1
Ron Brown
Chairman, President & CEO
Forward Looking Statements
Any forward-looking statements made at this meeting by their nature involve
risks and uncertainties that could significantly impact operations, markets,
products and expected results. For further information, please refer to the
Cautionary Statement included in our most recent Form 10-Q on file with the
Securities and Exchange Commission.
2
Largest and broadest-line manufacturer and supplier of plastics processing equipment,
supplies and services in North America; third largest worldwide
Largest global manufacturer of consumable synthetic industrial fluids used in
metalworking applications
Major manufacturing locations in North America, Europe and Asia
Supplier to over 20,000 plastics processing and metalworking customers in the
packaging, automotive, industrial components, consumer goods and other end markets
Established, reputable sales and service organization and global distribution network
2003 sales of $740 million; 46% outside the United States
Overview of Milacron
3
14%
23%
9%
13%
41%
Comprehensive Product Offering
2003 Revenues
$740 million
Injection Molding Machinery
Applications: wide array of plastic
products, including automotive
components, toothbrushes, computer
devices, mobile phones, toys, medical
equipment and DVDs
Key end markets: automotive, medical
consumer goods, packaging and
appliances
Blow Molding Machinery
Applications: hollow and semi-hollow
plastic products for food containers,
automotive parts, outdoor furniture and
playground equipment
Key end markets: automotive, packaging
and housewares
Extrusion Machinery
Applications continuous profile plastic
products such as pipe, siding, decking,
fencing, and window and door frames
Key end markets: construction
materials, packaging and medical
Mold Technologies
Mold bases, hot runner systems,
components and supplies used with
injection molding machinery
Key end markets: plastics injection
molders, die sets and custom
molders
Coolants, lubricants, forming fluids,
process cleaners and corrosion
inhibitors used in the machining,
grinding, pressing or stamping of metal
parts
Key end markets: automotive,
industrial machinery, aerospace and
appliances
Industrial Fluids
4
Small
machine
shop
Initial Public
Offering
(NYSE)
Pioneered
industry’s first
water-based
metalworking
fluids
1860
1947
2004
2002
Entered mold
technologies
market
Began
restructuring of
operations
The Evolution of Milacron
Entered plastics
injection molding
market
Entered
container
blowmolding
market / Exited
machine tools
1996
1968
1946
1998
Completed
operational
restructuring
2001
Exited cutting
tools
1971
Entered
plastics
extrusion
market
5
Key Strategies Going Forward
Grow Revenue – Focus on Organic Growth
Leverage our technology and service for key end markets
Maximize aftermarket parts and services opportunity
Expand our presence in emerging markets
Chinese joint-venture announced April 28
Drive Profitability and Cash Flow to Delever Balance Sheet
Leverage our low cost manufacturing base in Asia and Eastern Europe
Continue global implementation of Lean and Six Sigma strategies
Drive strategic sourcing initiatives
Margins expansion through selective price increases
Reduce primary working capital to 15% of sales (currently 23%)
6
Milacron is a market leader and the only full line supplier of plastics
processing machinery.
Not dependent on any one customer or end market.
Leading indicators suggest recovery is underway; new order trends are
promising.
Well positioned to capitalize on a rebound with improved cost structure
and more flexible capital structure.
Emerging from the bottom of the cycle.
$100 million of mandatorily convertible preferred equity from Glencore
and Mizuho.
Milacron: A Compelling Story
Market
Leadership
Strong Industry
and Business
Trends
Significant
Upside
Diverse
Business
Profile
Attractively
Positioned for
Rebound
Restructured
Balance Sheet
7
Milacron Maintains Leading Positions
Product
Line
MPM (Mannesmann)
Engel
Husky
Toshiba
SIG
Bekum
Graham Engineering
Davis Standard
Kraus Maffei (MPM)
Battenfeld (SMS)
Futaba
Hasco
Moldmasters
Castrol
Fuchs
Quaker
#3
#3
(Non-Pet)
____
#2
#2
(Synthetic)
#1
#1
(Non-Pet)
#1
(Twin Screw)
#1
#2
(Synthetic)
Injection Molding
Machinery
Blow Molding
Machinery
Extrusion
Machinery
Mold
Technologies
Industrial
Fluids
Estimated Position
North America Global
Primary
Competitors
8
Market Shares Supported By
Unique Core Competencies
Only true full-line supplier of machinery to the plastics processing
industry
Recognized leader in many plastics processing applications
Substantial R&D drives innovative products and solutions,
enhancing customer quality, productivity and profitability
Recognized technological leader in key products, including:
All-electric injection molding machinery
Multi-component and co-injection technology
High-performance synthetic and semi-synthetic fluids
Application engineering for highly customized processing solutions
24/7 product and technical support and remote diagnostics
Direct sales and service forces in North America, Europe and Asia
Significant
Product Breadth
Industry Leading
Technology
Reputable Customer
Service and
Support
9
10
5,000 machinery customers
Serve in excess of 20,000 customers
No customer accounted for more than 2%
of sales in 2003 and top 10 accounted for
less than 10% of sales
End Market Diversity
Geographic Diversity
Product Diversity
14%
Industrial Fluids
41%
Machinery
21%
Aftermarket
Services &
24%
Durables
Customer Diversity
Diverse Business Profile
Packaging
22%
Automotive
18%
Components
11%
Consumer Goods
8%
Building
Materials
9%
Custom
Molders
9%
Medical
7%
Appliance
7%
Other
9%
United States
54%
Europe
29%
Canada &
Mexico
7%
Asia
7%
ROW
3%
Drivers of a Plastics Machinery Recovery
Average age of existing plastics machinery estimated at 10+ years.
Today’s machines are more energy efficient and productive.
Plastics manufacturers need to be cost effective and cannot remain competitive
with antiquated machines.
Capacity is being stretched in certain end markets.
Average utilization rates approaching 84%.
Plastics processors’ earnings and cash flow continue to improve, enabling new
investment.
Continual conversion of manufacturing materials to plastics away from metal, wood,
glass, etc.
11
Beginning of Cyclical Recovery
Historical Capacity Utilization — Plastics Processors
In every cycle to date, industry sales have recovered beyond previous peak levels by
the peak of the next cycle.
Macro-economic and Milacron-specific data suggest that the plastics processing market
is poised for a recovery in the near-term:
Increased demand for Milacron’s machinery products has historically lagged two to
three quarters behind broader recovery in plastic part production.
Capacity utilization of 84% and higher has historically led to a strong pickup in
equipment orders/sales.
Source: Federal Reserve.
April 04: 83.1%
12
13
Plastics processors are optimistic about
2004:
65% expect a more profitable year.
Over 40% expect to add staff.
82% will spend equal or more on capital
expenditures in 2004.
As earnings improve, increased capital
spending should follow.
Plastics
Aluminum
Steel
2%
3%
4%
02 (5 Years)
-
1997
0%
2%
4%
02 (15 Years)
-
1986
1%
3%
6%
02 (32 Years)
-
1970
STEEL
ALUMINUM
PLASTICS
PERIOD
TH RATE
COMPOUND ANNUAL GROW
Source: APME
Capital Spending versus Earnings
Indexed Global Plastics Production
Sources: BEA (Bureau of Economic Analysis), Merrill Lynch
Positive Outlook and Long-term Trends
For Plastics Machinery Spending
-10
-5
0
5
10
15
20
-40
-20
0
20
40
Capital Spending ( L )
EPS ( R )
88
90
92
94
96
98
00
02
0
100
200
300
400
500
600
700
1970
1975
1980
1986
1991
1996
2002
Industrial Fluids Business
Industrial Fluids Sales
($ in millions)
Industrial Fluids Segment EBIT
($ in millions)
14
Coolants, lubricants, fluids used in machining, grinding and other processes.
Despite a pronounced industry downturn, the industrial fluids segment has maintained its revenue
stream and margins.
Broad use and consumable nature of manufacturing fluid products result in operating stability.
While customers typically delay equipment purchases in a recession, their existing machinery
(and thus Milacron's industrial fluids) is still used to manufacture products.
In 2003, Industrial Fluids generated segment EBIT of $15.7 million.
During the deep manufacturing recession from 2000 to 2003 the business remained stable.
Operates as an independent, stand-alone business.
Remains a Strong, Stable Cash Flow Contributor
2003
2002
2001
2000
$101
$93
$96
$104
$18
$18
$14
$16
15%
15%
19%
18%
2000
2001
2002
2003
9 manufacturing facilities closed since 2000
Approximately 40% reduction in direct labor and
approximately 30% reduction in indirect staffing since 2000
Divested non-core assets (metalworking tools)
Continue to leverage technology and service
Leading positions in all product segments
Implemented Lean and Six Sigma programs
Reduced inventory by $129 million from Q1 2001 to Q1 2004
Improved capital structure
$280 million reduction in debt from 12/31/01 to 12/31/03
$100 million equity infusion to further reduce debt
Well Positioned To Capitalize On Rebound
Rationalized
Operations
Renewed Focus
On Core
Competencies
Strong Market
Position
Increased
Operating
Efficiency
Improved
Financial
Profile
15
Financial Review
Bob Lienesch
Vice President – Finance and CFO
16
Effects of Manufacturing Recession
U.S. Injection Machinery – SPI Industry New Business
12 Month Moving Total
1995 1996 1997 1998 1999 2000 2001 2002 2003
Milacron Revenues
(In millions)
(In millions)
(In millions)
Cash Flow from Operations
17
Restructuring Is Driving Material
Employee Reductions
18
Improvements
Since 2000, focus has been on improving overall cost structure and operating efficiency:
Increased efficiencies from Lean & Six Sigma (e.g. $129 million in inventory reduction)
9 plants (420,000 sq. ft.) closed; production moved to more efficient facilities
Approximately 1,700 employee reductions: approximately 40% reduction in direct labor;
approximately 30% reduction in overhead staffing
Today, Milacron is seeing substantial benefits:
$49 million of annual restructuring cost benefits realized in 2003
$20 million of incremental benefits in 2004 from 2003 initiatives
$69 million of annual restructuring cost benefits is being realized in 2004
Note: Represents Milacron employees at year end.
5,203
3,513
3,967
4,474
2000
2001
2002
2003
Significant Primary Working Capital Improvement
Continued focus on primary working capital(1) has resulted in supplemental free cash
flow throughout downturn:
Strategic sourcing
Lean manufacturing techniques (reduction of lead times)
Management incentives based on primary working capital targets level
Primary Working Capital (as % of Sales)
Note: Represents Primary Working Capital at year-end.
(1) Primary working capital defined as Inventory + Accounts Receivable – Accounts Payable – Advance Payments.
30.0%
26.5%
23.5%
21.2% Est.
15%
19
First Quarter 2004 Results In Line With Estimates
Sales were off 6% (excluding currency), largely due to refinancing uncertainties.
Earnings comparisons were penalized $4 million from sales decline and $2 million from increased
pension and insurance.
Earnings in 2004 were positively impacted by over $7 million of restructuring savings and $1 million
of savings from Lean and strategic sourcing initiatives.
2004 Operating Earnings guidance of $25 - $33 million is on track. (See page 21.)
5.7
5.0 - 6.0
5.3
Depreciation & Amortization
0.9
(3.0) - 3.0
0.5
Adjusted Operating Earnings
6.0
1.1
Restructuring Costs
6.4
Refinancing Costs
$ (5.1)
$ (7.0)
Operating Loss
$ 190.2
$182 - $192
$ 188.9
Sales
Actual
Guidance
Actual
Q1 2003
Q1 2004
($ in millions)
20
Confidence in 2004 Guidance
* Excludes restructuring and refinancing costs. See page 38.
$ 33
To
$ 25
Estimated 2004 Operating Earnings*
4
8
(+/-) Other
(10)
(10)
(-) Pension & Insurance
11
1
(+) Volume & Mix
22
20
(+) Restructuring Initiatives
$ 6
$ 6
Adjusted 2003 Operating Earnings*
$ 805
To
$ 785
2004 Sales
High
Low
Guidance
$ 6
Adjusted 2003 Operating Earnings*
2
Refinancing Costs
27
Restructuring Costs
66
Goodwill Charge
$ (89)
2003 Operating Loss
($ in millions)
21
Refinancing and Proposals for Shareholder Approval
22
Capital Structure Transformation
Before Refinancing
$200 million in debt obligations maturing March 2004
$115 million 8-3/8% Senior Notes
Revolving credit facility ($54 million outstanding)
Accounts receivable liquidity facility ($30 million utilized)
Additional debt maturing in 2005
€115 million 7-5/8% Eurobonds due April 2005
Negative book equity – 35 million diluted common shares outstanding
After Refinancing (subject to shareholder approval)
All $200 million (‘04) and €115 million (‘05) debt obligations repaid (or funds
escrowed)
New $75 million asset-based loan provides liquidity
New $225 million long-term debt provides long-term financing
New $100 million mandatorily convertible preferred stock provides equity base
Positive book equity – 85 million diluted common shares outstanding
23
New Debt Securities
Senior Secured Notes - $225 M
Due 2011
11-1/2% coupon – discounted to yield 12%
Release of proceeds from escrow subject to conditions requiring
shareholder approval
Anticipated Asset-Based Revolving Credit Facility - $75 M
Being negotiated
Due 2008 with optional one-year extension
Libor + spread (275 bps initially)
Subject to conditions requiring shareholder approval
24
New Glencore / Mizuho Securities
$100 M investment
Initial investment in exchangeable debt securities
Upon shareholder approval of new shares and refinancing of Eurobonds,
exchangeable into convertible preferred stock
Two debt securities
$30 M Series A debt convertible into 15 M common shares (converted 4/15/04)
$70 M Series B debt
Terms of debt securities
With shareholder approval by 7/29/04:
6% interest
Without shareholder approval by 7/29/04:
20+% interest
Creates default
25
New Glencore / Mizuho Securities – continued
New $100 M convertible preferred stock (subject to shareholder approval)
6% (or 8% PIK) dividend rate
Convertible into 50 M common shares at $2.00 per share
Conversion price may be reset to $1.75; potential for 1M contingent warrants
Proceeds from a rights offering at $2.00 per share may be used to call up to
$30 M of the convertible preferred stock
Incremental portions may be called after four years over time at a premium
May be converted to common stock prior to seven years at holders’ option
Automatic conversion to common stock in seven years
Corporate governance
Glencore / Mizuho can elect board members proportionate to ownership
Presently one Glencore representative on the board and currently standing
for election to a three-year term
26
Voting Power
(a)
Holders of common stock are entitled to one vote per share held.
(b)
Holders of existing preferred stock are entitled to 24 votes per share.
(c)
On April 15, 2004, Glencore and Mizuho converted the entire $30 million of Series A Notes into
15 million shares of common stock.
(d)
Assumes no pay-in-kind dividends on the Series B Preferred Stock have been paid.
(e)
Assumes full subscription of the rights offering and the Board elects to redeem 150,000 shares
of Series B Preferred Stock with the proceeds.
27
Pro Forma Capitalization
28
12/31/03
3/31/04
Total Cash
92.8
$
62.0
$
Accounts Receivables Facility
33.0
-
Debt:
Old Revolver
42.0
-
Bridge Credit Facility
-
82.5
U.S. Notes
115.0
-
Eurobonds
142.6
139.4
New ABL
-
-
Senior Secured Notes
-
-
Exchangeble Notes
-
102.9
Capitalized Leases & Other
23.8
23.3
Total Debt
323.4
348.1
Series B Preferred Stock
-
-
Other Shareholders' Equity
(1)
(33.9)
(43.4)
Total Equity
(33.9)
(43.4)
Total Capitalization
289.5
304.7
Liquidity
(2)
103.7
97.5
(1) Includes existing 4% cumulative preferred stock ($6 million)
(2) Liquidity = Borrowing Base + Total Cash - Amount Drawn on ABL - Letters of Credit - Minimum Availability
As Reported
If Refinancing Proposals Are Not Approved
Significant increase in the interest payable on $70 million of debt
Default under certain financial agreements totaling more than $175 million
Cross-default on other debt
If defaulted debt is accelerated, company would not have sufficient cash to satisfy
Ability to borrow would be greatly restricted, causing severe liquidity problems
these obligations
29
If Refinancing Proposals Are Approved
Glencore and Mizuho will exchange their securities for 500,000 shares of Series B
Preferred Stock.
The interest payable on the Glencore and Mizuho debt will be retroactively reset
from 20% to 6%.
The new asset-based facility will be available.
The proceeds from the $225 million notes offering will be released from escrow.
The bridge credit facility will be repaid.
The tendered Eurobonds will be repaid (or funds escrowed) and…
…The refinancing will be completed on June 10.
30
From the Proxy
1.
To approve the following proposals necessary to implement the Refinancing Transactions (as
defined in this Proxy Statement):
a.
An amendment to the Company’s restated certificate of incorporation (the “Certificate of
Incorporation”) to increase the amount of authorized common stock of the Company;
b.
An amendment to the Certificate of Incorporation to decrease the par value of the common
stock;
c.
An amendment to the Certificate of Incorporation to delete the requirement that all shares of
any series of serial preference stock be identical in all respects;
d.
The issuance of a new series of the Company’s serial preference stock (the “Series B
Preferred Stock”);
e.
The issuance of the Contingent Warrants (as defined in this Proxy Statement); and
f.
The issuance of common stock in conjunction with a Rights Offering;
2.
To approve amendments to the Certificate of Incorporation to allow the Series B Preferred
Stock to be senior to the Company’s 4% Cumulative Preferred Stock in right of dividends and
payment upon liquidation;
3.
To approve an amendment to the Certificate of Incorporation to exempt the new Series B
Preferred Stock from the Net Asset Test (as defined in this Proxy Statement);
4.
To approve an amendment to the Certificate of Incorporation to decrease the par value of the
serial preference stock of the Company;
31
From the Proxy
5.
To elect three directors to the Company’s Board of Directors;
6.
To approve a proposed 2004 Long-Term Incentive Plan;
7.
To ratify the appointment of Ernst & Young LLP as independent auditors of the Company for
fiscal year 2004;
8.
To vote on one proposal submitted by shareholder Stephen A. Sawzin.
32
With Shareholder Approval,
Milacron Is Well Positioned to Participate in the Recovery
Leading market position in all product segments
Operations rationalized over the past three years
Increased operating efficiency with Lean and Six Sigma programs
Significantly reduced cost structure with good operating leverage
Financial profile dramatically improved with implementation of refinancing plan
33
Appendix
34
Proposals to Complete Refinancing
1(a) Authorize up to 165 M common shares
Allows conversion of Series B preferred stock.
Creates reserve of stock for contingent warrants.
Allows issuance of stock in a rights offering.
Creates reserve of stock for employee stock options.
1(b) Decrease par value of common shares to $.01
Allows exercise of warrants at $.01 per share.
Provides greater flexibility in paying dividends.
1(c) Delete requirement that all shares of any series be identical
Required to allow new Series B preferred stock to have additional voting rights and information rights.
1(d) Approve issuance of Series B preferred stock
Required by NYSE shareholder approval policy.
Allows issuance of new convertible preferred stock.
1(e) Approve issuance of contingent warrants
Required by NYSE shareholder approval policy.
Allows issuance of contingent warrants.
35
Proposals to Complete Refinancing
1(f) Approve issuance of stock in rights offering
Allows issuance of approximately 15 million common shares to previously existing shareholders.
Allows existing shareholders to participate in the recapitalization of the company.
2 Allow Series B preferred stock to be senior to existing
preferred stock
Removes impediments to the company’s ability to optionally redeem Series B preferred shares
with the proceeds of the rights offering.
3 Delete Net Asset Test
Removes restrictions on stock redemption and dividend payments.
4 Decrease par value of serial preference stock to $.01
Removes restrictions on dividend payments.
36
Other Proposals at Milacron’s 2004 Annual Meeting
5 Election of Directors
6 Approval of Long-Term Incentive Plan
7 Ratification of Independent Auditors
8 Shareholder Proposal
David L. Burner, former Chairman and CEO, Goodrich Corporation
Steven N. Isaacs, Chairman and Managing Director, Glencore Finance AG
Joseph A. Steger, President Emeritus, University of Cincinnati
Attract, retain and motivate key employees.
Ernst & Young LLP
The board recommends voting against this proposal.
37
Guidance – April 26, 2004
38
Quarter Ended
Year Ended
(In millions)
June 30, 2004
Dec. 31, 2004
Projected profit & loss items
Sales
$190 - 205
$785 - 805
Total plastics technologies
160 - 175
675 - 690
Industrial fluids
26 - 28
110 - 115
Segment earnings
Total plastics technologies
3 - 6
26 - 31
Industrial fluids
2 - 4
14 - 16
Corporate and unallocated expenses
(1)
3 - 4
14 - 15
Restructuring charges
1 - 2
2 - 3
Projected cash flow & balance sheet items
Depreciation
5 - 6
20 - 22
Working capital - increase (decrease)
(2)
2 - (2)
0 - (10)
Capital expenditures
3 - 5
14 - 17
Cash restructuring
3 - 4
7 - 8
1
Corporate and unallocated expenses
Includes corporate expenses and ongoing financing costs.
2
Working capital
= inventory + receivables - trade payables - advance billings
