Incorporated by reference to the companys
	Form 8-K dated October 15, 2001.

11.  Statement Regarding Computation of
Per-Share Earnings

12.  Statement Regarding Computation of
Ratios  not applicable

13.  Annual report to security holders,
Form 10-Q or quarterly report to security
holders  not applicable

16.  Letter regarding Change in
Certifying Accountant  not applicable

18.  Letter regarding Change in
Accounting Principles  not applicable

21.  Subsidiaries of the Registrant

22.  Published Report Regarding Matters
Submitted to Vote of Security Holders  none

51



---



##### Table of Contents



23.  Consent of Experts and Counsel

24.  Power of Attorney  not
applicable

99.  Additional Exhibits 
not applicable




Item 14(b)  Reports on
Form 8-K



| |   |                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | A current report on Form 8-K, Items 7 and 9,
	dated September 27, 2001, was filed concerning the
	companys press release lowering its third and fourth
	quarter 2001 earnings guidance.                                                                                                       
|
| |  | A current report on Form 8-K, Items 5 and 7,
	dated October 15, 2001, was filed concerning the
	companys Amendment Number Five (the Amendment)
	to its Amended and Restated Revolving Credit Agreement.                                                                                     
|
| |  | A current report on Form 8-K, items 7 and 9,
	dated October 16, 2001, was filed concerning the
	companys press release regarding the reduction in the
	Registrants quarterly dividend on common stock and the
	signing of an amended revolving credit agreement is incorporated
	by reference
|
| |  | A current report on Form 8-K, Items 5,7 and
	9, dated November 9, 2001 was filed concerning the
	companys press release regarding earnings for the third
	quarter 2001.                                                                                                                       




Item 14 (c) & (d) 
Index to Certain Exhibits and Financial Statement
Schedules

The responses to these portions of Item 14
are submitted as a separate section of this report.

52



---



##### Table of Contents



Milacron Inc. and Subsidiaries




Schedule II  Valuation and
Qualifying Accounts and Reserves


Years ended 2001, 2000 and 1999


(In thousands)


|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  |       |         |     |  |  |         | 
|--------------- | ---------------------------------------- | ---------- |  | ---------- |  | ---------- |  | ---------- |  | --------- | --- | ------ | --- |  | ----- | ------- | --- |  |  | ------- | 
|                |                                          |            |  |            |  |            |  |           
|Col. A          |                                          | Col. B     |  | Col. C     |  | Col. D     |  | Col. E    
|               
|               
|                |                                          |            |  |           
|                |                                          | Additions  |  |           
|                |                                          |            |  |           
|                |                                          | Balance at |  | Charged to |  |            |  |            |  | Balance  
|                |                                          | Beginning  |  | Cost and   |  | Other      |  | Deductions |  | at End   
|Description     |                                          | of Period  |  | Expenses   |  |  Describe |  |  Describe |  | of Period
|               
|               
|Year ended 2001 |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  |       |         |     |  |  |        
|                | Allowance for doubtful accounts          |            |  | $12,875    |  |            |  | $ 5,359    |  |           |     | $ 324  | (a) |  |       | $ 4,422 | (b) |  |  | $14,071 | 
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 65    | (c)     |     |  |  |        
|               
|                | Restructuring and consolidation reserves |            |  | $ 2,570    |  |            |  | $21,227    |  |           |     | $1,133 | (a) |  |       | $ 5,119 | (b) |  |  | $19,442 | 
|                |                                          |            |  |            |  |            |  |            |  |           | 132 | (c)    |     |  | 501   | (e)     |     |  |  |        
|               
|                | Allowance for inventory obsolescence     |            |  | $36,235    |  |            |  | $12,880    |  |           |     | $     |     |  |       | $ 4,945 | (b) |  |  | $43,968 | 
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 202   | (c)     |     |  |  |        
|               
|Year ended 2000 |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  |       |         |     |  |  |        
|                | Allowance for doubtful accounts          |            |  | $12,103    |  |            |  | $ 4,459    |  |           |     | $     |     |  |       | $ 2,981 | (b) |  |  | $12,875 | 
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 490   | (c)     |     |  |  |        
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 216   | (d)     |     |  |  |        
|               
|                | Restructuring and consolidation reserves |            |  | $17,836    |  |            |  | $         |  |           |     | $     |     |  |       | $13,955 | (b) |  |  | $ 2,570 | 
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 1,029 | (c)     |     |  |  |        
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 282   | (e)     |     |  |  |        
|               
|                | Allowance for inventory obsolescence     |            |  | $37,645    |  |            |  | $ 6,263    |  |           |     | $     |     |  |       | $ 5,306 | (b) |  |  | $36,235 | 
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 2,177 | (c)     |     |  |  |        
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 190   | (d)     |     |  |  |        
|               
|Year ended 1999 |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  |       |         |     |  |  |        
|                | Allowance for doubtful accounts          |            |  | $12,083    |  |            |  | $ 5,021    |  |           |     | $   46 | (a) |  |       | $ 2,618 | (b) |  |  | $12,103 | 
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 534   | (c)     |     |  |  |        
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 1,895 | (d)     |     |  |  |        
|               
|                | Restructuring and consolidation reserves |            |  | $   521    |  |            |  | $14,137    |  |           |     | $5,722 | (a) |  |       | $ 1,852 | (b) |  |  | $17,836 | 
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 692   | (c)     |     |  |  |        
|               
|                | Allowance for inventory obsolescence     |            |  | $37,350    |  |            |  | $ 9,920    |  |           |     | $ 271  | (a) |  |       | $ 6,791 | (b) |  |  | $37,645 | 
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 2,512 | (c)     |     |  |  |        
|                |                                          |            |  |            |  |            |  |            |  |           |     |        |     |  | 593   | (d)     |     |  |  |        
|               

|    |                                                                     
|--- | --------------------------------------------------------------------
|(a) | Consists of reserves of subsidiaries purchased
	during the year.    
|(b) | Represents amounts charged against the reserves
	during the year.   
|(c) | Represents foreign currency translation
	adjustment during the year.
|(d) | Consists of reserves of the business sold during
	the year.         
|(e) | Represents reversals of excess reserves.                            

53



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##### Table of Contents






Signatures

Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



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



| |     |                    
| | --- | -------------------
| | By: | /s/ Ronald D. Brown

| |                                       
| | --------------------------------------
| |                                       
| | Ronald D. Brown; Chairman,            
| | President and Chief Executive Officer,
| | Director                              
| | (Chief Executive Officer)             



| |     |                       
| | --- | ----------------------
| | By: | /s/ Robert P. Lienesch

| |                                     
| | ------------------------------------
| |                                     
| | Robert P. Lienesch; Vice President 
| | Finance and Chief Financial Officer 
| | (Chief Financial Officer)           



| |     |                      
| | --- | ---------------------
| | By: | /s/ Jerome L. Fedders

| |                              
| | -----------------------------
| |                              
| | Jerome L. Fedders; Controller
| | (Chief Accounting Officer)   

Date: March 20, 2002

Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed by the
following persons on behalf of the registrant and in capacities
and on the dates indicated.

|                                                                          |  |                                                                                                 
|------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------
|/s/ Harry A. HammerlyHarry A. Hammerly; March 20, 2002
        (Director) |  | /s/ Darryl F. Allen
        Darryl F. Allen; March 20, 2002
        (Director)                  
|                                                                         
|/s/ David L. BurnerDavid L. Burner; March 20, 2002
        (Director)     |  | /s/ Barbara Hackman Franklin
        Barbara Hackman Franklin; March 20, 2002
        (Director)
|                                                                         
|/s/ Daniel J. MeyerDaniel J. Meyer; March 20, 2002
        (Director)     |  |                                                                                                 

54



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##### Table of Contents






Item 14 (c) and (d)  Index to Certain
Exhibits and Financial Statement Schedules

|           |  |                                   |  |                 
|---------- |  | --------------------------------- |  | ----------------
|Exhibit 11 |  | Computation of Per-Share Earnings |  | Bound Separately
|          
|Exhibit 21 |  | Subsidiaries of the Registrant    |  | Bound Separately
|Exhibit 23 |  | Consent of Experts and Counsel    |  | Bound Separately

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