-1-
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, 1995
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, 1996, the aggregate market value of the registrant's
voting stock held by non-affiliates of the registrant was approximately
$1,900,000,000 based on the closing price on that date on the New York Stock
Exchange.
As of March 8, 1996, 43,786,017 shares of the registrant's Common Stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Document Incorporated into Form 10K
1995 Annual Report to Shareholders Parts I and II
(pages 29-47 only)
Definitive Proxy Statement Part III
dated March 15, 1996
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 N
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, 1995 (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 and in 1995 the Company spent
an additional $142 million ($78 million in 1994 and $64 million in 1995) in
connection with its open market share repurchase program originally set at
the $100 million level and subsequently expanded to $150M. As a result, as
of December 31, 1995 there were 44,262,147 shares of the Company's Common
Stock outstanding. After giving effect to 2 for 1 stock split effected in
the second quarter of 1995, there were outstanding 46,266,434 shares on
December 31, 1994 and 56,006,160 shares on December 31, 1993.
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 1995, approximately 66% 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 N 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
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
to 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 to meet
specific needs of the customer.
Customers and Markets
The Company sells its products primarily to the following markets: to
pharmaceutical/biotechnology, microelectronics, chemical and food and
beverage companies for use in their manufacturing procedures; and to
government, university and private research and testing analytical
laboratories. 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. Chemical manufacturers and processors use the
Company's products for purification of reagent grade chemicals, for
monitoring the atmosphere and waste streams in the industrial workplace and
for the purification of water for laboratory use.
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.
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 30 major industrialized and developing countries as
well as through independent distributors in other parts of the world.
During 1995, the Company's marketing, sales and service forces consisted of
approximately 333 employees in the United States and 670 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.
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 1993, 1994 and
1995 with respect to continuing operations were, $34,952,000, $34,327,000
and $36,515,000 respectively.
The Company has traditionally licensed newly developed technology from
unaffiliated third parties and/or acquired distribution rights with respect
thereto, when it believes it is in its long term interests to do so. In
this tradition, in November of 1995 Millipore entered into an agreement with
IBC Advanced Technologies to combine their technologies to create a new
class of purification products which Millipore will take to its customers in
its markets. This technology places ligands (organic molecules) on
membranes in order to selectively bind with a target molecule in solution,
for example a calcium, iron or aluminum ion.
Competition
The Company faces intense competition in all of its markets. The
Company believes that its principal competitors include Pall Corporation,
Barnstead Thermolyne Corporation, Sartorius GmbH, and Gelman Sciences, 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.
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 Company believes that the divestiture
of its chromatography business along with that of its non-membrane
bioscience business has enabled Millipore to better serve its membrane
customers, 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 first quarter of 1993 the Company took a charge, with respect to
the restructuring of its Waters Chromatography Division, of $13,000,000.
Other Information
Since April of 1988, the Company has had in place a shareholder rights
plan (the "Rights Plan") pursuant to which it 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 $80 for each share (giving effect to the 1995 two for one
stock split). 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.
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.
Twenty-nine percent of Millipore's 1995 consolidated sales were to the
microelectronics manufacturing market, which has experienced historic
volatility, the effect of any such volatility in the future could
significantly affect Millipore's sales growth. Similarly, since a large
percent of the Company's sales are transacted in foreign currencies, any
significant strengthening of the U.S. Dollar will have a negative impact on
reported sales growth and to a lesser extent on results of operations.
Other specific factors which could adversely affect Millipore's results of
operations are: lower than expected sales volume which would reduce gross
margins; a substantial rise in interest rates; increased regulatory concerns
on the part of the biopharmaceutical industry, and the other concerns
described in Management's Discussion and Analysis contained on pages 29 to
31 of its 1995 Annual Report to Stockholders which is incorporated herein by
reference.
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, 1995, Millipore employed 3,338 persons worldwide, of
whom 1,428 were employed in the United States and 1,910 overseas.
Executive Officers of Millipore
There follows a listing as of March 1, 1996 of the Executive Officers
of Millipore. All of the following individuals were elected to serve until
the Directors Meeting next following the 1996 Annual Stockholders Meeting.
First Elected:
To
An Present
Name Age Office Officer Office
John A. Gilmartin* 53 Chairman of the Board 1980 1986
President and Chief (Chairman
Executive Officer of in 1987)
the Corporation
Geoffrey Nunes 65 Senior Vice President 1976 1980
General Counsel
Glenda K. Burkhart** 44 Vice President 1993 1993
of the Corporation
Michael P. Carroll 45 Vice President of the Corporation
Chief Financial Officer and
Treasurer 1992 1992
Douglas B. Jacoby 49 Vice President 1989 1989
of the Corporation
John E. Lary 49 Vice President 1994 1994
of the Corporation
Hideo Takahashi 54 Vice President of 1996 1979
the Corporation and (As President
President of Nihon of Nihon
Millipore Millipore)
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 (1986-1989), and a consultant for Bain and Co., a strategy consulting
firm (1984-1986).
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.
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. In
1987, Mr. Jacoby assumed responsibility for the Company's process membrane
business and in 1994 assumed responsibility for the sales, marketing and R&D
for all of the Company's worldwide 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.
Mr. Takahashi joined Millipore in 1979 as President and Chief Executive
Officer of its Japanese subsidiary, Nihon Millipore Ltd. Mr. Takahashi was
elected as a Vice President of the Company on February 8, 1996.
___________________________
* On February 20, 1996, Mr. Gilmartin announced his resignation as
President, Chief Executive Officer and Chairman of the Board of
Millipore effective March 31, 1996. It is expected Mr. Gilmartin will
resign as a Director on April 30, 1996. Also on February 20, 1996, C.
William Zadel was elected to succeed Mr. Gilmartin as President, Chief
Executive Officer and Chairman. Mr. Zadel had been, since 1986,
President and Chief Executive Officer of CIBA-Corning Diagnostics Corp.
** On March 13, 1996 Ms. Burkhart announced her resignation as Vice
President of the Corporation to take effect in the latter part of April.
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 houses the Company's Process System Business (part of the
Pharmaceutical/
Biotechnology Manufacturing Group), as well as the customer training
laboratories for this 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 $4,883,000 in 1995. No single lease, in the opinion of
Millipore, is material to its operations.
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 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.
The Company and Waters Corporation are engaged in an arbitration
proceeding and a related litigation in the Superior Court, Middlesex,
Massachusetts, both of which commenced in the second quarter of 1995
with respect to the amount of assets required to be transferred by the
Company's Retirement Plan in connection with the Company's divestiture
of its former Chromatography Division. 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.
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.
The information called for by this item is set forth under the caption
"Millipore Stock Prices" on page 47 of Millipore's Annual Report to
Shareholders for the year ended December 31, 1995, 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 44 and 45
of Millipore's Annual Report to Shareholders for the year ended December 31,
1995, which information is hereby incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information called for by this item is set forth under the caption
"Management's Discussion and Analysis" on pages 29 to 31 of Millipore's
Annual Report to Shareholders for the year ended
December 31, 1995, 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 32 to 43
and under the caption "Quarterly Results (Unaudited)" on page 46 of
Millipore's Annual Report to Shareholders for the year ended December 31,
1995, 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 - 7 of
Millipore's definitive Proxy Statement, dated March 15, 1996, for
Millipore's Annual Meeting of Stockholders to be held on April 18, 1996,
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 13 -
16 of Millipore's definitive Proxy Statement, dated March 15, 1996, for
Millipore's Annual Meeting of Stockholders to be held on April 18, 1996,
which information is hereby incorporated herein by reference.
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 19 of Millipore's definitive
Proxy Statement, dated March 15, 1996, for Millipore's Annual Meeting of
Stockholders to be held
April 18, 1996, 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 -
9 and 15 - 18 of Millipore's definitive Proxy Statement, dated March 15,
1996, for Millipore's Annual Meeting of Stockholders to be held on April 18,
1996, 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 32 through 43, the Report
of Independent Accountants on page 43 and the Quarterly Results (Unaudited)
set forth on page 46 of Millipore's Annual Report to Shareholders for the
year ended December 31, 1995, 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, and 33-
58117 on Form S-4.
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 29 through 47 of
Millipore's Annual Report to Shareholders for the year ended December 31,
1995; 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:
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.
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 may be 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)*
1995 Employee Stock Purchase Form 10-K Report for the year
Plan ended December 31, 1994.
1995 Management Incentive Form 10-K Report for the year
Plan* ended December 31, 1994.
B. The following Exhibits are filed herewith:
(11) Computation of Per Share Earnings
(13) Annual Report to Shareholders, December 31, 1995
(21) Subsidiaries of Millipore
(23) Consents of Experts (see page 19 hereto)
(24) Power of Attorney
* A "management contract or compensatory plan"
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: March21, 1996
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 8, 1996
John A. Gilmartin Chief Executive Officer,
and Director
/s/Michael P. Carroll
Vice President February 8, 1996
Michael P. Carroll Chief Financial Officer
Treasurer
CHARLES D. BAKER* Director February 8, 1996
Charles D. Baker
SAMUEL C. BUTLER Director February 8, 1996
Samuel C. Butler
MAUREEN A. HENDRICKS* Director February 8, 1996
Maureen A. Hendricks
MARK HOFFMAN* Director February 8, 1996
Mark Hoffman
GERALD D. LAUBACH* Director February 8, 1996
Gerald D. Laubach
STEVEN MULLER* Director February 8, 1996
Steven Muller
THOMAS O. PYLE* Director February 8, 1996
Thomas O. Pyle
JOHN F. RENO* Director February 8, 1996
John F. Reno
*By /s/Geoffrey Nunes
Attorney-in-Fact
Geoffrey Nunes
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), on Form S-3
(File Nos. 2-84252, 33-9706, 33-22196, 33-20792, 33-47213) and on Form S-
4 (File No. 33-58117) of our report dated January 23, 1996 on our audits
of the consolidated financial statements of Millipore Corporation as of
December 31, 1995 and 1994, and for the years ended December 31, 1995,
1994, and 1993, which report is incorporated by reference in this Annual
Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 21, 1996
- --------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT
OF
MILLIPORE CORPORATION
For the Fiscal Year Ended December 31, 1995
****************
EXHIBITS
****************
- ----------------------------------------------------------------
INDEX TO EXHIBITS
Exhibit No. Description Tab No.
(11) Computation of Per Share Earnings 1
(13) Annual Report to Shareholders,
December 31, 1995 2
(21) Subsidiaries of Millipore 3
(23) Consents of Experts
(see page 19 hereto)
(24) Power of Attorney 4
Millipore Corporation
Exhibit 11
Computation of Earnings Per Share
(In Thousands Except Per Share Data)
Years Ended December 31,
Calculation of shares: 1995 1994 1993
Weighted average of shares
outstanding during the year 44,985 (b) 54,726 (b) 55,902 (b)
Shares outstanding from
assumed exercise of stock 2,995 4,056 1,940
option
(Treasury Method) (1,737) (2,856) (1,746)
(NQ tax benefit) (465) (438) (22)
Weighted average shares and
common stock equivalents
outstanding during the year 45,778 (a) 55,488 (a) 56,074 (a)
Additional shares assumed
exercised with full 0 0 0
dilution
Weighted average of shares
used in calculation of
fully
diluted earnings per share 45,778(a) 55,488(a) 56,074(a)
Net Income $ 85,354 $ 56,209 $34,603
Earnings per common share as
reported in the
Consolidated
Financial Statements $ 1.90 $ 1.03 $ 0.62
Primary earnings per common $ 1.86 $ 1.01 $ 0.62(a)
share (a) (a)
Net fully diluted earnings
per common share $ 1.86 $ 1.01 $ 0.62
(a) (a) (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 1995,
1994, and 1993 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. Those divisions, which represented separate
product lines with separate customers, have been accounted for as
discontinued operations. The Company sold those 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 20 percent in 1995 to $594
million. Sales growth rates by geography and market, measured in
local currencies and U.S. dollars, are summarized in the table
below:
Sales growth Sales growth
rates rates
measured in measured in
local currencies U.S. dollars
1995 1994 1993 1995 1994 1993
Americas 15% 8% 6% 13% 8% 6%
Europe 10% 6% 4% 20% 7% (7%)
Asia/Pacific 18% 16% 10% 27% 21% 18%
Consolidated 15% 10% 6% 20% 12% 4%
Microelectronics Mfg 43% 33% 10% 50% 39% 16%
BioPharmaceutical Mfg 9% 4% 11% 14% 6% 8%
Analytical Laboratory 3% 4% 3% 8% 6% 0%
Consolidated 15% 10% 6% 20% 12% 4%
Sales to the microelectronics manufacturing market grew at higher
rates than the Company's other markets in every geography in 1995
and 1994. Sales to microelectronics manufacturing customers in
1995 accounted for 29 percent of consolidated sales. The
Company's growth rates in this market in 1995 and 1994 were
similar to growth rates achieved by the semiconductor industry in
general and reflect the significant worldwide expansion of the
microelectronics manufacturing industry over the past few years.
Sales to the biopharmaceutical manufacturing market grew faster
in 1995 compared to 1994, with stronger sales to pharmaceutical
customers in Europe and beverage manufacturing customers in
Japan. Sales to the biopharmaceutical market in the Americas
continued to grow more slowly in 1995 than in the other
geographies, reflecting continued cautious spending by
pharmaceutical customers. Sales to biopharmaceutical customers
in 1995 accounted for 29 percent of consolidated sales.
Sales to the analytical laboratory market continued to grow at
lower rates than the Company's other markets in 1995. Within
this market, sales of the Company's laboratory water products
grew across all geographies, with the strongest growth in the
Americas and Europe. Sales to analytical laboratory customers in
1995 accounted for 42 percent of consolidated sales.
<PAGE>
The effect of foreign exchange rates on sales, specifically the
strengthening of the Japanese yen and french franc against the
U.S. dollar, increased reported sales growth by 5 percent in
1995, compared to a 2 percent increase in 1994 and a 2 percent
decrease in 1993. Approximately 66 percent, 64 percent and 62
percent of the Company's revenues in 1995, 1994 and 1993
respectively, were generated in foreign currencies. The
significant volume of business transacted in foreign currencies
exposes the Company to risks associated with currency rate
fluctuations which impact the Company's revenue and net income.
To partially mitigate this risk, the Company has entered into
foreign currency transactions, primarily forward 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. Though a weaker dollar will benefit, and a strong
dollar will adversely affect future reported sales growth, the
Company is unable to predict future currency fluctuations and to
quantify their effect on net income.
Price changes and inflation have not significantly affected the
comparability of sales during the past three years.
Gross Margins were 59.0 percent in 1995, 57.2 percent in 1994,
and 56.5 percent in 1993. The improvement in gross margins in
1995 compared to 1994 and 1994 compared to 1993 resulted from
significantly increased production volume in the Company's
microelectronics manufacturing 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 17 percent in
1995, 8 percent in 1994 and 6 percent in 1993. The Company
continued to invest in sales and marketing programs, particularly
within the microelectronics manufacturing and analytical
laboratory markets, to support future sales growth. G & A
expenses grew at a significantly lower rate than selling expenses
in 1995.
Research and Development Expenses increased by 6 percent in 1995
compared to 1994, principally due to investments in the
development of new and enhanced products in the microelectronics
manufacturing markets. The percentage increase in R & D spending
in 1995 was lower than the percentage increase in S, G & A as the
Company directed substantial resources into sales and marketing
initiatives designed to further enhance sales growth. The
Company continued to fund all major programs in 1995.
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.
Net Interest Expense in 1995 was significantly higher than in
1994 primarily due to the fact that net interest expense in 1994
benefited from the substantial net proceeds received from the
divested businesses. In addition, the Company increased short-
term borrowings by $25 million in 1995 to partially fund the
Company's stock repurchase program. Short-term interest rates in
1995 were slightly higher than in 1994.
The Provision for Income Taxes was 22.5 percent of pre-tax income
in 1995, the same effective rate as in 1994 and 1993. The
Company continues to benefit from low tax rates in Puerto Rico
and Ireland and tax incentives attributable to its U.S. export
operations.
The Net Loss on Disposal of Discontinued Operations reflects the
after-tax loss of disposing of the Company's Instrumentation
Divisions, the sale of which was concluded in the third quarter
of 1994.
Extraordinary Loss on Early Extinguishment of Debt reflects the
after-tax cost recorded by the Company in 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 a new $100
million note bearing interest at 6.78 percent.
<PAGE>
Earnings Per Share in 1994 and 1993 include certain non-recurring
charges. Earnings per share from continuing operations adjusted
for these charges are summarized as follows:
1995 1994 1993
Earnings from continuing operations after $1.90 $1.09 $0.81
charges
Charges - 0.15 0.07
Earnings from continuing operations before $1.90 $1.24 $0.88
charges
The charge in 1994 resulted from the settlement of litigation
relating to the Company's sale of the Process Water Division in
1989. The charge in 1993 resulted from the early extinguishment
of the Company's long-term debt.
Legal Proceedings
Significant amounts have been paid in prior years in connection
with environmental claims against all participants at hazardous
waste ("Superfund") sites in which the Company was named a
potentially responsible party by the Environmental Protection
Agency. Prior to 1995, the Company had paid $14 million to
settle claims at such sites. Due to the fact that Superfund
sites at which the Company was named a potentially responsible
party are in the late stages of remedy and a significant portion
of the remedy cost has already been funded, the Company believes
that its probable future financial obligation at December 31,
1995 will not materially impact its future operating results and
liquidity. Amounts paid by the Company in 1995 with respect to
the Superfund obligations were insignificant.
Capital Resources and Liquidity
In 1995, the Company generated $99 million of cash from operating
activities, compared to $89 million in 1994 and $74 million in
1993. Net cash provided by operating activities continues to be
the Company's primary source of funding capital expenditures and
dividends. The increase in net cash from operating activities in
1995 compared to 1994 was primarily due to increased net income
and improved working capital management, as both accounts
receivable and inventories grew at significantly lower rates than
sales. In addition, net cash flow from operating activities in
1994 benefited from a $14 million income tax refund.
Capital expenditures were higher in 1995 compared to 1994,
primarily due to increased tooling requirements in the Company's
manufacturing facilities and continued investment in information
technology systems. The Company expects capital expenditures and
depreciation expense in 1996 to be higher than capital spending
and depreciation expense in 1995. At December 31, 1995, the
Company had no significant commitments for capital expenditures.
In 1995, the Company paid $3.5 million to close out the Company's
German deutsche mark swap. In 1994, the Company paid a total of
$15.4 million in 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.
<PAGE>
In 1995 and 1994, the Company used the $258 million of net
proceeds from the sale of its Waters Chromatography and
Bioscience divisions, along with cash generated from its
continuing business, to purchases shares of its outstanding
common stock. The Company spent $293 million, net of stock
option exercise amounts, 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. The Company originally allocated
$100.0 million for the open market share repurchase program and
spent $78 million in the fourth quarter of 1994. In early 1995,
the Company announced plans to spend an additional $50 million on
open market share repurchases. The Company spent $64 million on
open market repurchases in 1995.
The net cash outflow of $7 million to settle discontinued
operations activities in 1995 was in line with the Company's
expectations. Spending of $27 million to settle costs associated
with the divestitures was offset by proceeds of $20 million
related to the divestitures. Included in the proceeds was a $10
million income tax refund applicable to discontinued operations
which caused the Company's other assets to decrease in 1995 as
compared to 1994. The Company believes that the net cash it will
spend with respect to the divestitures in 1996 will approximate
the $7 million spent in 1995.
The Company has $23.8 million of cash and short-term investments
on hand at the end of 1995, 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
1995 from $0.075 to $0.08 per share. Dividends paid in 1995 were
$14.1 million.
Business Outlook and Uncertainties
The following statements are based on current expectations.
These statements are forward looking and actual results may
differ materially.
Sales - As previously noted, 1995 sales to the microelectronics
manufacturing market accounted for 29 percent of 1995
consolidated sales and represented the fastest growing market in
which the Company participates. Sales growth into this
market in the past has been volatile, due to general cyclicality
historically exhibited by this market. This industry's predictions
for sales growth in 1996 are 15 to 20 percent lower than the growth
experienced in 1995 by the Company. As this market has become
a more significant component of the Company's consolidated sales,
the effects of future industry volatility could significantly
impact the Company's consolidated sales growth.
A large percentage of the Company's sales are transacted in
foreign currencies. Late in 1995, the U.S. dollar began to
strengthen against the Japanese yen and French franc. If foreign
exchange rates remain at March 1, 1996 levels, the effect of
foreign exchange will reduce first quarter 1996 and full-year
1996 reported sales growth by 4 percent compared to 1995. Any
change in foreign exchange rates will be reflected in the results
of operations.
Gross Margins - The Company expects gross margin percentages to
improve slightly in 1996 compared to 1995 due to increased volume
in the Company's manufacturing plants in support of expected
sales growth. Lower than expected sales growth will negatively
impact the Company's ability to improve gross margins. The
Company anticipates no significant changes in pricing products.
Operating Expenses - Operating expenses in total in 1996 are
expected to increase at a rate consistent or slightly lower than
sales growth. However, the Company expects the rate of growth in
S, G & A expenses to be lower in 1996 compared to 1995.
Conversely, the Company expects the rate of growth in R & D
expenses to be higher in 1996 compared to 1995.
Interest Expense - The Company expects net interest expense in
1996 will approximate net interest expense in 1995, assuming no
significant change in prevailing interest rates and no additional
<PAGE>
borrowings. The Company anticipates that 1996 borrowings will
fluctuate on a quarterly basis but anticipates no significant
increase in borrowings on a full-year basis.
Provision for Income Taxes - The effective tax rate in 1996 is
projected to be 23.5 percent, up from 22.5 percent in 1995. The
tax rate estimate is based on current tax law and is subject to
change.
Capital Spending - The Company expects to spend more on fixed
asset additions in 1996 compared to 1995. The Company does not
believe it needs to significantly expand or add manufacturing
capacity in 1996 to handle its anticipated 1996 sales growth.
However, the Company will invest in tooling within its
manufacturing plants as required. The Company will continue to
evaluate the adequacy of its worldwide sales and administration
offices in response to sales growth and may invest in additional
facilities as required. The Company also expects that 1996
depreciation expense will be higher than 1995 depreciation
expense.
Working Capital Management - Consistent with 1995, the Company
expects to continue to leverage its assets as accounts
receivable, inventories, and net property, plant and equipment
are expected to grow at a rate lower than sales growth. In
addition, the Company anticipates that its current tax strategies
will result in a decrease in deferred income tax assets in 1996,
although the exact decrease is not known at this time.
Stock Repurchases -In early 1996, the Company announced plans to
spend an additional $50 million on open market share repurchases.
The funds required for additional share repurchases are expected
to be generated by the Company's ongoing operations.
All the above forward-looking statements involve a number of
risks and uncertainties, the principal one as set forth is the
continued strong momentum worldwide of the microelectronics
manufacturing market. This, of course, is equally true of the
worldwide economy in general. Other specific factors that could
cause actual results to differ materially are: changes in foreign
exchange rates; increased regulatory concerns on the part of the
biopharmaceutical industry; further consolidation of drug
manufacturers; competitive factors such as new membrane
technology, and/or a new method of chip manufacture which relies
less heavily on purified chemicals and gases; availability of
component products on a timely basis; inventory risks due to
shift in market demand; change in product mix; and the risk
factors listed from time to time in the Company's SEC reports
including but not limited to the Company's Prospectus dated May
3, 1995 contained in its S-4 Filing #33-58117.
<PAGE>
Consolidated Statements of Income
Millipore Corporation
Year ended December 31
(In thousands except per share data) 1995 1994 1993
Net sales $594,466 $497,252 $445,366
Cost of sales 243,849 212,675 193,575
Gross profit 350,617 284,577 251,791
Selling, general and 195,026 159,591 145,647
administrative expenses
Research and development expenses 36,515 34,327 34,952
Operating income 119,076 90,659 71,192
Other expense - (10,800) -
Interest income 1,682 4,091 4,069
Interest expense (10,623) (7,035) (12,038)
Income from continuing
operations before income taxes 110,135 76,915 63,223
Provision for income taxes 24,781 17,306 14,225
Income from continuing operations
before extraordinary item 85,354 59,609 48,998
Loss from discontinued operations - - (10,851)
Net loss on disposal of - (3,400) -
discontinued operations
Income before extraordinary item 85,354 56,209 38,147
Extraordinary item - loss on
early extinguishment of debt - - (3,544)
Net income $85,354 $56,209 $34,603
Income per share
Income from continuing operations $1.90 $1.09 $0.88
Net income per common share $1.90 $1.03 $0.62
Weighted average common 44,985 54,726 55,902
shares outstanding
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
Consolidated Balance Sheets
Millipore Corporation
December 31
(In thousands) 1995 1994
Assets
Current assets:
Cash $2,696 $2,898
Short-term investments 21,062 27,338
Accounts receivable (less allowance for
doubtful accounts of $2,054 in 1995 and
$4,968 in 1994) 147,759 136,944
Inventories 80,386 71,209
Other current assets 5,260 5,351
Receivables arising from sale of 4,596 15,064
businesses
Total current assets 261,759 258,804
Property, plant and equipment, net 191,250 187,525
Intangible assets (less accumulated
amortization of $2,506 in 1995 and $1,597 7,219 5,177
in 1994)
Deferred income taxes 53,179 58,123
Other assets 17,538 27,351
Total assets $530,945 $536,980
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 80,768 $ 56,116
Accounts payable 33,436 30,510
Accrued expenses 32,366 33,523
Accrued divestiture costs 6,543 16,470
Dividends payable 3,537 3,500
Accrued retirement plan contributions 6,588 5,987
Accrued and deferred income taxes 9,926 12,049
payable
Total current liabilities 173,164 158,155
Long-term debt 105,272 109,327
Other liabilities 21,034 19,221
Accrued divestiture costs 5,000 29,000
Commitments and contingent liabilities - -
Shareholders' equity:
Common stock, par value $1.00 per share,
80,000 shares authorized; 56,988 and
28,494 shares issued as of December 31, 56,988 28,494
1995 and 1994, respectively
Additional paid-in capital - 23,603
Retained earnings 523,633 458,579
Translation adjustments 375 5,147
580,996 515,823
Less: Treasury stock at cost, 12,727 and
5,361 shares as of December 31, 1995 and
1994, respectively (354,521) (294,546)
Total shareholders' equity 226,475 221,277
Total liabilities and shareholders' equity $530,945 536,980
The accompanying notes are an integral part of the consolidated
financial statements.
<PAGE>
Consolidated Statements of Shareholders' Equity
Millipore Corporation
Year ended December 31, 1993, 1994 and 1995
(In thousands except per share data)
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Additional Total
Common Stock Paid-in Retained Translation Treasury Stock Shareholders'
Shares Par Value Capital Earnings Adjustments Shares Cost Equity
Balance January 1, 1993 28,344 $28,344 $16,524 $416,563 $4,028 (370) $(12,624) $452,835
Net income 34,603 34,603
Cash dividends declared, (15,396) (15,396)
$0.275 per share
Treasury stock acquired (112) (3,427) (3,427)
Stock options exercised (899) 104 3,468 2,569
Employees' stock purchase (32) 10 353 321
plan proceeds
Incentive plan awards 161 22 721 882
Stock awards (12) 5 152 140
U.S. tax benefit from 279 279
stock plan activity
Translation adjustments (11,652) (11,652)
Balance at December 31, 28,344 $28,344 $16,803 $434,988 $(7,624) (341) $(11,357) $461,154
1993
Net income 56,209 56,209
Cash dividends declared, (15,381) (15,381)
$0.295 per share
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 49 49 2,352 (1,712) 47 2,120 2,809
plan proceeds
Incentive plan awards (54) 8 431 377
Stock awards 8 1 64 72
Translation adjustments 12,771 12,771
Balance at December 31, 28,494 $28,494 $23,603 $458,579 $5,147 (5,361) $(294,546) $221,277
1994
Net income 85,354 85,354
Effect of two-for-one 28,494 28,494 (23,603) (4,891) (5,361) -
stock split
Cash dividends declared, (14,071) (14,071)
$0.315 per share
Treasury stock acquired (2,962) (90,113) (90,113)
Stock options exercised (1,553) 895 28,366 26,813
Employees' stock purchase (4) 33 905 901
plan proceeds
Savings and Participation 86 14 456 542
Plan proceeds
Incentive plan awards 124 13 354 478
Stock awards 9 2 57 66
Translation adjustments (4,772) (4,772)
Balance at December 31, 56,988 $56,988 $0 $523,633 $375 (12,727) $(354,521) $226,475
1995
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Consolidated Statements of Cash Flows
Millipore Corporation
Year ended December 31
(In thousands) 1995 1994 1993
Cash Flows from Operating Activities:
Net income $85,354 $56,209 $34,603
Adjustments to reconcile net income
to net cash provided by operating activities
Net loss from discontinued operations - - 10,851
Net loss on disposal of - 3,400 -
discontinued operations
Depreciation and amortization 27,478 27,604 23,775
Deferred income tax provision 1,372 (2,227) (1,745)
Extraordinary item-loss - - 3,544
on extinguishment of debt
Change in operating assets and liabilities:
(Increase) in accounts (10,548) (14,672) (5,440)
receivable
(Increase) decrease in (7,218) (1,894) 6,398
inventories
Decrease in other current assets 409 1,427 763
(Increase) in other assets (8,209) (695) (1,181)
Increase in accounts payable
and accrued expense 5,931 2,876 3,740
Increase (decrease) in accrued
retirement plan contributions 543 (269) (104)
Increase (decrease) in accrued 6,475 6,123 (1,002)
income taxes
Income tax refund received - 14,035 -
Other (2,438) (3,334) 53
Net cash provided by 99,149 88,583 74,255
operating activities
Cash Flows from Investing Activities:
Net proceeds from sales of businesses - 257,899 -
Additions to property, plant and (30,010) (21,009) (24,469)
equipment, net
Additions to intangible assets (2,135) (2,718) (800)
Net cash used by discontinued businesses (6,967) - (649)
Net cash provided by (used in) (39,112) 234,172 (25,918)
investing activities
Cash Flows from Financing Activities:
Treasury stock acquired (90,113) (334,702) (3,427)
Issuance of treasury stock under 16,937 33,876 3,912
stock plans
Cash paid to extinguish long-term debt - (5,088) -
Common stock issued - 7,350 -
Cash paid to close out foreign (3,546) (10,287) -
currency swap
Net change in short-term debt 25,795 (9,539) (59,887)
Net change in long-term debt - (1,820) (1,222)
Dividends paid (14,117) (15,802) (15,108)
Net cash used for financing activities (65,044) (336,012) (75,732)
Effect of foreign exchange rates on
cash and short-term investments (1,471) 2,851 (2,414)
Net decrease in cash and short-term (6,478) (10,406) (29,809)
investments
Cash and short-term investments on 30,236 40,642 70,451
January 1
Cash and short-term investments on $23,758 $30,236 $40,642
December 31
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
Notes to Consolidated Financial Statements (In thousands except
share and 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. The aggregate
transaction gains and losses included in the consolidated
statements of income are not material. 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.
Short-term Investments
Short-term investments consisting primarily of certificates of
deposit, are classified as available for sale and are carried at
cost plus accrued interest, which approximates market value. All
short-term investments have original maturities of three months
or less and are considered cash equivalents for purposes of the
consolidated statements of cash flows.
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.
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
Intangible Assets
Intangible assets consist primarily of goodwill and licenses and
are recorded at cost. Intangible assets are amortized on a
straight line basis over periods ranging from 7 to 20 years.
<PAGE>
Income Taxes
Deferred tax assets and liabilities reflect the net tax effects
of temporary differences between the carrying amounts of assets
and liabilities for financial statement purposes and the amounts
used for income tax purposes. With respect to the unremitted
earnings of the Company's foreign and Puerto Rican subsidiaries,
deferred taxes are only provided on amounts expected to be
repatriated.
Stock Options
Stock options are accounted for in accordance with APB 25,
"Accounting for Stock Issued to Employees." Accordingly, no
compensation cost has been recorded in connection with stock
option grants under the Company's fixed stock option plans.
During 1995, the Financial Accounting Standards Board issued SFAS
123, "Accounting for Stock-Based Compensation." SFAS 123 defines
a fair-value method of accounting for employee stock option or
similar equity instruments and encourages companies to adopt that
method of accounting beginning in 1996. However, SFAS 123 also
allows companies to continue to use the intrinsic value method of
accounting prescribed by APB Opinion 25. The Company expects to
continue to account for stock options in accordance with APB 25,
but beginning in 1996 will also make pro-forma disclosures of net
income and earnings per share as if the fair-value-based method
of accounting defined in SFAS 123 had been applied.
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 cost over the proceeds of reissued treasury stock 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.
Revenue Recognition
Sales of products and services are recorded at the time of
product shipment or performance of services.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to prior years'
financial statements to conform with the 1995 presentation.
Note B - Stock Split
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 28,494,000 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, all weighted average share and per share amounts, as
well as stock plan data, have been restated to reflect the stock
split. For purposes of presentation in the Consolidated
Statements of Shareholders' Equity, the stock split has been
accounted for as if it occurred on January 1, 1995.
<PAGE>
Note C - 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 were reclassified as discontinued
operations in the accompanying consolidated financial statements.
The operating results of these businesses after November 11, 1993
were deferred until the divestitures were completed. The results
of the discontinued operations included in the accompanying
statements of income are summarized as follows:
January 1, 1993 through
November 11, 1993
Net sales $279,303
Pre-tax loss $(14,001)
Credit for income taxes (3,150)
Net loss $(10,851)
Loss per share $ (0.19)
In 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.
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 each. The stock proceeds received from each sale have been
recorded at their estimated 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 $0.06
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.
In August, 1995, the Company received 912,000 shares of
PerSeptive Biosystems' common stock in connection with
PerSeptive's preferred stock redemption requirement. These
shares have been recorded at historical cost. Any realized gain
on the sale of these shares will be recognized when the shares
are sold.
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. During 1995, the Company charged $14,000 of
employee costs, $4,700 of facilities costs, $6,200 of contract
support services and $9,000 of other costs against divestiture
accruals. The Company periodically assesses the adequacy of the
divestiture accruals, and the remaining accrual balances at
December 31, 1995 are expected to be sufficient to satisfy the
Company's future obligations with respect to discontinued
operations. 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.
In accordance with each respective sales agreement, the Company
retained and is collecting certain customer accounts receivable
balances generated from sales of Instrumentation Division
products prior to and subsequent to the completion of the
divestitures. These amounts have been classified in Receivables
arising from sales of businesses in the accompanying consolidated
balance sheets.
<PAGE>
Note D - Inventories
Inventories at December 31 consisted of the following:
1995 1994
Raw materials $ 21,357 $ 19,895
Work in process 9,621 8,992
Finished goods 49,408 42,322
$ 80,386 $ 71,209
The value of inventories determined using the LIFO cost method
was $43,101 or 54 percent of the total at December 31, 1995 and
$45,473 or 64 percent of the total at December 31, 1994. If
these inventories had been valued using the FIFO cost method,
they would have been $45,608 at December 31, 1995 and $46,776 at
December 31, 1994.
Note E - Property, Plant and Equipment
Property, plant and equipment at December 31 consisted of the
following:
1995 1994
Land $ 7,419 $ 7,445
Leasehold improvements 9,214 9,054
Buildings and improvements 117,932 113,359
Production and other equipment 217,443 206,261
Construction in progress 21,932 16,442
373,940 352,561
Less: accumulated depreciation and 182,690 165,036
amortization
$191,250 $ 187,525
Note F - Notes Payable
Short-term borrowings and related lines of credit at December 31
are summarized as follows:
1995 1994
Notes payable $ 80,768 $ 56,116
Unused lines of credit $ 251,749 $ 174,409
Average amount outstanding at $ 91,338 $ 46,340
month-end during the year
Maximum amount outstanding at $116,721 $ 74,672
month-end during the year
Weighted average interest rate 6.2% 4.2%
during the year
Weighted average interest rate at 6.1% 5.5%
year-end
Notes payable generally consist of renewable, uncollateralized
borrowings under lines of credit that are denominated in various
currencies and bear interest at prevailing rates.
<PAGE>
Note G - Long-term Debt
Long-term debt at December 31 consisted of the following:
1995 1994
Notes payable due in 2004 $100,000 $100,000
Unrealized loss on revaluation of 5,272 9,327
yen-denominated debt
Long-term debt $105,272 $109,327
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
$0.07 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. The 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
acquisition of certain assets of $929 in 1995, $890 in 1994, and
$1,301 in 1993. Interest paid on short-term and long-term debt
during 1995, 1994, and 1993 amounted to $11,481, $8,946, and
$13,356, respectively.
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. In March, 1995, the Company paid
$3,546 in cash to close out the DM swap. This cash payment
represented the cumulative effect of the foreign currency rate
fluctuations over the life of the swap. The Company's foreign
currency obligations had effective weighted average interest
rates of 5.39 and 5.18 percent in 1995 and 1994, respectively.
The effects of foreign currency exchange rate fluctuations
resulting from these swap agreements are included in translation
adjustments and in transaction gains/losses.
Note H - Foreign Exchange
The Company has entered into forward exchange contracts to reduce
the impact of foreign currency fluctuations on certain
transactions. Gains or losses on these contracts are recorded
when the operating revenues and expenses related to the
underlying transactions are recognized. Realized losses of
$2,287 in 1995, $960 in 1994 and a gain of $2,300 in 1993 are
included in cost of sales. Contracts open at December 31, 1995,
aggregating $30,000, have an unrealized gain of $2,678. All open
contracts have maturities which do not exceed fifteen months.
<PAGE>
Note I - Income Taxes
Income taxes on both continuing and discontinued operations have
been provided in accordance with the provisions of SFAS #109.
The Company's provisions for income taxes are summarized as
follows:
1995 1994 1993
Domestic and foreign
income before income taxes:
Domestic $51,933 $23,042 $16,690
Foreign 58,202 48,206 32,532
110,135 71,248 49,222
Less: Loss from - - 14,001
discontinued operations
Loss on disposal - 5,667 -
of discontinued operations
Income from continuing $110,135 $76,915 $63,223
operations before income taxes
Domestic and foreign
provisions for income taxes:
Domestic $9,039 $(1,894) $(2,781)
Foreign 14,642 16,433 13,356
State 1,100 500 500
24,781 15,039 11,075
Less: portion applied to - 2,267 3,150
discontinued operations
$24,781 $17,306 $14,225
Current and deferred
provisions for income taxes:
Current $23,409 $28,800 $12,820
Deferred 1,372 (13,761) (1,745)
$24,781 $15,039 $11,075
A summary of the differences between the Company's consolidated
effective tax rate and the United States statutory federal income
tax rate is as follows:
1995 1994 1993
U.S. statutory income tax rate 35.0% 35.0% 35.0%
Puerto Rico tax rate benefits (4.8) (6.0) (11.9)
Ireland tax rate benefits (5.2) (4.0) (1.1)
Excess foreign over U.S. tax rate - - 5.6
(including unremitted earnings)
State income tax, net of federal .7 .5 .7
income tax benefit
Foreign Sales Corporation income not (2.0) (3.0) (4.6)
taxed
Tax credits (1.2) - -
Other - - (1.2)
Effective tax rate applicable to 22.5% 22.5% 22.5%
operations
Tax exemptions relating to Puerto Rico and Ireland operations are
effective through 2004 and 2010, respectively. Income taxes paid
(net of refunds) during 1995, 1994, and 1993 were $9,999,
$25,296, and $15,185, respectively.
The Company has not recorded deferred income taxes applicable to
undistributed earnings of foreign subsidiaries that are
indefinitely reinvested in foreign operations. These earnings
amounted to approximately $48,000 at December 31, 1995. If
earnings of such foreign subsidiaries were not indefinitely
reinvested, a deferred tax liability of approximately $12,000
would have been required.
At December 31, 1995, the Company has foreign tax credit
carryforwards of approximately $13,000 that expire in the years
1996 through 1999. General business credit carryforwards of
approximately $6,500 expire in the years 2002 through 2011. In
addition, the Company has alternative minimum tax credit
carryforwards of approximately $7,800 which can be carried
forward indefinitely.
<PAGE>
Significant components of the Company's net deferred tax assets
are as follows:
1995 1994
Intercompany and inventory related $13,943 $6,861
transactions
Postretirement benefits other than 3,421 3,271
pensions
Tax credits (including foreign tax
credits on unremitted earnings) 43,370 33,056
Divestiture related costs 7,435 30,850
Other, net 1,645 3,475
69,814 77,513
Valuation allowance (16,635) (19,390)
Net deferred tax asset $ 53,179 $ 58,123
The valuation allowance is provided primarily against foreign tax
credit carryforwards and foreign tax credits on unremitted
earnings which can be utilized against future taxable income in
the United States. The change in the valuation allowance for the
year results from the writedown of certain deferred tax assets
for which the valuation allowance had been previously
established. These attributes are no longer available to the
Company due to a change in business form of one of its foreign
entities. Although realization is not assured, management
believes it is more likely than not that the remainder of the
deferred tax asset, net of the valuation allowance, will be
realized. The amount of the deferred tax asset considered
realizable, however, could be reduced in the near term if
estimates of future taxable income are reduced.
During 1995 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
1991-1992 with no major adjustments.
<PAGE>
Note J - Legal Proceedings
The settlement to date of all environmental claims against all
participants at hazardous waste ("Superfund") sites in which the
Company was named a potentially responsible party by the
Environmental Protection Agency has been significant. Prior to
1995, the Company had paid $14,000 to settle claims at sites in
which the Company was named a potentially responsible party. Due
to the fact that Superfund sites at which the Company was named a
potentially responsible party are in the late stages of remedy
and a significant portion of the remedy cost has already been
funded, the Company believes that its probable future financial
obligation at December 31, 1995 will not materially affect its
future operating results and liquidity. Amounts paid by the
Company in 1995 with respect to the Superfund obligations were
insignificant.
In the fourth quarter of 1994, the Company settled a lawsuit
filed by Eastern Enterprises in connection with Eastern's
purchase of the Company's Process Water Division in 1989. Total
settlement costs of $10,800, including a $9,000 payment to
Eastern Enterprises and $1,800 of related costs incurred by the
Company, are included in Other expense in the accompanying
consolidated statements of income.
The Company and Waters Holdings, Inc. are engaged in a dispute
with respect to the amount of assets required to be transferred from the
Company's Retirement Plan in connection with the divestitures.
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.
Note K - 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 $7,828 in 1995, $8,545 in
1994, $10,878 in 1993. At December 31, 1995 future minimum rents
payable under noncancelable leases with initial terms exceeding
one year were as follows:
1996 $7,064
1997 5,805
1998 3,878
1999 2,491
2000 2,272
2001 - 2006 10,733
<PAGE>
Note L - 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:
1995 1994 1993
Option shares:
Outstanding at beginning of period 3,518,000 5,440,000 4,862,000
Issued during period 373,000 534,000 1,032,000
Exercised during period (885,000)(2,334,000) (200,000)
Canceled during period (66,000) (122,000) (254,000)
Outstanding at end of period 2,940,000 3,518,000 5,440,000
Exercisable at end of period 1,747,000 2,088,000 3,072,000
Shares available for granting of 1,039,000 1,344,000 1,758,000
options at end of period
Average price of outstanding options $20.82 $17.96 $16.67
at end of period
Average price of exercised options $16.70 $16.30 $12.26
during the period
In 1995, as part of the Company's broad-based open market stock
repurchase program, the Company repurchased, at market prices,
759,000 shares of common stock which had been
issued to current employees and former employees of the divested
businesses under the Company's stock option plan. The difference
between the market price of the shares repurchased and the stock
option exercise price was recognized as compensation expense and
is included in the Company's 1995 consolidated statement of
income or charged against accrued divestiture reserves.
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, each
eligible director receives options to purchase 4,000 shares of
Millipore common stock on the date of his or her first election,
and thereafter automatically receives additional options to
purchase 2,000 shares at the first board of directors meeting
following the Annual Meeting of Shareholders. 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. At
December 31, 1995, 122,000 options have been issued and 115,000
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 1995, 1994, and 1993 shares issued under the Plan were 33,000,
192,000, and 20,000, respectively. As of December 31, 1995, 367,0000
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 1995, 1994, and 1993,
109,000, 154,000, and 266,000 shares, respectively, were
outstanding under the plan. Plan expense was $450 in 1995, $790
in 1994 and $833 in 1993. As of December 31, 1995, 128,000
shares of Millipore common stock were available for future awards
under this plan.
<PAGE>
Note M - 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 $4,512 in 1995, $6,089 in 1994, $8,679 in 1993. Prior
years' Plan expense includes amounts related to employees of the
divested businesses through the date of the divestitures.
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. 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
1995 and 1994.
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 a discount rate of 7.0 percent in 1995 and 8.5 percent in 1994, and
a salary progression rate of 5.0 percent in 1995, and 6.0 percent
in 1994. The pension income was determined based on an expected
long-term rate of return on assets of 8.0 percent in both years.
Plan assets are invested primarily in mutual funds and money market funds.
The Company recognized a curtailment loss of $91 in the third
quarter of 1994 as a result of its divestitures. This amount was
included as part of the net loss on disposal of discontinued
operations. Plan data as of December 31, 1995 and 1994 includes
assets and obligations pertaining to employees of the Company's
former Waters Division, as the assets subject to these former
employees have not yet been transferred to Waters Holdings, Inc.
1995 1994
Actuarial present value of benefit
obligations:
Accumulated benefit
obligation, including vested
benefits of $6,460 on December 31, $ 6,693 $ 2,911
1995 and $2,761 on December 31,
1994
Projected benefit obligation $ (7,595) $ (4,076)
for service rendered to date
Plan assets at fair value 7,391 5,436
Plan assets (less than) in
excess of projected benefit obligation (204) 1,360
Unrecognized net actuarial loss 4,283 2,772
Unrecognized prior service cost 121 132
Unrecognized net asset being (579) (663)
amortized over 16.7 years
Prepaid pension cost included $ 3,621 $ 3,601
in financial statements
Net pension income includes the
following components
Service cost $ 179 $ 376
Interest cost (471) (361)
Return on plan assets 942 36
Amortization and deferral (630) 246
Net pension income $ 20 $ 297
<PAGE>
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.
The Company recognized $4,007 as a termination settlement in
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:
1995 1994
Service cost benefits attributed $ 357 $ 610
to service during the year
Interest cost on accumulated
postretirement benefit obligation 548 662
Net amortization and deferral (93) (62)
Net periodic postretirement $ 812 $ 1,210
benefit cost
Summary information on the Company's plans as of December 31 is
as follows:
1995 1994
Accumulated postretirement benefit
obligation:
Retirees and dependents $(3,272) $ (3,100)
Fully eligible active plan participants (550) (444)
Other active plan participants (5,056) (3,089)
Accrued postretirement benefit (8,878) (6,633)
obligation
Unrecognized gain from past experience
different from that assumed and from (897) (2,713)
changes in assumptions
Accrued postretirement benefit cost $(9,775) $(9,346)
The discount rate used in determining the accumulated
postretirement benefit obligation was 7.0 percent as of December
31,1995 and 8.5 percent as of December 31, 1994. The assumed
health care cost trend rate used in measuring the accumulated
postretirement benefit obligation was 7.8 percent in 1995,
declining gradually to 5.5 percent over 8 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, 1995 would be increased by $1,475 while the
aggregate of the service and interest cost components of net
periodic postretirement benefit cost for 1995 would be increased
by $174.
<PAGE>
Note N - 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. Transfers between geographic
areas are generally made at a discount from local in-market
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 Asia/Pacific Eliminations Total
1995
Sales:
Unaffiliated customers $202,717 $185,402 $204,895 $593,014
Unaffiliated export:
Pacific customers 553 553
European customers 899 899
Total unaffiliated 204,169 185,402 204,895 594,466
unaffiliated
Transfer between areas 95,267 46,602 14,267 (156,136) -
Total sales $299,436 $232,004 $219,162 $(156,136) $594,466
Operating profits $ 76,853 $ 33,072 $ 20,973 $130,898
General corporate expenses (11,822)
Interest expense, net (8,941)
Income from continuing
operations before income taxes $110,135
Identifiable assets $409,750 $219,681 $174,468 $(301,308) $502,591
Corporate assets 28,354
Total assets $530,945
1994
Sales:
Unaffiliated customers $180,569 $154,196 $160,781 $495,546
Unaffiliated export:
Pacific customers 806 806
European customers 900 900
Total unaffiliated 182,275 154,196 160,781 497,252
Transfer between areas 77,877 25,767 6,246 (109,890) -
Total sales $260,152 $179,963 $167,027 $(109,890) $497,252
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 $341,057 $187,132 $144,890 $(181,285) $491,794
Corporate assets 45,186
Total assets $536,980
<PAGE>
Americas Europe Asia/Pacific Eliminations Total
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
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 $292,770 $138,326 $141,442 $(122,941) $449,597
Corporate assets 40,642
Net current assets of 138,687
discontinued operations
Net long term assets of
discontinued operations 99,647
Total assets $728,573
<PAGE>
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, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1995.
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, 1995 and 1994, and the
consolidated results of its operations and its cash flows for each of
the three years in the period ended December 31, 1995 in conformity with
generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
January 23, 1996
<PAGE>
Eleven-year Summary of Operations
Millipore Corporation
(In thousands except per share) 1995 1994 1993 1992 1991
Net sales $594,466 $497,252 $445,366 $427,188 $415,075
Cost of sales 243,849 212,675 193,575 195,462 194,557
Gross profit 350,617 284,577 251,791 231,726 220,518
Selling, general and 195,026 159,591 145,647 142,701 129,593
administrative expenses
Research and development 36,515 34,327 34,952 32,953 32,633
expenses
Restructuring charge - - - - -
Operating income 119,076 90,659 71,192 56,072 58,292
Other income (expense), net - (10,800) - (2,415) -
Interest income 1,682 4,091 4,069 6,888 6,182
Interest expense (10,623) (7,035) (12,038) (14,692) (13,984)
Income from continuing
operations before income taxes 110,135 76,915 63,223 45,853 50,490
Provision for income taxes 24,781 17,306 14,225 10,317 14,570
Income from continuing
operations before extraordinary 85,354 59,609 48,998 35,536 35,920
item
Earnings (loss) from - - (10,851) 2,715 18,645
discontinued operations
Loss on disposal of - (3,400) - - -
discontinued operations
Income before extraordinary
item and cumulative effect of change
in accounting principle 85,354 56,209 38,147 38,251 54,565
Extraordinary item-loss on - - (3,544) - -
early extinguishment of debt
Cumulative effect of change in
accounting for postretirement - - - (5,068) -
benefits
Net income $85,354 $56,209 $34,603 $33,183 $54,565
Net income per common share:
Income from continuing operations$1.90 $1.09 $0.88 $0.63 0.64
Net income per common share $ 1.90 $1.03 $0.62 $0.59 $0.97
Cash dividends declared per share$0.315 $0.295 $0.275 $0.255 $0.235
Average common shares and 44,985 54,726 55,902 56,484 56,588
equivalents
Financial Data
Working Capital $88,595 $100,649 $232,865 $220,378 $247,399
Total assets 530,945 536,980 728,573 764,950 766,582
Long-term debt 105,272 109,327 110,067 103,332 107,759
Shareholders' equity $226,475 $221,277 $461,154 $452,835 $464,496
The Company adopted SFAS # 109 "Accounting for Income Taxes" during 1992 and
restated tax provisions in 1991 and 1990 and 1986.
<PAGE>
Eleven-year Summary of Operations (continued)
Millipore Corporation
(In thousands except per 1990 1989 1988 1987 1986 1985
share)
Net sales $380,983 $365,825 $347,267 $298,728 $251,212 $202,411
Cost of sales 170,049 165,979 161,613 138,587 117,997 99,427
Gross profit 210,934 199,846 185,654 160,141 133,215 102,984
Selling, general and 117,214 115,951 116,636 98,730 87,058 66,409
administrative expenses
Research and development 29,538 28,756 22,336 19,742 16,756 15,132
expenses
Restructuring charge 17,103 - - - - -
Operating income 47,079 55,139 46,682 41,669 29,401 21,443
Other income (expense), net - 3,149 - - - -
Interest income 6,723 3,914 3,450 2,234 3,066 3,403
Interest expense (10,418) (8,543) (6,543) (3,432) (3,762) (3,300)
Income from continuing
operations before income 43,384 53,659 43,589 40,471 28,705 21,546
taxes
Provision for income taxes13,629 11,619 10,955 10,040 10,538 5,357
Income from continuing
operations before 29,755 42,040 32,634 30,431 18,167 16,189
extraordinary item
Earnings (loss) from (6,678) 10,462 22,751 17,993 14,797 15,541
discontinued operations
Loss on disposal of - - - - - -
discontinued operations
Income before
extraordinary item and
cumulative effect of 23,077 52,502 55,385 48,424 32,964 31,730
change in accounting
principle
Extraordinary item-loss on
early extinguishment of debt - - - - - -
Cumulative effect of
change in accounting
for postretirement benefits - - - - - -
Net income $23,077 $52,502 $55,385 $48,424 $32,964 $31,730
Net income per common
share:
Income from
continuing operations $0.53 $0.74 $0.58 $0.54 $0.33 $0.30
Net income per common $0.41 $0.93 $0.98 $0.86 $0.59 $0.58
share
Cash dividends declared $0.215 $0.195 $0.175 $0.155 $0.135 $0.120
per share
Average common shares and 56,614 56,646 56,658 56,688 55,862 55,264
equivalents
Financial Data
Working Capital $225,039 $249,777 $251,825 $168,594 $165,421 $146,334
Total assets 700,415 605,388 545,523 452,387 369,414 326,903
Long-term debt 102,961 94,788 103,472 6,378 12,094 13,446
Shareholders' equity $427,008 $403,827 $362,800 $327,604 $283,547 $244,607
<PAGE>
Quarterly Results (Unaudited)
The Company's unaudited quarterly results are summarized below.
First Second Third Fourth
(In thousands, except per share quarter quarter quarter quarter Year
data)
1995
Net sales $141,427 $150,508 $147,547 $154,984 $594,466
Cost of sales 58,509 60,779 61,293 63,268 243,849
Gross profit 82,918 89,729 86,254 91,716 350,617
Selling, general and 45,795 49,610 48,842 50,779 195,026
administrative expenses
Research and development 8,513 9,155 9,352 9,495 36,515
expenses
Operating income 28,610 30,964 28,060 31,442 119,076
Interest income 386 337 427 532 1,682
Interest expense (2,318) (2,851) (2,616) (2,838) (10,623)
Income before income taxes 26,678 28,450 25,871 29,136 110,135
Provision for income taxes 6,003 6,401 5,821 6,556 24,781
Net income $20,675 $22,049 $20,050 $22,580 $85,354
Per share information
Net income $ 0.45 $ 0.49 $ 0.45 $ 0.51 $ 1.90
Weighted average common shares 45,960 44,998 44,642 44,348 44,985
outstanding
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 38,109 39,456 40,181 41,845 159,591
administrative expenses
Research and development 8,558 8,446 8,367 8,956 34,327
expenses
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 15,294 17,572 17,167 9,576 59,609
operations
Loss from discontinued - - (3,400) - (3,400)
operations
Net income $15,294 $17,572 $13,767 $9,576 $56,209
Per share information
Income from continuing
operations $0.27 $0.31 $0.31 $0.20 $1.09
Net income $0.27 $0.31 $0.25 $0.20 $1.03
Weighted average common shares 56,246 56,776 56,310 47,680 54,726
outstanding
<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 18, 1996 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 and 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 also 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
Stock price data from the New York Stock Exchange is based on
high and low sales prices. There were approximately 3,421
shareholders of record as of December 31, 1995.
Dividends
Declared
Range of Stock Prices Per Share
1995 1994 1995 1994
High Low High Low
First Quarter $28.69 $22.88 $24.44 $19.25 $0.075 $0.070
Second Quarter 34.56 27.00 26.94 21.38 0.080 0.075
Third Quarter 39.13 31.75 28.50 25.00 0.080 0.075
Fourth Quarter 41.50 34.13 27.57 23.32 0.080 0.075
<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, 1995, 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 8, 1996
John A. Gilmartin Chief Executive Officer
and Director
/s/Charles D. Baker Director February 8, 1996
Charles D. Baker
_____________________ Director February __, 1996
Samuel C. Butler
/s/Maureen A. Hendricks Director February 8, 1996
Maureen A. Hendricks
/s/Mark Hoffman Director February 8, 1996
Mark Hoffman
Page 2
Power of Attorney
SIGNATURE TITLE DATE
/s/Gerald D. Laubach Director February 8, 1996
Gerald D. Laubach
/s/Steven Muller Director February 8, 1996
Steven Muller
/s/Thomas O. Pyle Director February 8, 1996
Thomas O. Pyle
/s/John F. Reno Director February 8, 1996
John F. Reno
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,696
<SECURITIES> 21,062
<RECEIVABLES> 147,759
<ALLOWANCES> 0
<INVENTORY> 80,386
<CURRENT-ASSETS> 5,260
<PP&E> 373,940
<DEPRECIATION> 182,690
<TOTAL-ASSETS> 530,945
<CURRENT-LIABILITIES> 173,164
<BONDS> 0
<COMMON> 56,988
0
0
<OTHER-SE> 169,487
<TOTAL-LIABILITY-AND-EQUITY> 530,945
<SALES> 594,466
<TOTAL-REVENUES> 594,466
<CGS> 243,849
<TOTAL-COSTS> 243,849
<OTHER-EXPENSES> 231,541
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