Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
For Quarter Ended Commission File Number
March 31, 1995 0-1052
Millipore Corporation
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of 04-2170233
incorporation or organization) (I.R.S. Employer Identification No.)
80 Ashby Road
Bedford, Massachusetts 01730
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, include area code (617) 275-9200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities and Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of March 31, 1995: 22,581,983
<PAGE>
MILLIPORE CORPORATION
INDEX
Page No.
Part I. Financial Information:
Item 1. Condensed Financial Statements
Consolidated Balance Sheets --
March 31, 1995 and December 31, 1994 2
Consolidated Statements of
Income -- Three Months Ended
March 31, 1995 and 1994 3
Consolidated Statements of
Cash Flows -- Three Months Ended
March 31, 1995 and 1994 4
Notes to Consolidated Condensed
Financial Statements 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 6-7
Part II. Other Information 8
Signatures 9
<PAGE>
MILLIPORE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
March 31, December 31,
1995 1994
ASSETS (Unaudited)
Current assets
Cash $ 2,240 $ 2,898
Short-term investments 23,855 27,338
Accounts receivable, net 147,471 136,944
Inventories
Raw materials 23,254 19,895
Work in process 8,965 8,992
Finished goods 44,379 42,322
76,598 71,209
Other current assets 7,622 5,351
Receivables arising from sale of 10,206 15,064
businesses
Total current assets 267,992 258,804
Property, plant and equipment, net
of accumulated depreciation of
$174,139 in 1995 and $165,036
in 1994 195,081 187,525
Intangible assets 5,090 5,177
Deferred income taxes 57,580 58,123
Other assets 29,732 27,351
Total assets $555,475 $536,980
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable and current portion of
long-term debt
$93,316 $56,289
Accounts payable 32,154 30,510
Accrued expenses 34,474 33,350
Accrued divestiture costs 4,102 16,470
Dividends payable 3,467 3,500
Accrued retirement plan 3,180 5,987
contributions
Accrued and deferred income taxes 8,179 12,049
payable
Total current liabilities 178,872 158,155
Long-term debt 117,956 109,558
Other liabilities 20,576 18,990
Accrued divestiture costs 27,000 29,000
Shareholders' equity
Common stock 28,494 28,494
Additional paid-in capital 23,603 23,603
Retained earnings 473,133 458,579
Translation adjustments 9,698 5,147
534,928 515,823
Less: Treasury stock, at cost, 5,912
shares in 1995 and 5,361 in 1994 (323,857) (294,546)
Total shareholders' equity 211,071 221,277
Total liabilities and shareholders'
equity $555,475 $536,980
The accompanying notes are an integral part of the consolidated condensed
financial statements.
-2-
<PAGE>
MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended
March 31,
1995 1994
Net sales $141,427 $118,959
Cost of sales 58,509 51,265
Gross profit 82,918 67,694
Selling, general & administrative 45,795 38,109
expenses
Research & development expenses 8,513 8,558
Operating income 28,610 21,027
Interest income 386 565
Interest expense (2,318) (1,858)
Income before income taxes 26,678 19,734
Provision for income taxes 6,003 4,440
Net income $20,675 $15,294
Net income per common share $ 0.90 $ 0.54
Cash dividends declared
per common share $ 0.15 $ 0.14
Weighted average common shares 22,980 28,123
The accompanying notes are an integral part of the consolidated condensed
financial statements.
-3-
<PAGE>
MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
1995 1994
Cash Flows From Operating Activities:
Net income $ 20,675 $ 15,294
Adjustments to reconcile net income to net
cash provided:
Depreciation and amortization 6,508 6,047
Deferred income tax provision 543 (500)
Change in operating assets and
liabilities:
(Increase) in accounts receivable (2,816) (2,143)
(Increase) in inventories (1,854) (5,205)
(Increase) in other current assets (1,958) (3,087)
(Increase) decrease in other assets (2,690) 2,255
Increase in accounts payable and accrued 216 91
expenses
(Decrease) in accrued retirement plan (2,868) (4,122)
contributions
(Decrease) increase in accrued income (5,251) 1,173
taxes
Other 2,021 (2,693)
Net cash provided by continuing operating 12,526 7,110
activities
Cash Flows From Investing Activities:
Additions to property, plant, and equipment (8,171) (4,158)
Net cash generated by (spent by) (7,946) 5,437
discontinued operations
Net cash used in investing activities (16,117) 1,279
Cash Flows From Financing Activities:
Treasury stock acquired (36,397) (463)
Issuance of treasury stock under stock 4,432 9,767
plans
Cash paid to extinguish long-term debt - (5,088)
Cash paid to close out foreign currency (3,546) (10,287)
swap
Net change in short-term debt 37,908 (17,846)
Net change in long-term debt (43) 797
Dividends Paid (3,500) (3,921)
Net cash used for financing activities (1,146) (27,041)
Effect of foreign exchange rates on cash
and 596 1,754
short-term investments
Net decrease in cash and short-term (4,141) (16,898)
investments
Cash and short-term investments on January 1 30,236 40,642
Cash and short-term investments on March 31 $26,095 $23,744
Interest Paid $3,678 $3,480
Taxes Paid $10,823 $3,716
The accompanying notes are an integral part of the consolidated
condensed financial statements.
-4-
<PAGE>
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(in thousands)
1.The accompanying unaudited consolidated condensed financial statements
have been prepared in accordance with the instructions to Form 10-Q and,
accordingly, these footnotes condense or omit certain information and
disclosures normally included in financial statements. These financial
statements, which in the opinion of management reflect all adjustments
necessary for a fair presentation, should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1994. The
accompanying unaudited consolidated condensed financial statements are not
necessarily indicative of future trends or the Company's operations for
the entire year.
2.As discussed in footnote F to the December 31, 1994 annual report, the
cumulative unrealized loss on the Company's foreign currency Yen and DM
swaps of $9,327 at December 31, 1994 was recorded as a reduction in other
assets in the Company's December 31, 1994 consolidated balance sheet.
The Company's DM swap expired on March 31, 1995. The Company paid $3,546
in cash to close out the swap. The cash payment represented the
cumulative effect of the foreign currency rate fluctuations over the life
of the swap.
The cumulative unrealized loss on the Company's Yen currency swap of
$17,768 at March 31, 1995 is recorded in long-term debt in the Company's
unaudited March 31, 1995 consolidated balance sheet. Accordingly, the
cumulative unrealized loss of $9,327 at December 31, 1994, as discussed
above, has been reclassified to long-term debt in the December 31, 1994
consolidated balance sheet to conform to the 1995 presentation.
3.Depreciation on property, plant and equipment 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. The estimated
useful lives of the Company's depreciable assets are as follows:
Leasehold Improvements Life of the Lease
Buildings and Improvements 10-30 Years
Production and Other Equipment 3-15 Years
-5-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Consolidated net sales increased 19 percent in the first quarter of 1995
compared to the first quarter of 1994; led by a 53 percent increase in
worldwide sales to customers in the electronics / industrial market. Sales
to biotechnology / pharmaceutical customers increased 8 percent in the first
quarter of 1995 compared to the first quarter of 1994. Sales growth in the
first quarter was broadbased across all geographies, as summarized in the
following table:
Sales growth rates Sales growth rates
measured in local currencies measured in U.S. dollars
Americas 13% 11%
Europe 5% 17%
Asia/Pacific 18% 30%
Consolidated 12% 19%
Foreign currency rate fluctuations, specifically the strengthening of the
Yen, French Franc, and German Deutsch Mark against the U.S. dollar, increased
reported sales growth by 7 percent in the first quarter of 1995.
Gross margins increased in the first quarter of 1995 to 58.6 percent of sales
as compared to 56.9 percent in the first quarter of 1994. The improvement in
gross margins is primarily due to significantly increased production volume
in the Company's electronics / industrial plants as well as continued cost
control activities in all of the Company's manufacturing operations.
Selling, general and administrative expenses increased 20 percent in the
first quarter of 1995 compared to the first quarter of 1994, an increase
consistent with sales growth. The Company continued to invest in sales and
marketing programs to support future sales growth. Research and development
expenses in the first quarter of 1995 were essentially flat with the first
quarter of 1994, as the Company continued to fund all major programs. Net
interest expense in the first quarter was higher in 1995 compared to 1994
primarily due to increased short-term borrowings during the first quarter of
1995. The Company's effective income tax rate for 1995 is 22.5 percent,
consistent with the full year effective rate in 1994.
A substantial portion of the Company's business is conducted outside of the
United States through its foreign subsidiaries. This exposes the Company to
risks associated with foreign currency rate fluctuations which can impact the
Company's revenue and net income. To partially mitigate this risk, the
Company has entered into foreign currency transactions, primarily forward
exchange contracts to sell Yen, on a continuing basis in amounts and timing
consistent with the underlying currency exposure so that the gain or losses
on these transactions offset gains or losses on the underlying exposure. In
the first quarter of 1995, a loss of $470K was realized on the Company's
forward exchange contracts and was recorded in cost of sales. The Company
does not engage in any speculative trading activity.
The Company generated $12.5 million of cash from continuing operations in the
first quarter of 1995 compared to $7.1 million in the first quarter of 1994,
primarily due to increased net income in the first quarter of 1995 compared
to the first quarter of 1994. Property, plant and equipment expenditures in
the first quarter of 1995 were significantly higher than in the first quarter
of 1994. The Company expects future 1995 quarterly capital expenditures to
be in line with those of the first quarter. During the first quarter of
1995, the Company spent $36.4 million to re-purchase shares of its common
stock. Of this amount, $22 million was spent to close out the Company's $100
million share repurchase program announced in the fourth quarter of 1994.
In the first quarter of 1995, the Company announced plans to spend an
additional $50 million on open market share repurchases and spent $14.4
million in share repurchases. The $36.4 million spent on share repurchases
in the first quarter of 1995 was funded by short-term borrowings, which
increased by $37.9 million in the first quarter. The Company expects that
further 1995 share repurchases will be funded by cash generated from its
operations.
-6-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cash spent on discontinued operations in the first quarter of 1995 was in
line with the Company's expectations. The Company expects further quarterly
1995 cash expenditures related to its discontinued operations to be lower
than those of the first quarter.
-7-
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
b. Reports on Form 8-K - There were no reports on Form 8-K filed
for the quarter ended March 31, 1995.
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Millipore Corporation
Registrant
/S/Michael P. Carroll
Date Michael P. Carroll
Vice President, Chief Financial Officer and
Treasurer
-9-
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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