Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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
September 30, 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 01730
Bedford, Massachusetts (Zip Code)
(Address of principal executive
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 September 30, 1995: 44,553,557
<PAGE>
MILLIPORE CORPORATION
INDEX
Page No.
Part I. Financial Information:
Item 1. Condensed Financial Statements
Consolidated Balance Sheets --
September 30, 1995 and December 31, 1994 2
Consolidated Statements of
Income -- Three Months and Nine Months Ended
September 30, 1995 and 1994 3
Consolidated Statements of
Cash Flows -- Nine Months Ended
September 30, 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)
September 30, December 31,
1995 1994
ASSETS (Unaudited)
Current assets
Cash $ 1,979 $ 2,898
Short-term investments 31,341 27,338
Accounts receivable, net 146,952 136,944
Inventories
Raw materials 25,507 19,895
Work in process 10,941 8,992
Finished goods 42,477 42,322
78,925 71,209
Other current assets 7,763 5,351
Receivables arising from sale of 9,579 15,064
businesses
Total current assets 276,539 258,804
Property, plant and equipment, net of
accumulated depreciation of $183,098
in 1995 and $165,036 in 1994 189,926 187,525
Intangible assets 4,655 5,177
Deferred income taxes 57,580 58,123
Other assets 19,230 27,351
Total assets $547,930 $536,980
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable and current portion
of long-term debt $101,119 $56,289
Accounts payable 29,084 30,510
Accrued expenses 38,249 33,350
Accrued divestiture costs 7,369 16,470
Dividends payable 3,564 3,500
Accrued retirement plan 5,571 5,987
contributions
Accrued and deferred income taxes 10,486 12,049
payable
Total current liabilities 195,442 158,155
Long-term debt 107,392 109,558
Other liabilities 20,375 18,990
Accrued divestiture costs 15,000 29,000
Shareholders' equity
Common stock 56,988 28,494
Additional paid-in capital - 23,603
Retained earnings 493,471 458,579
Translation adjustments 2,931 5,147
553,390 515,823
Less: Treasury stock, at cost,
12,435 shares in 1995 and
5,361 in 1994 (343,669) (294,546)
Total shareholders' equity 209,721 221,277
Total liabilities and shareholders'
equity $547,930 $536,980
The accompanying notes are an integral part of the consolidated condensed
financial statements.
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<PAGE>
MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
Net sales $ 147,547 $ 123,551 $ 439,482 $ 367,200
Cost of sales 61,293 53,114 180,581 157,289
Gross profit 86,254 70,437 258,901 209,911
Selling, general & 48,842 40,181 144,247 117,746
administrative expenses
Research & development 9,352 8,367 27,020 25,371
expenses
Operating income 28,060 21,889 87,634 66,794
Interest income 427 1,976 1,150 3,254
Interest expense (2,616) (1,714) (7,785) (5,489)
Income from continuing
operations 25,871 22,151 80,999 64,559
before income taxes
Provision for income taxes 5,821 4,984 18,225 14,526
Income from continuing 20,050 17,167 62,774 50,033
operations
Loss on sale of discontinued - (3,400) - (3,400)
operations
Net income $20,050 13,767 62,774 46,633
Per share information
From continuing operations$ 0.45 $ 0.30 $1.39 $ 0.89
Net income $ 0.45 $ 0.24 $1.39 $ 0.83
Cash dividends declared
per common share $ 0.08 $ 0.075 $0.235 $ 0.22
Weighted average common 44,642 56,310 45,200 56,500
shares
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)
Nine Months Ended
September 30,
1995 1994
Cash Flows From Operating Activities:
Net income $62,774 $46,633
Adjustments to reconcile net income to net
cash provided:
Net loss from discontinued operations - 3,400
Depreciation and amortization 19,975 20,781
Deferred income tax provision 543 (1,000)
Change in operating assets and
liabilities:
(Increase) in accounts receivable (8,101) (14,495)
(Increase) in inventories (6,024) (5,591)
(Increase) in other current assets (2,058) (602)
(Increase) decrease in other assets (7,123) (11,103)
Increase in accounts payable and accrued 2,247 4,706
expenses
(Decrease) in accrued retirement plan (490) (1,437)
contributions
Increase in accrued income taxes 1,364 5,153
Income tax refund received - 14,035
Other (4,390) (3,262)
Net cash provided by operating activities 58,717 57,218
Cash Flows From Investing Activities:
Net proceeds from sales of businesses - 281,138
Net cash (used by) discontinued operations (6,210) -
Additions to property, plant, and equipment (20,262) (14,436)
Net cash provided by (used in) investing (26,472) 266,702
activities
Cash Flows From Financing Activities:
Treasury stock acquired (76,350) (245,828)
Issuance of treasury stock under stock 14,764 28,915
plans
Cash paid to extinguish long-term debt - (5,088)
Common stock issued - 7,350
Cash paid to close out foreign currency (3,546) (10,287)
swap
Net change in short-term debt 45,878 (44,628)
Repayment of long-term debt (47) (1,752)
Dividends Paid (10,553) (12,097)
Net cash used for financing activities (29,854) (283,415)
Effect of foreign exchange rates on cash 693 3,200
and short-term investments
Net increase in cash and short-term 3,084 43,705
investments
Cash and short-term investments on January 1 30,236 40,642
Cash and short-term investments on
September 30 $33,320 $84,347
Interest Paid $10,019 $10,255
Taxes Paid $22,016 $20,952
The accompanying notes are an integral part of the consolidated
condensed financial statements.
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<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.On June 8, 1995, the Company's Board of Directors authorized a two-for-one
stock split in the form of a 100% stock dividend, payable on July 21, 1995
to shareholders of record as of June 23, 1995. Par value per share
remained at $1.00. The stock split resulted in the issuance of 28,494
additional shares of common stock from authorized but unissued shares.
The issuance of additional shares resulted in the transfer of $23,603 from
additional paid in capital and $4,891 from retained earnings to common
stock, representing the par value of the shares issued. Accordingly,
weighted average share and per share amounts have been restated to reflect
the stock split.
3.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
$7,199 at September 30, 1995 is recorded in long-term debt in the
Company's unaudited June 30, 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.
4.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.The Company and Waters Holdings, Inc. are engaged in an arbitration
proceeding with respect the transfer of certain assets relating to the
Company's Retirement Plan. The Company believes that it has meritorious
arguments and should prevail. The ultimate disposition is not expected to
have a material adverse effect on the Company's financial condition.
6.In August, 1995, the Company received 912 shares of PerSeptive Biosystems'
common stock in partial redemption of the PerSeptive preferred stock it
received in connection with the Company's sale of its non-membrane
bioscience business to PerSeptive in 1994. These shares have been
recorded at historical cost, which management believes approximates fair
value. Any realized gain on the sale of these shares will be recognized
when the shares are sold.
-5-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Consolidated net sales increased 19 percent in the third quarter of 1995
compared to the third quarter of 1994, led by a 37 percent increase in
worldwide sales to customers in the electronics / industrial market. Sales
to biotechnology / pharmaceutical customers increased 15 percent in the third
quarter of 1995 compared to the third quarter of 1994. The following table
summarizes sales growth by geography and market:
Sales growth rates Sales growth rates
measured in local currencies measured in U.S. dollars
Three months Nine months Three months Nine months
ended ended ended ended
9/30/95 9/30/95 9/30/95 9/30/95
Americas 20% 15% 18% 13%
Europe 15% 9% 22% 19%
Asia/Pacific 13% 15% 19% 28%
Consolidated 16% 13% 19% 20%
Electronics/Industrial 32% 35% 37% 44%
Pharmaceutical/Biotechnology 12% 7% 15% 12%
University/Government 7% 1% 10% 8%
Medical/Health Care (15%) (14%) (13%) (8%)
Consolidated 16% 13% 19% 20%
Foreign currency rate fluctuations, specifically the strengthening of the
Japanese Yen, French Franc, and German Deutsch Mark against the U.S. dollar,
increased reported sales growth by 3 percent in the third quarter of 1995 and
7 percent for the first nine months of 1995.
Gross margins increased in the third quarter of 1995 to 58.5 percent of sales
as compared to 57.0 percent in the third quarter of 1994. The improvement in
gross margins is primarily due to significantly increased production volume
in the Company's electronics / industrial plants.
Selling, general and administrative expenses increased 22 percent in the
third quarter of 1995 compared to the third quarter of 1994, reflecting
investment in the field sales and marketing areas in order to sustain
continued sales growth. Research and development expenses in the third
quarter of 1995 increased 12 percent over the third quarter of 1994, as the
Company continued to fund all major programs. Net interest expense in the
third quarter of 1994 includes approximately $1.6 million of non-recurring
interest income generated by investing the proceeds received from the
Company's sale of its Waters Chromatography Division. Excluding this non-
recurring item, net interest expense in the third quarter and the first nine
months of 1995 is higher compared to 1994 primarily due to increased short-
term borrowings. The Company's effective income tax rate for the first nine
months of 1995 is 22.5 percent, consistent with the full year effective rate
in 1994.
-6-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
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 gains or losses
on these transactions offset gains or losses on the underlying exposure. In
the third quarter of 1995, a loss of $1,033K was realized on the Company's
forward exchange contracts and was recorded in cost of sales. For the nine
months ended September 30, 1995, losses of $2,307 have been realized on the
Company's forward exchange contracts and recorded in cost of sales. The
Company does not engage in any speculative trading activity.
The Company generated $58.7 million of cash from continuing operations in
the first nine months of 1995 compared to $57.2 million in the first nine
months of 1994. Cash generated from operations and $45.9 million of
additional short-term borrowings in the first nine months of 1995 was used to
invest in fixed assets, satisfy ongoing obligations relating to the divested
businesses, pay dividends, and buy back shares of the Company's stock.
Property, plant and equipment expenditures in the first nine months of 1995
were higher than the same period of 1994. The Company expects capital
expenditures in the fourth quarter 0f 1995 to be higher than those of the the
third quarter.
During the first nine months of 1995, the Company spent $76.4 million to re-
purchase shares of its common stock. In the first quarter of 1995, the
Company announced plans to spend an additional $50 million on open market
share repurchases and has spent $30 million in share repurchases to date.
The Company expects that further 1995 share repurchases will be funded by
cash generated from its operations.
The Company spent approximately $2.0 million in the third quarter to satisfy
obligations arising from discontinued operations. This amount was in line
with the Company's expectations. The Company expects cash expenditures
related to its discontinued operations for the fourth quarter of 1995 to be
in line with those of the third quarter.
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<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 September 30, 1995.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Millipore Corporation
Registrant
November 14, 1995 /s/Michael P. Carroll
Date Michael P. Carroll
Vice President, Chief Financial Officer and
Treasurer
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<PAGE>
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,979
<SECURITIES> 31,341
<RECEIVABLES> 146,952
<ALLOWANCES> 0
<INVENTORY> 78,925
<CURRENT-ASSETS> 7,763
<PP&E> 373,024
<DEPRECIATION> 183,098
<TOTAL-ASSETS> 547,930
<CURRENT-LIABILITIES> 195,442
<BONDS> 0
<COMMON> 56,988
0
0
<OTHER-SE> 152,733
<TOTAL-LIABILITY-AND-EQUITY> 547,930
<SALES> 439,482
<TOTAL-REVENUES> 439,482
<CGS> 180,581
<TOTAL-COSTS> 180,581
<OTHER-EXPENSES> 87,634
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,785
<INCOME-PRETAX> 80,999
<INCOME-TAX> 18,225
<INCOME-CONTINUING> 62,774
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 62,774
<EPS-PRIMARY> 1.39
<EPS-DILUTED> 0
</TABLE>
