Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
For Quarter Ended Commission File Number
March 31, 1994 0-1052
Millipore Corporation
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of
incorporation or organization)
80 Ashby Road
Bedford, Massachusetts
(Address of principal executive
offices)
04-2170233
(I.R.S. Employer Identification No.)
01730
(Zip Code)
Registrant's telephone number, include area code (617) 275-9200
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 and 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of March 31, 1994: 28,315,416
MILLIPORE CORPORATION
INDEX
Page No.
Part I. Financial Information:
Item 1. Condensed Financial Statements
Consolidated Balance Sheets --
March 31, 1994 and December 31, 1993 2
Consolidated Statements of
Income -- Three Months Ended
March 31, 1994 and 1993 3
Consolidated Statements of
Cash Flows -- Three Months Ended
March 31, 1994 and 1993 4
Notes to Consolidated Condensed
Financial Statements 5-6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7
Part II. Other Information 8
Signatures 9
Exhibit Index 10
MILLIPORE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
March 31, December 31,
1994 1993
ASSETS (Unaudited)
Current assets
Cash $ 1,146 $ 2,140
Short-term investments 22,598 38,502
Accounts receivable, net 112,490 99,655
Inventories
Raw materials 21,611 18,782
Work in process 8,863 7,852
Finished goods 42,297 38,553
72,771 65,187
Other current assets 16,064 12,790
Net current assets of
discontinued operations 139,063 138,687
Total current assets 364,132 356,961
Property, plant and equipment, net of
accumulated depreciation of $171,739
in 1994 and $163,071 in 1993 196,578 194,895
Intangible assets 2,646 2,769
Other assets 56,809 52,141
Net long-term assets of
discontinued operations 98,670 99,647
Total assets $718,835 $706,413
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable and current portion of
long-term debt $ 41,711 $51,420
Accounts payable and accrued expenses 53,597 57,505
Dividends payable 3,922 3,921
Accrued retirement plan contributions 2,284 6,356
Accrued and deferred income taxes
payable 6,523 4,894
Total current liabilities 108,037 124,096
Long-term debt 102,920 102,047
Other liabilities 20,334 19,116
Shareholders' equity
Common stock 28,344 28,344
Additional paid-in capital 16,803 16,803
Retained earnings 445,298 434,988
Translation adjustments (1,910) (7,624)
488,535 472,511
Less:Treasury stock, at cost, 28,937
shares in 1994 and 341,273 in 1993 (991) (11,357)
Total shareholders' equity 487,544 461,154
Total liabilities and
shareholders' equity $718,835 $706,413
The accompanying notes are an integral part of the consolidated condensed
financial statements.
MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended
March 31,
1994 1993
Net sales $118,959 $105,189
Cost of sales 51,265 45,140
Gross profit 67,694 60,049
Selling, general &
administrative expenses 38,109 36,555
Research & development
expenses 8,558 8,587
Operating income 21,027 14,907
Interest expense, net 1,293 2,217
Income from continuing operations before
income taxes 19,734 12,690
Provision for income taxes 4,440 2,855
Income from continuing operations 15,294 9,835
Loss from discontinued operations - (9,083)
Net income $ 15,294 $ 752
Net income per common share
From continuing operations $ 0.54 $ 0.35
Net income $ 0.54 $ 0.03
Cash dividends declared
per common share $ 0.14 $ 0.13
Weighted average common
shares 28,123 27,983
The accompanying notes are an integral part of the consolidated condensed
financial statements.
MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
1994 1993
Cash Flows From Operating Activities:
Net income $ 15,294 $ 752
Adjustments to reconcile net income to net
cash provided:
Net loss from discontinued operations - 9,083
Depreciation and amortization 6,047 6,465
Deferred income tax provision (500) 1,000
Change in operating assets and liabilities:
(Increase) in accounts receivable (7,988) (1,198)
(Increase) decrease in inventories (5,205) 2,743
(Increase) in other current assets (3,087) (2,065)
Decrease in other assets 2,255 2,020
Increase (decrease) in accounts
payable and accrued expenses 91 (2,521)
(Decrease) in accrued retirement
plan contributions (4,122) (2,530)
Increase in accrued income taxes 1,173 299
Other (2,693) (3,318)
Net cash provided by continuing operations 1,265 10,730
Net cash provided by discontinued operations 7,573 3,827
Net cash provided by operating activities 8,838 14,557
Cash Flows From Investing Activities:
Additions to property, plant, and equipment (4,158) (7,020)
Net investing activities of discontinued
operations (2,136) (2,282)
Net cash used in investing activities (6,294) (9,302)
Cash Flows From Financing Activities:
Treasury stock acquired (463) -
Issuance of treasury stock under stock plans 9,767 313
Cash paid to extinguish long-term debt (5,088) -
Cash paid to close out foreign currency swap(10,287) -
Net change in short-term debt (12,001) (3,044)
Net change in long-term debt 797 (22)
Dividends Paid (3,921) (3,636)
Net cash used for financing activities (21,196) (6,389)
Effect of foreign exchange rates on cash and
short-term investments 1,754 (124)
Net decrease in cash and
short-term investments (16,898) (1,258)
Cash and short-term investments on January 1 40,642 70,451
Cash and short-term investments on March 31 $ 23,744 $ 69,193
Interest Paid $ 3,480 $ 5,172
Taxes Paid $ 3,716 $ 2,524
The accompanying notes are an integral part of the consolidated
condensed financial statements.
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(in thousands)
1.The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the instructions to Form 10-Q and,
accordingly, these footnotes condense or omit certain information and
disclosures normally included in financial statements. These financial
statements, which in the opinion of management reflect all adjustments
necessary for a fair presentation, should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993. The
accompanying unaudited consolidated condensed financial statements are not
necessarily indicative of future trends or the Company's operations for
the entire year.
2.As discussed in Note B to the December 31, 1993 Annual Report, on November
11, 1993, the Company's Board of Directors approved a plan to divest
operations of the Company's Instrumentation Divisions, which serve
primarily the chromatography and bioscience markets. The operating
results of these businesses through November 11, 1993 have been classified
as discontinued operations in the Company's financial statements. The
operating results of these businesses from November 11, 1993 to the date
of the divestiture will be deferred until the divestiture is completed.
The Company expects to realize a net gain in 1994 upon the sale of these
businesses. Net current and long-term assets of discontinued operations
consist primarily of accounts receivable, inventory, property, plant and
equipment, intangibles, and accounts payable, and have been classified
separately in the accompanying consolidated balance sheets.
On April 4, 1994, the Company entered into a purchase and sale agreement
for the sale of the net assets of its Waters Chromatography Division to
Waters Holdings Inc., a corporation owned equally by AEA Investors, Inc.
and Bain Capital, Inc.
3.As discussed in Note I to the December 31, 1993 Annual Report, Eastern
Enterprises and its subsidiary, Ionpure Technologies Corporation filed a
suit against the Company alleging misrepresentations made in conjunction
with its 1989 purchase of the Company's Process Water Division. The
Company believes that it has adequate and complete defenses to this
lawsuit. Although the Company is unable to predict with certainty the
outcome of this litigation, its ultimate disposition is not expected to
have a material adverse effect on the Company's financial condition.
4.Certain reclassifications have been made to the 1993 financial statements
to conform to the 1994 presentation.
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(in thousands)
5.As discussed in Note F to the December 31, 1993 Annual Report,
the Company entered into an agreement in the fourth quarter of
1993 to retire its $100,000 notes payable bearing interest at
9.2 percent before their call date of March 30, 1995.
Accordingly, the Company recorded an extraordinary charge of
$5,906 ($3,544 net of income taxes) in December , 1993 to
reflect the cost of extinguishing the notes. In March, 1994,
the Company retired the notes and simultaneously issued
$100,000 of 6.78% notes due in 2004. Interest on the new
notes is payable semi-annually beginning in September, 1994.
At the same time as the issuance of the $100,000 9.2 percent
bearing notes described above, the Company partially hedged
its Japanese yen net asset exposure by entering into a
currency swap by exchanging $80,000 of dollar debt service
obligations for 9,936,000 of yen obligations. The yen
obligations bore a 5.27 percent interest rate and matured in
1995. The effects of foreign currency exchange rate
fluctuations resulting from this swap were reflected each
reporting period in translation adjustment and transaction
gains/losses. The unrealized loss on this swap of $8,833 at
December 31, 1993 was included in other assets in the
Company's balance sheet.
In January, 1994, the Company closed out its yen denominated
currency swap and simultaneously exchanged $80,000 of dollar
debt service obligations for a yen denominated obligation of
8,760,000 yen, which bears interest at a rate of 4.49 percent.
The swap matures in 2004. The Company paid $10,287 in cash to
close out the old swap. The cash payment represented the
cumulative effect of the foreign currency rate fluctuations
over the life of the swap.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sales for the first quarter of 1994 increased 13 percent compared to sales
for the first quarter of 1993, with improved performance in all of the
Company's key markets and geographic areas. Sales were particularly strong,
up 25 percent, for products and systems used in manufacturing applications.
This was fueled by continued growth in two of the Company's major markets,
the pharmaceutical/biotechnology and electronics/industrial markets. Sales
to the laboratory/research market grew modestly in the first quarter of 1994,
highlighted by strong growth in sales of laboratory water systems. All
geographic areas showed improvement during the quarter. Although foreign
currency fluctuations had no impact on the Company's reported sales growth,
they were a major factor in the reported sales growth within specific
geographies, positively impacting the Asia/Pacific region while negatively
impacting Europe. Sales growth by geography is summarized as follows:
Sales growth rates Sales growth rates
measured in local currenciesmeasured in U.S. dollars
Americas 13% 13%
Europe 8% 3%
Asia/Pacific 17% 26%
13% 13%
Gross margins decreased slightly during the first quarter of 1994 to 56.9
percent as compared to 57.1 percent in the first quarter of 1993 primarily
due to manufacturing inefficiencies. The increase in operating expenses in
the first quarter of 1994 as compared to the first quarter of 1993 was
limited as management continued to analyze the significant business
divestiture activities taking place and the resulting required level of
infrastructure spending to support the ongoing businesses. Net interest
expense in the first quarter decreased 42 percent compared to the first
quarter of 1993, primarily due to a lower interest rate on the Company's
refinanced long-term $100 million notes payable as well as an overall lower
level of short-term borrowings. The Company's effective income tax rate for
1994 is 22.5 percent, consistent with the full year effective rate in 1993.
The Company generated $1.3 million of cash from continuing operations in the
first quarter of 1994 compared to $10.7 million in the first quarter of 1993.
The primary reason for the decline in cash generated from operations was an
increase in inventories of approximately $5.2 million in the first quarter of
1994 compared to a decrease in inventories of $2.7 million in the first
quarter of 1993. Property, plant and equipment expenditures in the first
quarter of 1994 were lower than those for the comparable period in 1993, a
first quarter trend consistent with operating spending. During the first
quarter of 1994, the Company paid a total of $15.4 million in non-recurring
financing related transactions; $5.1 million was used to pre-pay the
Company's $100 million notes payable due in 1998, while $10.3 million was
used to close out the Company's yen currency swap. These non-recurring
payments were partially offset by $9.8 million of cash generated from stock
options exercised by employees. Demand for shares of the Company's common
stock in the first quarter under employee stock plans was satisfied by
issuing shares held in treasury. The Company did not purchase any of its
shares in the open market during the first quarter due to restrictions
resulting from the divestiture process. The Company plans to purchase shares
starting in the second quarter to meet its anticipated demand for stock under
its employee stock plans.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits - See Exhibit Index on the page immediately preceding
exhibits.
b. Reports on Form 8-K - There were no reports on Form 8-K filed for
the quarter ended March 31, 1994.
SIGNATURES
Pursuant to the requirements 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.
Millipore Corporation
Registrant
/s/Michael P. Carroll
Date Michael P. Carroll
May 16, 1994 Vice President, Chief Financial Officer and
Treasurer
EXHIBIT INDEX
Exhibit Number Document Page
10 Purchase and Sale Agreement