SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994
Commission File Number 0-1052
MILLIPORE CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2170233
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
80 Ashby Road, Bedford, MA 01730
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code 617-275-9200
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange
Title of Class on which registered
COMMON STOCK, $1.00 PAR VALUE NEW YORK STOCK EXCHANGE, INC.
Securities registered pursuant to Section 12(g) of the Act:
None
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 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 by check mark if disclosure of delinquent filers pursuant to Item 405
of regulation S-K is not contained herein and will not be contained to the
best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of Form 10-K or any amendment to this
Form 10-K [ ]
As of January 31, 1995, the aggregate market value of the registrant's voting
stock held by non-affiliates of the registrant was approximately
$1,140,000,000 based on the closing price on that date on the New York Stock
Exchange.
As of February 25, 1995, 23,095,750 shares of the registrant's Common Stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Incorporated into Form 10K
1994 Annual Report to Shareholders Parts I and II
(pages 25-43 only)
Definitive Proxy Statement Part III
dated March 17, 1995
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Item 1. Business.
The Company
Millipore Corporation was incorporated under the laws of Massachusetts on
May 3, 1954. Millipore and its subsidiaries operate in a single business
segment, the analysis, identification and purification of fluids using
separations technology. Business segment information is discussed in Note M
to the Millipore Corporation Consolidated Financial Statements (the "Financial
Statements") included in the Millipore Corporation Annual Report to
Shareholders for the year ended December 31, 1994 (the "Annual Report"), which
note is hereby incorporated herein by reference. Unless the context otherwise
requires, the terms "Millipore" or the "Company" mean Millipore Corporation
and its subsidiaries.
On November 11, 1993, Millipore announced that its Board of Directors had
approved a plan to focus the Company on its membrane business and to divest
operations of its Instrumentation Divisions (the Waters Chromatography
business and the non-membrane bioscience instrument business). These
Divisions with separate product lines and with separate customers have been
accounted for as discontinued operations.
In August of 1994 Millipore completed the divestiture of its
Instrumentation Divisions (the Waters Chromatography business and the non-
membrane bioscience instrument business). The Company realized a net loss in
1994 upon the disposition of these Divisions of $3.4 million which included
all costs estimated to be incurred in connection with the divestitures as well
as the pre-tax operating losses generated by the Divisions from November 11,
1993 through the completion of the divestitures. Net cash proceeds from the
divestitures were $258 million and the Company spent $216 million of such
proceeds to buy back shares of its Common Stock in a Dutch Auction Self
Tender. In the balance of 1994 the Company spent an additional $78 million in
connection with its $100 million open market share repurchase program. As a
result as of December 31, 1994 there were 23,133,217 shares of the Company's
Common Stock outstanding as compared with 28,191,515 shares on February 25,
1994.
Millipore is a leader in the field of membrane separations technology.
The Company develops, manufactures and sells products which are used primarily
for the analysis and purification of fluids. The Company's products are based
on a variety of membranes and certain other technologies that effect
separations, principally through physical and chemical methods. Millipore is
an integrated multinational manufacturer of these products. During 1994,
approximately 64% of Millipore's net sales were made to customers outside the
Americas. For financial information concerning foreign and domestic
operations and export sales, see Note M to the Financial Statements.
Products and Technologies
For analytical applications, the Company's products are used to gain
knowledge about a molecule, compound or micro-organism by detecting,
identifying and quantifying the relevant components of a sample. For
purification applications, the Company's products are used in manufacturing
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and research operations to isolate and purify specific components or to remove
contaminants.
The principal separation technologies utilized by the Company are based
on membrane filters, and certain chemistries, resins and enzyme immunoassays.
Membranes are used to filter either the wanted or the unwanted particulate,
bacterial, molecular or viral entities from fluids, or concentrate and retain
such entities (in the fluid) for further processing. Some of the Company's
newer membrane materials also use affinity, ion-exchange or electrical charge
mechanisms for separation.
Both analytical and purification products incorporate membrane and other
technologies. The Company's products include disc and cartridge filters and
housings of various sizes and configurations, filter-based test kits and
precision pumps and other ancillary equipment and supplies.
The Company has more than 3,000 products. Most of the Company's products
are listed in its catalogs and are sold as standard items, systems or devices.
For special applications, the Company assembles custom products, usually based
upon standard modules and components. In certain instances, the Company also
designs and engineers process systems specifically for the customer.
Customers and Markets
The Company sells its products primarily to customers in the following
markets: pharmaceutical/biotechnology, microelectronics, chemical and food and
beverage companies; government, university and private research and testing
laboratories; and health care and medical facilities. Within each of these
markets, the Company focuses its sales efforts upon those segments where
customers have specific requirements which can be satisfied by the Company's
products.
Pharmaceutical/Biotechnology Industry. The Company's products are used
by the pharmaceutical/biotechnology industry in sterilization, including virus
reduction, and sterility testing of products such as antibiotics, vaccines,
vitamins and protein solutions; concentration and fractionation of biological
molecules such as vaccines and blood products; cell harvesting; isolation and
purification of compounds from complex mixtures and the purification of water
for laboratory use. The Company's membrane products also play an important
role in the development of new drugs; in addition, Millipore has developed and
is developing products for biopharmaceutical applications in order to meet the
purification requirements of the biotechnology industry.
Microelectronics Industry. The microelectronics industry uses the
Company's products to purify (by removing particles and unwanted contaminating
molecules), deliver, and monitor the liquids and gases used in the
manufacturing processes of semiconductors and other microelectronics
components.
Chemical Industry. This industry uses the Company's products for
purification of reagent grade chemicals, for monitoring in the industrial
workplace and of waste streams and in the purification of water for laboratory
use.
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Food and Beverage Industry. The Company's products are widely used by
the food and beverage industry in quality control and process applications
principally to monitor for microbiological contamination; to remove bacteria
and yeast from products such as wine and beer, in order to prevent spoilage,
and in producing pure water for laboratory use.
Universities and Government Agencies. Universities, government and
private and corporate research and testing laboratories, environmental science
laboratories and regulatory agencies purchase a wide range of the Company's
products. Typical applications include: purification of proteins; cell
culture, structure studies and interactions; concentration of biological
molecules; fractionation of complex molecular mixtures; and collection of
microorganisms. The Company's water purification products are used
extensively by these organizations to prepare high purity water for sensitive
assays and the preparation of tissue culture media.
Health Care and Medical Research. Customers in this field include
hospitals, clinical laboratories, medical schools and medical research
institutions who use the Company's products to filter particulate and
bacterial contaminants which may be present in intravenous solutions, and its
water purification products to produce high purity water.
Sales and Marketing
The Company sells its products within the United States primarily to end
users through its own direct sales force. The Company sells its products in
foreign markets through the sales forces of its subsidiaries and branches
located in more than 25 major industrialized and developing countries as well
as through independent distributors in other parts of the world. During 1994,
the Company's marketing, sales and service forces consisted of approximately
281 employees in the United States and 617 employees abroad.
The Company's marketing efforts focus on application development for
existing products and on new and differentiated products for other existing,
newly-identified and proposed customer uses. The Company seeks to educate
customers as to the variety of analytical and purification problems which may
be addressed by its products and to adapt its products and technologies to
separations problems identified by customers.
The Company believes that its technical support services are important to
its marketing efforts. These services include assistance in defining the
customer's needs, evaluating alternative solutions, designing a specific
system to perform the desired separation training users, and assisting
customers in compliance with relevant government regulations.
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Research and Development
In its role as a pioneer of membrane separations Millipore has
traditionally placed heavy emphasis on research and development. Research and
development activities include the extension and enhancement of existing
separations technologies to respond to new applications, the development of
new membranes, and the upgrading of membrane based systems to afford the user
greater purification capabilities. Research and development efforts also
identify new separations applications to which disposable separations devices
would be responsive, and develop new configurations into which membrane and
ion exchange separations media can be fabricated to efficiently respond to the
applications identified. Instruments, hardware, and accessories are also
developed to incorporate membranes, modules and devices into total separations
systems. Introduction of new applications frequently requires considerable
market development prior to the generation of revenues. Millipore performs
substantially all of its own research and development and does not provide
material amounts of research services for others. Millipore's research and
development expenses in 1992, 1993 and 1994 with respect to continuing
operations were, $32,953,000, $34,952,000 and $34,327,000 respectively.
When it believes it to be in its long-term interests, the Company will
license newly developed technology from unaffiliated third parties and/or will
acquire exclusive distribution rights with respect thereto.
Competition
The Company's continuing operations face intense competition in all of
its markets. The Company believes that its principal competitors include Pall
Corporation, Barnstead Thermolyne Corporation, Sartorius GmbH, and Gelman,
Inc., Certain of the Company's competitors are larger and have greater
resources than the Company. However, the Company believes that it offers a
broader line of products, making use of a wider range of separations
technologies and addressing a broader range of applications than any single
competitor.
While price is an important factor, the Company competes primarily on the
basis of technical expertise, product quality and responsiveness to customer
needs, including service and technical support.
Acquisitions, Restructuring, and Divestitures
On November 11, 1993 Millipore announced that its Board of Directors had
approved a plan to divest its Instrumentation Divisions (the Waters
Chromatography and non-membrane bioscience businesses) in order to focus the
Company on its membrane business. The Waters Chromatography business was
acquired in 1980. Growth in the analytical instrument market has been limited
in the past few years, and the Company believes that the divestiture of its
chromatography business along with that of its non-membrane bioscience
business, will enable Millipore to better serve its membrane customers,
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improve operating performance and increase shareholder value. The
divestitures were completed in August of 1994 and resulted in a net loss of
$3.4 million as detailed under the subheading "The Company" above. In the
years 1986-1988 the Company expanded its MilliGen division in order to extend
its analytical and chemical capabilities into the bio-instrumentation and
chemicals field. In 1990 this business was consolidated into Millipore's then
existing businesses.
At the time of the 1990 consolidation of MilliGen, the Company took
certain other actions to improve profitability. These measures in total
resulted in a non-recurring charge in the fourth quarter of 1990 amounting to
$34,750,000. The Company took a further charge, with respect to the
restructuring of its Waters Chromatography Division, of $13,000,000 in the
first quarter of 1993.
In the five-year period prior to its November 11, 1993 announcement
concerning the sale of its Waters Chromatography and non-membrane bioscience
business, the Company undertook a number of initiatives to expand its business
into new markets within the field of analysis and purification. The Company
made several small, strategic acquisitions to accelerate technology and market
development in its several divisions. These included the acquisition of the
Bio Image division of Kodak in 1989, Extrel Corporation in February of 1992,
Immunosystems Incorporated in July of 1992, and the Ceraflo (ceramic modules)
manufacturing business of the Norton Company in October 1992, which business
it sold in 1994 for a small loss.
In November of 1989, the Company sold its process water division for
approximately $54,000,000 in cash. Included in the transaction were the
worldwide facilities and equipment and other assets for developing,
manufacturing and marketing that division's complete line of water
purification products, other than its laboratory scale water business. Also
included were the Company's 18 service deionization branches located
throughout the continental United States. This transaction was the subject of
litigation brought by Eastern Enterprises which was settled in the fourth
quarter of 1994 (see "Legal Proceedings").
Other Information
In April, 1988, the Company adopted a shareholder rights plan (the
"Rights Plan") and declared a dividend to its shareholders of the right to
purchase (a "Right"), for each share of Millipore Common Stock owned, one
additional share of Millipore Common Stock at a price of $160 for each share.
The Rights Plan is designed to protect Millipore's shareholders from attempts
by others to acquire Millipore on terms or by using tactics that could deny
all shareholders the opportunity to realize the full value of their
investment. The Rights will be exercisable only if a person or group of
affiliated or associated persons acquires beneficial ownership of 20% or more
of the outstanding shares of the Company Common Stock or commences a tender or
exchange offer that would result in a person or group owning 20% or more of
the outstanding Common Stock. In such event, or in the event that Millipore
is subsequently acquired in a merger or other business combination, each Right
will entitle its holder to purchase, at the then current exercise price,
shares of the common stock of the surviving company having a value equal to
twice the exercise price.
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Millipore has been granted a number of patents and licenses and has other
patent applications pending both in the United States and abroad. While these
patents and licenses are viewed
as valuable assets, Millipore's patent position is not of material importance
to its operations. Millipore also owns a number of trademarks, the most
significant being "Millipore."
Millipore's products are made from a wide variety of raw materials which
are generally available in quantity from alternate sources of supply; as a
result, Millipore is not substantially dependent upon any single supplier.
Millipore's business is neither seasonal nor dependent upon a single or
limited group of customers.
Bringing the Company's facilities into compliance with federal, state and
local laws regulating the discharge of materials into the environment or
otherwise relating to the protection of the environment has not, to date, had
a material effect upon Millipore's capital expenditures, earnings or
competitive position. (See "Legal Proceedings.")
As of December 31, 1994, Millipore's continuing operations employed 3,117
persons worldwide, of whom 1,640 were employed in the United States and 1,477
overseas.
Executive Officers of Millipore
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There follows a listing as of March 1, 1995 of the Executive Officers of
Millipore. All of the following individuals were elected to serve until the
Directors Meeting next following the 1995 Annual Stockholders Meeting.
First Elected:
To
An Present
Name Age Office Officer Office
John A. Gilmartin 52 Chairman of the Board 1980 1986
President and Chief (Chairman
Executive Officer of in 1987)
the Corporation
Geoffrey Nunes 64 Senior Vice President 1976 1980
General Counsel
Glenda K. Burkhart 43 Vice President 1993 1993
of the Corporation
Michael P. Carroll 44 Vice President of the Corporation
Chief Financial Officer and
Treasurer 1992 1992
Douglas B. Jacoby 48 Vice President 1989 1989
of the Corporation
John E. Lary 48 Vice President 1994 1994
of the Corporation
Mr. Gilmartin joined Millipore's finance department in 1979, was elected
Vice President and Chief Financial Officer in 1980, Senior Vice President in
1982, and to the additional position of President of the Membrane Division in
1985. In 1986, Mr. Gilmartin was elected President and Chief Executive
Officer of the Company and to the additional position of Chairman in 1987.
Mr. Nunes joined Millipore in 1976 as Vice President and General Counsel
and was elected a Senior Vice President in 1980.
Ms. Burkhart joined Millipore in 1993 as Corporate Vice President/Human
Resources. Prior to joining Millipore, she was a principal of Mass Burkhart,
a strategy consulting firm (1991-1993), responsible for organization
development and work force planning for Exxon Chemical (1989-1991), a
principal for Synectics, an organizational development consulting firm (1987-
1989), and a consultant for Bain and Co., a strategy consulting firm (1985-
1987).
Mr. Carroll joined Millipore in 1986 as Vice President/Finance for the
Membrane Products Division following a ten-year career in the general practice
audit division of Coopers and Lybrand. In 1988, Mr. Carroll assumed the
position of Vice President of Information Systems (worldwide) and in December
of 1990, he became the Vice President of Finance for the Company's Waters
Chromatography Division. Mr. Carroll was elected to his current position in
February, 1992.
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Mr. Jacoby joined Millipore in 1975. After serving in various sales and
marketing capacities, Mr. Jacoby became Director of Marketing for the
Millipore Membrane Products Division in 1983 and in 1985, he assumed the
position of General Manager of the Membrane Pharmaceutical Division. Since
1987, Mr. Jacoby has been responsible for the Company's process membrane
business. Mr. Jacoby was elected a Corporate officer in December, 1989.
Mr. Lary was elected a Corporate Vice President in November 1994, and is
responsible for the worldwide operations of the Company. From May of 1993
until his election as a Corporate Vice President, Mr. Lary served as Senior
Vice President and General Manager of the Americas Operation. For the ten
years prior to that time, he served as Senior Vice President of the Membrane
Operations Division of Millipore.
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Item 2. Properties.
Millipore owns in excess of 1.1 million square feet of facilities located
in the United States, Europe and Japan. The following table identifies the
principal properties owned by Millipore and describes the purpose, floor space
and land area of each.
Sq.Ft.
of Floor Land
Location Facility Space Area
Bedford, Executive Offices, research, 346,000 32 acres
Mass. pilot production & warehouse
Cidra, Manufacturing, warehouse
Puerto Rico and office 134,000 36 acres
Jaffrey, Manufacturing, warehouse 169,000 32 acres
N.H. and office
Molsheim, Manufacturing, warehouse 165,200 20 acres
France and office
Yonezawa, Manufacturing and warehouse 156,300 7 acres
Japan
Cork, Manufacturing 83,000 20 acres
Ireland
St. Quentin Office and research 50,000 5 acres
France
_____________________________________
In addition to the above properties, Millipore has entered into a long
term lease for premises abutting its Bedford facility. This lease makes
75,000 square feet of building available to Millipore and contains rights of
first refusal and options with respect to the purchase of the premises by
Millipore. During 1988 Millipore entered into a 10-year lease for a building
of 130,000 square feet located in Burlington, Massachusetts, approximately 5
miles from its Bedford headquarters. This lease contains a single 5-year
extension option. In 1991 the Company entered into a 15-year lease with
renewal options for an aggregate of 20 years, as well as a purchase option
covering a 134,000 square foot building which is adjacent to the leased
property referred to in the first sentence of this paragraph, and which is
being held for expansion purposes, initially the consolidation of the
Company's Process System Division (part of the Membrane Process Group).
In addition to its foregoing properties, Millipore currently leases
various manufacturing, sales, warehouse, and administrative facilities
throughout the world. Such leases expire at different times through 2006.
The rented space aggregate is approximately 666,000 square feet and cost was
approximately $6,197,000 in 1994. No single lease, in the opinion of
Millipore, is material to its operations.
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Millipore is of the opinion that all the facilities owned or leased by it
are well maintained, appropriately insured, in good operating condition and
suitable for their present uses.
Item 3. Legal Proceedings.
Millipore has settled its suit in the Superior Court for Middlesex
County, Massachusetts brought against it by Eastern Enterprises and its
subsidiary, Ionpure Technologies, Inc. ("Ionpure") alleging misrepresentations
made in conjunction with the sale by Millipore of its Process Water Division
to Ionpure in November of 1989. The settlement became final in December of
1994 and resulted in a payment by Millipore to Eastern Enterprises of $9.0
million. The Company incurred an additional $1.8M in costs related to this
matter.
Millipore has been, over the last 12 years, notified in ten
instances that the United States Environmental Protection Agency
("EPA") has determined that a release or a substantial threat of a
release of hazardous substances (a "Release") as defined in Section 101
of the Comprehensive Environmental Response Compensation and Liability
Act of 1980 ("CERCLA") as amended by the Superfund Amendments and
Reauthorization Act of 1986 (SARA) (the so-called "Superfund" law) has
occurred at certain sites to which chemical wastes generated by the
manufacturing operations of Millipore or one of its divisions may have
been sent. These notifications typically also allege that Millipore
may be a responsible party under CERCLA with respect to any remedial
action needed to control or prevent any such Release. Under CERCLA the
EPA may undertake remedial action in response to a Release and
responsible parties may be liable, without regard to fault or
negligence, for costs incurred. As a result it is possible, although
highly unlikely given the large number and size of financially solvent
corporations participating at each site who have been similarly
notified, that the Company might be liable for all of the costs
incurred in such a cleanup. In each instance Millipore knows that it
is only one of many companies and entities which received such
notification and who may likewise be held liable for any such remedial
costs. In seven separate instances involving a total of ten such
sites, the Company has entered into consent decrees, paid approximately
$14.0 million, and received partial releases. The Company believes it
has established reserves sufficient to satisfy all known claims by the
EPA, and that in any event the aggregate of any future potential
liabilities should not have a material adverse effect on Millipore's
financial condition.
Item 4. Submission of Matters to a Vote of Security Holders.
This item is not applicable.
PART II
Item 5. Market for Millipore's Common Stock, and Related Stockholder Matters.
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The information called for by this item is set forth under the caption
"Millipore Stock Prices" on page 43 of Millipore's Annual Report to
Shareholders for the year ended December 31, 1994, which information is hereby
incorporated herein by reference.
Item 6. Selected Financial Data.
The information called for by this item is set forth under the caption
"Millipore Corporation Eleven Year Summary of Operations" on pages 40 and 41
of Millipore's Annual Report to Shareholders for the year ended December 31,
1994, which information is hereby incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
The information called for by this item is set forth under the caption
"Management's Discussion and Analysis" on pages 25 and 26 of Millipore's
Annual Report to Shareholders for the year ended
December 31, 1994, which information is hereby incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data.
The information called for by this item is set forth on pages 27 to 39
and under the caption "Quarterly Results (Unaudited)" on page 42 of
Millipore's Annual Report to Shareholders for the year ended December 31,
1994, which information is hereby incorporated herein by reference.
Item 9. Disagreements on Accounting and Financial Disclosure.
This item is not applicable.
PART III
Item 10. Directors and Executive Officers of Millipore.
The information called for by this item with respect to registrant's
directors and compliance with Section 16(a) of the Securities Exchange Act of
1934 as amended is set forth under the caption "Management and Election of
Directors--Nominees for Election as Directors" on pages 2 - 8 of Millipore's
definitive Proxy Statement, dated March 17, 1995, for Millipore's Annual
Meeting of Stockholders to be held on April 20, 1995, which information is
hereby incorporated herein by reference.
Information called for by this item with respect to registrant's
executive officers is set forth under "Executive Officers of Millipore" in
Item 1 of this report.
Item 11. Executive Compensation.
The information called for by this item is set forth under the caption
"Management and Election of Directors-Executive Compensation" on pages 11 -
16 of Millipore's definitive Proxy Statement, dated March 17, 1995, for
Millipore's Annual Meeting of Stockholders to be held on April 20, 1995, which
information is hereby incorporated herein by reference.
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Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information called for by this item is set forth under the caption
"Ownership of Millipore Common Stock" on page 17 of Millipore's definitive
Proxy Statement, dated March 17, 1995, for Millipore's Annual Meeting of
Stockholders to be held
April 20, 1995, which information is hereby incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
The information called for by this item is set forth under the caption
"Management and Election of Directors - Executive Compensation" on pages 2 - 8
and 13 - 16 of Millipore's definitive Proxy Statement, dated March 17, 1995,
for Millipore's Annual Meeting of Stockholders to be held on April 20, 1995,
which information is hereby incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements
The financial statements set forth on pages 27 through 39, the Report of
Independent Accountants on Page 39 and the Quarterly Results (Unaudited) set
forth on page 42 of Millipore's Annual Report to Shareholders for the year
ended December 31, 1994, are hereby incorporated herein by reference. Filed
as part of this report are:
(1) Consent of Independent Accountants relating to the incorporation of
their report on the Consolidated Financial Statements into Registrant's
Securities Act Registration Nos. 2-72124, 2-85698, 2-91432, 2-97280, 33-37319,
33-37323 and 33-11-790 on Form S-8 and Securities Act Registration Nos. 2-
84252, 33-9706, 33-20792, 33-22196, 33-47213 on Form S-3.
No financial statement schedules have been included because they are not
applicable or not required under Regulation S-X.
Items 5 through 8 and Item 14 (a) (1) of this Annual Report on Form 10-K
incorporate only the indicated portions of Pages 25 through 42 of Millipore's
Annual Report to Shareholders for the year ended December 31, 1994; no other
portion of such Annual Report to Shareholders shall be deemed to be
incorporated herein or filed with the Commission.
For purposes of complying with the amendments to the rules governing Form
S-8 (effective July 13, 1990) under the Securities Act of 1933, the
undersigned registrant hereby undertakes as follows, which undertaking shall
be incorporated by reference into registrant's Registration Statements on Form
S-8 Nos.: 2-72124; 2-85698; 2-91432; 2-97280; 33-37319; 33-37323 and 33-11-
790:
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Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (The "Act") may be permitted to directors,
officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange commission such
indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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3. Exhibits:
A. Incorporated by Reference
Document Incorporated Referenced Document on
file with the Commission
(3) Amendment to Restated Articles Form 10-K Report for
of Organization dated May 22, year ended 12/31/87
1987 and By Laws and Form 10-K Report
for year ended 12/31/90
respectively
(4) Indenture dated as of May 3, Registration Statement
1995, relating to the issuance on Form S-4 (No.
of $100,000,000 principal amount 33-58117); and an
of Registrant's 6.78% Senior accompanying Form T-1
Notes due 2004
(10) Except as included in this filing and set forth under "B"
below, all of Millipore's various employee benefit and executive
compensation plans and arrangements are incorporated herein by
reference to the indicated documents filed with the Commission:
Document Referenced Document on File
Incorporated with the Commission:
Shareholder Rights Agreement Form 8-K Report for April, 1988
dated as of April 15, 1988
between Millipore and The
First National Bank of Boston
Long Term Restricted Stock Form 10-K Report for the year
(Incentive) Plan for Senior ended December 31, 1984.
Management*
1985 Combined Stock Option Form 10-K Report for the year
Plan ended December 31, 1985
Supplemental Savings and Form 10-K Report for the year
Retirement Plan for Key ended December 31, 1984.
Salaried Employees of
Millipore Corporation
Long Term Performance Plan Form 10-K Report for the year
for Senior Executives ended December 31, 1984.
Executive Termination Form 10-K Report for the year
Agreement* ended December 31, 1984.
Executive "Sale of Business" Form 10-K Report for the year
Incentive Termination Agree- ended December 31, 1993.
ments (2)*
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B. The following Exhibits are filed herewith:
(10) (a) 1995 Employee Stock Purchase Plan
(b) 1995 Management Incentive Plan*
(11) Computation of Per Share Earnings
(13) Annual Report to Shareholders, December 31, 1994
(21) Subsidiaries of Millipore
(23) Consents of Experts (see page 19 hereto)
(24) Power of Attorney
* A "management contract or compensatory plan"
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Geoffrey Nunes
By/S/Geoffrey Nunes
Senior Vice President
Dated: March 17, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacity and on the dates indicated.
SIGNATURE TITLE DATE
JOHN A. GILMARTIN* Chairman, President, February 9, 1995
John A. Gilmartin Chief Executive Officer,
and Director
/S/Michael P. Caroll Vice President February 9, 1995
Michael P. Carroll Chief Financial Officer
Treasurer
CHARLES D. BAKER* Director February 9, 1995
Charles D. Baker
SAMUEL C. BUTLER* Director February 9, 1995
Samuel C. Butler
MARK HOFFMAN* Director February 9, 1995
Mark Hoffman
GERALD D. LAUBACH* Director February 9, 1995
Gerald D. Laubach
STEVEN MULLER* Director February 9, 1995
Steven Muller
THOMAS O. PYLE* Director February 9, 1995
Thomas O. Pyle
JOHN F. RENO* Director February 9, 1995
John F. Reno
*By /S/Geoffrey Nunes
Attorney-in-Fact
Geoffrey Nunes
-18-
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Millipore Corporation on Form S-8 (File Nos. 2-91432, 2-
72124, 2-85698, 2-97280, 33-37319, 33-37323, 33-11-790), and on Form S-3
(File Nos. 2-84252, 33-9706, 33-22196, 33-20792, 33-47213) of our report
dated January 26, 1995 on our audits of the consolidated financial
statements of Millipore Corporation as of December 31, 1994 and 1993, and
for the years ended December 31, 1994, 1993, and 1992, which report is
incorporated by reference in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 17, 1995
-19-
<PAGE>
- --------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT
OF
MILLIPORE CORPORATION
For the Fiscal Year Ended December 31, 1994
****************
EXHIBITS
****************
- ----------------------------------------------------------------
-20-
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
(10) (a) 1995 Employee Stock Purchase Plan
(b) 1995 Management Incentive Plan*
(11) Computation of Per Share Earnings
(13) Annual Report to Shareholders,
December 31, 1994
(21) Subsidiaries of Millipore
(23) Consents of Experts
(see page 19 hereto)
(24) Power of Attorney
* A "management contract or compensatory plan"
-21-
<PAGE>
<PAGE>
MILLIPORE CORPORATION
---------------------
1995 EMPLOYEES' STOCK PURCHASE PLAN
-----------------------------------
The purpose of the Millipore Corporation 1995 Employees' Stock Purchase
Plan (the "Plan") is to provide employees of Millipore Corporation (the
"Corporation") and its subsidiary corporations a continuing opportunity to
purchase the Corporation's Common Stock (the "Common Stock") through annual
offerings. Two hundred thousand (200,000) authorized but unissued or treasury
shares of Common Stock in the aggregate may from time to time be reserved for
this purpose by the Board of Directors of the Corporation. It is intended that
this Plan shall constitute an "employee stock purchase plan" within the meaning
of Section 423 of the Internal Revenue Code of 1986 (the "Code"). The
provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
1. ADMINISTRATION. The Plan shall be administered by a committee
appointed by the Board of Directors of the Corporation (the "Committee"). The
Committee shall consist of no fewer than three members, some or all of whom may
but need not be members of the Board of Directors. The Board of Directors may
from time to time remove members from, or add members to, the Committee.
Vacancies of the Committee, however caused, shall be filled by the Board of
Directors. The Committee shall select one of its members as Chairman, and
shall hold meetings at such times and places as it may determine. Actions
pursuant to the affirmative vote of a majority of the members of the Committee
present at any meeting or pursuant to the written consent of a majority of the
members of the Committee shall be valid action of the Committee. The
interpretation and construction by the Committee of any provision of the Plan
or of any option granted under it shall be final unless otherwise determined by
the Board of Directors. No member of the Board of Directors or of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.
2. DEFINITIONS. In addition to the definitions provided elsewhere in
this Plan, the following terms shall have the meanings set forth below:
"Date of Offering" shall be the first day of May in each year.
"Parent corporation" and "subsidiary corporation" shall have the
meanings set forth in Section 425(c) and (f) of the Code.
"Total compensation" means an employee's regular straight time earnings,
including payments for overtime, shift premium, incentive compensation, bonuses,
and other special payments.
"Working Day" means a day other than a Saturday, Sunday or scheduled
holiday.
<PAGE>
3. ELIGIBILITY. All employees of the Corporation and its subsidiaries
who have been continuously employed by the Corporation and/or any of its
subsidiaries for ninety days shall be granted purchase rights under the Plan to
purchase Common Stock. Each eligible employee shall be granted a purchase right
effective on the next succeeding Date of Offering. In no event may an employee
be granted a purchase right if such employee, immediately after the purchase
right is granted, owns stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Corporation or of
its parent corporation or subsidiary corporation. For purposes of determining
stock ownership under this paragraph, Section 424(d) of the Code shall apply and
stock which the employee may purchase under the outstanding options shall be
treated as stock owned by the employee. For purposes of this Section 3, the
term "employee" shall not include an employee whose customary employment is not
more than five (5) months in any calendar year.
4. OFFERINGS. The Corporation will make one annual offering to
employees to purchase stock under the Plan. The terms and conditions for the
offering shall define the duration of the offering and shall specify the amount
of stock that may be purchased thereunder. The fixed term of any offering shall
include a Purchase Period of 12 months duration commencing with the Date of
Offering. The amounts received as Total Compensation by an employee shall
constitute the measure of such employee's participation in the offering in
accordance with Section 7.
5. ACCRUAL LIMITATION. No offering shall be effective to grant to any
employee a purchase right which permits his rights to purchase stock under all
"employee stock purchase plans" of the parent or any subsidiary corporation to
accrue at a rate which exceeds $25,000 of fair market value of such stock
(determined at the time such purchase right is granted) for each calendar year
in which such option is outstanding at any time.
For purposes of this paragraph:
(A) the right to purchase stock under a purchase right accrues when the
purchase right (or any portion thereof) first becomes exercisable during the
calendar year;
(B) the right to purchase stock under a purchase right accrues at the
rate provided in the purchase right, but in no case may such rate exceed $25,000
of the fair market value of such stock (determined at the time such purchase
right is granted) for any one calendar year; and
(C) a right to purchase stock which has accrued under one purchase
right granted pursuant to the Plan may not be carried over to any other purchase
right.
6. STOCK. The stock subject to the purchase rights shall be shares of
the Corporation's authorized but unissued or treasury
2
<PAGE>
shares. The aggregate number of shares which may be issued under all purchase
rights granted under this Plan shall not exceed 200,000 shares of Common Stock.
7. TERMS AND CONDITIONS OF PURCHASE RIGHTS. Purchase rights granted
pursuant to the Plan shall be in such form as the Committee may from time to
time recommend and the Board of Directors shall from time to time approve,
provided that all employees granted purchase rights shall have the same rights
and privileges (except as otherwise required by Section 5) and provided further
that such purchase rights shall comply with and be subject to the following
terms and conditions:
(a) NUMBER OF SHARES. Each purchase right granted thereunder shall
provide that the grantee may purchase a uniform fixed number of shares of
Common Stock, as specified in each offering, for each $1,000 and each
fraction thereof of total compensation earned by the employee in the
employment of the Corporation and/or any of its subsidiary corporations
during the calendar year immediately preceding the Date of Offering.
Provided, however, that for eligible employees who have completed less than
one year of service on the Date of Offering, Total Compensation shall be
the employee's annual earnings based on the rate of pay at the time of
employment by Millipore and its subsidiaries.
Furthermore, no purchase right may permit the purchase of stock in excess
of the amounts set forth in Section 5.
(b) PRICE. Each purchase right shall state that the price per share
shall be an amount equal to the lower of: (a) 100% of the fair market
value of each share of Common Stock on the date of the granting of the
purchase right (the "Offering Price"); or (b) 100% of the fair market value
of each share at the time of exercise (the "Alternative Offering Price").
The fair market value shall be defined as the closing price for the
Corporation's stock on the New York Stock Exchange as reported on the
composite tape on the last business day prior to the date on which the
option was granted, or if no sale of the stock shall have been made on the
New York Stock Exchange on that day, on the next preceding day on which
there was a sale of such stock. Subject to the foregoing the Board of
Directors and the Committee shall have full authority and discretion in
fixing the price and be fully protected in doing so.
8. PARTICIPATION. An eligible employee may participate in such
offering at any time during the purchase period by making an election through
Benefits Express'd 2001. The election will authorize regular payroll deductions
from the employee's compensation starting with the next paycheck when possible.
9. DEDUCTIONS. The Corporation will maintain payroll deduction
accounts for all participating employees. With respect to any offering made
under this Plan, an employee may authorize a
3
<PAGE>
payroll deduction up to a maximum of 25% of his total compensation during the
Purchase Period specified in the offering or during such portion thereof as he
may elect to participate, whichever is less. As a minimum, an employee may
only authorize a payroll deduction based on his rate of pay at the time of such
authorization which will enable him by the end of the Purchase Period to
accumulate in his account an amount equal to the Offering Price for one share of
stock for that particular offering.
10. DEDUCTION CHANGES. An employee may at any time increase or
decrease his or her payroll deduction by calling Benefits Express'd 2001. The
change may not become effective sooner than the next pay period. A payroll
deduction may be increased only once and reduced only once during any Purchase
Period.
11. WITHDRAWAL OF FUNDS. An employee may at any time and for any
reason permanently draw out the balance accumulated in his account and thereby
withdraw from participation in an offering. He may thereafter begin
participation again once during the remainder of the Purchase Period specified
in the offering. Partial withdrawals will not be permitted.
12. PURCHASE OF SHARES. As of the last day of each calendar month
during any offering, the account of each participating employee shall be totaled
and the Alternative Offering Price determined. When a participating employee
shall have sufficient funds in his account to purchase one or more full shares
at the lower of either the Offering Price or the Alternative Offering Price as
of that date, the employee shall be deemed to have exercised his purchase rights
to purchase such share or shares at such lower price; his account shall be
charged for the amount of the purchase;and shares shall be credited to the
employee's Smith Barney Shearson account within 10 days following July 31,
October 31, January 31 and April 30 of each Purchase Plan year, for such number
of shares as his payroll deductions have purchased during the quarter ending on
such dates. Subsequent shares covered by the employee's purchase right will be
purchased in the same manner, whenever sufficient funds have again accrued in
his account. Payroll deductions may be made under each offering to the extent
authorized by the employee, subject to the maximum and minimum limitations
imposed for such offering. A separate employee account will be maintained with
respect to each offering. A participating employee may not purchase a share
under any offering beyond 12 months from the effective date thereof. If an
employee does not accumulate sufficient funds in his account to purchase a share
within 12 months, he will thereupon be deemed to have withdrawn from the
offering to the extent of the unfunded shares and the balance of the amount in
his account will be refunded.
13. REGISTRATION OF CERTIFICATES. Certificates will be registered only
in the name of the employee, unless the employee completes and forwards a
Transaction Order Form to Smith Barney Shearson instructing that the
certificate(s) be issued in the employee's name jointly with a member of his or
family, with right of survivorship. An employee who is is a resident of a
4
<PAGE>
jurisdiction which does not recognize such a joint tenancy may have certificates
registered in his or her name as tenant in common with a member of his her
family, without right of survivorship. (The Transaction Order Forms are
available from the Human Resources Department.)
14. RIGHTS AS A STOCKHOLDER. None of the rights or privileges of a
stockholder of the Corporation shall exist with respect to shares purchased
under the Plan unless and until certificates representing such full shares have
been issued.
15. TERMINATION OF EMPLOYMENT EXCEPT BY DEATH. In the event that an
employee shall cease to be employed by the Corporation or by any of its
subsidiaries for any reason other than death and shall no longer be in the
employ of any of them, subject to the condition that no purchase right shall be
exercisable after the expiration of 27 months from the date it is granted, such
former employee shall have the right to exercise the purchase right at any time
within three months after such termination of employment. Whether authorized
leave of absence or absence for military or governmental service shall
constitute termination of employment for the purposes of the Plan, shall be
determined by the Committee, which determination, unless overruled by the Board
of Directors, shall be final and conclusive.
16. DEATH OF GRANTEE AND TRANSFER OF PURCHASE RIGHT. If an employee
shall die while in the employ of the Corporation or any of its subsidiaries or
within a period of three months after the termination of such employment and
shall not have fully exercised a purchase right, the purchase right may be
exercised (subject to the condition that no purchase right shall be exercisable
after the expiration of 27 months from the date it is granted) at any time
within six months after the grantee's death, by the executors or administrators
of the grantee or by any person or persons who shall have acquired the purchase
right directly from the grantee by bequest or inheritance.
No purchase right shall be transferable by the grantee otherwise than by
will or by the laws of descent and distribution.
17. PURCHASE RIGHTS NOT TRANSFERABLE. Purchase rights under this Plan
are not transferable by a participating employee other than by will or the laws
of descent and distribution, and are exercisable during the employee's lifetime
only by the employee.
18. APPLICATION OF FUNDS. All funds received or held by the
Corporation under this Plan may be used for any corporate purpose.
19. ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK. In the event
of subdivision of outstanding shares of Common Stock, or the payment of a stock
dividend with respect to the Common Stock of 10% or more, the number of shares
reserved or authorized to be reserved under this Plan, including shares covered
by outstanding grants to participating employees, shall be increased
proportionately, and the Offering Price for each participant at
5
<PAGE>
such time reduced proportionately, and such other adjustment shall be made as
may be deemed equitable by the Committee or by the Board of Directors. In the
event of any other change affecting the Common Stock such adjustment
shall be made as may be deemed equitable by the Board of Directors to give
proper effect to such event.
20. AMENDMENT OF THE PLAN. The Board of Directors may at any time, or
from time to time, amend this Plan in any respect, except that no amendment
shall be made without the approval of the stockholders of the Corporation (other
than as provided in Section 19 (i) increasing or decreasing the number of shares
to be reserved under this Plan or (ii) decreasing the purchase price per share.
21. TERMINATION OF THE PLAN. The Plan and all rights of employees
under any offering hereunder shall terminate:
(a) on the day that participating employees exercise purchase rights to
purchase a number of shares equal to or greater than the number of shares
remaining available for purchase. If the number of shares so purchasable is
greater than the shares remaining available, the available shares shall be
allocated by the Committee among such participating employees in such manner as
it deems fair; or
(b) at any time, at the discretion of the Board of Directors.
No offering hereunder shall be made which shall extend a Purchase Period
beyond April 30, 2005. Upon termination of this Plan, all amounts in the
accounts of participating employees shall be promptly refunded.
22. GOVERNMENTAL REGULATIONS. The Corporation's obligation to sell and
deliver Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such stock.
23. INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by Millipore Corporation
against the reasonable expenses, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any purchase right granted thereunder, and against
all amounts paid by them in satisfaction of a judgment in any such action, suit
or proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit, or proceeding that such Committee member is liable for
negligence or misconduct in the performance of his duties; provided that within
60 days after institution of any such action, suit or proceeding a Committee
member shall in writing offer the Company the opportunity, at its own expense,
to handle and defend the same.
6
<PAGE>
24. APPROVAL OF STOCKHOLDERS. The Plan shall not take effect until
approved by the stockholders of the Corporation, which approval must occur
within the period beginning with the adoption of the Plan by the Board of
Directors and ending twelve months after the date the Plan is so adopted.
7
<PAGE>
MANAGEMENT INCENTIVE PLAN
PLAN DOCUMENT
MILLIPORE CORPORATION
JANUARY 1995
<PAGE>
MANAGEMENT INCENTIVE PLAN PLAN DOCUMENT
PURPOSE
- -------
The purpose of Millipore Corporation's Management Incentive Plan ("Plan") is:
1. To motivate and reward the senior management group for improvements in the
year-to-year financial performance of the Corporation.
2. To motivate and reinforce the following behaviors among senior managers:
- Effective goal-setting tied to key strategic priorities,
- Accountability for goal achievement.
3. To provide a means for making awards that qualify for the performance-based
compensation exception described at Section 162(m) of the Internal Revenue
Code (the "Code").
PLAN OPERATION
- --------------
The Management Incentive Plan provides cash incentive payments based upon
achievement of corporate financial performance goals and achievement of
personal goals by Plan Participants, as described below.
1. Salary Administration
For positions covered by the Management Incentive Plan, salary levels are
established such that, when combined with target incentive
opportunities (expressed as a percent of base salary), target total cash
compensation is both competitive with comparable companies and equitable
within the internal organization.
The following definitions apply:
BASE SALARY The annualized regular cash compensation
of a Participant, excluding incentive
payments, company contributions to
employee benefit plans, foreign service
incentives, allowances, relocation, or
other compensation not designated as
salary. The base salary is the basis
for regular monthly paychecks.
Page 1 Rev. 1/95
<PAGE>
MANAGEMENT INCENTIVE PLAN PLAN DOCUMENT
1. Salary Administration (continued)
TARGET INCENTIVE That amount (described as a percentage
of a Participant's base salary) that
will be paid as an incentive if the
target corporate performance goal,
unit goals, and personal goals are
fully (100%) achieved.
TARGET TOTAL CASH COMPENSATION The assigned compensation level for each
Participant, based on market data and
internal equity considerations.
Comprised of base salary and target
incentive amount.
Target Incentive opportunities range from 10% to 50% of base salary
for Participants. Each Participant's target incentive is dependent
on the Participant's Tier* assignment in that Plan Year, as follows:
--------------------------------------
Target Incentive
Tier (percentage of base salary)
---- ---------------------------
1 50%
2 35%
3 30%
4 20%
5 10%
--------------------------------------
*See Executive Compensation documentation for definition of Tiers.
2. Corporate Performance Goals
Prior to the beginning of the Plan Year, the definition and weighting
of the Corporate Performance goals are proposed by Senior Management and
established by the Management Development and Compensation Committee of the
Board of Directors (the "Committee") all during the corporate goal setting
and budgeting process, and reviewed by the Board of Directors.
Corporate Performance is measured against financial goals for Sales
Growth, Profitability Enhancement (Contribution), and Increased Cash Flow,
expressed in actual dollars. Three levels of corporate financial
performance are defined each year, as follows:
TARGET Budgeted Sales, Contribution and Cash Flow increases over prior
year's actual results. Target goals represent a realistically
attainable level of corporate financial performance for the
year.
Page 2 Rev. 1/95
<PAGE>
MANAGEMENT INCENTIVE PLAN PLAN DOCUMENT
2. Corporate Performance Goals (continued)
STRETCH A level of achievement of Sales, Contribution and Cash Flow
increases over prior year's actual results, set above
target and representing a superior level of performance.
THRESHOLD A level of achievement of Sales, Contribution and Cash Flow
increases over prior year's actual results, set below target
and representing the minimum level of performance which is
required in order to produce any incentive payments under
the Plan.
3. Plan Funding
Incentive pool funding equals the sum of the Target Incentives of all
eligible Participants company-wide multiplied by the factor from the
table below that corresponds to the level of corporate financial goal
achievement for the Plan Year, plus an additional 10% of that amount to
cover contingencies.
---------------------------------------------------------------------------
INCENTIVE MULTIPLIERS FOR LEVELS OF GOAL ACHIEVEMENT
Goal Achievement Level Multiplier
---------------------- ----------
Threshold .5
Target 1.0
Stretch 2.0
Above Stretch 1.5 times the rate between Target and
Stretch (subject to Committee
approval in the event of
performance over Stretch)
Exact funding levels are determined via interpolation or extrapolation
relative to the defined threshold, target and stretch goals for the
Plan Year.
---------------------------------------------------------------------------
The total of all incentive payments cannot exceed the pool size.
Individual payments may be pro-rated in order to achieve this plan
requirement. No incentive payment under the Plan shall exceed in any one
year more than $1 million.
See next page for example.
Page 3 Rev. 1/95
<PAGE>
MANAGEMENT INCENTIVE PLAN PLAN DOCUMENT
- --------------------------------------------------------------------------------
CORPORATE GOAL SETTING AND PLAN FUNDING EXAMPLE:
If, for a Plan Year, Corporate Target Goals were assigned the following
weighting*:
Target Goal Weight
----------- ------
Sales Growth 50%
Growth in Contribution 30%
Growth in Cash Flow 20%
*Weighting is determined each Plan Year, and reviewed by the Board of
Directors.
And if, in the example year, the Company achieved:
120% of the Target Sales Growth Goal (X)
75% of the Target Contribution Goal (Y)
100% of the Target Cash Flow Goal (Z)
Then:
(a) (b) (c) (b) x (c)
Goal Weighting Results** Corp Fin Goal Achievement
---- --------- --------- -------------------------
X 50% 120% 60.0%
Y 30% 75% 22.5%
Z 20% 100% 20.0%
CORPORATE FINANCIAL GOAL ACHIEVEMENT = 102.5% OF WEIGHTED
TARGET GOALS
**As percentage of Target Goals.
And the Corporate Incentive Pool size is determined:
In this example, we will assume that Threshold has been set at 40% of
Weighted Target Goals, and Stretch at 135% of Weighted Target Goals.
Referring to the table of incentive multipliers on page 3, the
multiple that corresponds to 102.5% goal achievement is 1.071, since
102.5% is 7.1% of the way between 100% (Target) and 135% (Stretch).
Incentive Pool size would be 1.071 times the sum of target
incentives company-wide, plus 10% for contingencies.
- --------------------------------------------------------------------------------
Page 4 Rev. 1/95
<PAGE>
MANAGEMENT INCENTIVE PLAN PLAN DOCUMENT
4. Divisional and Geographic Financial Performance Goals
Target Goals and weightings will be established for all Divisions and
Geographies during the annual goal setting and budgeting process. As in
the case of corporate financial performance goals, these goals will
account for growth in Sales, Contribution and Cash Flow over prior
year's actuals; however, they will be measured in standard
dollars. Threshold and Stretch Goals (expressed as percentages of
Weighted Target Goals, as illustrated in the example on page 4) will be
set for each Division and Geography.
5. Personal Goals
Millipore's Corporate Performance System includes a Management Goal
Alignment Process, which results in objective pre-established
annualized Personal Goals for Senior Management. Objective personal
goals focus on areas of individuals' responsibilities related to
their units' key priorities, and are based on one or more of the
following performance measures: product and market development; human
resource development and customer satisfaction programs; operating
efficiencies and process improvement. These personal goals are
compensable under the Plan.
The Committee sets the CEO's goals and considers the CEO's
recommendations in establishing the Corporate Executive Committee
("CEC") members' goals, and goals of direct reports of CEC members.
6. Weighting of Goals
Depending on the Participant's organization unit, individual
incentive payments will be based upon the following weighting:
---------------------------------------------------------------------
Corporate Div/Geog Personal
Organization Unit Performance Performance Goals
----------------- ----------- ----------- --------
Corporate Function 66.6% NA 33.3%
Division or Geography 33.3% 33.3% 33.3%
---------------------------------------------------------------------
Page 5 Rev. 1/95
<PAGE>
MANAGEMENT INCENTIVE PLAN PLAN DOCUMENT
7. Distributions to Participants
The component of incentive payment tied to corporate financial goals
is paid out in direct relationship to corporate financial performance.
The division/geography component is based on how well the business unit
performs in relation to its goals. A division/geography incentive
multiplier (from the table on page 3) is determined based on
achievement against weighted division/geography target goals in the
same manner as described in the example on page 4.
The personal goals payout component equals one third of the
individual's target incentive times the corporate incentive
multiplier, adjusted up or down at the discretion of the
Committee according to the Participant's actual results for the
plan year against personal goals.
INCENTIVE PAYOUT EXAMPLE
[CHART]
The size of the pool available is determined by the level of corporate
financial goal achievement.
Page 6 Rev. 1/95
<PAGE>
MANAGEMENT INCENTIVE PLAN PLAN DOCUMENT
7. Distributions to Participants (continued)
The Committee evaluates the CEO's performance and establishes the
appropriate personal goals-based payout component for the CEO and CEC
members, as well as for other Plan Participants.
8. Timing
Payments from the Plan will be made as soon as practicable after
the end of the Plan Year, but no later than April 1 of the following
year. Incentive payments are made in a single lump-sum payment and are
subject to applicable withholding and other taxes as prescribed by local
law.
PARTICIPATION
- -------------
Plan Participants are senior managers and other key employees whose
responsibilities and accomplishments can be directly tied to significant
short-term business goals. The CEO recommends to the Committee on an annual
basis and the Committee selects Participants for whom incentive payments will
be established under the Plan.
In order to be eligible for an incentive payment, a Participant must have been
employed in a Plan-eligible position(s) for at least six consecutive months
of the Plan Year. For a Participant who serves in a Plan-eligible
position(s) for less than a full year, the incentive payment may be pro-rated
based on the number of months, including partial months, the employee was a
Participant during the Plan Year.
The Committee has authority to make decisions regarding eligibility for
incentive payments in the event of new hires, employment terminations, periods
of disability or leave, and transfers into, out of, and between Plan-
eligible positions during the Plan Year.
EFFECT ON TAXES
- ---------------
Payments made under this Plan will be included in total wages in the year
paid, and are thus considered taxable income in that year.
Page 7 Rev. 1/95
<PAGE>
MANAGEMENT INCENTIVE PLAN PLAN DOCUMENT
TERMS AND CONDITIONS
- --------------------
1. The Plan shall be administered by the Committee. All members of the
Committee shall be "outside directors" within the meaning of section
162(m) of the Code. The Committee shall have authority, consistent with
the Plan, to establish Plan periods during which awards may be
established and earned under the Plan, to determine the size and terms
of the awards to be made to each Plan Participant, to determine the time
when awards will be made, to prescribe the form of payment for awards
under the Plan, to adopt, amend and rescind rules and regulations
for the administration of the Plan and for its own acts and proceedings,
and to decide all questions and settle all controversies and disputes which
may arise in connection with the Plan. All decisions,
determinations and interpretations of the Committee shall be binding upon
all parties concerned.
The terms of an award, once fixed, shall preclude future Committee
discretion with respect to the amount or timing of payments of the award,
except that (i) no payment of an award shall be made unless and until
the Committee certifies in writing that the performance goals
specified in the award have been satisfied; (ii) the Committee may retain
the discretion to reduce payments; (iii) the Committee may permit the
deferral of payments that have been earned under an award provided
such deferral is consistent with Section 162 of the Code and (iv)
the Committee may retain such other discretion as is consistent
with the qualification of the award under Section 162(m).
2. Corporate Performance results are determined at the end of the fiscal
year when audited data is available. Adjustments may be made in
order to minimize the potential distortion of performance
measurements resulting from major unplanned/uncontrollable events, such
as a major unbudgeted acquisition, or other events or conditions
during the year affecting financial performance, so long as such
adjustments are made without the involvement of the CEO, and are in
conformity with Section 162(m) of the Internal Revenue Code. Such
adjustments may be made when it is judged that the Corporation
would have been unable to anticipate said event(s) during the corporate
goal setting process.
3. Eligibility criteria for participation in the Plan and entitlements to
receive incentive payments shall be as set forth in the "Participation
Guidelines" reviewed and approved by the Committee .
Page 8 Rev. 1/95
<PAGE>
MANAGEMENT INCENTIVE PLAN PLAN DOCUMENT
TERMS AND CONDITIONS (CONTINUED)
- --------------------------------
4. The Management Incentive Plan does not, directly or indirectly,
create in any employee or class of employees any right with respect to
continuation of employment by the Company, and it shall not be
deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an employee's employment at any time.
No employee shall have a right to be selected as a Participant for
any year nor, having been selected a Participant in the Plan for one
year, to be a Participant in any other year. Neither the Plan nor
any award thereunder shall be an element of damages in any claim based
upon discharge in violation of a contract unless the contract in
question shall be in writing and shall make specific reference to
this section and this sentence, overriding the same; nor shall this
Plan or any rights thereto be regarded as an element of damages for
wrongful discharge in any other context except to the extent that
rights shall have accrued hereunder as of the date of discharge.
5. The provisions of the Plan and the grant of any incentive payment shall
inure to the benefit of all successors of each Participant, including
without limitation such Participant's estate and the executors,
administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.
6. The Plan may be amended or terminated at any time by the Board of
Directors of the Corporation, and shall continue in effect until so
terminated; provided however that no amendment or termination of the
Plan shall adversely affect any right of any Plan Participant with
respect to any incentive payment theretofore made without such Plan
Participant's written consent.
7. The Plan shall be effective with respect to the Plan Year beginning
January 1, 1995.
8. This Plan and all determinations made and actions taken hereunder shall
be construed in accordance with the laws of the Commonwealth of
Massachusetts.
Page 9 Rev. 1/95
Millipore Corporation
Exhibit 11
Computation of Earnings Per Share
(In Thousands Except Per Share Data)
Years Ended December 31,
Calculation of shares: 1994 1993 1992
Weighted average of shares
outstanding during the year 27,363 (b) 27,951 (b) 28,242 (b)
Shares outstanding from
assumed exercise of stock 2,028 970 1,476
option
(Treasury Method) (1,428) (873) (1,268)
Weighted average shares and
common stock equivalents
outstanding during the year 27,963 (a) 28,048 (a) 28,450 (a)
Additional shares assumed
exercised with full 0 0 0
dilution
Weighted average of shares
used in calculation of
fully
diluted earnings per share $ 27,963(a) $ 28,048(a) $ 28,450(a)
Net Income $ 56,209 $ 34,603 $ 33,183
Earnings per common share as
reported in the
Consolidated
Financial Statements $ 2.05 $ 1.24 $ 1.17
Primary earnings per common $ 2.01(a) $ 1.23(a) $ 1.16(a)
share
Net fully diluted earnings
per common share $ 2.01(a) $ 1.23(a) $ 1.16(a)
(a)These calculations are submitted in accordance
with Securities Exchange Act of 1934 Release N.
9083 although not required by APB No. 15 because
they result in dilutions of less than 3%.
(b)Represents weighted average of shares
outstanding used in the earnings per share
calculations. Common stock equivalents for 1994,
1993, and 1992 were not included in the weighted
average share computation as they were less than
3% dilutive.
Management's Discussion and Analysis
General
On November 11, 1993, the Company's Board of Directors approved
a plan to divest operations of the Company's Instrumentation
Divisions, which served primarily the chromatography and
bioscience markets. These divisions, which represented separate
product lines with separate customers, have been accounted for
as discontinued operations. The Company sold these divisions in
the third quarter of 1994 and realized a net loss upon their
disposition. The consolidated statement of income in 1993
included the results of discontinued operations through November
11, 1993. The following discussion on results of operations
applies to continuing operations.
Results of Operations
Consolidated net sales increased 12 percent in 1994 to $497
million. Sales growth rates, measured both in local currencies
and in U.S. dollars, are summarized in the table below.
Sales growth rates Sales growth rates
measured in local currencies measured in U.S. dollars
1994 1993 1992 1994 1993 1992
Americas 8% 6% (1%) 8% 6% (1%)
Europe 6% 4% 9% 7% (7%) 12%
Asia/Pacific 16% 10% (6%) 21% 18% (2%)
Consolidated 10% 6% 1% 12% 4% 3%
Sales growth, excluding foreign exchange impact, increased to 10
percent in 1994 from 6 percent in 1993. This performance was
led by the electronics/industrial market which grew by 28
percent.
In the Americas, sales growth increased to 8 percent in 1994
from 6 percent in 1993; and in Europe, sales grew 6 percent in
1994 from 4 percent in 1993. Sales in Japan grew 10 percent in
1994 from 2 percent in 1993; while sales in the rest of Asia
increased by 53 percent.
Electronics/industrial was the strongest market in each
geography, with particular impact in Korea and Japan. Sales to
the pharmaceutical/biotechnology market grew more slowly in 1994
due to reduced spending by pharmaceutical customers in the
Americas and to a recessionary economy and a more difficult
regulatory environment in Europe and Japan. The lab/research
market showed sales growth in the Americas, Europe and Japan,
and was particularly strong in Asia. Laboratory water products
also grew across all geographies, with strongest performance in
Europe and Japan.
The effect of foreign exchange rates on sales was 2 percent
favorable in 1994, compared to 2 percent unfavorable in 1993 and
2 percent favorable in 1992. A weaker dollar will benefit, and
a stronger dollar will affect adversely, future operations.
However, the Company is unable to predict future currency
fluctuations and to quantify their effect on income. Price
changes and inflation have not significantly affected the
comparability of sales during the past three years.
Gross Margins were 57.2 percent in 1994, 56.5 percent in 1993,
and 54.2 percent in 1992. Excluding the charges for EPA
settlements and the accrual of costs associated with increasing
the efficiency of our manufacturing operations in 1992, margins
in 1992 were 56.3 percent. The improvement in margins in 1994
as compared to 1993 and 1992 resulted from significantly
increased production volume in the Company's
electronics/industrial plants as well as continued cost
reduction activities in all of the Company's manufacturing
operations.
Selling, General and Administrative (S,G&A) expenses, excluding
the effects of foreign exchange, grew 8 percent in 1994, 6
percent in 1993 and 10 percent in 1992. S,G&A spending was
higher in the second half of 1994 than in the first half as the
Company invested in sales and marketing programs to support
future sales growth.
Research and Development Expenses decreased slightly in 1994
compared to a 6 percent increase in 1993 and a marginal increase
in 1992. The Company continued to fund all major programs in
1994.
Other Expense in 1994 reflects a non-recurring charge of $10.8
million to settle litigation which arose from the Company's sale
of its Process Water Division in 1989. The litigation was
settled in the fourth quarter of 1994. Other expense in 1992
reflects the loss taken on the sale of the Company's
environmental testing business Resource Analysts, Inc. (RAI), in
1992.
Net Interest Expense in 1994 was significantly lower than in
1993 and 1992, primarily due to interest earned on the net
proceeds received from the divested businesses; a lower interest
rate on the refinanced $100 million long-term note; and an
overall lower level of net short-term borrowings.
The Provision for Income Taxes was 22.5 percent of pre-tax
income in 1994, the same effective rate as in 1993 and 1992.
The Company continues to benefit from low tax rates in Puerto
Rico and Ireland and tax incentives attributable to its U.S.
export operations.
25
<PAGE>
The Net Loss on Disposal of Discontinued Operations reflects the
after-tax loss of the disposition of the Company's
Instrumentation Divisions, which were concluded in the third
quarter of 1994.
Extraordinary Loss on Early Extinguishment of Debt reflects the
after-tax cost recorded by the Company in the fourth quarter of
1993 to pre-pay its $100 million note, which bore interest at
9.2 percent and was callable in 1995. In March 1994, the Company
issued and sold a new $100 million note bearing interest at 6.78
percent.
Earnings Per Share for the past three years include a number of
charges resulting from either specific transactions or adoption
of new accounting pronouncements. Earnings per share from
continuing operations adjusted for these events are summarized
as follows:
1994 1993 1992
Earnings from continuing
operations after accounting
changes and charges $2.18 $1.62 $1.07
SFAS #106 Charges - cumulative
impact - - .19
Charges .30 .13 .34
Earnings from continuing
operations before accounting
changes and charges $2.48 $1.75 $1.60
The charge in 1994 resulted from the settlement of litigation
relating to the Company's sale of the its Process Water Division
in 1989. The charge in 1993 resulted from the early
extinguishment of the Company's long-term debt. The charges in
1992 resulted from providing for the settlement of all known
environmental disputes with the Environmental Protection Agency
(EPA), the sale of Resource Analysts, Inc., and an additional
charge taken to cover costs of increasing the efficiencies of
the Company's manufacturing operations.
Legal Proceedings
The potential settlement amount of all environmental claims
against all participants at hazardous waste ("Superfund") sites
in which the Company has been named a potentially responsible
party by the EPA is significant. It is unlikely, however, that
the Company's share of these costs will have a material impact
on the financial condition of the Company. The Company is only
one of many potentially responsible parties named at each site.
Additionally, in certain instances the Company believes that its
insurance will cover a portion of the costs incurred. In 1992,
the EPA unexpectedly proposed settlements for several of these
sites. Based on these proposed settlements and all other
information available to management, the Company recorded a
provision of $5.8 million in cost of sales in 1992, which, in
management's best estimate, will be sufficient to satisfy all
known claims by the EPA. No individual settlement to date has
had a material impact on the Company's financial condition.
Capital Resources and Liquidity
In 1994, the Company generated $49 million of cash from
continuing operations, compared to generating $34 million in
1993 and expending $14 million in 1992. Cash provided by
operations continues to be the Company's primary source of
funding working capital requirements. In addition to the
increase in net income from continuing operations of $14.1
million in 1994 as compared to 1993, 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 $14.7
million in 1994 compared to an increase of $5.4 million in 1993.
In addition, inventories increased $1.9 million in 1994 compared
to a decrease of $6.4 million in 1993. Capital expenditures by
continuing operations were lower in 1994 than in 1993 and 1992
as the Company spent less on facility expansions and information
technology systems. The Company expects capital expenditures in
1995 to be in line with capital spending in 1994 and 1993. At
December 31, 1994, the Company had no significant commitments
for capital expenditures.
In 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 had $258 million of net
proceeds from the sale of its Waters Chromatography and
Bioscience divisions in 1994. The Company spent $293 million,
net of stock option receipts, to repurchase 6.1 million shares
of its common stock in 1994, primarily pursuant to a Dutch
Auction Self Tender completed in the third quarter and an
ongoing open market share repurchase program. In the fourth
quarter of 1994, the Company announced a $100 million open
market share repurchase program and spent $78 million in share
repurchases. In early 1995, the Company announced plans to
spend an additional $50 million on open market share
repurchases.
The Company has $30.2 million of cash and short-term investments
on hand at the end of 1994 which, along with the Company's
strong financial position, provides a high degree of flexibility
in financing future requirements.
Dividends
The quarterly dividend was increased in the second quarter of
1994 from $0.14 to $0.15 per share. Dividends paid in 1994 were
$15.8 million.
26
<PAGE>
Consolidated Statements of Income
Millipore Corporation
Year ended December 31
(In thousands except per share data) 1994 1993 1992
Net sales $ 497,252 $ 445,366 $ 427,188
Cost of sales 212,675 193,575 195,462
Gross profit 284,577 251,791 231,726
Selling, general and
administrative expenses 159,591 145,647 142,701
Research and development expenses 34,327 34,952 32,953
Operating income 90,659 71,192 56,072
Other expense (10,800) - (2,415)
Interest income 4,091 4,069 6,888
Interest expense (7,035) (12,038) (14,692)
Income from continuing
operations before income taxes 76,915 63,223 45,853
Provision for income taxes 17,306 14,225 10,317
Income from continuing operations before
extraordinary item and cumulative effect of
change in accounting principle 59,609 48,998 35,536
Earnings (loss) from discontinued operations - (10,851) 2,715
Net loss on disposal of discontinued
operations (3,400) - -
Income before extraordinary item and
cumulative effect of change in accounting
principle 56,209 38,147 38,251
Extraordinary item - loss on early
extinguishment of debt - 3,544 -
Cumulative effect of change in accounting
for postretirement benefits other
than pensions - - 5,068
Net income $ 56,209 $ 34,603 $ 33,183
Income per share
Income from continuing operations$ 2.18 $ 1.75 $ 1.26
Net income per common share $ 2.05 $ 1.24 $ 1.17
Weighted average common shares
outstanding 27,363 27,951 28,242
27
<PAGE>
Consolidated Balance Sheets
Millipore Corporation
December 31
(In thousands) 1994 1993
Assets
Current assets:
Cash $2,898 $2,140
Short-term investments 27,338 38,502
Accounts receivable (less allowance for doubtful accounts of
$4,968 in 1994 and $3,063 in 1993) 136,944 113,795
Inventories 71,209 65,187
Other current assets 5,351 12,790
Receivables arising from sale of businesses 15,064 -
Net current assets of discontinued operations - 138,687
Total current assets 258,804 371,101
Property, plant and equipment, net 187,525 194,895
Intangible assets (less accumulated amortization of $1,597 in 1994
and $1,169 in 1993) 5,177 2,769
Deferred income taxes 58,123 40,792
Other assets 18,024 11,349
Net long-term assets of discontinued operations - 99,647
Total assets $527,653 $720,553
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable and current portion of long-term debt $ 56,289 $ 65,560
Accounts payable and accrued expenses 63,860 57,505
Accrued divestiture costs 16,470 -
Dividends payable 3,500 3,921
Accrued retirement plan contributions 5,987 6,356
Accrued and deferred income taxes payable 12,049 4,894
Total current liabilities 158,155 138,236
Long-term debt 100,231 102,047
Other liabilities 18,990 19,116
Accrued divestiture costs 29,000 -
Commitments and contingent liabilities - -
Shareholders' equity:
Common stock, par value $1.00 per share, 80,000 shares
authorized. 28,494 and 28,344 shares issued as of
December 31, 1994 and 1993, respectively 28,494 28,344
Additional paid-in capital 23,603 16,803
Retained earnings 458,579 434,988
Translation adjustments 5,147 (7,624)
515,823 472,511
Less: Treasury stock at cost, 5,361 and 341 shares as of
December 31, 1994 and 1993, respectively (294,546) (11,357)
Total shareholders' equity 221,277 461,154
Total liabilities and shareholders' equity $527,653 $720,553
Consolidated Statements of Shareholders' Equity
28
<PAGE>
Millipore Corporation
Year ended December 31, 1992, 1993 and 1994
(In thousands)
<TABLE>
<CAPTION>
Additional Total
Common Stock Paid-in Retained Translation Treasury Stock Shareholders'
Shares Par Value Capital Earnings Adjustments Shares Cost Equity
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1992 28,344 $28,344 $15,743 $398,643 $21,766 0 $0 $464,496
Net income 33,183 33,183
Cash dividends declared, $0.51 per share (14,376) (14,376)
Treasury stock acquired (484) (16,777) (16,777)
Stock options exercised (889) 111 4,033 3,144
Employees' stock purchase plan proceeds 2 3 120 122
U.S. tax benefit from stock
plan activity 781 781
Translation adjustments (17,738) (17,738)
Balance at December 31, 1992 28,344 $28,344 $16,524 $416,563 $4,028 (370) $(12,624) $452,835
Net income 34,603 34,603
Cash dividends declared, $0.55 per share (15,396) (15,396)
Treasury stock acquired (112) (3,427) (3,427)
Stock options exercised (899) 104 3,468 2,569
Employees' stock purchase plan proceeds (32) 10 353 321
Incentive plan awards 161 22 721 882
Stock Awards (12) 5 152 140
U.S. tax benefit from
stock plan activity 279 279
Translation adjustments (11,652) (11,652)
Balance at December 31, 1993 28,344 $28,344 $16,803 $434,988 $(7,624) (341) $(11,357) $461,154
Net income 56,209 56,209
Cash dividends declared, $0.59 per share (15,381) (15,381)
Treasury stock acquired (400) (6,148) (334,702) (335,102)
Stock options exercised 101 101 4,848 (15,479) 1,072 48,898 38,368
Employees' stock purchase
plan proceeds 49 49 2,352 (1,712) 47 2,120 2,809
Incentive plan awards (54) 8 431 377
Stock Awards 8 1 64 72
Translation adjustments 12,771 12,771
Balance at December 31, 1994 28,494 $28,494 $23,603 $458,579 $5,147 (5,361)$(294,546) $221,277
</TABLE>
29
<PAGE>
Consolidated Statements of Cash Flows
Millipore Corporation
Year ended December 31
(In thousands) 1994 1993 1992
Cash Flows From Operating Activities:
Net income $56,209 $34,603 $33,183
Adjustments to reconcile net income to net cash provided by
continuing operations
Net loss (income) from discontinued operations - 10,851 (2,715)
Net loss on disposal of discontinued operations3,400 - -
Depreciation and amortization 27,604 23,775 23,507
Deferred income tax provision (2,227) (1,745) 225
Extraordinary item-loss on extinguishment of debt - 3,544 -
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable (14,672) (5,440) 8,348
(Increase) decrease in inventories (1,894) 6,398 (8,269)
Decrease in other current assets 1,427 763 1,276
(Increase) in other assets (3,413) (1,981) (16,003)
Increase (decrease) in accounts payable
and accrued expenses 2,876 3,740 (2,475)
(Decrease) increase in accrued retirement plan
contributions (269) (104) 600
Increase (decrease) in accrued income taxes 6,123 (1,002) (2,111)
Income tax refund received 14,035 - -
Other (3,334) 53 11,898
Net cash provided by continuing operations 85,865 73,455 47,464
Net cash provided by discontinued operations - 8,708 4,691
Net cash provided by operating activities 85,865 82,163 52,155
Cash Flows From Investing Activities:
Net proceeds from sales of businesses 257,899 - -
Additions to property, plant and equipment, ne t (21,009) (24,469) (33,906)
Net investing activities of discontinued businesses - (9,357) (11,018)
Net cash provided by (used in) investing
activities 236,890 (33,826) (44,924)
Cash Flows From Financing Activities:
Treasury stock acquired (334,702) (3,427) (16,777)
Issuance of treasury stock under stock plans 33,876 3,912 3,266
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 (9,539) (59,887) 20,137
Net change in long-term debt (1,820) (1,222) (2,988)
Dividends paid (15,802 (15,108) (14,093)
Net cash used for financing activities (336,012) (75,732) (10,455)
Effect of foreign exchange rates on cash and
short-term investments 2,851 (2,414) (2,765)
Net decrease in cash and short-term investments (10,406) (29,809) (5,989)
Cash and short-term investments on January 1 40,642 70,451 76,440
Cash and short-term investments on
December 31 $ 30,236 $ 40,642 $ 70,451
30
<PAGE>
Notes to Consolidated Financial Statements (In thousands except per
share data)
Note A - Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. All material
intercompany balances and transactions have been eliminated.
Translation of Foreign Currencies
For all of the Company's foreign subsidiaries, except Brazil, assets and
liabilities are translated at exchange rates prevailing on the balance sheet
date, revenues and expenses are translated at average exchange rates
prevailing during the period, and elements of shareholders' equity are
translated at historical rates. Any resulting translation gains and losses
are reported separately in shareholders' equity. For the Company's
subsidiary in Brazil, where inflation is very high, the translation is the
same except that inventories, cost of sales, property, plant and equipment,
and depreciation are translated at historical rates. Resulting translation
gains and losses for this subsidiary are included in income. Net losses
from foreign currency transactions and translations of $644 in 1994, $867 in
1993, and $1,767 in 1992 were included in selling, general and
administrative expenses.
Short-term Investments
Short-term investments consist primarily of government securities and
certificates of deposit and are carried at cost plus accrued interest, which
approximates market value.
Inventories
The Company values all of its inventories manufactured in the United States
at the lower of cost or market, principally on a last-in, first-out (LIFO)
basis. Inventories manufactured outside of the United States are valued on a
first-in, first-out (FIFO) basis.
Property, Plant and Equipment
Property, plant and equipment is recorded at cost. Expenditures for
maintenance and repairs are charged to expense while the costs of
significant improvements are capitalized. Depreciation on assets acquired
before January 1, 1989 generally is provided using accelerated methods over
the estimated useful lives of the assets. Assets acquired after January 1,
1989 primarily are depreciated using straight-line methods. Upon retirement
or sale, the cost of assets disposed and the related accumulated
depreciation are eliminated and related gains or losses reflected in income.
Intangible Assets
Intangible assets consist primarily of goodwill and licenses. Intangible
assets are amortized on a straight-line basis over appropriate periods not
exceeding 15 years.
Income Taxes
In 1992, the Company adopted the provisions of SFAS #109 "Accounting for
Income Taxes". As discussed more fully in Note H, deferred income taxes
under SFAS #109 are determined on the liability method. The Company
provides deferred income taxes only on the unremitted earnings of foreign
and Puerto Rican subsidiaries which are expected to be repatriated.
Treasury Stock
Treasury stock is recorded at its cost on the date acquired and is relieved
at its weighted average cost upon reissuance. The excess of the cost over
proceeds of treasury stock reissued is charged to retained earnings.
Net Income Per Common Share
Net income per common share is calculated by dividing the net income for the
period by the weighted average number of common shares outstanding for the
period.
Postretirement Benefits Other Than Pensions
In 1992, the Company adopted the provisions of SFAS #106 "Employers'
Accounting for Postretirement Benefits Other than Pensions". This new
standard, discussed more fully in Note L requires that the expected cost of
retiree health benefits be expensed during the years employees render
service rather than the Company's prior practice of recognizing these costs
on a cash basis.
Revenue Recognition
Sales of products and services are recorded based on product shipment or
performance of services.
Reclassifications
Certain reclassifications have been made to prior years' financial
statements to conform with the 1994 presentation.
31
<PAGE>
Note B - Discontinued Operations
On November 11, 1993, the Company's Board of Directors 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 have been reclassified
as discontinued operations in the accompanying consolidated financial
statements. The operating results of these businesses subsequent to
November 11, 1993 were deferred until the divestitures were completed. The
results of the discontinued operations included in the accompanying
consolidated statements of income are summarized as follows:
1993 1992
through
11/11/93
Net sales $279,303 $349,813
Pre-tax income (loss) $(14,001) $5,632
Provision (credit)
for income taxes (3,150) 1,267
Cumulative effect of change
in accounting for post-
retirement benefits - 1,650
Net income (loss) $ (10,851) $ 2,715
Earnings (loss) per share $ (0.38) $ 0.10
The operating results for 1993 are for the period ended November 11, 1993,
the date the divestiture plan was approved. In the first quarter of 1993,
the Company recorded a restructuring charge of $13,000 to cover costs
associated with reorganizing and restructuring the Company's chromatography
division into more market-focused customer-oriented business units. The
restructuring charge covered the cost of severance and other personnel-
related items resulting from the reorganization.
On August 18, 1994, the Company sold its Waters Chromatography Division to
Waters Holdings, Inc. for $330,000 in cash and $10,000 in stock. On August
23, 1994, the Company sold certain assets of its non-membrane bioscience
business to PerSeptive BioSystems, Inc. for $10,000 in cash and four
thousand shares of preferred stock redeemable in four equal annual
installments of $10,000. The stock proceeds received from each sale have
been recorded at their fair value at the date of receipt. Both sales were
recorded in the third quarter of 1994 and resulted in a combined pre-tax
loss of $5,667 ($3,400 or $0.13 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 received approximately $258,000 in cash proceeds from the
disposition after related expenses in 1994. In accordance with each
respective sales agreement, the Company retained and will collect certain
customer accounts receivable balances generated by 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 have been classified in Receivables arising from
sales of businesses in the accompanying consolidated balance sheets.
Note B - Discontinued Operations (continued)
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 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.
Net current and long-term assets of discontinued operations as of December
31, 1993 consisted primarily of accounts receivable, inventory, property,
plant and equipment, intangibles, and accounts payable, and were classified
separately in the accompanying consolidated balance sheets.
Note C - Inventories
Inventories at December 31 consisted of the following:
1994 1993
Raw materials $ 19,895 $ 18,782
Work in process 8,992 7,852
Finished goods 42,322 38,553
$ 71,209 $ 65,187
The value of inventories determined using the LIFO cost method was $45,473
or 64 percent of the total at December 31, 1994 and $47,097 or 72 percent of
the total at December 31, 1993. If these inventories had been valued using
the FIFO cost method, they would have been $46,776 at December 31, 1994 and
$48,847 at December 31, 1993.
32
<PAGE>
Note D - Property, Plant and Equipment
Property, plant and equipment at December 31 consisted of the
following:
1994 1993
Land $ 7,445 $ 6,966
Leasehold improvements 9,054 16,108
Buildings and improvements 113,359 108,054
Production and other equipment 206,261 206,207
Construction in progress 16,442 20,631
352,561 357,966
Less: accumulated depreciation and
amortization 165,036 163,071
$ 187,525 $ 194,895
Note E - Notes Payable and Current Portion of Long-term Debt
Short-term borrowings and related lines of credit at December 31 are
summarized as follows:
1994 1993
Notes payable and current portion of
long-term debt:
Notes payable $ 56,116 $ 64,942
Current portion of long-term debt 173 618
$ 56,289 $ 65,560
Unused lines of credit $174,409 $240,755
Average amount outstanding at month-end
during the year $46,340 $109,477
Maximum month-end amount outstanding
during the year $74,672 $135,887
Weighted average interest rate
during the year 4.2% 4.3%
Weighted average interest rate at year-end 5.5% 4.5%
Notes payable generally consist of renewable, uncollateralized
borrowings under lines of credit that are denominated in various
currencies and bear interest at prevailing rates.
Note F - Long-term Debt
Long-term debt at December 31 consisted of the following:
1994 1993
Notes payable due in 2004 $100,000 $100,000
Other notes payable with average interest of 11.2% in
1994 and 5.9% in 1993, due through 1997 404 2,665
100,404 102,665
Less: Current portion (173) (618)
Long-term debt $100,231 $102,047
In the fourth quarter of 1993, the Company entered into an
agreement to retire its 9.2 percent $100,000 notes payable
before their call date of March 30, 1995. Accordingly, the
Company recorded an extraordinary charge of $5,906 ($3,544 net
of income taxes or $0.13 per share) in December, 1993 to
reflect the cost of extinguishing the notes. In March, 1994,
the Company issued $100,000 of 6.78 percent notes due in 2004.
Interest is payable semi-annually on these notes in March and
September.
Long-term debt, including current portion, matures as follows:
Year ended December 31, 1995 $ 173
Year ended December 31, 1996 160
Year ended December 31, 1997 71
Year ended December 31, 1998 0
Year ended December 31, 1999 0
Years subsequent to December 31, 1999 $ 100,000
Certain notes contain covenants relating to maintenance
of current asset levels, cash dividends and limitations on
long-term debt. The Company is in compliance with all such
covenants.
The Company capitalized interest costs associated with
the construction of certain assets of $890 in 1994, $1,301 in
1993, and $1,561 in 1992. Interest paid on debt during 1994,
1993, and 1992 amounted to $8,946, $13,356, and $16,637,
respectively.
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<PAGE>
As of December 31, 1993, the Company had partially hedged
its foreign currency net asset exposure by entering into a
currency swap which was to mature in 1995. Under the terms of
the original swap, the Company exchanged $100,000 of dollar
debt service obligations for foreign obligations of 9,936,000
yen and 33,193 DM. In January, 1994, the Company closed out
the yen-denominated 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. This swap matures in 2004. The Company's
foreign currency obligations had effective weighted average
interest rates of 5.18 and 6.02 percent in 1994 and 1993
respectively. The effects of foreign currency exchange rate
fluctuations resulting from these swap agreements are included
in translation adjustments and in transaction gains/losses.
Unrealized losses on these swap agreements of $9,327 at
December 31, 1994 and $8,020 at December 31, 1993 are included
in other assets in the consolidated balance sheets.
Note G - Foreign Exchange
In the fourth quarter of 1993, the Company entered into
forward exchange contracts to reduce the impact of foreign
currency fluctuations on certain transactions in 1994. A loss
of $960 was realized on these contracts and was recorded in
cost of sales in 1994. During 1994, the Company has again
entered into forward exchange contracts to reduce the impact
of foreign currency fluctuations on certain transactions. The
gains or losses on these contracts will be included in income
when the operating revenues and expenses related to the
underlying transactions are recognized. Contracts open at
December 31, 1994, aggregating $26,000, have an unrealized
loss of $467. All open contracts have maturities which do not
exceed fifteen months.
Note H - Income Taxes
The Company has provided for income taxes on both
continuing and discontinued operations according to the
provisions of SFAS #109 "Accounting for Income Taxes" which
the Company adopted in 1992. Data related to the provisions
for income taxes are summarized as follows:
1994 1993 1992
Domestic and foreign income before income taxes:
Domestic $23,042 $16,690 $27,077
Foreign 48,206 32,532 24,408
71,248 49,222 51,485
Less: (Income) loss from discontinued
operations - 14,001 (5,632)
loss on disposal of discontinued
operations 5,667 - -
Income from continuing operations before
income taxes $76,915 $63,223 $45,853
Domestic and foreign provisions for income taxes:
Domestic $(1,894) $(2,781) $ 2,842
Foreign 16,433 13,356 8,242
State 500 500 500
15,039 11,075 11,584
Less: portion applied to discontinued
operations 2,267 3,150 (1,267)
$17,306 $14,225 $10,317
Current and deferred provisions for income taxes:
Current $28,800 $12,820 $11,359
Deferred (13,761) (1,745) 225
$15,039 $11,075 $11,584
Summary of the differences between the Company's consolidated
effective tax rate and the United States statutory federal
income tax rate:
U.S. statutory income tax rate 35.0% 35.0% 34.0%
Puerto Rico tax rate benefits (6.0) (11.9) (9.8)
Ireland tax rate benefits (4.0) (1.1) (1.7)
Excess foreign over U.S. tax rate - 5.6 -
State income tax, net of federal income tax
benefit .5 .7 .6
Foreign Sales Corporation income
not taxed (3.0) (4.6) (4.1)
Other - (1.2) 3.5
Effective tax rate applicable to
operations 22.5% 22.5% 22.5%
34
<PAGE>
Net deferred tax assets result from temporary differences in
the recognition of revenues and expenses for financial
statement and income tax purposes. Components of the net
deferred tax assets are as follows:
1994 1993
Intercompany and inventory
related transaction $6,861 $18,698
Postretirement benefits other
than pensions 3,271 4,435
Tax credits (including foreign tax
credits on unremitted earnings) 33,056 21,800
Divestiture related costs 30,850 -
U.S. net operating loss
carryforwards - 14,001
Other, net 3,475 1,248
77,513 60,182
Valuation allowance (19,390) (19,390)
Net deferred tax asset $ 58,123 $ 40,792
The valuation allowance is provided primarily against foreign
tax credits which can be utilized against future taxable
income in the United States after the utilization of other
carryforwards and expire no later than 1996.
The reduction in tax expense attributable to tax exemptions on
the Company's operations in Puerto Rico was $3,673 in 1994,
$5,843 in 1993, and $5,035 in 1992 or $0.13, $0.21, and $0.18,
per share, respectively. Tax exemptions relating to these
operations are effective through 2004. Income taxes paid
during 1994, 1993, and 1992 were $25,296, $15,185, and $18,634
respectively.
During 1994 the Internal Revenue Service ("IRS") completed its
examination of the Company's federal income tax returns
pertaining to its U.S. and Puerto Rican operations for the
years 1985-1990.
Note I - Legal Proceedings
The Company has been notified in a number of instances that
the United States Environmental Protection Agency (EPA) has
determined that a release or a substantial threat of a release
of hazardous substances (Release) as defined in Section 101 of
the Comprehensive Environmental Response Compensation and
Liability Act of 1980 as amended by the Superfund Amendments
and Reauthorization Act of 1986 (the so-called "Superfund"
law) has occurred at certain sites to which chemical wastes
generated by the manufacturing operations of the Company have
been sent. These notifications typically also allege that the
Company may be a potentially responsible party under the law
with respect to any remedial action needed to control or
prevent any such Release. Under the law the EPA may undertake
remedial action and responsible parties may be liable, without
regard to fault or negligence, for all costs incurred. In
several of these instances the EPA has issued a proposal for
remedial action it considers necessary to protect the
environment. In each instance the Company was only one of a
large number of corporations and entities which received such
notification, and anticipates that any ultimate liability for
remedial costs will be shared by others. In 1992, the EPA
unexpectedly proposed settlements for several of these sites.
Based on those proposed settlements and all other information
available to management, the Company recorded a provision of
$5,800 in cost of sales which, in management's best estimate
will be sufficient to satisfy all known claims by the EPA.
The Company has paid a total of $14,028 to date to satisfy
environmental claims. The aggregate of further potential
liabilities is not expected to have a material adverse effect
on the Company's financial condition.
Eastern Enterprises filed a lawsuit against the Company
alleging misrepresentations made in connection with its 1989
purchase of the Company's Process Water Division. This
lawsuit was settled in the fourth quarter of 1994 at a total
cost of $10,800, which included a $9,000 payment to Eastern
Enterprises and $1,800 of related costs incurred by the
Company. The cost of settlement is included in Other expense
in the accompanying consolidated statement of income.
Note J - Leases
Lease agreements cover sales offices, warehouse space,
computers and automobiles. These leases have expiration dates
through 2006. Certain land and building leases contain
renewal options for periods ranging from five to ten years and
purchase options at fair market value. Rental expense was
$8,545 in 1994, $10,878 in 1993, and $8,880 in 1992. At
December 31, 1994 future minimum rents payable under
noncancelable leases with initial terms exceeding one year
were as follows:
1995 $7,642
1996 6,588
1997 5,350
1998 3,685
1999 2,634
2000 - 2006 12,533
35
<PAGE>
Note K - Stock Plans
Stock Option Plan
Under the Company's Combined Stock Option Plan, stock options
to purchase Millipore common stock may be granted to
employees. The plan provides that the option price per share
may not be less than the fair market value of the stock at the
time the option is granted and that options must expire not
later than 10 years from the date of grant. Plan data are
summarized as follows:
1994 1993 1992
Option shares:
Outstanding at beginning of period 2,720 2,431 2,207
Issued during period 267 516 510
Exercised during period (1,167) (100) (111)
Canceled during period (61) (127) (175)
Outstanding at end of period 1,759 2,720 2,431
Exercisable at end of period 1,044 1,536 1,254
Shares available for granting of options at end of
period 672 879 270
Average price of outstanding options
at end of period $35.92 $33.34 $32.70
Average price of exercised options
during the period $32.60 $24.51 $28.22
Non-Employee Director Stock Option Plan
In 1990, a stock option plan for Non-Employee Directors was
approved by the Company's shareholders. Under this plan,
stock options to purchase up to 100 shares of Millipore common
stock may be granted to non-employee directors of the Company.
The plan provides that the option price per share may not be
less then the fair market value of the stock at the time the
option is granted. At December 31, 1994, 63 options have been
issued and 52 are outstanding.
Employees' Stock Purchase Plan
Under the Company's Employees' Stock Purchase Plan, all
employees of the Company and its subsidiaries who have 90 days
continuous service prior to the beginning of the plan year,
May 1, may purchase shares of Millipore common stock by
payroll deduction. The purchase price per share during the
plan year is the lesser of the fair market value of the common
stock at the time of purchase or on May 1.
In 1994, 1993, and 1992 shares issued under the plan were
96, 10, and 3, respectively. As of December 31, 1994, 21
shares of Millipore common stock were available for sale to
employees under the plan.
Incentive Plan for Senior Management
Under this plan, Millipore common stock is awarded to key members of senior
management at no cost to them. The stock cannot be sold, assigned,
transferred or pledged during a restriction period which is normally four
years. Shares are subject to forfeiture should employment terminate during
the restriction period.
The stock issued under the plan is recorded at its fair market value on the
award date; the related deferred compensation is amortized to selling,
general and administrative expenses over the restriction period. At the end
of 1994, 1993, and 1992, 77, 133, and 114 shares, respectively, were
outstanding under the plan. Plan expense was $790 in 1994, $833 in 1993,
and $924 in 1992. As of December 31, 1994, 70 shares of Millipore common
stock were available for future awards under this plan.
Note L - Employee Retirement Plans
Participation and Savings Plan
The Millipore Corporation Employees' Participation and Savings Plan
(Participation and Savings Plan), maintained for the benefit of all full-
time U.S. employees, combines both a defined contribution plan
(Participation Plan) and an employee savings plan (Savings Plan).
Contributions to the Participation Plan are allocated among the U.S.
employees of the Company who have completed at least two years of continuous
service on the basis of the compensation they received during the year for
which the contribution is made. The Savings Plan allows employees with one
year of continuous service to make certain tax-deferred voluntary
contributions which the company matches with a 25 percent contribution (50
percent contribution for employees with 10 years of service). Total expense
under the Participation and Savings Plan was $6,089 in 1994, $8,679 in 1993,
and $8,520 in 1992.
Retirement Plan
The Company's Retirement Plan for Employees of Millipore Corporation
(Retirement Plan) is a defined benefit plan for all U.S. employees which
provides benefits to the extent that assets of the Participation Plan,
described above, do not provide guaranteed retirement income levels.
36
<PAGE>
Guaranteed retirement income levels are determined based on years of service
and salary level as integrated with Social Security benefits. Employees are
eligible under the Retirement Plan after one year of continuous service and
are vested after 5 years of service. For accounting purposes, the Company
uses the projected unit credit method of actuarial valuation. The actuarial
method for funding purposes is the entry age normal method. The Company
contributes annually to the Retirement Plan, subject to Internal Revenue
Service and ERISA funding limitations. No contributions were required for
1994 and 1993.
The following table summarizes the funded status of the plan and amounts
reflected in the Company's consolidated balance sheets at December 31. The
projected benefit obligation was calculated using discount and investment
return rates of 8.5 and 8.0 percent, respectively, in 1994 and 7.5 percent
in 1993, and a salary progression rate of 6 percent in both years. Plan
assets are invested primarily in common stock, mutual funds and money market
funds.
The Company recognized a curailment loss of $91 in the third quarter of 1994
as a result of its divestitures. Such amount was included as part of the
net loss on disposal of discontinued operations.
1994 1993
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including
vested benefits of $2,761 on December 31, 1994 and
$2,804 on December 31, 1993 $ 2,911 $ 2,983
Projected benefit obligation for service
rendered to date $(4,076) $(5,003)
Plan assets at fair value 5,436 5,663
Plan assets in excess of projected benefit
obligation 1,360 660
Unrecognized net actuarial loss 2,772 3,069
Unrecognized prior service cost 132 413
Unrecognized net asset being amortized over
16.7 years (663) (747)
Prepaid pension cost included in financial
statements $ 3,601 $3,395
Net pension income includes the following components
Service cost $ 376 $ 393
Interest cost (361) (358)
Return on plan assets 36 430
Amortization and deferral 246 (131)
Net pension income $ 297 $ 334
Postretirement Benefits Other Than Pensions
The Company sponsors several unfunded defined benefit postretirement plans
covering all U.S. employees. The plans provide medical and life insurance
benefits and are, depending on the plan; either contributory or non-
contributory. As discussed in Note A, the Company adopted the provisions of
SFAS #106 "Employers' Accounting for Postretirement Benefits Other Than
Pensions" effective January 1, 1992. In adopting this standard, the Company
recorded in the final quarter of 1992 a one-time, non-cash charge againsst
earnings from continuing operations of $7,678 before taxes and $5,068 after
taxes, or $0.19 per share.
The Company recognized $4,007 as a settlement in the third quarter of 1994
as a result of its divestitures. The settlement was included as part of the
net loss on disposal of discontinued operations.
Net periodic postretirement benefit cost included the following components:
1994 1993
Service cost benefits attributed to service
during the year $ 610 $ 754
Interest cost on accumulated postretirement
benefit obligation 662 787
Net amortization and deferral (62) (15)
Net periodic postretirement benefit cost $ 1,210 $ 1,526
Summary information on the Company's plans as of December 31 is as follows:
1994 1993
Accumulated postretirement benefit obligation:
Retirees and dependents $ (3,100) $ (3,520)
Fully eligible active plan participants (444) (478)
Other active plan participants (3,089) (8,171)
Accrued postretirement benefit cost (6,633) (12,169)
Unrecognized gain from past experience different
from that assumed and from changes in
assumptions (2,713) (361)
Accrued postretirement benefit obligation $(9,346) $(12,530)
37
<PAGE>
The discount rate used in determining the accumulated postretirement benefit
obligation was 8.5 percent as of December 31,1994 and 7.5 percent as of
December 31, 1993. The assumed health care cost trend rate used in
measuring the accumulated postretirement benefit obligation was 10 percent
in 1994, declining gradually to 5.5 percent over 9 years, remaining level
thereafter.
If the health care cost trend rate assumptions were increased by 1 percent,
the accumulated postretirement benefit obligation as of December 31, 1994
would be increased by $987 while the aggregate of the service and interest
cost components of net periodic postretirement benefit cost for 1994 would
be increased by $245.
Note M - Business Segment Information
Industry Segments
The Company operates in one industry segment. Using
primarily membrane technology, the Company develops,
manufactures and markets products used for analysis and
purification.
Geographical Segments
The Company operates in the geographical segments indicated
in the table below. Sales are reflected in the segment from
which the sales are made. The Americas segment includes
North and South America. The European region includes
Western and Central Europe, Russia, the Middle East and
Africa. The Asia/Pacific region includes Japan, Korea,
Taiwan, Hong Kong, China, Southeast Asia and Australia.
Transfer sales between geographical areas are generally made
at a discount from list price. Operating profits for each
geographical segment exclude general corporate expenses.
Identifiable assets consist of those assets utilized within
each respective geographic segment and exclude cash and
short-term investments and receivables arising from sale of
businesses, which are classified as corporate assets.
Americas Europe Pacific Eliminations Total
1994
Sales:
Unaffiliated
customers $180,569 $154,196 $160,781 $495,546
Unaffiliated export:
Pacific customers 806 806
European customers 900 900
Total unaffiliated 182,275 154,196 160,781 497,251
Transfer between areas 77,877 25,767 6,246 (109,890) -
Total sales $260,152 $179,963 $167,027 $(109,890) $497,251
Operating profits $ 54,301 $ 23,908 $ 24,879 $103,088
General corporate expenses (12,429)
Other expense (10,800)
Interest expense, net (2,944)
Income from continuing
operations before income taxes $ 76,915
Identifiable assets $331,730 $187,132 $144,890 $(181,285) $482,467
Corporate assets 45,186
Total assets $527,653
1993
Sales:
Unaffiliated
customers $168,800 $145,485 $128,840 $443,125
Unaffiliated export:
Pacific customers 977 977
European customers 1,264 1,264
Total unaffiliated 171,041 145,485 128,840 445,366
Transfer between areas 85,438 24,513 6,162 (116,113) -
Total sales $256,479 $169,998 $135,002 $(116,113) $445,366
38
<PAGE>
Operating profits $ 23,180 $ 36,902 $ 27,731 $ 87,813
General corporate expenses (16,621)
Interest expense, net (7,969)
Income from continuing
operations before income taxes $ 63,223
Identifiable assets $284,750 $138,326 $141,442 $(122,941) $441,577
Corporate assets 40,642
Net current assets of
discontinued operations 138,687
Net long term assets of
discontinued operations 99,647
Total assets $720,553
1992
Sales:
Unaffiliated
customers $159,458 $154,200 $108,923 $422,581
Unaffiliated export:
Pacific customers 908 908
European customers 3,699 3,699
Total unaffiliated 164,065 154,200 108,923 427,188
Transfer between areas 80,944 23,391 7,360 (111,695) -
Total sales $245,009 $177,591 $116,283 $(111,695) $427,188
Operating profits $ 23,715 $ 40,962 $ 7,186 $ 71,863
General corporate expenses (15,791)
Interest expense, net (7,804)
Loss on sale of business (2,415) (2,415)
Income from continuing
operations before income taxes $ 45,853
Identifiable assets $271,894 $178,224 $116,175 $(125,560) $440,733
Corporate assets 70,451
Net current assets of
discontinued operations 147,480
Net long term assets of
discontinued operations 106,194
Total assets $764,858
Report of Independent Accountants
To the Shareholders and Directors of Millipore Corporation:
We have audited the accompanying consolidated balance sheets of Millipore
Corporation as of December 31, 1994 and 1993, and the related consolidated
statements of income, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Millipore
Corporation at December 31, 1994 and 1993, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1994 in conformity with generally accepted accounting principles.
As discussed in Notes A, H and L to the consolidated financial statements, the
Company changed its method of accounting for postretirement benefits other
than pensions and its accounting for income taxes in 1992.
Boston, Massachusetts Coopers & Lybrand L.L.P.
January 26, 1995
39
<PAGE>
Eleven-year Summary of Operations
Millipore Corporation
(In thousands except per share)
1994 1993 1992 1991 1990
Net sales $497,252 $445,366 $427,188 $415,075 $380,983
Cost of sales 212,675 193,575 195,462 194,557 170,049
Gross profit 284,577 251,791 231,726 220,518 210,934
Selling, general and
administrative expenses 159,591 145,647 142,701 129,593 117,214
Research and
development expenses 34,327 34,952 32,953 32,633 29,538
Restructuring charge - - - - 17,103
Operating income 90,659 71,192 56,072 58,292 47,079
Other Income (expense) (10,800) - (2,415) - -
Interest income 4,091 4,069 6,888 6,182 6,723
Interest expense (7,035) (12,038) (14,692) (13,984) (10,418)
Income from continuing
operations before
income taxes 76,915 63,223 45,853 50,490 43,384
Provision for income
taxes
excluding non-recurring 17,306 14,225 10,317 14,570 13,629
tax benfit
Nonrecurring tax - - - - -
benefit
Income from continuing 59,609 48,998 35,536 35,920 29,755
operations
Earnings (loss) from
discontinued operations - (10,851) 2,715 18,645 (6,678)
Loss on disposal of
discontinued operations (3,400) - - - -
Income before
extraordinary item and
cumulative effect
of change in 56,209 38,147 38,251 54,565 23,077
accounting principle
Extraordinary item-loss
on early extinguishment - 3,544 - - -
of debt
Cumulative effect of
change in accounting
for postretirement
benefits - - 5,068 - -
Net income $56,209 $34,603 $33,183 $54,565 $23,077
Net income per common
share:
Income from continuing $2.18 $1.75 $1.26 $1.27 $1.05
operations
Net income per common 2.05 1.24 1.17 1.93 0.82
share
Cash dividends declared 0.59 0.55 0.51 0.47 0.43
per share
Average common shares
and equivalents 27,363 27,951 28,242 28,294 28,307
Financial Data
Working Capital $100,649 $232,865 $220,378 $247,399 $225,039
Total assets 527,653 720,553 764,858 765,129 704,971
Long-term obligations 100,231 102,047 103,240 106,306 107,517
Shareholders' equity $221,277 $461,154 $452,835 $464,496 $427,008
The Company adopted SFAS # 109 "Accounting for Income Taxes" during
1992 and restated tax provisions in 1991 and 1990
and 1986.
1984 earnings per share include a $.15 per share non-recurring tax
benefit from the reversal of all deferred taxes provided on DISC income
prior to 1984.
1989 1988 1987 1986 1985 1984
Net sales $365,825 $347,267 $298,728 $251,212 $202,411 $193,190
Cost of sales 165,979 161,613 138,587 117,997 99,427 97,048
Gross profit 199,846 185,654 160,141 133,215 102,984 96,142
Selling, general and
administrative expenses 115,951 116,636 98,730 87,058 66,409 62,777
Research and
development expenses 28,756 22,336 19,742 16,756 15,132 15,407
Restructuring charge - - - - - -
Operating income 55,139 46,682 41,669 29,401 21,443 17,958
Other Income (expense) 3,149 - - - - -
Interest income 3,914 3,450 2,234 3,066 3,403 4,145
Interest expense (8,543) (6,543) (3,432) (3,762) (3,300) (3,136)
Income from continuing
operations before
income taxes 53,659 43,589 40,471 28,705 21,546 18,967
Provision for income
taxes
excluding non-recurring 11,619 10,955 10,040 10,538 5,357 5,121
tax
benefit
Nonrecurring benefit - - - - - (4,002)
Income from continuing 42,040 32,634 30,431 18,167 16,189 17,848
operations
Earnings (loss) from
discontinued operations 10,462 22,751 17,993 14,797 15,541 12,645
Loss on disposal of
discontinued operations - - - - - -
Income before
extraordinary item and
cumulative effect
of change in 52,502 55,385 48,424 32,964 31,730 30,493
accounting principle
Extraordinary item-loss
on early extinguishment - - - - - -
of debt
Cumulative effect of
change in accounting
for postretirement
benefits - - - - - -
Net income
$52,502 $55,385 $48,424 $32,964 $31,730 $30,493
Net income per common
share:
Income from continuing $1.48 $1.15 $1.07 $0.65 $0.59 $0.65
operations
Net income per common 1.85 1.96 1.71 1.18 1.15 1.11
share
Cash dividends declared 0.39 0.35 0.31 0.27 0.24 0.22
per share
Average common shares
and equivalents 28,323 28,329 28,344 27,931 27,632 27,552
Financial Data
Working Capital $249,777 $251,825 $168,594 $165,421 $146,334 $121,075
Total assets 616,747 547,997 452,387 369,414 326,903 283,517
Long-term obligations 106,147 105,946 6,378 12,094 13,446 10,630
Shareholders' equity $403,827 $362,800 $327,604 $283,547 $244,607 $214,289
40-41
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Quarterly Results (Unaudited)
The Company's unaudited quarterly results are summarized below.
First Second Third Fourth
(In thousands, except per
share data) quarter quarter quarter quarter Year
1994
Net sales $118,959 $124,690 $123,551$130,052$497,252
Cost of sales 51,265 52,910 53,114 55,386 212,675
Gross profit 67,694 71,780 70,437 74,666 284,577
Selling, general and administrative
expenses 38,109 39,456 40,181 41,845 159,591
Research and development
expenses 8,558 8,446 8,367 8,956 34,327
Operating income 21,027 23,878 21,889 23,865 90,659
Other expense - - -(10,800)(10,800)
Interest income 565 713 1,976 837 4,091
Interest expense (1,858) (1,917) (1,714) (1,546) (7,035)
Income from continuing
operations before income
taxes 19,734 22,674 22,151 12,356 76,915
Provision for income taxes 4,440 5,102 4,984 2,780 17,306
Income from continuing
operations 15,294 17,572 17,167 9,576 59,609
Loss from discontinued operations - - (3,400) - (3,400)
Net income $ 15,294 $ 17,572 $ 13,767 $ 9,576 $56,209
Per share information
Income from continuing
operations $0.54 $0.62 $0.61 $0.40 $2.18
Net income $0.54 $0.62 $0.49 $0.40 $2.05
Weighted average common shares
outstanding 28,123 28,388 28,155 23,840 27,363
1993
Net sales $105,189 $114,613 $111,854$113,710$445,366
Cost of sales 45,140 49,271 49,587 49,577 193,575
Gross profit 60,049 65,342 62,267 64,133 251,791
Selling, general and administrative
expenses 36,555 36,946 36,424 35,722 145,647
Research and development
expenses 8,587 9,010 8,652 8,703 34,952
Operating income 14,907 19,386 17,191 19,708 71,192
Interest income 1,098 1,039 1,047 885 4,069
Interest expense (3,315) (3,122) (3,015) (2,586)(12,038)
Income from continuing
operations before income
taxes 12,690 17,303 15,223 18,007 63,223
Provision for income taxes 2,855 3,893 3,425 4,052 14,225
Income from continuing
operations 9,835 13,410 11,798 13,955 48,998
Loss from discontinued
operations (9,083) (579) (1,189) - (10,851)
Extraordinary item - loss on early
extinguishment of debt - - - 3,544 3,544
Net income $ 752 $ 12,831 $ 10,609$ 10,411$ 34,603
Per share information
Income from continuing
operations $0.35 $0.48 $0.42 $0.50 $1.75
Net income $0.03 $0.46 $0.38 $0.37 $1.24
Weighted average common shares
outstanding 27,983 27,946 27,921 27,954 27,951
42
<PAGE>
Investor Information
Registrar and Transfer Agent
The First National Bank of Boston
Shareholders Services Division
P.O. Box 644
Boston, Massachusetts 02102-0644
Annual Meeting
The Annual Meeting of Shareholders of Millipore Corporation will be
held at our Bedford Massachusetts Facility (80 Ashby Road) on Thursday,
April 20, 1995 at 11 a.m.
Dividend Reinvestment
An automatic dividend reinvestment program is available to
shareholders. A descriptive brochure and authorization card are
available on request.
Reports
Quarterly results are available through facsimile, voice mail, and the
Internet, or on request from the Company. Form 10-K is filed annually
with the Securities Exchange Commission and is available on the
Internet and on request from the Company. To receive the latest
quarterly results through facsimile, call (800)758-5804 (PIN# 101371);
through voice mail call (800)605-5249; through the Internet go to URL
http://www.millipore.com. The 10-K is alos available through that
voice mail number and that Internet address. For other investor
information, contact:
Geoffrey E. Helliwell
Director of Treasury Operations
Millipore Corporation
80 Ashby Road
Bedford, Massachusetts 01730-2271
(617) 533-2032
Common Stock
Millipore's Common Stock is traded on the New York Stock Exchange. Our
symbol is MIL. Stock price information is shown below.
Millipore Stock Prices
Range of Stock Prices Dividends Declared
Per Share
1994 1993 1994 1993
High Low High Low
First Quarter $48.87 $38.50 $35.50 $25.88 $0.14 $0.13
Second Quarter 53.87 42.75 32.38 26.50 0.15 0.14
Third Quarter 57.00 50.00 34.25 29.75 0.15 0.14
Fourth Quarter 55.13 46.63 40.25 32.75 0.15 0.14
43
<PAGE>
-1-
Exhibit (21)
SUBSIDIARIES OF MILLIPORE CORPORATION
Pursuant to Item 601, Paragraph 22, clause (ii) of Regulation S-K,
the following list excludes subsidiaries who conduct no business
operations or which have no significant assets.
COMPANY JURISDICTION
Millipore Asia Ltd. Delaware
Millipore Cidra, Inc. Delaware
Millipore Dublin International Finance Company Ireland
Millipore Intertech (V.I.), Inc. U.S. Virgin Is.
Millipore International Holding Company B.V. Netherlands
Millipore Japan Company L.L.C. Delaware
Millipore S.A./N.V. Belgium
Millipore (Canada) Ltd. Canada
Millipore (U.K.) Ltd. United Kingdom
Millipore S.A. France
Millipore Ireland B.V. Netherlands
Millipore GmbH Germany
Millipore S.p.A. Italy
Millipore A.B. Sweden
Millipore A.G. Switzerland
Millipore A/S Denmark
Millipore AS Norway
Millipore Australia Pty. Ltd. Australia
Millipore GesmbH Austria
Millipore Iberica S.A. Spain
Millipore S.A. de C.V. Mexico
Millipore I.E.C., Ltda. Brazil
Millipore OY Finland
Millipore B.V. The Netherlands
Millipore Korea Ltd. Korea
Millipore China Ltd. Hong Kong
Millipore KFT Hungary
Millipore S.R.O. Czech Republic
Millipore of New Hampshire, Inc. New Hampshire
Millicorp, Inc. Delaware
Minerva Insurance Corp. Ltd. Bermuda
Nihon Millipore Limited Japan
Millipore Investment Holdings Ltd. Delaware
Immunosystems Incorporated Maine
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned Directors and
Officers of Millipore Corporation (the "Corporation"), do hereby
constitute and appoint John A. Gilmartin and Geoffrey Nunes and each of
them individually, their true and lawful attorneys and agents to
execute on behalf of the Corporation the Form 10-K Annual Report of the
Corporation for the fiscal year ended December 31, 1994, and all such
additional instruments related thereto which such attorneys and agents
may deem to be necessary and desirable to enable the Corporation to
comply with the requirements of the Securities Exchange Act of 1934, as
amended, and any regulations, orders, or other requirements of the
United States Securities and Exchange Commission thereunder in
connection with the preparation and filing of said Form 10-K Annual
Report, including specifically, but without limitation of the
foregoing, power and authority to sign the names of each of such
Directors and Officers on his behalf, as such Director or Officer, as
indicated below to the said Form 10-K Annual Report or documents filed
or to be filed as a part of or in connection with such Form 10-K Annual
Report; and each of the undersigned hereby ratifies and confirms all
that said attorneys and agents shall do or cause to be done by virtue
thereof.
SIGNATURE TITLE DATE
/S/John A. Gilmartin Chairman, President February 9, 1994
John A. Gilmartin Chief Executive Officer
and Director
/S/Charles D. Baker Director February 9, 1994
Charles D. Baker
/S/Samuel C. Butler Director February 9, 1994
Samuel C. Butler
/S/Mark Hoffman Director February 9, 1994
Mark Hoffman
/S/Gerald D. Laubach Director February 9, 1994
<PAGE>
Gerald D. Laubach
Power of Attorney
Page 2
SIGNATURE TITLE DATE
/S/Steven Muller Director February 9, 1994
Steven Muller
/S/Thomas O. Pyle Director February 9, 1994
Thomas O. Pyle
/S/John F. Reno Director February 9, 1994
John F. Reno
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 2,898
<SECURITIES> 27,338
<RECEIVABLES> 136,944
<ALLOWANCES> 0
<INVENTORY> 71,209
<CURRENT-ASSETS> 258,804
<PP&E> 352,561
<DEPRECIATION> 165,036
<TOTAL-ASSETS> 527,653
<CURRENT-LIABILITIES> 158,155
<BONDS> 0
<COMMON> 28,494
0
0
<OTHER-SE> 192,783
<TOTAL-LIABILITY-AND-EQUITY> 527,653
<SALES> 497,252
<TOTAL-REVENUES> 497,252
<CGS> 212,675
<TOTAL-COSTS> 212,675
<OTHER-EXPENSES> 193,918
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,035
<INCOME-PRETAX> 76,915
<INCOME-TAX> 17,306
<INCOME-CONTINUING> 56,609
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