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 June 30, 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 43,851,735 shares of common stock outstanding as of July 24, 1998. MILLIPORE CORPORATION INDEX TO FORM 10-Q Page No. Part I. Financial Information Item 1. Condensed Financial Statements Consolidated Balance Sheets -- June 30,1998 and December 31, 1997 2 Consolidated Statements of Income -- Three and Six Months Ended June 30, 1998 and 1997 3 Consolidated Statements of Cash Flows -- Six Months Ended June 30, 1998 and 1997 4 Notes to Consolidated Condensed Financial Statements 5-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 Part II. Other Information Item 1. Legal Proceedings 12 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 MILLIPORE CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) June 30, December 31, 1998 1997 ASSETS (Unaudited) Current assets Cash $ 2,896 $ 2,240 Short-term investments 26,456 18,029 Accounts receivable, net 161,671 176,585 Inventories 131,836 127,192 Other current assets 13,088 28,362 Total Current Assets 335,947 352,408 Property, plant and equipment, net 219,293 220,094 Intangible assets 87,435 77,394 Deferred income taxes 80,010 88,760 Other assets 22,950 27,588 Total Assets $745,635 $766,244 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Notes payable $172,263 $ 165,576 Accounts payable 41,179 46,088 Accrued expenses 57,776 74,856 Dividends payable 4,823 4,369 Accrued retirement plan 5,389 7,088 contributions Accrued income taxes payable 1,843 6,896 Total Current Liabilities 283,273 304,873 Long-term debt 279,216 286,844 Other liabilities 25,197 25,533 Shareholders' equity Common stock 56,988 56,988 Additional paid-in capital 10,927 10,927 Retained earnings 518,051 490,289 Accumulated other comprehensive (44,568) (21,720) loss 541,398 536,484 Less: Treasury stock, at cost, 13,144 shares in 1998 and 13,291 in 1997 (383,449) (387,490) Total Shareholders' Equity 157,949 148,994 Total Liabilities and Shareholders' $745,635 $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 Six Months Ended June 30, June 30, 1998 1997 1998 1997 Net sales $175,172 $192,498 $360,834 $371,337 Cost of sales 85,507 86,424 171,936 167,058 Gross profit 89,665 106,074 188,898 204,279 Selling, general & administrative expenses 60,809 63,273 122,496 123,050 Research & development expenses 13,910 15,003 27,045 28,154 Purchased research & development expense - - - 114,091 Settlement of litigation - - 11,766 - Operating income / (loss) 14,946 27,798 27,591 (61,016) Gain on sale of equity securities - - 35,594 1,769 Interest income 761 636 1,375 1,397 Interest expense (7,058) (8,159) (14,131) (14,183) Income / (loss) before income taxes 8,649 20,275 50,429 (72,033) Provision for income taxes 1,816 3,894 12,186 9,348 Net income / (loss) $6,833 $16,381 $38,243 $(81,381) Net income / (loss) per share: Basic $ 0.16 $0.38 $0.87 $(1.87) Diluted $ 0.15 $0.37 $0.86 $(1.87) Cash dividends declared per $ 0.11 $0.10 $0.21 $0.19 common share Weighted average common shares outstanding: Basic 43,819 43,512 43,774 43,452 Diluted 44,327 44,274 44,317 43,452 The accompanying notes are an integral part of the consolidated condensed financial statements. -3- MILLIPORE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 1998 1997 Cash Flows From Operating Activities: Net income (loss) $38,243 $(81,381) 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 21,783 19,323 Gain on sale of equity securities (35,594) (1,769) Deferred tax provision 8,750 - Change in operating assets and liabilities, net: Decrease (increase) in accounts 10,212 (17,287) receivable (Increase) in inventories (9,378) (6,413) (Increase) in other current assets (1,920) (7,603) Decrease (increase) in other assets 2,806 (1,090) (Decrease) in accounts payable and (19,583) (13,231) accrued expenses (Decrease) in accrued retirement (1,710) 137 plan contributions (Decrease) in accrued income taxes (5,053) (2,844) Other (1,435) 4,903 Net cash provided by operating 7,121 11,836 activities Cash Flows From Investing Activities: Additions to property, plant and (26,634) (16,993) equipment Acquisition of Tylan, net of cash - (159,158) acquired Proceeds from sale of equity 35,594 1,769 securities Investment in intangibles (3,453) - Net cash used by discontinued (2,340) (2,775) operations Net cash provided by (used in) 3,167 (177,157) investing activities Cash Flows From Financing Activities: Issuance of treasury stock under stock 2,637 4,284 plans Increase in short-term debt 6,761 80,567 Proceeds from issuance of long-term - 197,950 debt Payments on long-term debt - (123,914) Dividends paid (8,743) (7,820) Net cash provided by financing 655 151,067 activities Effect of foreign exchange rates on cash and (1,860) (3,264) short-term investments Net increase (decrease) in cash and 9,083 (17,518) short-term investments Cash and short-term investments on 20,269 46,870 January 1 Cash and short-term investments on $29,352 $29,352 June 30 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. General: 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: Inventories consisted of the following: December 31, June 30, 1998 1997 Raw materials $36,295 $42,518 Work in 22,311 16,545 process Finished 73,230 68,129 goods $131,836 $127,192 3. Property, Plant and Equipment: Accumulated depreciation on property, plant and equipment was $182,679 at June 30,1998, and $166,585 at December 31, 1997. 4. Acquisitions: 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 was $32,000. The final adjusted 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. 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 and ordered Millipore Cidra, Inc. to manage the nitrocellulose membrane scrap as a hazardous waste. The Company recorded a charge of $5,000 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 to settle a separate lawsuit with an intervening party in the EQB administrative case described above. 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. -5- MILLIPORE CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (In thousands) Legal Proceedings (cont'd): 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 by opinion dated April 3, 1998. On June 2, 1998, the Company transferred $2,439 (including interest through the date of transfer) from its Retirement Plan to the Waters Retirement Plan as provided by the amended and restated Purchase and Sale Agreement. In order to fund the transfer, the Company made a contribution of $2,255 to its Retirement Plan in accordance with ERISA funding requirements. 6. Restructuring: On June 15, 1998, the Company announced a restructuring program to streamline operations and reduce the cost structure. This program includes consolidation of transaction processing into regional business centers, outsourcing of certain administration, distribution and manufacturing activities, realigning and downsizing geographic support organizations and consolidating manufacturing operations. The Company has not yet determined the magnitude of the restructuring charge which will be recorded in the third quarter of 1998. 7. Gain on sale of equity securities: 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. In the first quarter of 1998, the Company sold all 586,541 shares of its Perkin-Elmer common stock and recognized a net gain of $32,500. The Company also sold all of its common shares of Glyko Biomedical in the first quarter of 1998 and recognized a gain of $3,100. 8. Basic and Diluted Earnings Per Share: The following table reconciles the numerator and denominator for basic and diluted earnings per share for the three months and six months ended June 30, 1998 and June 30, 1997. For the six months ended June 30, 1997, the Company was in a loss position and therefore, basic and diluted earnings per share are the same. The effect of anti-dilutive securities for the six months in 1997 amounted to 796 shares. Three Months Ended June 1998 1997 30, Net Net Income Shares EPS Income Shares EPS Basic earnings per $6,833 43,819 $0.16 $16,381 43,512 $0.38 share Effect of dilutive securities: 508 762 Stock options Diluted earnings per $6,833 44,327 $0.15 $16,381 44,274 $0.37 share Six Months Ended June 1998 1997 30, Net Net Income Shares EPS Income Shares EPS Basic earnings per $38,243 43,774 $0.87 $(81,381) 43,452 $(1.87) share Effect of dilutive securities: 543 - Stock options Diluted earnings per $38,243 44,317 $0.86 $(81,381) 43,452 $(1.87) share -6- MILLIPORE CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (In thousands) 9. New Accounting Pronouncements: The Company has adopted Statement of Financial Accounting Standard ("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. For the three months and six months ended June 30, 1998 and 1997, total comprehensive income/(loss), was comprised of the following: Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 Net income/(loss) $ 6,833 $16,381 $38,243 $(81,381) Foreign currency (3,852) 2,582 (4,660) (11,504) translation Unrealized holding loss on equity securities (893) (2,599) (18,188) (2,724) arising during period, net of tax Total comprehensive income/(loss) $ 2,088 $16,364 $15,395 $(95,609) In July 1997, the Financial Accounting Standards Board ("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, FASB issued 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 period ended June 30, 1998. -7- MILLIPORE CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (In thousands) New Accounting Pronouncements (cont'd): In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" effective January 1, 2000 for the Company. SFAS 133 establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments imbedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The Company is currently assessing the impact of this new statement on its consolidated financial position, liquidity and results of operations. -8- 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 June 15, 1998, the Company announced a restructuring program to streamline operations and reduce the cost structure. This program includes consolidation of transaction processing into regional business centers, outsourcing of certain administration, distribution and manufacturing activities, realigning and downsizing geographic support organizations and consolidating manufacturing operations. The Company has not yet determined the magnitude of the restructuring charge which will be recorded in the third quarter of 1998. Results of Operations Consolidated net sales for the second quarter of 1998 were $175,172, a decrease of 9% from sales for the same period last year. Revenues decreased 4% as measured in local currency terms for the second quarter of 1998. Second quarter diluted earnings per share were $0.15 per share, compared to $0.37 per share last year. The following table summarizes revenue growth by market and geography in the second quarter of 1998 as compared to the second quarter of 1997 (in millions): % Increase/ % (Decrease) June June Increase/ Local 30,1997 30,1998 (Decrease) Currency Microelectronics $66 $49 (26%) (21%) BioPharmaceutical 56 54 (4%) 0% Analytical 70 72 3% 10% Laboratory TOTAL $192 $175 (9%) (4%) Americas $80 $73 (9%) (8%) Europe 57 59 4% 7% Asia/Pacific 55 43 (22%) (8%) TOTAL $192 $175 (9%) (4%) Sales to microelectronics customers, in local currency, decreased 21% in the second quarter of 1998 compared to the second quarter of 1997. The Company continues to be negatively impacted by the semiconductor industry downturn and weakening economic conditions in Asia during the first half of 1998. The downturn in the semiconductor industry began in 1996 and there is no consensus opinion amongst the industry experts on how long this current cycle will last. Sales to the BioPharmaceutical sector, in local currency, in the second quarter were equal to those of the prior year's second quarter. This result is the combination of a 4% increase in the sales to pharmaceutical and biotech customers and a 17% decrease in sales to food and beverage customers. For the remaining six months of 1998, the rate of growth is expected to accelerate in the BioPharmaceutical sector on the strength of increased demand for filters used in biotech process plants. Sales growth in the Analytical Laboratory business was 10%, in local currency, reflecting an increase in market penetration of core products and new products introduced to ultra pure water customers and research laboratories. This business expects a similar growth 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) In the second quarter of 1998, the U.S. dollar strengthened against most European and Asian currencies. Expected third quarter and full year 1998 sales growth rates will be approximately 4 to 5 percentage points lower then local currency growth rates if foreign exchange rates remain at June 30, 1998 levels. Gross profit margins in the second quarter of 1998 were 51% of sales, compared to 55% in the second quarter of 1997. Gross margin percentages were lower than those in the same period last year reflecting the impact of a stronger U.S. dollar and reduced volume in the Company's manufacturing plants. The Company expects gross margin percentages in the third quarter of 1998 to approximate those reported in the second quarter of 1998. Total operating expenses decreased 5% from total operating expenses for the second quarter of 1997 primarily due to decreases in selling, general and administrative expenses attributable to cost containment programs and the U.S. dollar strengthening against European and Asian currencies, as well as a slight decrease in research and development spending. Net interest expense in the second quarter of 1998 was lower than the first quarter of 1997 due to both lower borrowings and interest rates. The Company expects that interest expense in the third 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 is used to reduce outstanding borrowings. The Company's effective income tax rate for the second quarter of 1998 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. The Company has authorized an internal team to assess the Company's Year 2000 readiness and to determine the steps necessary to address its Year 2000 issues. Among the areas that are being assessed are the Company's internal software systems, its products, its manufacturing equipment, and its facilities. In addition, the Company is undertaking to work with its key suppliers and financial institutions in assessing their Year 2000 readiness. The Company utilizes a common worldwide software system for its financial and business processes. The vendor of this system has certified it as being Year 2000 compliant, and the Company is conducting its own tests to verify compliance. A large majority of the Company's products do not include software or have embedded microprocessors, and of those that do, most have been determined to be Year 2000 compliant. Though a full assessment is not yet complete, the Company currently does not believe that either its Year 2000 issues or any future costs necessary to ensure the Company's Year 2000 readiness will have a material effect on its business, results of operations or financial condition. 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 contracts 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. The gains or losses resulting from these transactions are recorded in cost of sales. In the second quarter of 1998, a gain of $510 was realized on the Company's foreign exchange contracts compared to a gain of $1,515 in the second quarter of 1997. As of June 30, 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. -10- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (In thousands) Capital Resources And Liquidity Cash generated by operations in the first six months of 1998 was $7,121 compared to $11,836 in the first six months of 1997. During the first six months of 1998, cash expenditures amounting to $16,907 were charged against restructuring reserves established during 1997; $5,037 of employee costs, $9,248 of contract termination costs, and $2,622 of other integration expenses. Cash generated by the Company during the six months of 1998 was used to invest in property, plant and equipment, and pay dividends. Property, plant and equipment expenditures for the first six months of 1998 exceeded those for the same period in 1997 by $9,641 primarily due to $10,100 for the construction of the new manufacturing facility in Allen, Texas. The total cost of this facility will be approximately $28,000. The Company expects property, plant and equipment expenditures to increase over the remainder of 1998 as it completes this facility. -11- 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. All payments required by the Stipulation have now been made to the EQB. 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 settlement agreement has now been approved by the Courts and payment has been made by the Company. 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 June 2, 1998, the Company transferred $2,439,561 (including interest through the date of transfer) from the Company's Retirement Plan to the Waters Retirement Plan as provided by the amended and restated Purchase and Sale Agreement. In order to fund the transfer, the Company made a contribution of $2,254,567 to its Retirement Plan in accordance with ERISA funding requirements. -12- PART II - OTHER INFORMATION (cont'd) Item 4. Submission of Matters to a Vote of Security Holders. a. The Annual Meeting of Stockholders of Millipore Corporation was held on April 16, 1998. c. The following matter was voted upon at the Annual Meeting: the election of three Class II Directors for a three-year term. The following votes were tabulated with respect to the election: Matter Voted Upon Votes "For" Withheld Election of Directors: Robert C. Bishop 36,898,010 209,078 Samuel C. Butler 36,901,543 205,545 Robert E. Caldwell 36,901,164 205,924 There were no votes against any nominee and no broker non- votes. Item 6. Exhibits and Reports on Form 8-K. a.Exhibits 27 Article 5 Financial Data Schedule - second Quarter 1998 b. Reports on Form 8-K The Company filed the following report on Form 8-K during the second quarter of 1998: Form 8-K report dated April 16, 1998 filed on April 30, 1998; Common Stock Rights Agreement, amended and restated. -13- 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 August 14, 1998 /s/ Kathleen B. Allen Date Kathleen B. Allen Chief Accounting Officer -14-