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, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the transition period from to COMMISSION FILE NUMBER 0-1052 Millipore Corporation (Exact name of registrant as specified in its charter) Massachusetts (State or other jurisdiction of incorporation or organization) 04-2170233 (I.R.S. Employer Identification No.) 80 Ashby Road Bedford, Massachusetts 01730 (Address of principal executive offices) Registrant's telephone number, include area code (781) 533-6000 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 The Company had 43,808,352 shares of common stock outstanding as of April 24, 1998. MILLIPORE CORPORATION INDEX TO FORM 10-Q Page No. Part I. Financial Information Item 1. Condensed Financial Statements Consolidated Balance Sheets -- March 31,1998 and December 31, 1997 2 Consolidated Statements of Income -- Three Months Ended March 31, 1998 and 1997 3 Consolidated Statements of Cash Flows -- Three Months Ended March 31, 1998 and 1997 4 Notes to Consolidated Condensed Financial Statements 5-7 Item 2. Management's Discussion and Analysis 8-10 of Financial Condition and Results of Operations Part II. Other Information Item 1. Legal Proceedings 11 Item 6. Exhibits and Reports on Form 8-K 11 Signatures 12 MILLIPORE CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) March 31, December 31, 1998 1997 ASSETS (Unaudited) Current assets Cash $ 1,381 $ 2,240 Short-term investments 32,358 18,029 Accounts receivable, net 178,029 176,585 Inventories 141,677 127,192 Other current assets 15,860 28,362 Total Current Assets 369,305 352,408 Property, plant and equipment, net 213,858 220,094 Intangible assets 86,206 77,394 Deferred income taxes 80,010 88,760 Other assets 27,337 27,588 Total Assets $776,716 $766,244 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable $158,750 $165,576 Accounts payable 48,830 46,088 Accrued expenses 82,703 74,856 Dividends payable 4,380 4,369 Accrued retirement plan 3,763 7,088 contributions Accrued income taxes payable 4,933 6,896 Total Current Liabilities 303,359 304,873 Long-term debt 287,825 286,844 Other liabilities 25,648 25,533 Shareholders' equity Common stock 56,988 56,988 Additional paid-in capital 10,927 10,927 Retained earnings 516,357 490,289 Accumulated other comprehensive (39,823) (21,720) loss 544,449 536,484 Less: Treasury stock, at cost, 13,184 shares in 1998 and 13,291 in (384,565) (387,490) 1997 Total Shareholders' Equity 159,884 148,994 Total Liabilities and Shareholders' $776,716 $766,244 Equity The accompanying notes are an integral part of the consolidated condensed financial statements. -2- MILLIPORE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share data) (Unaudited) Three Months Ended March 31, 1998 1997 Net sales $185,662 $178,839 Cost of sales 86,429 80,634 Gross profit 99,233 98,205 Selling, general & 61,687 59,777 administrative expenses Research & development 13,135 13,151 expenses Purchased research & development expense - 114,091 Settlement of litigation 11,766 - Operating income / (loss) 12,645 (88,814) Gain on sale of equity securities 35,594 1,769 Interest income 614 761 Interest expense (7,073) (6,024) Income / (loss) before income taxes 41,780 (92,308) Provision for income taxes 10,370 5,454 Net income / (loss) $31,410 $ (97,762) Net income / (loss) per common share: Basic $ 0.72 $ (2.25) Diluted $ 0.71 $ (2.25) Cash dividends declared per $ 0.10 $ 0.09 common share Weighted average common shares: Basic 43,727 43,391 Diluted 44,307 43,391 The accompanying notes are an integral part of the consolidated condensed financial statements. -3- MILLIPORE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Three Months Ended March 31, 1998 1997 Cash Flows From Operating Activities: Net income (loss) $31,410 $(97,762) Adjustments to reconcile net income (loss) to net cash provided: Purchased research and development - 114,091 expense Write-off of acquired inventory step- - 5,000 up Depreciation and amortization 10,716 8,666 Gain on sale of equity securities (35,594) (1,769) Deferred tax provision 8,750 - Change in operating assets and liabilities: (Increase) in accounts receivable (924) (12,500) (Increase) in inventories (16,945) (4,515) (Increase) in other current assets (4,595) (6,594) Decrease in other assets 610 8,059 Increase (decrease) in accounts payable and accrued expenses 10,115 (6,073) (Decrease) in accrued retirement (3,307) (1,567) plan contributions (Decrease) in accrued income taxes (1,963) (870) Other 924 2,186 Net cash (used in) provided by (803) 6,352 operating activities Cash Flows From Investing Activities: Additions to property, plant and (10,735) (7,144) equipment Acquisition of Tylan, net of cash - (161,267) acquired Proceeds from sale of equity 35,594 1,769 securities Net cash used by discontinued (78) (2,009) operations Net cash provided by (used) in 24,781 (168,651) investing activities Cash Flows From Financing Activities: Issuance of treasury stock under stock 1,851 3,127 plans (Decrease) increase in short-term debt (6,821) 92,073 Proceeds from issuance of long-term - 197,950 debt Payments on long-term debt - (123,532) Dividends paid (4,369) (3,899) Net cash (used in) provided by (9,339) 165,719 financing activities Effect of foreign exchange rates on cash and short-term investments (1,169) (3,025) Net increase in cash and short-term 13,470 395 investments Cash and short-term investments on 20,269 46,870 January 1 Cash and short-term investments on $33,739 $47,265 March 31 The accompanying notes are an integral part of the consolidated condensed financial statements. -4- 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, 1997. The accompanying unaudited consolidated condensed financial statements are not necessarily indicative of future trends or the Company's operations for the entire year. 2. Inventories consisted of the following: March 31, 1998 December 31, 1997 Raw materials $39,738 $42,518 Work in process 22,656 16,545 Finished goods 79,283 68,129 $141,677 $127,192 3. Accumulated depreciation on property, plant and equipment was $169,242 at March 31, 1998, and $166,585 at December 31, 1997. 4.During the first quarter of 1998, the Company finalized the allocation of the purchase price relating to the acquisition of Tylan General, Inc. as discussed in Note C to the Company's financial statements for the year ended December 31, 1997. The final accrual for additional costs associated with the acquisition is $32,000. The final purchase price included current assets of $42,544, property and equipment of $15,559, other assets of $16,477 and liabilities of $22,042. Intangible assets valued at $28,742 are being amortized over their estimated useful lives ranging from 6 to 20 years. 5.On May 2, 1997, the Environmental Quality Board (EQB) of Puerto Rico served an administrative order on Millipore Cidra, Inc., a wholly-owned subsidiary of the Company. The administrative order (EQB order) alleged: (i) that the nitrocellulose filter membrane scrap produced by Millipore Cidra's manufacturing operations is a hazardous waste as defined in EQB regulations; (ii) that Millipore Cidra, Inc. failed to manage, transport and dispose of the nitrocellulose membrane scrap as a hazardous waste; and (iii) that such failure violated EQB regulations. The EQB order proposed penalties in the amount of $96,500 and ordered Millipore Cidra, Inc. to manage the nitrocellulose membrane scrap as a hazardous waste. The Company has recorded a charge of $5,000 (including legal fees) in the first quarter of 1998 reflecting its costs to settle this matter. The Company also recorded a charge of $3,100 in the first quarter of 1998 reflecting its costs in settling a separate lawsuit (subject to court approval) with an intervening party in the EQB administrative case described above. -5- MILLIPORE CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (In thousands) 6.The Company and Waters Corporation were engaged in an arbitration proceeding and a related litigation in the Superior Court, Middlesex, Massachusetts, both of which commenced in the second quarter of 1995 with respect to the amount of assets required to be transferred by the Company's Retirement Plan in connection with the Company's divestiture of its former Chromatography Division. In the second quarter of 1996, Waters filed a Complaint in the Federal District Court of Massachusetts alleging that the Company's operation of the Retirement Plan violates ERISA and certain sections of the Internal Revenue Code. Judgments in the Company's favor were handed down by both the Massachusetts Superior Court and the Federal District Court in May 1997 and July 1997, respectively. Waters appealed the federal court judgment, which was affirmed by the United States Court of Appeals for the First Circuit in April 1998. 7. The Company recorded a charge of $3,666 in the first quarter of 1998 to settle a patent lawsuit with Mott Metallurgical Corporation. In the lawsuit, each party claimed infringement of one of its patents by the other. As part of the settlement, the parties agreed to cross license the two patents at issue. 8.In partial consideration for the sale of its non-membrane bioscience instrument division in 1994, the Company received four thousand shares of preferred stock of PerSeptive Biosystems, Inc. ("PerSeptive"). The preferred stock was redeemable in four equal annual installments of $10,000, commencing in August 1995, in the equivalent value as of each redemption date in common stock, $0.01 par value of PerSeptive. Effective January 22, 1998, PerSeptive completed a merger with Perkin-Elmer Corporation ("Perkin-Elmer") and became a wholly-owned subsidiary of Perkin-Elmer. Pursuant to this merger all of the Company's remaining holdings in PerSeptive, which consisted of 2,213,357 shares of common stock and one thousand shares of preferred stock were converted into 586,541 shares of Perkin-Elmer common stock. The Company sold all 586,541 shares of its Perkin-Elmer common stock holdings in the first quarter of 1998 and recognized a net gain of $32.5 million. 9.For March 31, 1997 basic and diluted earnings per share are the same, as the Company was in a loss position. The effect of anti- dilutive securities in 1997 amounted to 836 shares. The following is a reconciliation for March 31, 1998 of the numerator and denominator for basic and diluted earnings per share: Net Income Shares EPS Basic earnings per share $ 31,410 43,727 $0.72 Effect of dilutive securities: Stock options 580 Diluted earnings per share $ 31,410 44,307 $0.71 -6- MILLIPORE CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (In thousands) 10. The Company has adopted SFAS No. 130, "Reporting Comprehensive Income", which requires that all components of comprehensive income and total comprehensive income be reported and that changes be shown in a financial statement displayed with the same prominence as other financial statements. The Company has elected to disclose this information in its statement of stockholders' equity. Total comprehensive income/(loss) for the quarters ended March 31, was comprised of the following: March 31, March 31, 1998 1997 Net income/(loss) $31,410 $(97,762) Foreign currency translation (808) (14,086) Unrealized holding gain on equity securities, net of tax (17,295) (125) Total comprehensive income/(loss) $13,307 $(111,973) 11.In July 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information", which is effective for fiscal years beginning after December 15, 1997. The interim reporting disclosures are not required in the first year of adoption. SFAS 131 specifies revised guidelines for determining an entity's operating segments and the type and level of financial information to be disclosed. SFAS 131 changes current practice under SFAS 14 by establishing a new framework on which to base segment reporting. The "management" approach expands the required disclosures for each segment. The Company will adopt SFAS 131 in the fourth quarter ended December 31, 1998 and has not yet determined the impact of such adoption on its segment reporting as currently presented. In February 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits". SFAS No. 132 establishes new increased requirements for disclosure of a Company's pensions and other postretirement benefit obligations. SFAS No. 132 is effective for fiscal years beginning after December 15, 1997, but may be adopted earlier. The Company will adopt the increased disclosure requirements of SFAS No. 132 in the fourth quarter ended December 31, 1998. In March 1998, Statement of Position 98-1, "Accounting for the Cost of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"), was issued which provides guidance on applying generally accepted accounting principles in addressing whether and under what conditions the costs of internal-use software should be capitalized. SOP 98-1 is effective for transactions entered into in fiscal years beginning after December 15, 1998, however, earlier adoption is encouraged. The Company adopted the guidelines of SOP 98-1 as of January 1, 1998 and the impact of such adoption was not material to the results of operations or cash flows for the quarter ended March 31, 1998. -7- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In thousands) Forward Looking Statements The following Discussion and Analysis includes certain forward- looking statements which are subject to a number of risks and uncertainties as described in Management's Discussion and Analysis in the Company's Annual Report on Form 10-K for the year ended December 31, 1997. Such forward-looking statements are based on current expectations and actual results may differ materially. Recent Developments On May 2, 1997, the Environmental Quality Board (EQB) of Puerto Rico served an administrative order on Millipore Cidra, Inc., a wholly- owned subsidiary of the Company. The administrative order (EQB order) alleged: (i) that the nitrocellulose filter membrane scrap produced by Millipore Cidra's manufacturing operations is a hazardous waste as defined in EQB regulations; (ii) that Millipore Cidra, Inc. failed to manage, transport and dispose of the nitrocellulose membrane scrap as a hazardous waste; and (iii) that such failure violated EQB regulations. The EQB order proposed penalties in the amount of $96,500 and ordered Millipore Cidra, Inc. to manage the nitrocellulose membrane scrap as a hazardous waste. The Company has recorded a charge of $5,000 (including legal fees) in the first quarter of 1998 reflecting its costs to settle this matter. The Company also recorded a charge of $3,100 in the first quarter of 1998 reflecting its costs in settling a separate lawsuit (subject to court approval) with an intervening party in the EQB administrative case described above. Results of Operations Consolidated net sales for the first quarter of 1998 were $185,662, an increase of 4% over sales for the same period last year. Sales growth measured in local currency terms was 9% in the first quarter of 1998. Sales growth in the first quarter of 1998, excluding the Tylan acquisition, would have been 3% or 8% in local currency. First quarter earnings per share, excluding non-recurring items, were $0.32 per share, compared to $0.45 per share last year. There were three one-time events that affected earnings performance in the first quarter of 1998 including the sale of equity securities, which had a positive impact of $0.63 per share; the settlement of a patent dispute with Mott Metallurgical Corporation, which reduced earnings per share by $0.07; and a reduction to earnings of $8.1 million, or $0.17 per share, reflecting the costs, including legal fees, associated with settling both its administrative dispute with the Environmental Quality Board in Puerto Rico and a separate lawsuit with an intervening party in that administrative case. Including these one-time items, the earnings per share for the first quarter was $0.71. The following table summarizes sales growth by geography and market in the first quarter of 1998: % Growth Q1-1997 Q1-1998 % Growth Local Currency Microelectronics $ 57 $ 59 3% 10% BioPharmaceutical $ 54 $ 58 6% 10% Analytical $ 68 $ 69 2% 8% Laboratory TOTAL $ 179 $ 186 4% 9% Americas $ 75 $ 82 9% 10% Europe $ 53 $ 56 5% 13% Asia/Pacific $ 51 $ 48 (6)% 5% TOTAL $ 179 $ 186 4% 9% -8- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In thousands) Results of Operations (continued) Sales to microelectronics customers increased 10%, in local currency, in the first quarter of 1998 compared to the first quarter of 1997. This growth rate includes incremental sales related to Tylan General, which was acquired in late January 1997. The Company continues to be negatively impacted by the downturn in the semiconductor industry which started in 1996. Although the growth in the first quarter of 1998 was 10%, we experienced a slowing in the microelectronics business midway through the quarter. This trend is expected to continue throughout the second quarter of 1998. Sales growth in the Bio- Pharmaceutical market was 10%, in local currency, representing strong growth in sales to Biotechnology customers offset by a decline in sales to the food and beverage industry. Sales to Biotechnology customers represents approximately 50% of sales in the Bio- Pharmaceutical market. Sales growth in the Analytical Laboratory market was 8%, in local currency, reflecting an increase in market penetration of core products, continued growth of rapid detection products and new products introduced to ultra pure water customers. In the first quarter of 1998, the U.S. dollar continued to strengthen against all European currencies and most Asian currencies. If foreign exchange rates remain at March 31, 1998 levels, the affect of foreign exchange currencies is expected to reduce reported second quarter and full year 1998 sales growth by approximately 4 to 5 percentage points when compared to local currency growth rates. Gross profit margins in the first quarter of 1998 were 53.4% of sales, compared to 57.7% in the first quarter of 1997, excluding non- recurring charges in the first quarter of 1997 associated with the acquisitions of both Tylan General and Amicon. Gross margin percentages were lower than those in the same period last year reflecting the impact of a stronger U.S. dollar and a higher concentration of lower margin Tylan business. The Company expects that gross margin percentages in the second quarter of 1998 will approximate those reported in the first quarter of 1998. Operating expenses excluding the settlement of litigation in the first quarter of 1998 increased 2.6% over operating expenses for the first quarter of 1997. Included in the settlement of litigation is the costs to settle with the EQB and the intervening party, as discussed in Footnote 5 to the Consolidated Condensed Financial Statements. In addition the Company recorded a charge of $3,666 in the first quarter of 1998 to settle a patent lawsuit with Mott Metallurgical Corporation. In the lawsuit, each party claimed infringement of one of its patents by the other. As part of the settlement, the parties agreed to cross license the two patents at issue. The gain on sale of equity securities in the first quarter of 1998, reflects the sale of the Company's holdings in Perkin-Elmer Corporation as discussed in Footnote 8 to the Consolidated Condensed Financial Statements. The Company also sold all of its common shares of Glyko Biomedical in the first quarter of 1998 and recognized a gain of $3.1 million. Net interest expense in the first quarter of 1998 was higher than that of the first quarter of 1997 due to increased interest rates. Interest on borrowings required to complete the acquisition, as well as interest on Tylan's assumed debt, are included in the Company's statement of income from January 22, 1997. The Company expects that interest expense in the second quarter and for the year ended 1998 will be slightly lower than 1997 as cash generated from operating activities and the proceeds from the sale of equity securities will be used to reduce outstanding borrowings. The Company's effective income tax rate for the first three months of 1998, excluding the non-tax deductible expense for the EQB settlement was 21.0%, the same as the full year of 1997, excluding the non-tax deductible write-offs associated with the Tylan acquisition. The Company expects to sustain the 21.0% tax rate for the remainder of 1998. -9- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In thousands) Results of Operations (continued) The Company utilizes a common worldwide software system for its financial and business reporting. The Company believes that its system is Year 2000 compliant and that future costs necessary to ensure successful Year 2000 compliance will not have a material effect on the Company's results of operations. A substantial portion of the Company's business is conducted outside of the United States through its foreign subsidiaries. This exposes the Company to risks associated with foreign currency rate fluctuations, which can impact the Company's revenue and net income. The Company had entered into foreign currency option transactions to sell Yen, on a continuing basis in amounts and timing consistent with the underlying currency exposure so that the gains or losses on these transactions partially offset the realized foreign exchange gains or losses on the underlying exposure. In the first quarter of 1998, a gain of $681 was realized on the Company's foreign exchange contracts and was recorded in cost of sales, compared to a gain of $1,575 in the first quarter of 1997. As of March 31, 1998, the Company has only forward option contracts to sell yen. In the event of a significant strengthening of the U.S. dollar against the yen, the exercise of these forward options will partially mitigate losses incurred by the Company on the underlying currency exposure. The Company does not engage in speculative trading activity. Capital Resources And Liquidity Cash used by operations in the first three months of 1998 was $803 compared to cash generated from operations of $6,352 in the first three months of 1997. Cash flow from operations in the first quarter of 1998 included outflows of $1,861 of employee costs, $75 of facilities-related costs, $1,184 of contract termination costs, and $1,556 of other integration expenses against the acquisition accruals. Cash generated by the Company during the three months of 1998 was used to pay down short-term debt, invest in property, plant and equipment, and pay dividends. Property, plant and equipment expenditures for the first three months of 1998 exceeded those for the same period in 1997. The Company expects property, plant and equipment expenditures to increase over the remainder of 1998 as it completes the construction of its new manufacturing facility in Allen, Texas. Refer to Footnote 5 to the Consolidated Condensed Financial Statements regarding the Company's notification from the Environmental Quality Board of Puerto Rico. -10- PART II - OTHER INFORMATION Item 1. Legal Proceedings. On May 2, 1997, the Environmental Quality Board (EQB) of Puerto Rico served an administrative order on Millipore Cidra, Inc., a wholly- owned subsidiary of the Company. The administrative order (EQB Order) alleged: (i) that the nitrocellulose filter membrane scrap produced by Millipore Cidra's manufacturing operations is a hazardous waste as defined in EQB regulations; (ii) that Millipore Cidra, Inc. failed to manage, transport and dispose of the nitrocellulose membrane scrap as a hazardous waste; and (iii) that such failure violated EQB regulations. The EQB Order proposed penalties in the amount of $96,500,000 and ordered Millipore Cidra, Inc. to manage the nitrocellulose membrane scrap as a hazardous waste. On March 12, 1998 Millipore Cidra and the EQB entered into a Stipulation settling the administrative proceeding with respect to the EQB Order. On March 27, 1998 the Governing Board of the EQB voted to approve the recommendation of the hearing examiner for this proceeding that the Stipulation be ratified. Formal notice of this EQB Governing Board vote was mailed to Millipore Cidra on May 7, 1998. The Stipulation provides that: (i) it does not constitute any admission or determination of fact or any conclusion of law with respect to any of the allegations contained in the EQB Order; (ii) Millipore Cidra and its affiliates are released and exonerated from any claims related to the EQB Order; (iii) Millipore Cidra shall pay the EQB $4,600,000 in full satisfaction of all claims under the EQB Order; and (iv) Millipore Cidra shall manage the nitrocellulose membrane scrap as if it were a hazardous waste. On March 12, 1998 the Company entered into a settlement agreement with respect to a separate lawsuit (subject to court approval) with Redondo Waste Systems, Inc. d/b/a Celsius, an intervening party in the administrative proceeding with respect to the EQB Order. This suit was filed in the Superior Court for Caguas County, Puerto Rico in 1991 and related to damages claimed to result from a fire at a landfill owned by such intervening party. Under this settlement agreement the Company agreed to pay $3,000,000 to such intervening party in complete satisfaction of all claims under such lawsuit. The Company and Waters Corporation were engaged in an arbitration proceeding and a related litigation in the Superior Court, Middlesex, Massachusetts, both of which commenced in the second quarter of 1995 with respect to the amount of assets required to be transferred by the Company's Retirement Plan in connection with the Company's divestiture of its former Chromatography Division. In the second quarter of 1996, Waters filed a Complaint in the Federal District Court of Massachusetts alleging that the Company's operation of the Retirement Plan violates ERISA and certain sections of the Internal Revenue Code. Judgments in the Company's favor were handed down by both the Massachusetts Superior Court and the Federal District Court in May 1997 and July 1997, respectively. Waters appealed the federal court judgment, which was affirmed by the United States Court of Appeals for the First Circuit by opinion dated April 3, 1998. On October 15, 1996 the Company commenced an action for declaratory judgement in the U.S. District Court for the District of Massachusetts against Mott Metallurgical Corporation (Mott) seeking a determination that U.S. Patent No. 5,114,447 was invalid and that the Company did not infringe such patent. On December 16, 1996 Mott filed a counterclaim seeking declaratory, injunctive and monetary relief from the alleged infringement by the Company of the foregoing patent. On January 6, 1997, the Company filed a reply to the counterclaim, asserting the invalidity of U.S. Patent No. 5,114,447 and that Mott infringed the Company's U.S. Patent No. 5,487,771. Both patents relate to porous metal filters for high purity gas filtration for semiconductor manufacturing applications. On February 18, 1998, the Company entered into a settlement agreement with Mott pursuant to which Mott and the Company agreed to cross license their respective patents and the Company agreed to a one time payment to Mott of $3,500,000. Item 6. Exhibits and Reports on Form 8-K. a.Exhibits 27 Article 5 Financial Data Schedule - First Quarter 1998 b. Reports on Form 8-K None. -11- 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 May 15, 1998 /s/ Francis J. Lunger Date Francis J. Lunger Corporate Vice President, Chief Financial Officer and Treasurer -12-