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 September 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
September 30, 1994 0-1052
<PAGE>
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 September 30, 1994: 24,703,283
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MILLIPORE CORPORATION
INDEX
Page No.
Part I. Financial Information:
Item 1. Condensed Financial Statements
Consolidated Balance Sheets --
September 30, 1994 and December 31, 1993 2
Consolidated Statements of
Income -- Three Months and Nine Months
Ended September 30, 1994 and 1993 3
Consolidated Statements of
Cash Flows -- Nine Months Ended
September 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
<PAGE>
MILLIPORE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
September 30, December 31,
1994 1993
ASSETS (Unaudited)
Current assets
Cash $ 3,323 $ 2,140
Short-term investments 81,024 38,502
Accounts receivable, trade 139,787 113,795
Inventories
Raw materials 20,908 18,782
Work in process 8,750 7,852
Finished goods 46,204 38,553
75,862 65,187
Other current assets 7,474 12,790
Receivables arising from sale of
businesses 34,240 -
Net current assets of discontinued
operations - 138,687
Total current assets 341,710 371,101
Property, plant and equipment, net of
accumulated depreciation of $174,490
in 1994 and $163,071 in 1993 198,881 194,895
Intangible assets 5,318 2,769
Other assets 63,278 52,141
Net long-term assets of discontinued
operations - 99,647
Total assets $609,187 $720,553
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable and current portion of
long-term debt $ 23,261 $65,560
Accounts payable and accrued expenses 66,271 57,505
Accrued divestiture costs 40,000 -
Dividends payable 3,705 3,921
Accrued retirement plan contributions 4,818 6,356
Accrued and deferred income taxes
payable 11,532 4,894
Total current liabilities 149,587 138,236
Long-term debt 100,295 102,047
Other liabilities 19,166 19,116
Accrued divestiture costs 29,000 -
Shareholders' equity
Common stock 28,494 28,344
Additional paid-in capital 23,603 16,803
Retained earnings 467,204 434,988
Translation adjustments 8,778 (7,624)
528,079 472,511
Less:Treasury stock, at cost, 3,791
shares in 1994 and 341 in 1993 (216,940) (11,357)
Total shareholders' equity 311,139 461,154
Total liabilities and shareholders'
equity $609,187 $720,553
The accompanying notes are an integral part of the consolidated condensed
financial statements.
<PAGE>
MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
Net sales $123,551 $ 111,854 $367,200 $331,656
Cost of sales 53,114 49,587 157,289 143,998
Gross profit 70,437 62,267 209,911 187,658
Selling, general &
administrative expenses 40,181 36,424 117,746 109,925
Research & development
expenses 8,367 8,652 25,371 26,249
Operating income 21,889 17,191 66,794 51,484
Interest income 1,976 1,047 3,254 3,184
Interest expense (1,714) (3,015) (5,489) (9,452)
Income from continuing operations before
income taxes 22,151 15,223 64,559 45,216
Provision for income taxes 4,984 3,425 14,526 10,173
Income from continuing
operations 17,167 11,798 50,033 35,043
Discontinued operations
Loss from discontinued
operations - (1,189) - (10,851)
Net gain on disposal of
discontinued operations 5,000 - 5,000 -
Net income $22,167 $10,609 $55,033 $24,192
Net income per common share
From continuing operations$ 0.61 $ 0.42 $ 1.77 $ 1.25
Net income $ 0.79 $ 0.38 $ 1.95 $ 0.87
Cash dividends declared
per common share $ 0.15 $ 0.14 $ 0.44 $ 0.41
Weighted average common
shares 28,155 27,921 28,250 27,950
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)
Nine Months Ended
September 30,
1994 1993
Cash Flows From Operating Activities:
Net income $ 55,033 $ 24,192
Adjustments to reconcile net income to net
cash provided:
Net loss from discontinued operations - 10,851
Net gain on disposal of discontinued
operations (5,000) -
Depreciation and amortization 20,781 17,827
Deferred income tax provision (1,000) 3,000
Change in operating assets and liabilities:
(Increase) in accounts receivable (14,495) (9,871)
(Increase) decrease in inventories (5,591) 4,151
(Increase) in other current assets (602) (3,407)
(Increase) in other assets (11,103) (1,915)
Increase in accounts payable and accrued
expenses 4,706 2,805
(Decrease) in accrued retirement plan
contributions (1,437) (846)
Increase in accrued income taxes 5,153 58
Income tax refund received 14,035 -
Other (3,262) (2,301)
Net cash provided by continuing
operations 57,218 44,544
Net cash provided by discontinued
operations - 2,053
Net cash provided by operating
activities 57,218 46,597
Cash Flows From Investing Activities:
Net proceeds from sales of businesses 281,138 -
Additions to property, plant and (14,436) (18,696)
equipment, net
Net cash provided by (used in) investing
activities 266,702 (18,696)
Cash Flows From Financing Activities:
Treasury stock acquired (245,828) (3,034)
Issuance of treasury stock under stock
plans 28,915 1,426
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 (44,628) (38,119)
Net change in long-term debt (1,752) (229)
Dividends Paid (12,097) (11,194)
Net cash used for financing activities (283,415) (51,150)
Effect of foreign exchange rates on cash and
short-term investments 3,200 (1,485)
Net increase (decrease) in cash and short-term investments
43,705 (24,734)
Cash and short-term investments on
January 1 40,642 70,451
Cash and short-term investments on
September 30 $ 84,347 $ 45,717
Interest Paid $ 10,255 $ 10,479
Taxes Paid $ 20,952 $ 11,455
The accompanying notes are an integral part of the consolidated
condensed financial statements.
<PAGE>
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 served
primarily chromatography and bioscience markets. Accordingly, the
operating results of these businesses through November 11, 1993 were
reclassified as discontinued operations in the Company's 1993 financial
statements. On August 18, 1994, the Company sold its Waters
Chromatography Division to Waters Holdings, Inc. for $330,000 in cash and
$10,000 of stock. On August 23, 1994, the Company sold certain assets of
its non-membrane bioscience business (Biosearch) to PerSeptive BioSystems,
Inc. for $10,000 in cash and 4,000 shares of preferred stock redeemable in
four equal annual installments of $10,000. Both sales were recorded in
the third quarter of 1994 and resulted in a pre-tax gain of $8,333 ($5,000
or $0.18 per share net of income taxes) which included estimated costs to
be incurred in connection with the divestitures as well as pre-tax
operating losses of $4,189 generated by the Instrumentation Divisions from
November 11, 1993 through the completion of the divestitures.
The Company netted approximately $281,000 in cash proceeds in the third
quarter of 1994. In accordance with each respective sales agreement, the
Company retained and will collect certain customer accounts receivable
balances generated from sales of Instrumentation Division products prior
to the completion of the divestitures; such balances were applied against
the cash proceeds specified in the sales agreements. These amounts, along
with the $10,000 installment due in September 1995 from PerSeptive
BioSystems, Inc. which has been recorded at its estimated fair market
value, have been classified in Receivables Arising from Sales of
Businesses in the accompanying consolidated balance sheets. The remaining
stock related proceeds have been recorded at their estimated fair market
value and are included in Other assets in the accompanying consolidated
balance sheets.
Accruals associated with the divestitures consist primarily of costs to be
incurred in providing future general and administrative support services
for the divested businesses as specified in the sales agreements, costs
associated with abandoning facilities operated under long-term leases, and
employee termination costs. These accruals have been separately
classified in both current and long-term liabilities in the consolidated
balance sheets based on management's estimates of when such liabilities
will be settled.
3.On August 24, 1994, the Company initiated a Dutch Auction Self-Tender to
repurchase up to 3,500 shares of common stock. The tender offer expired
on September 22, 1994, at which time the Company elected to increase the
number of shares to 3,771. All tendered shares were repurchased on
September 29, 1994 at $57.25 per share and are classified as Treasury
Stock in the accompanying consolidated balances sheets.
<PAGE>
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(in thousands)
4.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.
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 percent 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 notes bearing
interest at 9.2 percent 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 accounted for 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.
6.Certain reclassifications have been made to the 1993 financial
statements to conform to the 1994 presentation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Sales for the third quarter of 1994 increased 11 percent compared to sales
for the third quarter of 1993. For the first nine months of 1994, sales also
increased 11 percent over the same period in 1993. For the quarter, sales
were up 15 percent for products and systems used in manufacturing
applications, led by sales to microelectronics customers. Sales to the
laboratory/research market grew 7 percent in the quarter. By geography,
sales growth in the Asia/Pacific region was 20 percent in the third quarter,
with continued strong growth in Korea. Sales growth in Europe, aided in
large part by a weaker dollar, grew 13 percent, while sales in the Americas
region grew 2 percent in the quarter. Foreign currency fluctuations
increased reported sales growth by 4 points for the quarter, and 1 point for
the first nine months. Sales growth by geography is summarized as follows:
Sales growth rates Sales growth rates
measured in local currenciesmeasured in U.S. dollars
3 months ended9 months ended3 months ended9 months ended
9/30/94 9/30/94 9/30/94 9/30/94
Americas 2% 7% 2% 7%
Europe 5% 6% 13% 6%
Asia/Pacific 16% 17% 20% 22%
7% 10% 11% 11%
Gross margins increased during the third quarter of 1994 to 57.0 percent as
compared to 55.7 percent in the third quarter of 1993. Gross margins for the
first nine months of 1994 have improved slightly over the first nine months
of 1993. The percentage increase in operating expenses in the third quarter
of 1994 was higher than the percentage increase in the first two quarters of
1994 as the Company continues to fund programs designed to fuel future sales
growth. The Company generated approximately $1.6 million of non-recurring
interest income in the third quarter of 1994 by investing the proceeds
received from the sale of its Waters Chromatography Division. Excluding this
non-recurring item, net interest expense for the first nine months of 1994 is
lower than the comparable period in 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 on operations for 1994 is 22.5 percent, consistent with the
full year effective rate in 1993.
The Company generated $57.2 million of cash from the operating activities of
continuing operations in the first nine months of 1994 compared to $44.5
million during the same period in 1993. In addition to the increase in net
income from continuing operations of $15.0 million period over period, the
Company received a tax refund of $14.0 million in 1994. These sources of
cash were partially offset by an increase in accounts receivable of $14.5
million in the first nine months of 1994 compared to an increase of $9.9
million in 1993. In addition, inventories increased $5.6 million in 1994
compared to a decrease in inventories of $4.2 million in 1993. Property,
plant and equipment expenditures in the first nine months of 1994 were lower
than those for the comparable period in 1993. During the first nine 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.
In addition, the Company collected $281.0 million of net proceeds from the
sale of its Waters Chromatography and BioScience Divisions in the third
quarter of 1994. The Company spent approximately $216.0 million from the net
proceeds to buy back shares of its common stock in a Dutch Auction
Self-Tender. The Company intends to continue to make open market share
repurchases and has allocated $100 million for this program.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
b. Reports on Form 8-K
The Company filed a report on Form 8-K which reported the following
items:
On August 18th, 1994, the Company finalized the sale of the net
assets of its Waters Chromatography division to Waters Holdings,
Inc.
On August 23, 1994, the Company announced that it had completed the
sale of its Biosearch division to PerSeptive BioSystems, Inc.
On August 24, 1994, the Company announced that it would repurchase
up to 3,500,000 shares of common stock through a Dutch auction.
The following financial statements were also filed with the Form 8-K:
Unaudited Pro Forma Condensed Consolidated Statement of Income of
Millipore Corporation for the six months ended June 30, 1994 and
the year ended December 31, 1993.
Unaudited Pro Forma Condensed Consolidated Balance Sheet of
Millipore Corporation as of June 30, 1994.
<PAGE>
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
November 14, 1994
Date /S/Michael P. Carroll
Vice President, Chief Financial Officer and
Treasurer
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<S> <C>
<PERIOD-TYPE> 9-MOS
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<PERIOD-END> SEP-30-1994
<CASH> 3,323
<SECURITIES> 81,024
<RECEIVABLES> 139,787
<ALLOWANCES> 0
<INVENTORY> 75,862
<CURRENT-ASSETS> 341,710
<PP&E> 373,371
<DEPRECIATION> 174,490
<TOTAL-ASSETS> 609,187
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<COMMON> 28,494
0
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<OTHER-SE> 282,645
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<SALES> 367,200
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<CGS> 157,289
<TOTAL-COSTS> 157,289
<OTHER-EXPENSES> 143,117
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