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, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
For Quarter Ended Commission File Number
June 30, 1994 0-1052
Millipore Corporation
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of
incorporation or organization)
80 Ashby Road
Bedford, Massachusetts
(Address of principal executive
offices)
04-2170233
(I.R.S. Employer Identification No.)
01730
(Zip Code)
Registrant's telephone number, include area code (617) 275-9200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of June 30, 1994: 28,381,370
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MILLIPORE CORPORATION
INDEX
Page No.
Part I. Financial Information:
Item 1. Condensed Financial Statements
Consolidated Balance Sheets --
June 30, 1994 and December 31, 1993 2
Consolidated Statements of
Income -- Three Months and Six Months
Ended June 30, 1994 and 1993 3
Consolidated Statements of
Cash Flows -- Six Months Ended
June 30, 1994 and 1993 4
Notes to Consolidated Condensed
Financial Statements 5-6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7
Part II. Other Information 8
Signatures 9
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MILLIPORE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
June 30, December 31,
1994 1993
ASSETS (Unaudited)
Current assets
Cash $ 2,036 $ 2,140
Short-term investments 18,472 38,502
Accounts receivable, net 123,496 99,655
Inventories
Raw materials 21,432 18,782
Work in process 9,306 7,852
Finished goods 45,205 38,553
75,943 65,187
Other current assets 8,730 12,790
Net current assets of discontinued
operations 146,647 138,687
Total current assets 375,324 356,961
Property, plant and equipment, net of
accumulated depreciation of $176,464
in 1994 and $163,071 in 1993 197,299 194,895
Intangible assets 2,549 2,769
Other assets 48,048 52,141
Net long-term assets of discontinued
operations 100,428 99,647
Total asset $723,648 $706,413
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable and current portion of
long-term debt $ 26,098 $51,420
Accounts payable and accrued expenses 52,785 57,505
Dividends payable 4,253 3,921
Accrued retirement plan contributions 3,005 6,356
Accrued and deferred income
taxes payable 10,324 4,894
Total current liabilities 96,465 124,096
Long-term debt 102,061 102,047
Other liabilities 18,257 19,116
Shareholders' equity
Common stock 28,494 28,344
Additional paid-in capital 24,003 16,803
Retained earnings 455,307 434,988
Translation adjustments 5,003 (7,624)
512,807 472,511
Less: Treasury stock, at cost, 112,983
shares in 1994 and 341,273 in 1993 (5,942) (11,357)
Total shareholders' equity 506,865 461,154
Total liabilities and
shareholders' equity $723,648 $706,413
The accompanying notes are an integral part of the consolidated condensed
financial statements.
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MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1994 1993 1994 1993
Net sales $124,690 $ 114,613 $243,649 $ 219,802
Cost of sales 52,910 49,271 104,175 94,411
Gross profit 71,780 65,342 139,474 125,391
Selling, general &
administrative expenses 39,456 36,946 77,565 73,501
Research & development
expenses 8,446 9,010 17,004 17,597
Operating income 23,878 19,386 44,905 34,293
Interest expense, net 1,204 2,083 2,497 4,300
Income from continuing operations before
income taxes 22,674 17,303 42,408 29,993
Provision for income taxes 5,102 3,893 9,542 6,748
Income from continuing
operations 17,572 13,410 32,866 23,245
Loss from discontinued
operations - (579) - (9,662)
Net income $ 17,572 $ 12,831 $32,866 $ 13,583
Net income per common share
From continuing operations$ 0.62 $ 0.48 $ 1.16 $ 0.83
Net income $ 0.62 $ 0.46 $ 1.16 $ 0.49
Cash dividends declared
per common share $ 0.15 $ 0.14 $ 0.29 $ 0.27
Weighted average common
shares 28,388 27,946 28,256 27,964
The accompanying notes are an integral part of the consolidated condensed
financial statements.
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MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
1994 1993
Cash Flows From Operating Activities:
Net income $ 32,866 $ 13,583
Adjustments to reconcile net income to net
cash provided:
Net loss from discontinued operations - 9,662
Depreciation and amortization 13,845 13,612
Deferred income tax provision (1,000) 2,000
Change in operating assets and liabilities:
(Increase) in accounts receivable (15,220) (6,228)
(Increase) decrease in inventories (6,193) 5,159
(Increase) in other current assets (1,977) (3,438)
Decrease (increase) in other assets (573) (2,623)
(Decrease) in accounts payable and accrued
expenses (2,115) (5,282)
(Decrease) in accrued retirement plan
contributions (3,484) (2,045)
Increase in accrued income taxes 4,145 2,062
Income tax refund received 14,035 -
Other (1,887) (1,474)
Net cash provided by continuing operations 32,442 24,988
Net cash provided by discontinued operations 2,798 9,153
Net cash provided by operating activities 35,240 34,141
Cash Flows From Investing Activities:
Additions to property, plant, and equipment (9,911) (13,609)
Net investing activities of discontinued
operations (4,703) (3,712)
Net cash used in investing activities (14,614) (17,321)
Cash Flows From Financing Activities:
Treasury stock acquired (15,804) (3,034)
Issuance of treasury stock under stock plans 16,905 630
Cash paid to extinguish long-term debt (5,088) -
Common stock issued 7,350 -
Cash paid to close out foreign currency swap(10,287) -
Net change in short-term debt (28,375) (15,428)
Net change in long-term debt (92) (68)
Dividends Paid (7,844) (7,281)
Net cash used for financing activities (43,235) (25,181)
Effect of foreign exchange rates on cash and
short-term investments 2,475 (1,455)
Net decrease in cash and
short-term investments (20,134) (9,816)
Cash and short-term investments on January 1 40,642 70,451
Cash and short-term investments on June 30 $ 20,508 $ 60,635
Interest Paid $ 4,343 $ 4,588
Taxes Paid $ 8,199 $ 5,005
The accompanying notes are an integral part of the consolidated
condensed financial statements.
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MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(in thousands)
1.The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the instructions to Form 10-Q and,
accordingly, these footnotes condense or omit certain information and
disclosures normally included in financial statements. These financial
statements, which in the opinion of management reflect all adjustments
necessary for a fair presentation, should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1993. The
accompanying unaudited consolidated condensed financial statements are not
necessarily indicative of future trends or the Company's operations for
the entire year.
2.As discussed in Note B to the December 31, 1993 Annual Report, on November
11, 1993, the Company's Board of Director's approved a plan to divest
operations of the Company's Instrumentation Divisions, which serve
primarily the chromatography and bioscience markets. The operating
results of these businesses through November 11, 1993 have been classified
as discontinued operations in the Company's financial statements. The
operating results of these businesses from November 11, 1993 to the date
of the divestiture will be deferred until the divestiture is completed.
The Company expects to realize a net gain in 1994 upon the sale of these
businesses. Net current and long-term assets of discontinued operations
consist primarily of accounts receivable, inventory, property, plant and
equipment, intangibles, and accounts payable, and have been classified
separately in the accompanying consolidated balance sheets.
On April 4, 1994, the Company entered into a purchase and sale agreement
for the sale of the net assets of its Waters Chromatography Division to
Waters Holdings Inc., a corporation owned equally by AEA Investors, Inc.
and Bain Capital, Inc.
On July 14, 1994, the Company announced that it had finalized an asset
purchase and sale agreement for the sale of the business and certain net
assets of its Biosearch division to PerSeptive Biosystems, Inc.
The Company expects to complete the sale of both divisions by the end of
August, 1994.
3.As discussed in Note I to the December 31, 1993 Annual Report, Eastern
Enterprises and its subsidiary, Ionpure Technologies Corporation filed a
suit against the Company alleging misrepresentations made in conjunction
with its 1989 purchase of the Company's Process Water Division. The
Company believes that it has adequate and complete defenses to this
lawsuit. Although the Company is unable to predict with certainty the
outcome of this litigation, its ultimate disposition is not expected to
have a material adverse effect on the Company's financial condition.
4.Certain reclassifications have been made to the 1993 financial statements
to conform to the 1994 presentation.
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MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(in thousands)
5.As discussed in Note F to the December 31, 1993 Annual Report,
the Company entered into an agreement in the fourth quarter of
1993 to retire its $100,000 notes payable bearing interest at
9.2 percent before their call date of March 30, 1995.
Accordingly, the Company recorded an extraordinary charge of
$5,906 ($3,544 net of income taxes) in December, 1993 to
reflect the cost of extinguishing the notes. In March, 1994,
the Company retired the notes and simultaneously issued
$100,000 of 6.78% notes due in 2004. Interest on the new
notes is payable semi-annually beginning in September, 1994.
At the same time as the issuance of the $100,000 9.2 percent
bearing notes described above, the Company partially hedged
its Japanese yen net asset exposure by entering into a
currency swap by exchanging $80,000 of dollar debt service
obligations for 9,936,000 of yen obligations. The yen
obligations bore a 5.27 percent interest rate and matured in
1995. The effects of foreign currency exchange rate
fluctuations resulting from this swap were reflected each
reporting period in translation adjustment and transaction
gains/losses. The unrealized loss on this swap of $8,833 at
December 31, 1993 was included in other assets in the
Company's balance sheet.
In January, 1994, the Company closed out its yen denominated
currency swap and simultaneously exchanged $80,000 of dollar
debt service obligations for a yen denominated obligation of
8,760,000 yen, which bears interest at a rate of 4.49 percent.
The swap matures in 2004. The Company paid $10,287 in cash to
close out the old swap. The cash payment represented the
cumulative effect of the foreign currency rate fluctuations
over the life of the swap.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sales for the second quarter of 1994 increased 9 percent compared to sales
for the second quarter of 1993. For the first six months of 1994, sales
increased 11 percent over the same period in 1993. For the quarter, sales
were particularly strong, up 15 percent, for products and systems used in
manufacturing applications, led by sales to microelectronics customers.
Sales to the laboratory/research market, however continued to grow modestly
in the second quarter of 1994. By geography, sales growth continued to be
strong in the Asia/Pacific region, with particularly strong growth in Korea,
in the second quarter. Sales growth in both the Americas and Europe was more
modest in the second quarter of 1994 than in the first quarter. Although
foreign currency fluctuations had no impact on the Company's reported sales
growth, they were a factor in the reported sales growth within specific
geographies, positively impacting the Asia/Pacific region while negatively
impacting Europe. Sales growth by geography is summarized as follows:
Sales growth rates Sales growth rates
measured in local currencies measured in U.S. dollars
3 months ended Six months ended 3 months ended Six months ended
6/30/94 6/30/94 6/30/94 6/30/94
Americas 5% 9% 5% 9%
Europe 5% 7% 2% 3%
Asia/Pacific 17% 17% 20% 23%
9% 11% 9% 11%
Gross margins increased slightly during the second quarter of 1994 to 57.6
percent as compared to 57.0 percent in the second quarter of 1993. Gross
margins for the first six months of 1994 improved slightly over the first six
months of 1993. The increase in operating expenses in the second quarter of
1994, as well as in the first six months, as compared to 1993 has been
limited as management continued to analyze the significant business
divestiture activities taking place and the resulting required level of
infrastructure spending to support the ongoing businesses. Net interest
expense decreased 42 percent in the second quarter and first six months of
1994 compared to 1993, primarily due to a lower interest rate on the
Company's refinanced long-term $100 million notes payable as well as an
overall lower level of short-term borrowings. The Company's effective income
tax rate for 1994 is 22.5 percent, consistent with the full year effective
rate in 1993.
The Company generated $32.4 million of cash from continuing operations in the
first six months of 1994 compared to $25.0 million during the same period in
1993. In addition to the increase in net income of $19.3 million year over
year, the Company received a tax refund of $14.0 during the second quarter of
1994. This was offset by an increase in accounts receivable of $15.2 million
in the first six months of 1994 compared to an increase of $6.2 million in
1993. Inventories increased $6.2 million in 1994 compared to a decrease in
inventories of $5.2 million in 1993. Property, plant and equipment
expenditures in the first six months of 1994 were lower than those for the
comparable period in 1993. During the first six months of 1994, the Company
paid a total of $15.4 million in non-recurring financing related
transactions; $5.1 million was used to pre-pay the Company's $100 million
notes payable due in 1998, while $10.3 million was used to close out the
Company's yen currency swap. These non-recurring payments were partially
offset by $16.9 million of cash generated from stock options exercised by
employees.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
b. Reports on Form 8-K - There were no reports on Form 8-K filed for
the quarter ended June 30, 1994.
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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 15, 1994 /s/ Michael P. Carroll
Date Michael P. Carroll
Vice President, Chief Financial Officer and
Treasurer
