Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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
June 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 June 30, 1995: 44,823,754
<PAGE>
MILLIPORE CORPORATION
INDEX
Page No.
Part I. Financial Information:
Item 1. Condensed Financial Statements
Consolidated Balance Sheets --
June 30, 1995 and December 31, 1994 2
Consolidated Statements of
Income -- Three Months and Six Months Ended
June 30, 1995 and 1994 3
Consolidated Statements of
Cash Flows -- Six Months Ended
June 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 except share data)
June 30, December 31,
1995 1994
ASSETS (Unaudited)
Current assets
Cash $ 2,073 $ 2,898
Short-term investments 20,565 27,338
Accounts receivable, net 153,645 136,944
Inventories
Raw materials 24,489 19,895
Work in process 9,687 8,992
Finished goods 49,749 42,322
83,925 71,209
Other current assets 9,462 5,351
Receivables arising from sale of 10,329 15,064
businesses
Total current assets 279,999 258,804
Property, plant and equipment, net of
accumulated depreciation of $181,257
in 1995 and $165,036 in 1994 196,321 187,525
Intangible assets 4,938 5,177
Deferred income taxes 57,580 58,123
Other assets 29,407 27,351
Total assets $ 568,245 $ 536,980
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Notes payable and current portion
of long-term debt $ 90,393 $ 56,289
Accounts payable 28,932 30,510
Accrued expenses 32,611 33,350
Accrued divestiture costs 7,906 16,470
Dividends payable 3,586 3,500
Accrued retirement plan 4,546 5,987
contributions
Accrued and deferred income taxes 18,383 12,049
payable
Total current liabilities 186,357 158,155
Long-term debt 123,721 109,558
Other liabilities 21,396 18,990
Accrued divestiture costs 17,000 29,000
Shareholders' equity
Common stock 56,988 28,494
Additional paid-in capital - 23,603
Retained earnings 484,993 458,579
Translation adjustments 12,478 5,147
554,459 515,823
Less: Treasury stock, at cost,
12,165 shares in 1995 and 5,361
in 1994 (334,688) (294,546)
Total shareholders' equity 219,771 221,277
Total liabilities and shareholders'
equity $ 568,245 $ 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 Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Net sales $150,508 $124,690 $291,935 $243,649
Cost of sales 60,779 52,910 119,288 104,175
Gross profit 89,729 71,780 172,647 139,474
Selling, general & 49,610 39,456 95,405 77,565
administrative expenses
Research & development 9,155 8,446 17,668 17,004
expenses
Operating income 30,964 23,878 59,574 44,905
Interest income 337 713 723 1,278
Interest expense (2,851) (1,917) (5,169) (3,775)
Income before income taxes 28,450 22,674 55,128 42,408
Provision for income taxes 6,401 5,102 12,404 9,542
Net income $22,049 $17,572 $42,724 $32,866
Net income per common share $ 0.49 $ 0.31 $ 0.94 $ 0.58
Cash dividends declared
per common share $ 0.08 $ 0.075 $ 0.155 $ 0.145
Weighted average common 44,998 56,776 45,479 56,512
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)
Six Months Ended
June 30,
1995 1994
Cash Flows From Operating Activities:
Net income $ 42,724 $ 32,866
Adjustments to reconcile net income to net
cash provided:
Depreciation and amortization 13,068 13,845
Deferred income tax provision 543 (1,000)
Change in operating assets and
liabilities:
(Increase) in accounts receivable (3,724) (8,448)
(Increase) in inventories (6,940) (6,193)
(Increase) in other current assets (3,554) (1,977)
(Increase) decrease in other assets (6,964) (573)
(Decrease) in accounts payable and (4,870) (2,115)
accrued expenses
(Decrease) in accrued retirement plan (1,534) (3,484)
contributions
Increase in accrued income taxes 3,001 4,145
Income tax refund received - 14,035
Other (2,482) (1,887)
Net cash provided by continuing operating 29,268 39,214
activities
Cash Flows From Investing Activities:
Additions to property, plant, and equipment (14,125) (9,911)
Net cash (spent by) discontinued operations (4,220) (1,905)
Net cash used in investing activities (18,345) (11,816)
Cash Flows From Financing Activities:
Treasury stock acquired (51,485) (15,804)
Issuance of treasury stock under stock 6,898 16,905
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 35,074 (35,147)
Repayment of long-term debt (56) (92)
Dividends Paid (6,967) (7,844)
Net cash used for financing activities (20,082) (50,007)
Effect of foreign exchange rates on cash
and short-term investments 1,561 2,475
Net decrease in cash and short-term (7,598) (20,134)
investments
Cash and short-term investments on January 1 30,236 40,642
Cash and short-term investments on June 30 $22,638 $20,508
Interest Paid $ 5,254 $ 4,343
Taxes Paid $14,931 $ 8,199
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.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,
common shares outstanding as of June 30, 1995 and all 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
$23,546 at June 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-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Consolidated net sales increased 21 percent in the second quarter of 1995
compared to the second quarter of 1994; led by a 43 percent increase in
worldwide sales to customers in the electronics / industrial market. Sales
to biotechnology / pharmaceutical customers increased 13 percent in the
second quarter of 1995 compared to the second 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 Six months Three months Six months
ended ended ended ended
6/30/95 6/30/95 6/30/95 6/30/95
Americas 12% 13% 10% 11%
Europe 6% 5% 19% 18%
Asia/Pacific 15% 16% 35% 33%
Consolidated 11% 11% 21% 20%
Electronics/Industrial 31% 37% 43% 48%
Pharmaceutical/Biotechnology 5% 4% 13% 11%
University/Government 1% (1%) 11% 8%
Medical/Health Care (14%) (13%) (5%) (6%)
Consolidated 11% 11% 21% 20%
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 10 percent in the second quarter of 1995 and 9
percent for the first six months of 1995.
Gross margins increased in the second quarter of 1995 to 59.6 percent of
sales as compared to 57.6 percent in the second 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 26 percent in the
second quarter of 1995 compared to the second quarter of 1994, an increase
consistent with sales growth. The Company continued to invest in sales and
marketing programs to support future sales growth, particularly in the
Asia/Pacific region. Research and development expenses in the second quarter
of 1995 were slightly higher than the second quarter of 1994, as the Company
continued to fund all major programs. Net interest expense in the second
quarter was higher in 1995 compared to 1994 primarily due to increased short-
term borrowings made during the first quarter of 1995. The Company's
effective income tax rate for the first six 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 second quarter of 1995, a loss of $804K was realized on the Company's
forward exchange contracts and was recorded in cost of sales. For the six
months ended June 30, 1995, losses of $1,274 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 $29.3 million of cash from continuing operations in the
first six months of 1995 compared to $39.2 million in the first six months
of 1994. Cash generated from operations and $35.0 million of additional
short-term borrowings in the first six 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 half of 1995 were
higher than in the first half of 1994. The Company expects second half 1995
capital expenditures to be in line with those of the first half.
During the first six months of 1995, the Company spent $51.5 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 has spent $29.5 million in share repurchases. The Company
expects that further 1995 share repurchases will be funded by cash generated
from its operations.
The Company generated approximately $3.7 million of net cash from
discontinued operations in the second quarter of 1995, principally due to
$10.0 million of proceeds related to the discontinued businesses. Cash spent
in the second quarter of 1995 to satisfy obligations arising from the
discontinued operations was lower than the first quarter of 1995 and in line
with the Company's expectations. The Company expects further quarterly 1995
cash expenditures related to its discontinued operations to be in line with
those of the second quarter.
-7-
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
a. The Annual Meeting of Stockholders of Millipore Corporation
was held on April 20, 1995.
c. There were three matters voted upon at the annual meeting:
the election of directors, the adoption of the Millipore
Corporation 1995 Employees' Stock Purchase Plan, the adoption of
the Millipore Corporation Management Incentive Plan. The following
votes were tabulated:
Election of Directors Number of Shares
For Withheld
Samuel C. Butler 19,231,340 64,848
Steven Muller 19,229,641 66,547
Adoption of Millipore Corporation 1995
Employees' Stock Purchase Plan Number of Shares
For 19,119,641
Withheld 130,869
Abstentions 45,679
Adoption of Millipore Corporation
Management Incentive Plan Number of Shares
For 18,329,309
Withheld 908,370
Abstentions 58,510
There were no broker "non-votes" recorded on any of the matters
voted on at the meeting. The shares listed in this item were not
adjusted to reflect the stock split discussed in Note 4 to the
Consolidated Financial Statements.
Item 6. Exhibits and Reports on Form 8-K.
b. Reports on Form 8-K - There were no reports on Form 8-K filed
for the quarter ended June 30, 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>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,073
<SECURITIES> 20,565
<RECEIVABLES> 153,645
<ALLOWANCES> 0
<INVENTORY> 83,925
<CURRENT-ASSETS> 279,999
<PP&E> 377,578
<DEPRECIATION> 181,257
<TOTAL-ASSETS> 568,245
<CURRENT-LIABILITIES> 186,357
<BONDS> 0
<COMMON> 56,988
0
0
<OTHER-SE> 162,783
<TOTAL-LIABILITY-AND-EQUITY> 568,245
<SALES> 291,935
<TOTAL-REVENUES> 291,935
<CGS> 119,288
<TOTAL-COSTS> 119,288
<OTHER-EXPENSES> 113,073
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,169
<INCOME-PRETAX> 55,128
<INCOME-TAX> 12,404
<INCOME-CONTINUING> 42,724
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,724
<EPS-PRIMARY> .94
<EPS-DILUTED> 0
</TABLE>
