SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
--------------
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
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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 47,098,256 shares of common stock outstanding as of May 2, 2001.
MILLIPORE CORPORATION
INDEX TO FORM 10-Q
Page No.
--------
Part I. Financial Information
Item 1. Condensed Financial Statements
Consolidated Balance Sheets -
March 31, 2001 and December 31, 2000 2
Consolidated Statements of Income -
Three Months Ended March 31, 2001 and 2000 3
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 2001 and 2000 4
Notes to Consolidated Condensed
Financial Statements 5-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8-11
Item 3. Quantitative and Qualitative Disclosures about Market Risk 11
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
MILLIPORE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2001 2000
- -------------------------------------------------------------------------------------------------------------
ASSETS (Unaudited)
- ------
Current assets
Cash and cash equivalents $ 58,423 $ 55,186
Cash held as collateral - 3,212
Accounts receivable, net 219,887 232,283
Inventories 151,145 146,691
Deferred income taxes 21,631 21,631
Other current assets 8,892 6,480
--------- ---------
Total Current Assets 459,978 465,483
Property, plant and equipment, net 230,238 233,604
Deferred income taxes 93,980 93,980
Intangible assets, net 59,695 61,853
Other assets 16,708 20,005
--------- ---------
Total Assets $ 860,599 $ 874,925
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Notes payable $ 70,000 $ 52,544
Accounts payable 69,888 69,770
Accrued expenses 84,353 78,633
Dividends payable 5,332 5,319
Accrued retirement plan contributions 4,189 8,244
Accrued income taxes payable 3,216 20,137
--------- ---------
Total Current Liabilities 236,978 234,647
Long-term debt 300,000 300,130
Other liabilities 30,259 34,780
Shareholders' equity
Common stock 56,988 56,988
Additional paid-in capital 35,547 30,546
Retained earnings 586,313 586,795
Unearned compensation (4,211) (4,490)
Accumulated other comprehensive loss (80,427) (55,791)
--------- ---------
594,210 614,048
Less: Treasury stock, at cost, 10,309
shares in 2001 and 10,594 in 2000 (300,848) (308,680)
--------- ---------
Total Shareholders' Equity 293,362 305,368
--------- ---------
Total Liabilities and Shareholders' Equity $ 860,599 $ 874,925
========= =========
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)
March 31,
--------------------------
2001 2000
---------- ----------
Net sales $244,496 $224,823
Cost of sales 116,874 100,326
---------- ----------
Gross profit 127,622 124,497
Selling, general & administrative expenses 69,566 70,034
Research & development expenses 16,580 14,714
Restructuring and other charges 30,518 -
Separation costs 3,506 -
---------- ----------
Operating income 7,452 39,749
Interest income 718 466
Interest expense (6,627) (7,034)
---------- ----------
Income before income taxes 1,543 33,181
Income tax (benefit) expense (3,628) 6,968
---------- ----------
Net income $ 5,171 $ 26,213
========== ===========
Net income per share:
Basic $ 0.11 $ 0.58
Diluted $ 0.11 $ 0.56
Cash dividends declared per share $ 0.11 $ 0.11
Weighted average shares outstanding:
Basic 46,414 45,273
Diluted 47,414 46,452
The accompanying notes are an integral part of the consolidated condensed
financial statements.
3
MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
----------------------------
2001 2000
-------- --------
Cash Flows From Operating Activities:
- -------------------------------------
Net income $ 5,171 $ 26,213
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 11,126 11,266
Restructuring and other charges 30,518 -
Changes in operating assets and liabilities, net:
Increase in accounts receivable (222) (9,913)
(Increase) in inventories (11,242) (18,089)
Increase in other current assets and other assets (1,650) (3,001)
Decrease in accounts payable and accrued expenses (13,197) (261)
Decrease in accrued retirement plan contributions (3,904) (3,657)
(Decrease) increase in accrued income taxes (18,136) 3,049
(Decrease) increase in other (3,282) 1,843
-------- --------
Net cash (used in) provided by operating activities (4,818) 7,450
Cash Flows From Investing Activities:
- -------------------------------------
Additions to property, plant and equipment (12,012) (7,584)
Proceeds from sale of property - 8,808
-------- --------
Net cash (used in) provided by investing activities (12,012) 1,224
Cash Flows From Financing Activities:
- -------------------------------------
Issuance of treasury stock under stock plans 8,167 14,600
Net change in short-term debt 17,456 12,355
Decrease in cash held as collateral 3,212 3,856
Dividends paid (5,103) (4,982)
-------- --------
Net cash provided by financing activities 23,732 25,829
Effect of foreign exchange rates on cash and cash equivalents (3,665) (1,358)
-------- --------
Net change in cash and cash equivalents 3,237 33,145
Cash and cash equivalents on January 1 55,186 32,420
-------- --------
Cash and cash equivalents on March 31 $ 58,423 $ 65,565
======== ========
The accompanying notes are an integral part of the consolidated condensed
financial statements.
4
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in millions, shares 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 which substantially duplicate information provided in the
Company's latest audited financial statements. These financial statements
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, 2000. In the opinion of management, these financial
statements reflect all adjustments necessary for a fair presentation of the
results for the interim periods presented. 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:
March 31, December 31,
2001 2000
--------------- -----------------
Raw materials $ 58.6 $ 53.9
Work in process 33.0 29.8
Finished goods 59.5 63.0
--------------- -----------------
Total $151.1 $146.7
=============== =================
3. PROPERTY, PLANT AND EQUIPMENT: Accumulated depreciation on property, plant
and equipment was $209.7 at March 31, 2001 and $209.3 at December 31, 2000.
4. 1998 RESTRUCTURING PROGRAM: The 1998 Restructuring Program has been
completed and substantially all final cash payments will occur in the second
quarter of 2001. The payments consist primarily of lease termination costs.
Of the planned 620 employees, 615 left the Company pursuant to this
initiative.
The following is a summary of the 1998 Restructuring Program reserve
balances at March 31, 2001:
Balance at Cash Balance at
December 31, 2000 disbursements March 31, 2001
----------------- ------------- --------------
Employee severance costs $0.9 $0.2 $0.7
Leasehold and other costs 1.7 0.3 1.4
---- ---- ----
Total $2.6 $0.5 $2.1
==== ==== ====
5. 2001 RESTRUCTURING PROGRAM AND OTHER CHARGES:
In the first quarter of 2001, in connection with the previously announced
separation of the Company into two independent companies, a restructuring
program was initiated to reorganize both the Microelectronics and BioScience
businesses of the Company. There were also costs associated with resizing
the Microelectronics business in view of the current microelectronics
industry downturn. The program included reducing, consolidating and
outsourcing of certain manufacturing operations, centralization of European
shared services (including order processing, cash collections and cash
applications processes) and streamlining certain corporate shared services
and divisional overhead functions to serve smaller organizations.
5
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in millions, shares in thousands)
These initiatives included a $28.1 million restructuring charge and $2.4
million of fixed asset write-offs for assets that are no longer in use. The
restructuring charge included $26.7 million of employee severance costs and
$1.4 million of lease cancellation costs. The severance costs included non-
cash stock based compensation expense related to changes in stock awards.
Approximately 420 positions will be eliminated and the affected employees
were notified by March 31, 2001, however a number of these employees will
continue in their existing positions with their related salary costs charged
to operations as incurred. Under the terms of the severance agreements, the
Company expects to pay severance and associated benefits through 2002.
Through March 31, 2001, approximately 100 employees have left the Company
and $2.8 million of cash severance benefits have been paid.
The following is a summary of the 2001 Restructuring Program reserve
balances at March 31, 2001:
Restructuring Cash Non-cash Balance at
Charge activity activity March 31, 2001
---------------------------------------------------------------
Employee severance costs $26.7 $2.8 $5.4 $18.5
Leasehold and other costs 1.4 - - 1.4
----- ---- ---- -----
Total $28.1 $2.8 $5.4 $19.9
===== ==== ==== =====
In the first quarter of 2001, the Company also incurred professional fees of
approximately $3.5 million related to the separation of the Company's
Microelectronics and BioScience business segments.
6. BUSINESS SEGMENT INFORMATION: The Company has two reportable business
segments: BioScience and Microelectronics. The results for BioScience,
Microelectronics and Corporate are presented below in "local currencies".
Local currency results represent the foreign currency balances translated,
in all periods presented, at Millipore's budgeted exchange rates for 2001,
thus excluding the impact of fluctuations in the actual foreign currency
rates. The Company's management uses this presentation for internal
evaluation of the financial performance of the Company's business segments
because it believes that the local currency results provides a clearer
presentation of underlying business trends. The U.S. dollar results
represent the foreign currency balances translated at actual exchange rates.
Three Months Ended
March 31,
Consolidated Net Sales 2001 2000
- ---------------------------------------------------------------------------
BioScience $173.3 $151.6
Microelectronics 85.6 75.1
Foreign exchange (14.4) (1.9)
------ ------
Total net sales at actual exchange rates $244.5 $224.8
====== ======
Three Months Ended
March 31,
Consolidated Operating Income 2001 2000
- ----------------------------------------------------------------------------
BioScience $ 44.6 $ 36.1
Microelectronics 14.0 16.8
Corporate (11.8) (14.0)
Restructuring and other charges (30.5) -
Separation costs ( 3.5) -
Foreign exchange ( 5.3) 0.8
------ ------
Total operating income at actual exchange rates $ 7.5 $ 39.7
====== ======
6
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Dollars in millions, shares in thousands)
7. BASIC AND DILUTED EARNINGS PER SHARE: The following table sets
forth the computation of basic and diluted earnings per share:
Three Months Ended
March 31,
2001 2000
------------------
Numerator:
Net income $ 5.2 $ 26.2
======= =======
Denominator:
Basic weighted average shares outstanding 46,414 45,273
Effect of dilutive securities 1,000 1,179
------- -------
Diluted weighted average shares outstanding 47,414 46,452
======= =======
Net income per share:
Basic $ 0.11 $ 0.58
Diluted $ 0.11 $ 0.56
8. COMPREHENSIVE INCOME (LOSS): The following table presents the components of
comprehensive income (loss), net of taxes:
Three Months Ended
March 31,
2001 2000
------------------
Net unrealized gain (loss) on securities available
for sale $ (1.4) $ 5.8
Impact of adopting SFAS No. 133 (5.1) -
Change in value of foreign currency interest rate
swaps designated as hedges 5.9
Foreign currency translation adjustments (24.1) (8.2)
------ -----
Other comprehensive loss (24.7) (2.4)
Net income 5.2 26.2
------ -----
Total comprehensive income (loss) $(19.5) $23.8
====== =====
9. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT:
Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 138.
SFAS No. 133 establishes accounting and reporting standards requiring that
every derivative instrument, including certain derivative instruments
embedded 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.
With respect to all derivative instruments, SFAS No. 133 requires that
companies, upon adoption of the new standard, record an adjustment to record
the difference between a derivative's previous carrying amount and its
current fair market value as a transition adjustment. At December 31, 2000,
the Company was a party to U.S. dollar to Japanese yen foreign currency
fixed rate-to-fixed rate interest rate swap agreements, which were
designated as a hedge of the Company's net investment exposure in its
Japanese subsidiary. On January 1, 2001, the Company recorded a net
derivative liability transition adjustment of $5.1 million which was the
difference between the Company's carrying value and the fair value of this
derivative. This transition adjustment was recorded as a cumulative-effect
type adjustment to other comprehensive income. During the first quarter of
2001, the swap agreements were terminated and a gain of $0.8 million was
realized and recorded in other comprehensive income. In addition, the
Company is no longer required to provide any cash collateralization which
had previously been required as part of one its swap agreements.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Local Currency Results
- ----------------------
The following discussion of the Results of Operations includes reference to
revenue, margins and expenses in "local currencies". Local currency results
represent the foreign currency balances translated, in all periods presented, at
Millipore's budgeted exchange rates for 2001, thus excluding the impact of
fluctuations in the actual foreign currency rates. The Company's management
uses this presentation for internal evaluation of the financial performance of
the Company's business segments because it believes that the local currency
results provide a clearer presentation of underlying business trends. The U.S.
dollar results represent the foreign currency balances translated at actual
exchange rates.
Results of Operations
- ---------------------
Consolidated net sales for the first quarter of 2001 were $245 million, an
increase of 9% over sales for the same period last year. The Company reported
earnings per share of $0.11 for the first quarter of 2001 compared to earnings
per share of $0.56 for the first quarter of 2000. Excluding restructuring
charges and other costs incurred to separate the Microelectronics business in
the first quarter of 2001, earnings per share were $0.59.
The following table summarizes sales growth by business segment and geography in
the first quarter of 2001 as compared to the first quarter of 2000 (U.S. dollars
in millions):
March 31, Sales Growth
2001 2000 In U.S. Dollars Local Currency
---------------------------------------------------------------
BioScience $ 162 $ 148 9% 14%
Microelectronics 83 77 8% 14%
----- ----- -- --
Total $ 245 $ 225 9% 14%
===== ===== == ==
Americas $ 105 $ 97 9% 9%
Europe 66 60 9% 17%
Asia/Pacific 74 68 9% 20%
----- ----- -- --
Total $ 245 $ 225 9% 14%
===== ===== == ==
Currency Translation
- --------------------
Currency translation reduced reported sales growth rates by 5 percentage points
in the first quarter of 2001 due to the weakening of the Euro, the British pound
and the Japanese yen. If foreign exchange rates remain at April 27, 2001 levels,
the expected second quarter and full year 2001 sales growth rates in dollars
will be lower than local currency growth rates.
Business Segment Results
- ------------------------
BioScience Segment:
BioScience sales, in local currency, increased 14% in the first quarter of 2001
compared to the first quarter of 2000. Double digit sales growth, in local
currency, was reported in all geographies. Sales growth was strongest to
customers in biotechnology markets and also to life science customers.
BioScience operating income, in local currency, increased 23% in the first
quarter of 2001 over the first quarter of 2000 as a result of the increased
sales combined with improved gross profit margins. The improved gross profit
margin percentage was attributed to an increased mix of consumable product sales
that generally have higher margins.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Microelectronics Segment:
Microelectronics sales, in local currency, increased 14% in the first quarter of
2001 compared to the same period last year. Sales growth was positive in all
geographies with the most significant growth in Europe and Asia/Pacific. First
quarter of 2001, sequential quarter sales growth was down 15% from the fourth
quarter of 2000. Although recently published industry results and forecasts
depict trends of continued decline in demand for both semiconductors and
semiconductor capital equipment for at least the remainder of 2001, the extent
and the duration of this industry downturn to the Microelectronics segment is
unknown.
Microelectronics operating income, in local currency, decreased from $16.8
million or 22% of sales in the first quarter of 2000 to $14.0 million or 16% of
sales in the first quarter of 2001. The decrease is primarily due to reduced
gross profit margins offset by sales growth and operating expense leverage. The
gross profit margins were negatively impacted by having more manufacturing
employees than needed based on the reduced demand. The Company responded during
the quarter by restructuring its manufacturing operations for the industry
downturn.
Corporate Expenses:
Corporate expenses, in local currency decreased from $14.0 million to $11.8
million in the first quarter of 2001 as compared to the same quarter of the
prior year. The decreased expenses related primarily to reduced variable
compensation expense.
Restructuring and Other Charges
- -------------------------------
In the first quarter of 2001, in connection with the previously announced
separation of the Company into two independent companies, a restructuring
program was initiated to reorganize both the Microelectronics and BioScience
businesses and to prepare them to operate successfully as two independent
companies. There were also costs associated with resizing the Microelectronics
business in view of the current microelectronics industry downturn.
Key initiatives which will be substantially concluded in the next twelve months
include:
o Globally streamlining certain corporate shared services and divisional
overhead functions to serve smaller organizations
o Centralizing into two locations European shared services including order
processing, cash collections and cash applications processes
o Closing the manufacturing operation in China in order to reduce
manufacturing infrastructures
o Outsourcing certain manufacturing processes in Puerto Rico to third party
vendors in order to create a more flexible cost structure
o Reducing and reorganizing Microelectronics manufacturing including
reduction of manufacturing workforce due to the current industry downturn
and reorganizing manufacturing to better leverage worldwide manufacturing
capacity
These initiatives included a $28.1 million restructuring charge and $2.4 million
of fixed asset write-offs for assets which are no longer in use. The
restructuring charge included $26.7 million of employee severance costs and $1.4
million of lease cancellation costs. Approximately 420 positions will be
eliminated and the affected employees were notified by March 31, 2001, however
for employees temporarily continuing in their existing positions, related salary
costs will be charged to operations as incurred. Under the terms of the
severance agreements, the Company expects to pay severance and associated
benefits through 2002. Through March 31, 2001, approximately 100 employees have
left the Company and $2.8 million of severance benefits have been paid.
The restructuring program is expected to yield annualized savings of
approximately $20 million. The savings will result in reduced wages, facility
related costs and depreciation. The savings will be reflected in cost of sales,
selling, general and administrative expenses and research and development
expenses. The savings will begin in the second quarter of 2001 but will not be
fully realizable until the second half of this year and into the first quarter
of 2002.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
During the next several quarters, the Company expects to incur approximately $4
million of additional operating expenses associated with the restructuring
program. These costs primarily relate to the closure of leased facilities and
fixed assets that are currently in use and employee retention bonuses. In
addition, the Company plans to open a Microelectronics manufacturing plant in
Ireland in 2002 and will incur additional restructuring and operating expenses
to relocate production activities.
In the first quarter of fiscal 2001, the Company also incurred professional fees
of $3.5 million related to the separation of the Company's Microelectronics and
BioScience business segments.
Consolidated Results
- --------------------
Gross profit margins, in local currencies, were 53% in the first quarter of 2001
compared to 55% reported in the first quarter of 2000. The margin reduction can
be primarily attributed to relatively higher manufacturing costs in the
Microelectronics segment.
Selling, general and administrative expenses (SG&A), in local currencies,
increased 4% in the first quarter of 2001 as compared to the first quarter of
2000. This increase is primarily attributed to additional headcounts and
increased spending due to higher sales volume. As a percentage of net sales,
SG&A expenses in local currencies decreased approximately 2 percentage points.
Research and development (R&D) expenses, in local currencies, increased 14% in
the first quarter of 2001 as compared to the first quarter of 2000. This
increase is due to additional research and development programs. As a
percentage of sales, R&D expenses remained constant at 6.5%.
Operating income, excluding restructuring and other costs, in the first quarter
of 2001 as compared to the same period of the prior year in U.S. dollars, was
adversely effected by the impact of the weakened Euro, British pound and
Japanese Yen. If current foreign exchange rates remain in effect for the second
quarter and full year of 2001 then foreign exchange will have a more significant
negative impact on operating income as compared to the same periods of the prior
year.
Net interest expense decreased in the first quarter of 2001 as compared to the
first quarter of 2000 primarily attributed to lower average borrowings.
The effective income tax rate, excluding unusual expenses for the 2001
restructuring program, for the first quarter of 2001 was 22.0% compared to 21.0%
for the first quarter of 2000. The effective income tax rate on the
restructuring and other charges was 35% because these charges occurred in
countries with higher tax rates.
Change in Accounting for Derivative Financial Instruments
- ---------------------------------------------------------
Effective January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 138. SFAS
No. 133 establishes accounting and reporting standards requiring that every
derivative instrument, including certain derivative instruments embedded 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.
With respect to all derivative instruments, SFAS No. 133 requires that companies
record an adjustment to record the difference between a derivative's previous
carrying amount and its current fair market value as a transition adjustment. At
December 31, 2000, the Company was a party to U.S. dollar to Japanese yen
foreign currency fixed rate-to-fixed rate interest rate swap agreements, which
were designated as a hedge of the Company's net investment exposure in it's
Japanese subsidiary. The Company recorded a net derivative liability transition
adjustment of $5.1 million, on January 1, 2001, to record the difference between
the Company's carrying value and the fair value of this derivative. This
transition adjustment was recorded as a cumulative-effect type adjustment to
other comprehensive income. During the first quarter of 2001, the swap
agreements were terminated and a gain of $0.8 million was realized and recorded
to other comprehensive income. In addition, the Company is no longer required
to provide any cash collateralization which had previously been required as part
of one its swap agreements.
10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Foreign Exchange
- ----------------
A substantial portion of the Company's business is conducted outside of the
United States through its foreign subsidiaries. This business is transacted
through the Company's network of international subsidiaries generally in the
local currency. Approximately 30% of the Company's sales are derived from Europe
where the U.S. dollar continued to strengthen against the Euro during the first
quarter of 2001. The Company is able to partially mitigate the impact of
fluctuations in the Euro by active management of cross border currency flows and
material sourcing. Additionally, the Company has significant exposure to
changes in the Japanese yen that can not be mitigated through normal financing
or operating activities. Accordingly, the net equity exposure had been managed
through the use of debt swap agreements. The Company terminated the debt swap
agreements in the first quarter of 2001 and intends to pursue other instruments
in the second quarter of 2001 to mitigate the yen exposure. Generally, when the
U.S. dollar strengthens against currencies in which the Company transacts its
business, sales and net income will be adversely impacted.
Capital Resources and Liquidity
- -------------------------------
Cash used by operations in the first three months of 2001 was $4.8 million
compared to cash generated by operations of $7.5 million in the first three
months of 2000. In the first quarter of 2001, net income of $5.2 million
(excluding the $30.5 million ($19.8 million after tax) of restructuring and
other expenses) was primarily offset by increases in inventories of $11.2
million and decreases in both accrued expenses of $16.3 million and accrued
income taxes of $18.1 million. The inventory growth related to both future sales
for the BioScience segment and purchase commitments for Microelectronics. The
accrued expense decrease related to payments for employee compensation accrued
in 2000. The Company also borrowed $17.5 million under its revolving credit
facility and received $8.2 million for stock option exercises and $3.2 million
of cash previously restricted as part of the close out of the debt swap
agreements. Cash was used to invest $12.0 million in property, plant and
equipment and to pay dividends of $5.1 million.
Forward Looking Statements
- --------------------------
The foregoing Management's Discussion and Analysis of Financial Condition and
Results of Operations contain certain forward-looking statements based on
current management expectations involving substantial risks and uncertainties
that could cause actual results to differ materially from the results expressed
in, or implied by, these forward-looking statements. These risks and
uncertainties include, without limitation, difficulties in the successful
implementation of our restructuring activities, as well as those risks and
uncertainties described in our Form 10-K for the year ended December 31, 2000.
11
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The mitigating actions enumerated above under "Foreign Exchange" in Management's
Discussion and Analysis of Financial Condition and Results of Operations and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's Annual Report on Form 10-K have
effectively limited the impact of exchange rate fluctuations and credit risk on
the Company's results of operations and financial position to a level which is
not material.
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
The annual Meeting of Stockholders of Millipore Corporation was held on April
26, 2001. At the Annual Meeting the only matter voted on was the election of
three Class II Directors for a three-year term (expiring in 2004). The
following votes were tabulated with respect to the election:
Votes "For" Withheld
----------- --------
Daniel Bellus 40,967,659 449,148
Robert C. Bishop 40,961,229 455,578
Robert E. Caldwell 40,945,964 470,843
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
10 Letter Agreement, dated March 28, 2001, between the Company and Michael
P. Carroll
b. Report on Form 8-K
No reports on Form 8-K have been filed by the Company during the fiscal
quarter ended March 31, 2001.
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 14, 2001 /s/ Kathleen B. Allen
- ------------ -------------------------------------
Date Kathleen B. Allen
Vice President and Chief Financial Officer
May 14, 2001 /s/ Donald B. Melson
- ------------ -------------------------------------
Date Donald B. Melson
Corporate Controller and Chief Accounting Officer
12