<PAGE>
RULE NO. 424(b)(1)
REGISTRATION NO. 333-23025
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 18, 1997)
MILLIPORE
$100,000,000
7.20% Notes due 2002
$100,000,000
7.50% Notes due 2007
Interest payable April 1 and October 1
The 7.20% Notes due 2002 (the "2002 Notes") of Millipore Corporation (the
"Company") offered hereby will mature on April 1, 2002. The 7.50% Notes due
2007 (the "2007 Notes") of the Company offered hereby will mature on April 1,
2007. The 2002 Notes and the 2007 Notes are collectively referred to herein as
the Notes. Interest on the Notes is payable semiannually on April 1 and
October 1 of each year, commencing October 1, 1997. See "Description of
Notes".
The Notes are not redeemable prior to maturity and are not subject to any
sinking fund. The Notes are unsecured and will rank pari passu with all other
unsecured and unsubordinated indebtedness of the Company. See "Description of
the Debt Securities" in the accompanying Prospectus. Unless otherwise
indicated, defined terms used in this Prospectus Supplement have the meanings
ascribed to them in the accompanying Prospectus.
The Notes will be represented by one or more Global Notes registered in the
name of the nominee of The Depository Trust Company, which will act as the
Depositary. Beneficial interests in the Global Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary and its direct and indirect participants. Except as described
herein, Notes in definitive form will not be issued. See "Description of
Notes--Book-Entry System".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO THE
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
- ------------------------------------------------------------
<S> <C> <C> <C>
Per 2002 Note 99.892% .600% 99.292%
- ------------------------------------------------------------
Total $99,892,000 $600,000 $99,292,000
- ------------------------------------------------------------
Per 2007 Note 99.308% .650% 98.658%
- ------------------------------------------------------------
Total $99,308,000 $650,000 $98,658,000
- ------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from April 1, 1997.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting".
(3) Before deducting expenses payable by the Company, estimated at $350,000.
The Notes are offered subject to prior sale, when, as and if delivered to and
accepted by the Underwriters, and subject to approval of certain legal matters
by Cravath, Swaine & Moore, counsel for the Underwriters. It is expected that
delivery of the Notes will be made through the facilities of The Depository
Trust Company on or about April 1, 1997, against payment therefor in
immediately available funds.
J.P. MORGAN & CO. CREDIT SUISSE FIRST BOSTON
March 26, 1997
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NOTES.
SPECIFICALLY, THE UNDERWRITERS MAY OVERALLOT IN CONNECTION WITH THE OFFERING,
AND MAY BID FOR, AND PURCHASE, THE NOTES IN THE OPEN MARKET. FOR A DESCRIPTION
OF THESE ACTIVITIES, SEE "UNDERWRITING".
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN OR IN THE ACCOMPANYING
PROSPECTUS IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF OR THEREOF
OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THEREOF. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING
PROSPECTUS CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
THE NOTES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
----
<S> <C>
Incorporation by Reference................................................ S-2
Summary................................................................... S-3
Capitalization............................................................ S-6
Ratio of Earnings to Fixed Charges........................................ S-6
Use of Proceeds........................................................... S-6
The Company............................................................... S-7
Management................................................................ S-11
Selected Historical and Pro Forma Financial Information................... S-13
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... S-15
Description of Notes...................................................... S-18
Underwriting.............................................................. S-20
Legal Opinions............................................................ S-20
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Company............................................................... 3
Factors That May Affect Future Results.................................... 3
Ratio of Earnings to Fixed Charges........................................ 4
Use of Proceeds........................................................... 5
Description of the Debt Securities........................................ 5
Plan of Distribution...................................................... 14
Experts................................................................... 15
</TABLE>
INCORPORATION BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1996, and Current Report on Form 8-K/A dated March 17, 1997, at the time of
filing of such reports with the Securities and Exchange Commission, modify and
supersede all prior documents filed pursuant to Sections 13, 14 and 15(d) of
the Securities Exchange Act of 1934 and are incorporated by reference into
this Prospectus, as supplemented.
S-2
<PAGE>
SUMMARY
The following is a summary of certain information contained, or incorporated
by reference, in this Prospectus, as supplemented. Reference is made to, and
this summary is qualified in its entirety by, the more detailed information and
financial statements contained or incorporated by reference in this Prospectus,
as supplemented. Unless the context otherwise requires, the terms "Millipore"
or the "Company" mean Millipore Corporation and its subsidiaries, including,
except where noted, the Amicon Separation Science Business of W.R. Grace & Co.
("Amicon") and Tylan General, Inc. ("Tylan").
THE COMPANY
Millipore is a leader in the field of membrane separations technology and
develops, manufactures and sells products which are used primarily for the
analysis, identification and purification of fluids. Millipore's products are
based on a variety of membrane and other technologies that effect separations,
principally through physical and chemical methods. Millipore is an integrated
multinational manufacturer of these products. In 1996, Millipore had net sales
of approximately $619 million and net income of approximately $44 million,
after giving effect to a write-off for in-process research and development
purchased from Amicon. During 1996, approximately 65% of Millipore's net sales
were made to customers outside the United States.
On December 31, 1996, Millipore acquired Amicon for a purchase price of
approximately $129 million in cash (including transaction costs). Amicon
develops, manufactures and sells molecular separation and purification products
for the life science research laboratory and for pharmaceutical/biotechnology
manufacturing applications. The technologies employed in its products consist
primarily of membrane ultrafiltration and liquid chromatography. Amicon's 1996
revenues were approximately $57 million.
Effective as of January 27, 1997, Millipore acquired all the shares of Tylan
for approximately $133 million and assumed Tylan's outstanding debt, net of
cash, of approximately $24 million. Tylan develops, manufactures, markets and
sells a broad range of components used in the handling of process gases for the
semiconductor industry. Tylan's 1996 revenues were approximately $148 million.
S-3
<PAGE>
THE OFFERING
Issuer.................. Millipore Corporation.
The Notes............... $100,000,000 aggregate principal amount of the 7.20%
Notes due 2002, and $100,000,000 aggregate principal
amount of the 7.50% Notes due 2007. The Notes will be
unsecured unsubordinated obligations of the Company.
Maturity................ April 1, 2002 for the 2002 Notes, and April 1, 2007
for the 2007 Notes.
Offering Price per 99.892% of the principal amount thereof for the 2002
Note.................... Notes and 99.308% of the principal amount thereof for
the 2007 Notes, plus accrued interest in each case,
if any, from April 1, 1997.
Interest................ The 2002 Notes and 2007 Notes will bear interest at
the rate of 7.20% and 7.50%, respectively, per annum
from April 1, 1997. Interest on the Notes will be
payable semi-annually on April 1 and October 1 in
each year (each an "Interest Payment Date"), and at
maturity, commencing October 1, 1997, to the holders
of record on the close of business on the preceding
March 15 or September 15, respectively. Interest on
the Notes will be calculated based upon a 360-day
year consisting of twelve 30-day months. See
"Description of Notes".
Ranking................. The Notes rank pari passu with all other unsecured
and unsubordinated indebtedness of the Company.
Use of Proceeds......... The net proceeds to be received from the sale of the
Notes will be used by the Company to repay all its
short-term indebtedness and a portion of its
indebtedness outstanding under its revolving credit
agreement. See "Use of Proceeds".
Form and Denomination... Each of the 2002 Notes and 2007 Notes will be issued
in minimum denominations of $1,000 and integral
multiples thereof and will be represented by one or
more Global Notes. Beneficial interests in the Global
Notes will trade in The Depository Trust Company's
Same-Day Funds Settlement System, and secondary
market trading activity in such interests will
therefore settle in same-day funds.
Trustee................. State Street Bank and Trust Company.
For additional information concerning the Notes, and the definitions of
certain capitalized terms used above, see "Description of Notes" in this
Prospectus Supplement and "Description of the Debt Securities" in the
accompanying Prospectus.
S-4
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FOR THE TWELVE MONTHS ENDED OR AT DECEMBER 31,
-----------------------------------------------------------
PRO FORMA
1996(A) 1996(B) 1995 1994 1993 1992
-------- ---------- -------- -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Net sales............... $618,735 $824,555 $594,466 $497,252 $445,366 $427,188
Cost of sales........... 249,443 371,372 243,849 212,675 193,575 195,462
-------- -------- -------- -------- -------- --------
Gross profit............ 369,292 453,183 350,617 284,577 251,791 231,726
Selling, general and
administrative
expenses............... 202,140 270,177 195,026 159,591 145,647 142,701
Research and development
expenses............... 38,429 55,488 36,515 34,327 34,952 32,953
Purchased research &
development
expense(c)............. 68,311 68,311 -- -- -- --
-------- -------- -------- -------- -------- --------
Operating income........ 60,412 59,207 119,076 90,659 71,192 56,072
Gain on sale of equity
securities............. 5,329 5,329 -- -- -- --
Other income (expense),
net.................... -- (1,275) -- (10,800) -- (2,415)
Interest income......... 2,780 2,780 1,682 4,091 4,069 6,888
Interest expense........ (11,498) (31,705) (10,623) (7,035) (12,038) (14,692)
-------- -------- -------- -------- -------- --------
Income from continuing
operations before
income taxes........... 57,023 34,336 110,135 76,915 63,223 45,853
Provision for income
taxes.................. 13,401 7,937 24,781 17,306 14,225 10,317
-------- -------- -------- -------- -------- --------
Income from continuing
operations before
extraordinary item..... 43,622 26,399 85,354 59,609 48,998 35,536
Earnings (loss) from
discontinued
operations............. -- -- -- -- (10,851) 2,715
Loss on disposal of
discontinued
operations(d).......... -- -- -- (3,400) -- --
-------- -------- -------- -------- -------- --------
Income before
extraordinary item and
cumulative effect of
change in accounting
principle.............. 43,622 26,399 85,354 56,209 38,147 38,251
Extraordinary item, net
of income tax benefit.. -- (224) -- -- (3,544) --
Cumulative effect of
change in accounting
for postretirement
benefits............... -- -- -- -- -- (5,068)
-------- -------- -------- -------- -------- --------
Net income.............. $ 43,622 $ 26,175 $ 85,354 $ 56,209 $ 34,603 $ 33,183
-------- -------- -------- -------- -------- --------
Net income per common
share:
Income from continuing
operations........... $ 1.00 $ 0.60 $ 1.90 $ 1.09 $ 0.88 $ 0.63
Net income per common
share................ 1.00 0.60 1.90 1.03 0.62 0.59
Cash dividends declared
per share.............. 0.35 0.35 0.315 0.295 0.275 0.255
Average common shares
and equivalents........ 43,602 43,602 44,985 54,726 55,902 56,484
BALANCE SHEET DATA
Working capital......... $ 95,512 $ 94,769 $ 90,337 $100,649 $232,865 $220,378
Total assets............ 682,892 795,099 530,945 536,980 728,573 764,950
Long-term debt.......... 224,359 371,552 105,272 109,327 110,067 103,332
Shareholders'
equity(c).............. $217,605 $117,605 $226,475 $221,277 $461,154 $452,835
</TABLE>
- --------
(a) The 1996 statement of income data excludes all 1996 business activity
conducted by Amicon, which was acquired by the Company on December 31,
1996. However, the assets acquired and liabilities assumed of Amicon, as
well as indebtedness of approximately $128 million (including assumed
indebtedness of Amicon) required to complete the acquisition of Amicon, are
included in the Company's balance sheet data at December 31, 1996.
(b) Pro forma financial data have been prepared to give effect to the
acquisitions of Amicon and Tylan as if such acquisitions had occurred on
January 1, 1996 (other than the pro forma balance sheet data which assumes
the acquisition of Tylan was consummated as of December 31, 1996). The pro
forma balance sheet data includes approximately $133 million of
indebtedness required to complete the acquisition of Tylan and
approximately $22.6 million at October 31, 1996, of assumed indebtedness of
Tylan. The acquisitions of Amicon and Tylan have each been accounted for as
a purchase, and accordingly, the total purchase cost of each acquisition
has been allocated to the identifiable tangible and intangible assets of
the respective acquired companies based on the estimated fair market values
of those assets.
(c) Purchased research and development expense represents the write-off of the
$68.3 million value of in-process research and development purchased from
Amicon. The pro forma statement of income does not reflect an estimated
non-tax deductible charge of $100 million for in-process research and
development purchased from Tylan, which will be charged to the Company's
income in the first quarter of 1997. However, the estimated charge of $100
million for Tylan's in-process research and development has been reflected
as a reduction to pro forma shareholders' equity.
(d) The loss on disposal of discontinued operations in 1994 includes pre-tax
operating losses generated by the discontinued businesses from November 11,
1993, through the completion of such divestitures.
S-5
<PAGE>
CAPITALIZATION
The following table sets forth as of December 31, 1996, the unaudited
consolidated short-term debt and capitalization of the Company (i) on a
historical basis, (ii) pro forma, after giving effect to the acquisition of
Tylan, and (iii) as adjusted to give effect to the issuance of the Notes
offered hereby as if such issuance had occurred as of December 31, 1996, and
the application of the proceeds therefrom to repay the Company's short-term
indebtedness and a portion of its indebtedness outstanding under its revolving
credit agreement. See "Use of Proceeds". The summary is based on the Company's
consolidated financial statements and Tylan's historical financial statements,
which are incorporated by reference in this Prospectus, as supplemented.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1996
----------------------------------
PRO FORMA
ACTUAL PRO FORMA(1) AS ADJUSTED
-------- ------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt:
Short-term borrowings and current
maturities of long-term debt............. $101,546 $109,957 --
Long-term debt:
7.20% Notes due 2002...................... -- -- 100,000
7.50% Notes due 2007...................... -- -- 100,000
6.78% Notes due March 3, 2004(2).......... 100,000 100,000 100,000
Revolving Credit Facility................. 124,397 271,590 187,636
Unrealized gain on revaluation of yen-
denominated debt......................... (3,727) (3,727) (3,727)
Other..................................... 3,689 3,689 --
-------- -------- --------
Total long-term debt.................... 224,359 371,552 483,909
Total shareholders' equity.................. 217,605 117,605 117,605
-------- -------- --------
Total capitalization........................ $543,510 $599,114 $601,514
======== ======== ========
</TABLE>
- --------
(1) After giving effect to the acquisition of Tylan. The assets and
liabilities of Amicon are included in the Company's balance sheet data at
December 31, 1996.
(2) Effective as of March 21, 1997, the Company agreed to increase by 10 basis
points per annum the interest payable on its 6.78% Notes due March 3,
2004, in exchange for the holder thereof agreeing to different financial
covenants with respect to such Notes.
RATIO OF EARNINGS TO FIXED CHARGES
See the table set forth under the caption "Ratio of Earnings to Fixed
Charges" in the accompanying Prospectus for the Company's historical ratios of
earnings to fixed charges for the periods indicated therein. On a pro forma
basis, assuming that the acquisitions of Amicon and Tylan had occurred on
January 1, 1996, and the indebtedness used to finance such acquisitions had
been incurred on such date, but excluding the associated noncash charges of
$68.3 million and an estimated $100 million for in-process research and
development purchased from Amicon and Tylan, respectively, the unaudited ratio
of earnings to fixed charges for the year ended December 31, 1996, would have
been 3.93.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Notes offered hereby
are estimated to be $197.6 million, after deducting the underwriting
commissions and estimated offering expenses payable by the Company. Such net
proceeds will be used to repay a portion of the indebtedness under the
Company's Revolving Credit Agreement dated as of January 22, 1997 (the "Credit
Facility"), which amounts may be reborrowed, and to repay all short-term
indebtedness. The Company had used approximately $272 million of the proceeds
from its borrowings under the Credit Facility and short-term borrowings to
finance its acquisitions of Amicon and Tylan in December 1996 and January
1997, respectively. At March 18, 1997, the Company's short-term borrowings and
borrowings under the Credit Facility had an average interest rate of 5.70%.
Morgan Guaranty Trust Company of New York, an affiliate of J.P. Morgan
Securities Inc., is a lender under the Credit Facility.
S-6
<PAGE>
THE COMPANY
Millipore is a leader in the field of membrane separations technology and
develops, manufactures and sells products which are used primarily for the
analysis, identification and purification of fluids. Millipore's products are
based on a variety of membrane and other technologies that effect separations,
principally through physical and chemical methods. Millipore is an integrated
multinational manufacturer of these products. During 1996, approximately 65%
of Millipore's net sales were made to customers outside the United States.
Millipore was incorporated under the laws of Massachusetts on May 3, 1954.
On December 31, 1996, Millipore acquired Amicon for a purchase price of
$129.3 million in cash (including transaction costs). Amicon develops,
manufactures and sells molecular separation and purification products for the
life science research laboratory and for pharmaceutical/biotechnology
manufacturing applications. The technologies employed in its products consist
primarily of membrane ultrafiltration and liquid chromatography. Amicon's 1996
revenues were approximately $57 million.
Effective as of January 27, 1997, Millipore acquired all the shares of Tylan
for approximately $133 million and assumed Tylan's outstanding debt, net of
cash, of approximately $24 million. Tylan develops, manufactures, markets and
sells a broad range of components used in the handling of process gases for
the semiconductor industry. Tylan's 1996 revenues were approximately $148
million.
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 and
liquid chromatography. 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 also
sells a broad range of components used in the handling of process gases for
the semiconductor industry. These include mass flow controllers, pressure
gauges and gas panels.
The Company sells 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 (particularly with
respect to process chromatography), the Company also designs and engineers
process systems to meet specific needs of the customer. The Company's products
also include, in some cases, proprietary software designed to operate and/or
integrate certain of its other products or systems (particularly membrane
ultrafiltration and chromatography systems).
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.
S-7
<PAGE>
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. Sales to the microelectronics market (excluding Tylan's products)
accounted for 28.1 percent of Millipore's 1996 consolidated sales. Including
sales of Tylan's products in 1996 would have increased this percentage to
approximately 39.0%. The microelectronics manufacturing market has experienced
historic volatility, and the effect of any such volatility in the future could
significantly affect Millipore's sales growth.
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 used by the food and
beverage industry in quality control and process applications, principally to
monitor for microbiological contamination and to remove bacteria and yeast
from products, such as wine and beer, in order to prevent spoilage.
Universities and Government Agencies. Universities, governments 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, and cell 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 and, in the case of analytical
products, to a limited extent through an independent distributor. 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 1996, the Company's marketing, sales and service
forces (including Tylan) consisted of approximately 379 employees in the
United States and 702 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 assisting 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.
S-8
<PAGE>
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. Also, in order to
compete effectively in some of its markets, Millipore must continually improve
its products to accommodate the rapidly changing technology of its customers
and emerging industry standards. 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 (excluding
Amicon and Tylan) in 1994, 1995 and 1996 with respect to continuing operations
were approximately $34 million, $37 million and $38 million, respectively.
Amicon's research and development expenses in 1994, 1995 and 1996 were
approximately $4 million, $4 million, and $5 million, respectively. Tylan's
research and development expenses in Fiscal 1994, 1995 and 1996 were
approximately $4 million, $8 million, and $12 million, 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 intends to 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. Similarly, in May of 1996 Millipore entered
into an R&D supply and distribution agreement with Celsis International plc.
designed to enhance Millipore's entry into the rapid microbiological market,
where there is a need for faster, easier and more accurate ways to detect
microbiological contamination. The Celsis technology focuses on the
development and supply of rapid diagnostics and monitoring systems to detect
and measure microbial contamination.
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."
COMPETITION
The Company faces intense competition in all of its markets. The Company
believes that its principal competitors include Pall Corporation, Barnstead
Thermolyne Corporation and Sartorius GmbH. 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.
ENVIRONMENTAL MATTERS
The Company is subject to numerous federal, state and foreign laws and
regulations that impose strict requirements for the control and abatement of
air, water and soil pollutants and the manufacturing, storage, handling and
disposal of hazardous substances and waste. These laws and regulations include
the federal
S-9
<PAGE>
Comprehensive Environmental Response, Compensation, and Liability Act, the
Clean Air Act, the Clean Water Act and the Resource Conservation and Recovery
Act. The Company is in substantial compliance with applicable environmental
requirements. Because regulatory standards under environmental laws and
regulations are becoming increasingly stringent, however, there can be no
assurance that future developments will not cause the Company to incur
material environmental liabilities or costs.
Under the Clean Air Act Amendments of 1990 ("CAA"), the Environmental
Protection Agency has been directed, among other things, to develop standards
and permit procedures with respect to certain air pollutants. Because many of
the implementing regulations have not yet been promulgated, the Company cannot
make a final assessment of the impact of the CAA. Based upon its preliminary
review of the CAA, however, the Company currently believes that compliance
with the CAA will not have a material adverse impact on the operations or
financial condition of the Company.
LEGAL PROCEEDINGS
The Company and Waters Corporation are engaged in an arbitration proceeding
and related state and federal litigation, which commenced in 1995 and 1996,
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. In the opinion of the Company, although final
settlement of this matter may impact the Company's financial statements in a
particular period, it is not expected to have a material adverse effect on the
Company's financial condition.
S-10
<PAGE>
MANAGEMENT
The following is a list as of March 1, 1997 of the Executive Officers of
Millipore. All of the following individuals were elected to serve until the
Directors Meeting next following the 1997 Annual Stockholders Meeting.
<TABLE>
<CAPTION>
FIRST ELECTED
NAME AGE PRESENT OFFICE TO AN OFFICE OFFICER
---- --- -------------- ------------- -------
<S> <C> <C> <C> <C>
C. William Zadel........ 53 Chairman of the Board 1996 1996
President and Chief
Executive Officer of the
Corporation
Geoffrey Nunes.......... 66 Senior Vice President of 1976 1980
the Corporation
Michael P. Carroll...... 46 Vice President of the 1992 1992
Corporation and Chief
Financial Officer
Douglas B. Jacoby....... 50 Vice President of the 1989 1989
Corporation
John E. Lary............ 50 Vice President of the 1994 1994
Corporation
Joanna Nikka............ 45 Vice President of the 1996 1996
Corporation
Jeffrey Rudin........... 45 Vice President of the 1996 1996
Corporation and General
Counsel
Hideo Takahashi......... 55 Vice President of the 1996 1979
Corporation and (As President
President of Nihon of Nihon
Millipore)
</TABLE>
Mr. Zadel was elected President, Chief Executive Officer and Chairman on
February 20, 1996. Mr. Zadel had been, since 1986, President and Chief
Executive Officer of Ciba Corning Diagnostics Corp., a company that develops,
manufactures and sells medical diagnostic products. Prior to that he was
Senior Vice President of Corning Glass Works (now Corning Inc.) Americas
Operations (1985) and Vice President of business development (1983). Mr. Zadel
currently serves on the Boards of Directors of Kulicke and Soffa Industries,
Inc., Matritech, Inc. and Zoll Medical Corporation.
Mr. Nunes joined Millipore in 1976 as Vice President and General Counsel and
was elected a Senior Vice President in 1980. Mr. Nunes has announced that he
will be retiring from Millipore at the end of April 1997.
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 Corporate Vice President,
Chief Financial Officer and Treasurer in February, 1992. Mr. Carroll has been
designated President Millipore Asia Ltd, a position he will assume once his
successor as Chief Financial Officer has been appointed and installed. He will
remain a Corporate Vice President.
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.
S-11
<PAGE>
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.
Ms. Nikka was elected Corporate Vice President for Human Resources in
November 1996. Ms. Nikka was Vice President at Fidelity Investments from 1991
to November 1996. Prior to joining Fidelity in 1991, Ms. Nikka was Vice
President of Human Resources at Symbolics, Inc.
Mr. Rudin was elected Corporate Vice President and General Counsel in
December 1996. Prior to joining Millipore, and since 1993 Mr. Rudin was Senior
Vice President and General Counsel of Ciba Corning Diagnostics Corporation and
was Vice President and General Counsel of that company from 1988 until 1993.
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.
S-12
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
The following table sets forth selected financial information for the
Company on (i) a historical basis as of December 31, 1996, 1995, 1994, 1993,
1992 and for the years then ended and (ii) on a pro forma basis as of and for
the year ended December 31, 1996, after giving effect to the acquisitions of
Amicon and Tylan. The selected historical financial information for the
Company set forth below has been derived from, and is qualified in its
entirety by reference to, the Company's consolidated financial statements and
related notes thereto incorporated by reference in this Prospectus, as
supplemented, and which have been audited by Coopers & Lybrand L.L.P.,
independent certified public accountants.
The pro forma financial data has been prepared based upon the Company's
consolidated financial statements and the historical financial statements of
each of Amicon and Tylan, in each case incorporated by reference in this
Prospectus, as supplemented. The pro forma income data for the year ended
December 31, 1996, gives effect to the acquisitions of Amicon and Tylan as if
they had occurred at January 1, 1996, and includes the historical results of
Tylan's operations for its fiscal year ended October 31, 1996. The pro forma
balance sheet data as of December 31, 1996, has been prepared as if the
acquisition of Tylan was consummated as of that date.
The pro forma financial data are provided for informational purposes only
and do not purport to be indicative of the financial position or results of
operations which would have actually been obtained had the acquisitions been
completed on the dates indicated or which may be expected to occur in the
future. The Selected Historical and Pro Forma Financial Information should be
read in conjunction with the consolidated financial statements of the Company,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", the historical financial statements of Amicon and Tylan and other
financial information and statements incorporated by reference in this
Prospectus, as supplemented.
S-13
<PAGE>
<TABLE>
<CAPTION>
FOR THE TWELVE MONTHS ENDED OR AT DECEMBER 31,
-----------------------------------------------------------
PRO FORMA
1996(A) 1996 (B) 1995 1994 1993 1992
-------- --------- -------- -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Net sales............... $618,735 $824,555 $594,466 $497,252 $445,366 $427,188
Cost of Sales........... 249,443 371,372 243,849 212,675 193,575 195,462
-------- -------- -------- -------- -------- --------
Gross profit............ 369,292 453,183 350,617 284,577 251,791 231,726
Selling, general and
administrative
expenses............... 202,140 270,177 195,026 159,591 145,647 142,701
Research and development
expenses............... 38,429 55,488 36,515 34,327 34,952 32,953
Purchased research &
development
expense(c)............. 68,311 68,311 -- -- -- --
-------- -------- -------- -------- -------- --------
Operating income........ 60,412 59,207 119,076 90,659 71,192 56,072
Gain on sale of equity
securities............. 5,329 5,329 -- -- -- --
Other income (expense),
net.................... -- (1,275) -- (10,800) -- (2,415)
Interest income......... 2,780 2,780 1,682 4,091 4,069 6,888
Interest expense........ (11,498) (31,705) (10,623) (7,035) (12,038) (14,692)
-------- -------- -------- -------- -------- --------
Income from continuing
operations before
income taxes........... 57,023 34,336 110,135 76,915 63,223 45,853
Provision for income
taxes.................. 13,401 7,937 24,781 17,306 14,225 10,317
-------- -------- -------- -------- -------- --------
Income from continuing
operations before
extraordinary item..... 43,622 26,399 85,354 59,609 48,998 35,536
Earnings (loss) from
discontinued
operations............. -- -- -- -- (10,851) 2,715
Loss on disposal of
discontinued
operations(d).......... -- -- -- (3,400) -- --
-------- -------- -------- -------- -------- --------
Income before
extraordinary item and
cumulative effect of
change in accounting
principle.............. 43,622 26,399 85,354 56,209 38,147 38,251
Extraordinary item, net
of income tax benefit.. -- (224) -- -- (3,544) --
Cumulative effect of
change in accounting
for postretirement
benefits............... -- -- -- -- -- (5,068)
-------- -------- -------- -------- -------- --------
Net income.............. $ 43,622 $ 26,175 $ 85,354 $ 56,209 $ 34,603 $ 33,183
-------- -------- -------- -------- -------- --------
NET INCOME PER COMMON
SHARE:
Income from continuing
operations............. $ 1.00 $ 0.60 $ 1.90 $ 1.09 $ 0.88 $ 0.63
Net income per common
share.................. 1.00 0.60 1.90 1.03 0.62 0.59
Cash dividends declared
per share.............. 0.35 0.35 0.315 0.295 0.275 0.255
Average common shares
and equivalents........ 43,602 43,602 44,985 54,726 55,902 56,484
BALANCE SHEET DATA
Working capital......... $ 95,512 $ 94,769 $ 90,337 $100,649 $232,865 $220,378
Total assets............ 682,892 795,099 530,945 536,980 728,573 764,950
Long-term debt.......... 224,359 371,552 105,272 109,327 110,067 103,332
Shareholders'
equity(c).............. $217,605 117,605 $226,475 $221,277 $461,154 $452,835
</TABLE>
- --------
(a) The 1996 statement of income data excludes all 1996 business activity
conducted by Amicon, which was acquired by the Company on December 31,
1996. However, the assets acquired and liabilities assumed of Amicon, as
well as indebtedness of approximately $128 million (including assumed
indebtedness of Amicon) required to complete the acquisition of Amicon, are
included in the Company's balance sheet data at December 31, 1996.
(b) Pro forma financial data have been prepared to give effect to the
acquisitions of Amicon and Tylan as if such acquisitions had occurred on
January 1, 1996 (other than the pro forma balance sheet data which assumes
the acquisition of Tylan was consummated as of December 31, 1996). The pro
forma balance sheet data includes approximately $133 million of
indebtedness required to complete the acquisition of Tylan and
approximately $22.6 million at October 31, 1996, of assumed indebtedness of
Tylan. The acquisitions of Amicon and Tylan have each been accounted for as
a purchase, and accordingly, the total purchase cost of each acquisition
has been allocated to the identifiable tangible and intangible assets of
the respective acquired companies based on the estimated fair market values
of those assets.
(c) Purchased research and development expense represents the write-off of the
$68.3 million value of in-process research and development purchased from
Amicon. The pro forma statement of income does not reflect an estimated
non-tax deductible charge of $100 million for in-process research and
development purchased from Tylan, which will be charged to the Company's
income in the first quarter of 1997. However, the estimated charge of $100
million for Tylan's in-process research and development has been reflected
as a reduction to pro forma shareholders' equity.
(d) The loss on disposal of discontinued operations in 1994 includes pre-tax
operating losses generated by the discontinued businesses from November 11,
1993, through the completion of such divestitures.
S-14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The matters discussed in this section do not purport to be a complete
analysis of the Company's financial condition and results of operations or a
full discussion of the trends, demands, risks and uncertainties that may
materially affect the liquidity, capital resources and operating results of
the Company. For a more complete discussion of the topics discussed herein,
see "Management's Discussion and Analysis of Financial Condition and Results
of Operations" included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, which is incorporated by reference in this
Prospectus, as supplemented. In addition, this Prospectus, as supplemented,
including any documents incorporated by reference herein, contains certain
forward-looking statements that are based on current management expectations.
Actual results could differ materially from the results expressed in, or
implied by, these forward- looking statements. See "Factors that May Affect
Future Results" in the accompanying Prospectus for a discussion of the
potential risks and uncertainties that could affect the Company's future
operating results and financial condition.
The financial results discussed below exclude the operating results of
Amicon. However, Amicon's assets and liabilities assumed by the Company are
included in the Company's consolidated balance sheet at December 31, 1996,
and, accordingly, are reflected in the discussion below of the Company's
financial condition. The Company acquired Amicon on December 31, 1996, for a
price of $129.3 million in cash, including transaction costs. This transaction
was accounted for as a purchase and results in a pre-tax write-off for
purchased research and development of $68.3 million in the fourth quarter of
1996.
On January 22, 1997, the Company announced the successful completion of its
tender offer for all of the outstanding common shares of Tylan for $16.00 per
share. Tylan became a wholly owned subsidiary of the Company on January 27,
1997. The purchase price was $133.0 million, plus the assumption of Tylan's
outstanding debt, net of cash, totaling $23.6 million. This acquisition will
be accounted for as a purchase in the first quarter of 1997. The financial
results discussed below exclude entirely the effect of the Company's
acquisition of Tylan.
RESULTS OF OPERATIONS
Net Sales
Consolidated net sales, measured in U.S. dollars, increased 4 percent in
1996 compared to an increase of 20 percent in 1995. The lower sales growth
rate in 1996 compared to 1995 was primarily attributable to the
microelectronics manufacturing market entering one of its periodic downturns
as well as unfavorable foreign exchange comparisons. Sales growth rates by
geography and market, measured in local currencies and U.S. dollars, are
summarized in the table below:
<TABLE>
<CAPTION>
SALES GROWTH RATES SALES GROWTH RATES
MEASURED IN LOCAL MEASURED IN U.S.
CURRENCIES DOLLARS
---------------------- ----------------------
1996 1995 1994 1996 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Americas.......................... 8% 15% 8% 7% 13% 8%
Europe............................ 6% 10% 6% 4% 20% 7%
Asia/Pacific...................... 14% 18% 16% 2% 27% 21%
------ ------ ------ ------ ------ ------
Consolidated...................... 10% 15% 10% 4% 20% 12%
Microelectronics Mfg.............. 8% 43% 33% 0% 50% 39%
Biopharmaceutical Mfg............. 14% 9% 4% 10% 14% 6%
Analytical Laboratory............. 8% 3% 4% 3% 8% 6%
------ ------ ------ ------ ------ ------
Consolidated...................... 10% 15% 10% 4% 20% 12%
</TABLE>
S-15
<PAGE>
Full year sales in 1996 to microelectronics manufacturing customers measured
in local currencies increased 8 percent compared to 1995. A downturn in the
microelectronics market began to impact the Company's sales growth around the
middle of 1996, as sales to customers in this market grew 24 percent in the
first six months of 1996 compared to 1995 and declined 7 percent in the second
half of 1996 compared to 1995. The slowdown significantly impacted growth in
both the Americas and Japan, while sales growth in the remaining Asia/Pacific
microelectronics market remained strong. Sales into the microelectronics
market comprised 28 percent of total consolidated sales in 1996, versus 29
percent of total sales in 1995.
Sales to the biopharmaceutical manufacturing market grew 14 percent in local
currencies during 1996, compared to 9 percent growth in 1995. The higher
growth rate in 1996 was due to increased sales of large protein processing
systems to biotechnology customers in both the Americas and Europe, and higher
sales to beer manufacturing customers in Japan, particularly in the first six
months of the year. Sales to Biopharmaceutical customers comprised 31 percent
of total sales in 1996 and 29 percent in 1995.
Sales to the analytical laboratory market measured in local currencies grew
at faster rates in 1996 than in 1995 and 1994. New product introductions and a
new distribution strategy in the United States fueled sales growth in this
market, particularly in the last six months of 1996. Sales growth was
strongest in the Americas and Japan, while sales grew more modestly in Europe
due to a difficult economic environment. Sales to analytical laboratory
customers comprised 41 percent of total sales in 1996 and 42 percent in 1995.
Foreign exchange rate fluctuations, primarily the U.S. dollar strengthening
against the Japanese yen, reduced reported sales growth by 6 percent in 1996,
compared to increasing sales by 5 percent in 1995 and 2 percent in 1994.
Approximately 29 percent of the Company's sales in 1996 and 1995 were
generated in Japan. On average, the U.S. dollar was 15 percent stronger
against the Japanese yen in 1996 compared to 1995. The year to year
comparisons were particularly unfavorable in the second and third quarters of
1996 as the dollar was at historic post-war lows against the yen during this
time frame in 1995. 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
Gross Margins were 59.7 percent in 1996, 59.0 percent in 1995, and 57.2
percent in 1994. The margin improvement in 1996 was due to continued cost
containment and increased volume in the Company's manufacturing plants. The
significant volume of business transacted in foreign currencies as discussed
above exposes the Company to risks associated with currency rate fluctuations
which impact the Company's sales and net income. To partially mitigate this
risk, the Company has entered into foreign currency transactions, forward and
option contracts to sell yen, on a continuing basis in amounts and timing
consistent with underlying currency exposure on inventory purchases so that
the gains or losses on these transactions offset gains or losses on the
underlying exposure. A realized gain of $2.7 million in 1996 and realized
losses of $2.3 million in 1995 and $1.0 million in 1994 relating to these
contracts were recognized. These gains and losses were reflected in cost of
sales each year, partially offsetting the impact of foreign exchange
fluctuations. At December 31, 1996, the Company has open forward exchange
contracts to sell yen aggregating $13.4 million and open forward option
contracts to sell yen aggregating $27.0 million pertaining to this hedging
program. These open contracts have an unrealized gain of $1.7 million at
December 31, 1996. All open contracts mature within 15 months.
Operating Expenses
Selling, General and Administrative ("SG&A") Expenses, excluding the effects
of foreign exchange, grew 8 percent in 1996, 17 percent in 1995 and 8 percent
in 1994. The Company continued to invest in selling and marketing resources to
support both new product launches and future sales growth initiatives,
particularly in the microelectronics and analytical laboratory markets.
S-16
<PAGE>
Research and Development Expenses increased by 5 percent in 1996 compared to
1995 after increasing 6 percent in 1995 compared to 1994. The increase in
spending the past two years is principally due to investments in new products
in the microelectronics manufacturing market.
Purchased Research and Development Expense of $68.3 million in 1996
represents the write-off of in-process research and development arising from
the acquisition of Amicon on December 31, 1996.
Other Income/Expense
Gain on Sale of Equity Securities reflects the sale of a significant portion
of the Company's stock holdings in a Japanese company. The Company sold these
securities in the third and fourth quarters of 1996 to fund a new headquarters
and research and development facility in Japan. The cost of moving to this new
facility was $2.0 million and was recorded in SG&A expense.
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.
Net Interest Expense in 1996 was comparable with net interest expense in
1995, as the impact of slightly higher net borrowings during 1996 was offset
by lower short term interest rates. Net interest expense in 1994 was
significantly lower compared to 1995 and 1996, as 1994 benefited from the
substantial net proceeds received from the divested business.
The Provision for Income Taxes was 23.5 percent of pre-tax income in 1996,
versus an effective rate in 1995 and 1994 of 22.5 percent. While 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 overall increase in
profitability in 1996 slightly diminished the relative benefit derived from
these low tax jurisdictions.
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 1994.
LIQUIDITY AND CAPITAL RESOURCES
In 1996, the Company generated $102.2 million of cash from operating
activities, compared to $99.1 million in 1995 and $88.6 million in 1994. Net
cash provided by operating activities continued to be the Company's primary
source of funding capital expenditures, dividends and open market share
repurchases in 1996. The slight increase in cash generated from operating
activities in 1996 compared to 1995 was primarily due to strong collections of
accounts receivable, which helped fund an $11.6 million increase in
inventories.
Capital spending in 1996 was the same as in 1995. The Company continued to
invest in capacity expansions in the Company's manufacturing facilities and in
information technology systems. In addition, the Company moved into a new
headquarters and research and development facility in Japan. As previously
discussed, the cost of this move was funded by a sale of equity securities in
Japan.
During the past three years, the Company has used cash generated from its
operations and, in 1995 and 1994, cash generated from the sale of its Waters
Chromatography and BioScience divisions, to purchase shares of its outstanding
common stock. The Company spent net of stock option exercise amounts, $46.9
million, $64.0 million and $293.0 million in 1996, 1995 and 1994,
respectively, to repurchase shares of its outstanding common stock. At
December 31, 1996, the Company had $9.0 million remaining to spend on a $50.0
million share repurchase program announced in the first quarter of 1996. Share
repurchases were stopped at the end of the third quarter of 1996 to maintain
financial flexibility in light of pending acquisitions.
The Company incurred one-time finance related costs in both 1995 and 1994,
which did not repeat in 1996. In 1995, the Company paid $3.5 million to close
out the Company's German Deutschemark swap. In 1994, the
S-17
<PAGE>
Company paid a total of $15.4 million in financing related transactions; $5.1
million was used to pre-pay the Company's $100.0 million notes payable due in
1998, while $10.3 million was used to close out the Company's yen currency
swap.
The Company had $46.9 million of cash and short-term investments on hand at
the end of 1996. The amount on hand at December 31, 1996 was higher than that
normally held by the Company and consists primarily of balances held by the
Company's international subsidiaries which were used to fund their respective
portions of the Amicon and Tylan acquisitions. In addition, the Company's
Credit Facility was drawn on to fund both acquisitions. Borrowings required to
fund the acquisition of Amicon were drawn on in December, 1996. Borrowings
required to fund the acquisition of Tylan were drawn on in the first quarter
of 1997.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes (which
represent two separate series of, and are referred to in the accompanying
Prospectus as, "Debt Securities"), supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Debt Securities set forth in the accompanying Prospectus, to which reference
is hereby made. The particular terms of the Notes offered by this Prospectus
Supplement are described herein.
The Notes are to be issued under the Indenture dated as of April 1, 1997,
between the Company and State Street Bank and Trust Company, as Trustee,
described in the accompanying Prospectus. The following information relating
to the Notes and the Indenture is a summary of provisions contained therein
and does not purport to be complete. The provisions of the Indenture are
incorporated herein by reference and the following summary is qualified in its
entirety thereby.
GENERAL
The 2002 Notes and the 2007 Notes will bear interest at the rates set forth
on the cover page hereof from April 1, 1997. Such interest will be computed on
the basis of a 360-day year of twelve 30-day months and will be payable
semiannually on April 1 and October 1 of each year, commencing October 1,
1997, to the holders of record at the close of business on the preceding March
15 or September 15, as the case may be. The 2002 Notes will mature on April 1,
2002. The 2007 Notes will mature on April 1, 2007.
If any Interest Payment Date falls on a day that is not a Business Day, the
interest payment shall be postponed to the next day that is a Business Day,
and no interest on such payment shall accrue for the period from and after
such Interest Payment Date. If the maturity date of the Notes falls on a day
that is not a Business Day, the payment of interest and principal may be made
on the next succeeding Business Day, and no interest on such payment shall
accrue for the period from and after the maturity date. For these purposes,
"Business Day" means any day, except Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized by law to close.
The Notes are unsecured and will rank pari passu with all other unsecured
and unsubordinated debt of the Company. The Notes will not be redeemable prior
to maturity and will not provide for any sinking fund.
BOOK-ENTRY SYSTEM
Upon issuance, the Notes will each be represented by one or more fully
registered global notes (the "Global Notes" and each a "Global Note"). The
Global Notes will be deposited with, or on behalf of, The Depository Trust
Company ("DTC"), as depositary (the "Depositary"), and registered in the name
of a nominee of the Depositary. Principal of and interest on the Notes will be
payable, and the transfer of Notes will be registrable, only through
Depositary. Unless and until it is exchanged in whole or in part for Notes in
definitive registered form, a Global Note may not be transferred except as a
whole by the Depositary to a nominee of such Depositary
S-18
<PAGE>
or by a nominee of such Depositary to such Depositary or another nominee of
such Depositary or by such Depositary or any such nominee to a successor of
such Depositary or a nominee of such successor.
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities of its participants and to facilitate the
clearance and settlement of transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers
(including the Underwriters), banks, trust companies, clearing corporations
and certain other organizations, some of whom (and/or their representatives)
own DTC. Access to DTC's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a participant, either directly or indirectly.
A further description of the Depositary's procedures with respect to the
Global Notes is set forth in the accompanying Prospectus under "Description of
the Debt Securities--Global Securities." DTC has confirmed to the Company, the
Underwriters and the Trustee that it intends to follow such procedures.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters (as defined below)
in immediately available funds. All payments of principal and interest to the
Depositary will be made by the Company in immediately available funds. The
Notes will trade in the DTC's Same-Day Funds Settlement System until maturity,
and secondary market trading activity in the Notes will therefore settle in
immediately available funds. No assurance can be given as to the effect, if
any, of settlements in immediately available funds on trading activity in the
Notes.
TRUSTEE'S RELATIONSHIP WITH ISSUER
State Street Bank and Trust Company, the Trustee under the Indenture, also
acts as successor trustee under the indenture dated as of May 3, 1995, between
the Company and The First National Bank of Boston, with respect to the
Company's 6.78% Notes due March 3, 2004.
S-19
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Company has agreed to sell to each of the underwriters named below (the
"Underwriters"), and each of the Underwriters has severally agreed to
purchase, the respective principal amounts of the Notes set forth opposite its
name below:
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
UNDERWRITER 2002 NOTES 2007 NOTES
----------- ------------ ------------
<S> <C> <C>
J.P. Morgan Securities Inc........................... $ 50,000,000 $ 50,000,000
Credit Suisse First Boston Corporation............... 50,000,000 50,000,000
------------ ------------
Total............................................ $100,000,000 $100,000,000
============ ============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Notes, if any are
taken.
The Underwriters initially propose to offer the 2002 Notes and 2007 Notes
directly to the public at the respective public offering prices set forth on
the cover page of this Prospectus Supplement and to certain dealers at such
prices less a concession of, in the case of the 2002 Notes, not in excess of
.35% of the principal amount thereof and, in the case of the 2007 Notes, not
in excess of .40% of the principal amount thereof. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of .25% of the
principal amount of the Notes to certain other dealers. After the initial
public offering, such prices and such concessions may be changed.
The Company does not intend to apply for listing of the Notes on any
securities exchange. The Notes are a new issue of securities with no
established trading market. The Company has been advised by the Underwriters
that the Underwriters intend to make a market in the Notes, but the
Underwriters are not obligated to do so and may discontinue market making at
any time without notice. No assurance can be given as to the liquidity of the
trading markets for the Notes.
In connection with the offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Notes.
Specifically, the Underwriters may overallot the offering, creating a
syndicate short position. In addition, the Underwriters may bid for, and
purchase, in the open market to cover syndicate shorts or to stabilize the
price of the Notes. Finally, the underwriting syndicate may reclaim selling
concessions allowed for distributing the Notes in the offering, if the
syndicate repurchases previously distributed Notes in syndicate covering
transactions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the Notes above
independent market levels. The Underwriters are not required to engage in
these activities, and may end any of these activities at any time.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, the Underwriters and
their affiliates have acted as financial advisors and engaged, and may in the
future engage, in other commercial banking, investment banking and financial
transactions with the Company. Morgan Guaranty Trust Company of New York, an
affiliate of J.P. Morgan Securities Inc., is currently a lender to the Company
under the Credit Facility. In addition, Maureen Hendricks, a managing director
of J.P. Morgan & Co. is also a member of the Board of Directors of the
Company.
LEGAL OPINIONS
The validity of the Notes will be passed upon for the Company by Geoffrey
Nunes, Senior Vice President of the Company, and certain legal matters will be
passed upon for the Underwriters by Cravath, Swaine & Moore, New York, New
York, counsel for the Underwriters. Samuel C. Butler, a partner at Cravath,
Swaine & Moore, is a director of the Company.
S-20
<PAGE>
$300,000,000
MILLIPORE CORPORATION
DEBT SECURITIES
Millipore Corporation (the "Company") may offer from time to time its
unsecured debt securities consisting of notes, debentures or other evidences
of indebtedness (the "Debt Securities") at an aggregate initial offering price
of not more than $300,000,000. The Debt Securities may be offered as separate
series in amounts, at prices and on terms to be determined in light of market
conditions at the time of sale and set forth in a Prospectus Supplement or
Prospectus Supplements.
The terms of each series of Debt Securities, including, where applicable,
the specific designation, aggregate principal amount, authorized
denominations, maturity, rate or rates (or method of calculation) and time or
times of payment of any interest, any terms for optional or mandatory
redemption or early payment or payment of additional amounts or any sinking
fund provisions, any initial public offering price, the proceeds to the
Company and any other specific terms in connection with the offering and sale
of such series and any listing on a securities exchange will be set forth in a
Prospectus Supplement or Prospectus Supplements. Debt Securities may be issued
with amounts payable in respect of principal of or any premium or interest on
the Debt Securities determined by reference to the value, rate or price of one
or more specified indices.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The Debt Securities may be sold directly by the Company, through agents
designated from time to time or to or through underwriters or dealers. See
"Plan of Distribution". If any agents of the Company or any underwriters are
involved in the sale of any Debt Securities in respect of which this
Prospectus is being delivered, the names of such agents or underwriters and
any applicable commissions or discounts will be set forth in a Prospectus
Supplement.
This Prospectus may not be used to consummate sales of securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is March 18, 1997
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
Regional Offices of the Commission: Northeast Regional Office, 7 World Trade
Center, Suite 1300, New York, New York 10048; and Midwest Regional Office,
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can also be obtained by mail from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Common Stock of the Company is listed on the New York
Stock Exchange and such reports, proxy statements, and other information can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005. The Registration Statement has been, and
amendments thereto will be, filed with the Commission through the Electronic
Data Gathering, Analysis and Retrieval ("EDGAR") system. Registration
statements, reports, proxy statements and other information filed through the
EDGAR system with respect to the Company are publicly available through the
Commission's Web site (http://www.sec.gov).
The Company has filed with the Commission a Registration Statement on Form
S-3 (together with all amendments and exhibits thereto, called the
"Registration Statement") under the Securities Act of 1933 (the "Act") with
respect to the Debt Securities offered by this Prospectus. This Prospectus
does not contain all of the information set forth or incorporated by reference
in the Registration Statement and the exhibits and schedules relating thereto,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. For further information with respect to the
Company and the Debt Securities offered by this Prospectus, reference is made
to the Registration Statement and the exhibits filed or incorporated as a part
thereof, which are on file at the offices of the Commission and may be
obtained upon payment of the fee prescribed by the Commission or may be
examined without charge at the offices of the Commission. Statements contained
in this Prospectus as to the contents of any documents referred to are not
necessarily complete, and, in each such instance, are qualified in all
respects by reference to the applicable documents filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference into this Prospectus:
(a) the Company's Annual Report on Form 10-K for the year ended December
31, 1996, dated March 7, 1997;
(b) the Company's Current Report on Form 8-K, filed January 14, 1997;
(c) the Company's Current Report on Form 8-K filed February 7, 1997.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act prior to the termination of the
offering of Debt Securities hereunder shall be deemed to be incorporated by
reference in this Prospectus and to be a part of this Prospectus from the date
of filing thereof. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
2
<PAGE>
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, at the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated by reference into this Prospectus
(other than certain exhibits). Requests for such copies should be directed to:
Millipore Corporation, 80 Ashby Road, Bedford, Massachusetts 01730, Attention:
Jeffrey Rudin, Esq., telephone (617)-533-2044.
THE COMPANY
The Company develops, manufactures and sells products which are used
primarily for the analysis and purification of fluids, as well as for their
control, measurement and distribution.
The Company's products are based on a variety of membrane and other
technologies that effect separations, and fluid process management,
principally through physical and chemical methods as well as a specialty
instrumentation. The Company is an integrated multinational manufacturer of
these products; during 1996 approximately 65% of the Company's sales were made
to customers outside the United States.
The Company's principal executive offices are located at 80 Ashby Road,
Bedford, Massachusetts 01730. The Company's telephone number is (617)-275-
9200. References herein to the Company shall mean Millipore Corporation and
its subsidiaries, unless the context requires otherwise.
FACTORS THAT MAY AFFECT FUTURE RESULTS
FORWARD-LOOKING STATEMENTS
This Prospectus, including any documents incorporated herein by reference
and any Prospectus Supplements, contains certain forward-looking statements
that involve substantial risks and uncertainties as more fully described
below. In addition, from time to time, management of the Company have made or
may make forward-looking statements, orally or in writing. When used in this
Prospectus or in any such documents incorporated herein by reference or in any
such statements, the words "anticipate", "believe", "estimate", "expect",
"may", "will", "should" or the negative thereof and similar expressions as
they relate to the Company or its management are intended to identify such
forward-looking statements. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Potential risks and uncertainties that
could affect the Company's future operating results include, without
limitation, 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; the inability to
utilize technology in current or planned products due to overriding rights by
third parties, and any other risk factors identified in this Prospectus,
including any documents incorporated herein by reference and any Prospectus
Supplements. In addition to the foregoing, prospective investors should
carefully consider the following risk factors in addition to the other
information set forth in this Prospectus before making any decision to invest
in the securities offered hereby.
RISKS FROM COMPETITION
The Company faces intense competition in all of its sales to customers. The
Company believes that its principal competitors currently include Pall
Corporation, Barnstead Thermolyne Corporation, Sartorius GmbH, and MKS
Instruments, Inc. Certain of the Company's competitors are larger and have
greater financial and other resources than the Company. The Company believes
that the principal competitive factors affecting its business include price,
technical expertise, product quality and responsiveness to customer needs,
including service and technical support.
3
<PAGE>
CURRENCY RISKS FROM OVERSEAS OPERATIONS
Approximately 65% of the Company's sales derive from sales to customers
outside of United States. Consequently, the Company's results of operations
could be negatively affected by a material strengthening of the dollar over a
short period of time. Exchange rate fluctuations are beyond the Company's
control, and there can be no assurance that the U.S. dollar will not
appreciate against the Japanese Yen or other currencies in which the Company
earns a significant portion of its revenues.
RISKS FROM ENVIRONMENTAL CLAIMS
The Company's operations are subject to federal, state and local
environmental and health and safety laws and regulations that impose workplace
standards and limitations on the discharge of pollutants into the environment
and establish standards for the handling, generation, emission, release,
discharge, treatment, storage and disposal of certain materials, substances
and wastes. The Company is a potentially responsible party at twelve hazardous
waste sites. To date the Company has paid approximately $14 million to settle
its liabilities at seven of these sites. The Company does not believe that its
estimated remaining share of liability for the cleanup of these sites will
have a material adverse effect on the Company's business or financial
position. However, future events, such as changes in existing laws and
regulations or enforcement policies or the discovery of contamination on sites
operated by the Company, may give rise to additional compliance costs which
could have a material adverse effect on the Company's financial condition.
RISKS FROM INTEGRATION OF OPERATIONS
The Company has recently acquired two businesses that must be integrated and
combined efficiently. The integration process will present significant
challenges, particularly as one of the two acquired companies made an
acquisition of its own in the summer of 1996 which it had not integrated prior
to itself being acquired by Millipore in January of 1997. The process of
integrating acquired businesses may involve unforeseen difficulties, and there
can be no assurance that the potential benefits of such integration will be
realized to the extent or on the schedule expected by the Company. Moreover,
such integration may require a disproportionate amount of the time and
attention of the Company's management and the Company's financial and other
resources. Any delays or unexpected costs in connection with such integration
could have a material adverse effect on the Company's financial condition and
results of operations.
RISKS OF CYCLICALITY OF MICROELECTRONICS INDUSTRY
A substantial portion of the Company's business depends upon the future
worldwide growth of the microelectronics industry, particularly the
semiconductor portion, which is beyond Millipore's control. The
microelectronics industry is highly cyclical and historically has experienced
periods of oversupply, resulting in significantly reduced demand for capital
equipment, including the products manufactured by the Company. As a result of
this cyclicality, Millipore has experienced, and in the future could
experience, reduced revenues. The Company's exposure to the microelectronics
industry will increase as a result of its acquisition in the first quarter of
1997 of a company whose customers are primarily manufacturers of semiconductor
wafer processing equipment.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's coverage ratios for the past five years are as set forth in the
following table:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------
1992 1993 1994 1995 1996
---- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(a)............ 4.72 5.90 10.77 9.06 5.17
</TABLE>
- --------
(a) The ratio of earnings to fixed charges has been computed by dividing
earnings available from continuing operations before fixed charges and
income taxes by the fixed charges. Fixed charges consist of interest and
debt expense and the portion of rental expense that is representative of the
interest factor (deemed by the Company to be one-third).
4
<PAGE>
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Debt Securities
primarily for the repayment of outstanding debt and for general corporate
purposes.
The Company expects that it will, on recurring basis, engage in additional
financings in character and amount to be determined as the need arises.
DESCRIPTION OF THE DEBT SECURITIES
The Debt Securities are to be issued under an Indenture (the "Indenture") to
be entered into between the Company and State Street Bank and Trust Company,
as Trustee (the "Trustee"), the form of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The Debt Securities
may be issued from time to time in one or more series. The particular terms of
each series, or of Debt Securities forming a part of a series, which are
offered by a Prospectus Supplement will be described in such Prospectus
Supplement. The following statements are subject to the detailed provisions of
the Indenture; whenever particular provisions of the Indenture are referred
to, such provisions are incorporated by reference as a part of the statement
made, and the statement is qualified in its entirety by such reference.
Whenever a defined term is referred to and not defined under "Description of
the Debt Securities", the definition thereof is contained in the Indenture.
GENERAL
The Indenture provides for the issuance from time to time of Debt Securities
in an unlimited aggregate principal amount and an unlimited number of series.
The Debt Securities are unsecured and will rank pari passu with all other
unsecured and nonsubordinated debt of the Company.
Reference is made to the applicable Prospectus Supplement for the following
terms of the series of Debt Securities offered thereby: (i) the title of the
Debt Securities of such series; (ii) any limit upon the aggregate principal
amount of such Debt Securities; (iii) the person to whom the interest on a
Debt Security of any series will be payable if not the person in whose name
that Debt Security is registered on the regular record date; (iv) the date or
dates on which such Debt Securities will mature; (v) the rate or rates, or the
method of determination thereof, at which such Debt Securities will bear
interest, if any, the date or dates from which such interest will accrue, the
date or dates such interest will be payable and the Regular Record Dates; (vi)
the place or places where the principal of, premium, if any, and interest, if
any, on, such Debt Securities will be payable; (vii) the periods, prices and
terms and conditions upon which any such Debt Security may be redeemed, in
whole or in part, at the option of the Company; (viii) any terms for
redemption or repurchase pursuant to any sinking fund or analogous provision
or at the option of a Holder; (ix) any terms for conversion of the Debt
Securities into other securities of the Company or any other corporation at
the option of a holder; (x) any terms for the attachment to such Debt
Securities of warrants, options or other rights to purchase or sell stock or
other securities of the Company; (xi) if other than the principal amount
thereof, the portion of the principal amount of such Debt Securities that will
be payable upon acceleration of maturity (Debt Securities subject to such
provisions being referred to as "Original Issue Discount Securities"); (xii)
any deletions or modifications of, or additions to, the Events of Default or
covenants of the Company under the Indenture with respect to such Debt
Securities (including whether the covenants described below under "Certain
Covenants of the Company" will not apply to such Debt Securities); (xiii)
whether such Debt Securities will be issued in the form of one or more global
securities (each a "Global Debt Security"); (xiv) if such Debt Securities are
to be issued upon the exercise of warrants, the time, manner and place for
such Debt Securities to be authenticated and delivered; and (xv) any other
terms of any of such Debt Securities not inconsistent with the Indenture.
(Sections 202 and 301)
Unless otherwise specified in the applicable Prospectus Supplement, (x) the
Debt Securities will be issued only in fully registered form without coupons
and (y) Debt Securities denominated in U.S. dollars will be issued in
denominations of $1,000 or an integral multiple thereof. Debt Securities may
bear legends required by United States Federal tax law and regulations.
(Section 401)
5
<PAGE>
CERTAIN COVENANTS OF THE COMPANY
Certain Definitions Applicable to Covenants
The term "Subsidiary" of the Company will be defined in the Indenture as a
corporation at least a majority of whose outstanding Voting Stock shall at the
time be owned, directly or indirectly, by the Company and/or one or more
subsidiaries of the Company.
The term "Restricted Subsidiary" will be defined as a Subsidiary of the
Company which either owns a Principal Property or which had total assets that
exceeded 10% of the total assets of the Company and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year.
The term "Principal Property" will be defined as any real estate or any
manufacturing or processing plant or warehouse owned or leased by the Company
or by any Restricted Subsidiary and the gross book value of which (without
deduction of any depreciation reserves) on the date as which the determination
is being made exceeds 2% of Consolidated Net Tangible Assets, other than (a)
properties which in the opinion of the Board of Directors are not of material
importance to the Company's business as an entirety or (b) any portion of any
particular property which is found by the Board of Directors not to be of
material importance to the use or operation of such property.
The term "Attributable Debt" will be defined as the total net amount of rent
required to be paid during the remaining term of certain leases, discounted at
the rate per annum borne by the relevant Debt Securities.
The term "Consolidated Net Tangible Assets" will be defined as the total
assets (less applicable reserves and other properly deductible items) on the
balance sheet of the Company, less (a) all current liabilities and (b)
goodwill, trade names, trademarks, patents, organization expenses and other
like intangibles of the Company and its consolidated Subsidiaries. (Section
101)
Restrictions on Secured Debt
If the Company or any Restricted Subsidiary shall incur or guarantee any
indebtedness for money borrowed ("Debt") secured by a mortgage, pledge or lien
("Mortgage") on any Principal Property of the Company or of any Restricted
Subsidiary, or on any shares of stock or Debt of any Restricted Subsidiary,
the Company will secure or cause such Restricted Subsidiary to secure the Debt
Securities equally and ratably with (or, at the Company's option, prior to)
such secured Debt, unless the aggregate amount of all such secured Debt,
together with all Attributable Debt of the Company and its Restricted
Subsidiaries with respect to sale and leaseback transactions involving
Principal Properties (with the exception of such transactions which are
excluded as described in "Restrictions on Sales and Leasebacks" below), would
not exceed 15% of Consolidated Net Tangible Assets. (Section 1104)
The above restrictions will not apply to, and there will be excluded from
secured Debt in any computation under such restrictions, Debt secured by (a)
Mortgages on property of, or on any shares of stock of or Debt of, any
corporation existing at the time such corporation becomes a Restricted
Subsidiary; provided, however, that such Mortgages in effect as of the date of
acquisition of a Restricted Subsidiary or a business acquired by a Restricted
Subsidiary shall not have been incurred in contemplation of such acquisition,
(b) Mortgages in favor of landlords and mechanics and materialmen incurred in
the ordinary course of business; (c) Mortgages in favor of the Company or a
Restricted Subsidiary; (d) Mortgages in favor of governmental bodies to secure
progress or advance payments; (e) Mortgages on property, shares of stock or
Debt existing at the time of acquisition thereof (including acquisition
through merger or consolidation) and purchase money and construction Mortgages
which are entered into prior to, at the time of or within 180 days after the
later of acquisition or completion of construction; (f) Mortgages securing
industrial revenue or pollution control bonds; (g) Mortgages made in
connection with, or to secure payment of, workmen's compensation, unemployment
insurance, old age pensions or other social security obligations; (h)
encumbrances consisting of easements, rights of way, zoning restrictions,
restrictions on the use of real property and defects and irregularities in the
title thereto; (i) Mortgages in respect of certain judgements or awards in
respect of which the Company or any of its Restricted Subsidiaries has
maintained adequate reserves and (j) any extension, renewal or refunding of
any Mortgage referred to in the foregoing clauses (a) though (i) inclusive;
provided that, any such extended, renewed or replaced Mortgage shall be
limited to the same property, stock or Debt that secured the original
Mortgage. (Section 1104)
6
<PAGE>
Restrictions on Sales and Leasebacks
Neither the Company nor any Restricted Subsidiary may enter into any sale
and leaseback transaction involving any Principal Property, unless the
aggregate amount of all Attributable Debt with respect to such transactions
plus all Debt secured by Mortgages on Principal Properties (with the exception
of secured Debt which is excluded as described in "Restrictions on Secured
Debt" above) would not exceed 10% of Consolidated Net Tangible Assets.
(Section 1105)
The restrictions on sale and leaseback transactions will not apply to, and
there shall be excluded from Attributable Debt in any computation under such
restrictions, any sale and leaseback transaction if (a) the lease is for a
period, including renewal rights, of not in excess of three years, (b) the
sale or transfer of the Principal Property is made prior to, at the time of or
within 180 days after its acquisition or construction, (c) the lease secures
or relates to industrial revenue or pollution control bonds, (d) the
transaction is between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries or (e) the Company or such Restricted Subsidiary,
within 180 days after the sale or transfer is completed, applies to the
retirement of Funded Debt (including the Debt Securities) of the Company
ranking on a parity with or senior to all the Debt Securities, or Funded Debt
of a Restricted Subsidiary, or to the purchase of other property which will
constitute a Principal Property of a value at least equal to the value of the
Principal Property leased back, an amount not less than the greater of (i) the
net proceeds of the sale of the Principal Property leased back or (ii) the
fair market value of the Principal Property leased back. The amount to be
applied to the retirement of Funded Debt shall be reduced by the principal
amount of any debentures or notes constituting Funded Debt (including the Debt
Securities) of the Company or a Restricted Subsidiary surrendered to the
applicable trustee for cancellation within such 180-day period or the
principal amount of Funded Debt voluntarily retired within such 180-day
period; provided, that, no retirement referred to in this sentence may be
effected by payment at maturity or pursuant to any mandatory prepayment
provision. (Section 1105)
Event Risk
Except for the limitations on Secured Indebtedness and Sale and Leaseback
Transactions described above, the Indenture and Debt Securities do not contain
any covenants or other provisions designed to afford holders of the Debt
Securities protection in the event of a highly leveraged transaction involving
the Company.
Limitation on Merger, Consolidation and Certain Sales of Assets
The Company will covenant that it will not merge into or consolidate with
any other corporation, or convey or transfer its properties and assets
substantially as an entirety to, any person unless (a) such successor shall be
a corporation organized and existing under the laws of the United States of
America or any state or the District of Columbia; (b) the successor assumes on
the same terms and conditions all obligations under the Debt Securities and
Indenture and (c) immediately after giving effect to the transaction, there is
no default, or an event which, after notice or lapse of time, or both, would
become a default, under the Indenture. (Section 901) Upon any such merger,
consolidation, conveyance or transfer, the successor will succeed to, and will
be substituted in lieu of, the Company. (Section 902)
EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of any series will be exchangeable for other Debt Securities
of the same series and of a like aggregate principal amount and tenor of
different authorized denominations. No service charge will be made for any
transfer or exchange of the Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge in
connection therewith. (Section 404)
Debt Securities may be presented for exchange as provided above, and Debt
Securities (other than Book-Entry Debt Securities (as defined below under
"Global Securities")) may be presented for registration of transfer (with the
form of transfer endorsed thereon duly executed), at the office of the
Security Registrar or at the office of any additional transfer agent
designated by the Company for such purpose with respect to any series of Debt
7
<PAGE>
Securities and referred to in the applicable Prospectus Supplement. (Sections
404 and 1102) The Trustee will be the initial Security Registrar under the
Indenture. State Street Bank and Trust Company, N.A., an affiliate of the
Trustee, with offices currently located at 61 Broadway, Concourse Level, New
York, New York 10006, will initially be designated as the office or agency of
the Company in the Borough of Manhattan, The City of New York where Debt
Securities may be presented for registration of transfer or exchange. (Section
404) The Company may at any time designate, or rescind the designation of, the
Security Registrar or any additional transfer agent or approve a change in the
location through which the Security Registrar or any such transfer agent acts,
except that the Company will be required to maintain a transfer agent in each
Place of Payment for each series of Debt Securities. The Company may at any
time designate additional transfer agents with respect to any series of Debt
Securities. (Section 1102)
In the event of any redemption in part of any series of Debt Securities, the
Company will not be required to: (i) issue, register the transfer of, or
exchange, Debt Securities of any series during a period beginning at the
opening of business 15 Business Days before any selection of Debt Securities
of that series to be redeemed and ending at the close of business on the day
of mailing of the relevant notice of redemption; (ii) register the transfer
of, or exchange, any Debt Security selected for redemption, in whole or in
part, except the unredeemed portion of any Debt Security being redeemed in
part. (Section 404)
For a discussion of restrictions on the exchange, registration and transfer
of Global Debt Securities, see "Global Securities" below.
PAYMENT AND PAYING AGENTS
Payment of principal of, premium, if any, and interest, if any, on, Debt
Securities will be made at the office of such Paying Agent or Paying Agents as
the Company may designate from time to time. At the option of the Company,
payment of any interest on Debt Securities may be made by check mailed to the
address of the person entitled thereto as such address shall appear in the
Security Register. Payment of any installment of interest on any Debt Security
will be made to the person in whose name such Debt Security is registered at
the close of business on the Regular Record Date for such interest. (Sections
406 and 410)
Unless otherwise indicated in the applicable Prospectus Supplement, the
Trustee will be designated as the Company's Paying Agent with respect to Debt
Securities, and the office of State Street Bank and Trust Company, N.A., an
affiliate of the Trustee, will be the office or agency of the Company in the
Borough of Manhattan, The City of New York where Debt Securities may be
presented or surrendered for payment. Any other Paying Agents in the United
States initially designated by the Company for the Debt Securities of a series
will be named in the applicable Prospectus Supplement. The Company may at any
time designate additional Paying Agents or rescind that designation of any
Paying Agent or approve a change in the office through which any Paying Agent
acts, except that the Company will be required to maintain a Paying Agent in
each Place of Payment for each series of Debt Securities.
All moneys deposited with the Trustee or a Paying Agent, or then held by the
Company, in trust for the payment of principal of, premium, if any, and
interest, if any, on, any Debt Security that remains unclaimed at the end of
two years after such principal, premium or interest shall become due and
payable will be repaid to the Company, or, if then held by the Company,
discharged from such trust, and the holder of such Debt Security will
thereafter look only to the Company for payment thereof. (Section 1103)
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part as one or
more Global Debt Securities in registered, definitive form. The Global Debt
Security or Securities of a series will be deposited with, or on behalf of, a
depositary located in the United States (a "U.S. Depositary"). (Section 403)
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The specific terms of the depositary arrangement with respect to any Debt
Securities of a series issued in global form will be described in the
Prospectus Supplement relating to such series. The Company anticipates that
the following provisions will apply to all depositary arrangements. None of
the Company, the Trustee, any Paying Agent or the Security Registrar will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Debt
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. (Section 411) The Company anticipates
that the following provisions will apply to all depositary arrangements with a
U.S. Depositary.
If Debt Securities of a series are to be represented by a definitive global
registered Debt Security to be deposited with or on behalf of a U.S.
Depositary, such Debt Securities ("Book-Entry Debt Securities") will be
represented by a definitive Global Debt Security registered in the name of the
U.S. Depositary or its nominee. In such case, one or more Global Debt
Securities will be issued in a denomination or aggregate denominations equal
to the portion of the aggregate principal or face amount of outstanding
registered Debt Securities. Unless and until it is exchanged in whole for Debt
Securities in definitive registered form, a Global Debt Security may not be
transferred except as a whole by the U.S. Depositary for such Global Debt
Security to a nominee of such U.S. Depositary, or by a nominee of such U.S.
Depositary to such U.S. Depositary or another nominee of such U.S. Depositary
or by such U.S. Depositary or any such nominee to a successor U.S. Depositary
or a nominee of such successor. Upon the issuance of a definitive Global Debt
Security registered in the name of the U.S. Depositary, the U.S. Depositary
will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Book-Entry Debt Securities represented by
such Global Debt Security to the accounts of institutions that have accounts
with such depository or its nominee ("participants"). The accounts to be
credited shall be designated by the underwriters or agents for the sale of
such Book-Entry Debt Securities or by the Company, if such Debt Securities are
offered and sold directly by the Company. Ownership of Book-Entry Debt
Securities will be limited to participants or persons that may hold interests
through participants. Ownership of Book-Entry Debt Securities will be shown
on, and the transfer of that ownership will be effected only through, records
maintained by the U.S. Depositary or its nominee for the applicable definitive
Global Debt Security or by participants or persons that hold through
participants. So long as the U.S. Depositary, or its nominee, is the
registered owner of such global Debt Security, such depositary or such
nominee, as the case may be, will be considered the sole owner or holder of
the Book-Entry Debt Securities represented by such Global Debt Security for
all purposes under the Indenture. Accordingly, each person owning a beneficial
interest in a Global Debt Security must rely on the procedures of the U.S.
Depositary for such Global Debt Security and, if such person is not a
participant, on the procedures of the participant through which such person
owns its interest, to exercise any rights of a holder under the applicable
Indenture. The Company understands that under existing industry practices, if
it requests any action of holders or if an owner of a beneficial interest in a
Global Debt Security desires to give or take any action which a holder is
entitled to give or take under the applicable Indenture, the U.S. Depositary
for such Global Debt Security would authorize the participants holding the
relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners acting through them.
Payment of principal of, premium, if any, and interest, if any, on Book-
Entry Debt Securities will be made to the U.S. Depositary or its nominee, as
the case may be, as the registered owner or the holder of the Global Debt
Security representing such Book-Entry Debt Securities. Owners of Book-Entry
Debt Securities will not be entitled to have such Debt Securities registered
in their names in the Security Register, will not receive or be entitled to
receive physical delivery of such Debt Securities in definitive form and will
not be considered the owners or holders thereof under the Indenture. The laws
of some jurisdictions required that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws impair the ability to purchase or transfer Book-Entry Debt Securities.
The Company expects that the U.S. Depositary for Book-Entry Debt Securities
of a series, upon receipt of any payment of principal of, premium, if any, or
interest, if any, on, the related definitive Global Debt Security,
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will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount
of such Global Debt Security as shown on the records of such U.S. Depositary.
The Company also expects that payments by participants to owners of beneficial
interests in such Global Debt Security held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants.
If the U.S. Depositary for a series of Debt Securities is at any time
unwilling, unable or ineligible to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue individual Debt Securities of such series in definitive form in exchange
for the Global Debt Security representing such series of Debt Securities. In
addition, the Company may, at any time and in its sole discretion, subject to
any limitations described in the Prospectus Supplement, determine not to have
any Debt Securities of such series represented by one or more Global Debt
Securities and, in such event, will issue individual Debt Securities of such
series in exchange for the Global Debt Security or Securities representing
such series of Debt Securities. In either instance, the Company will issue
Debt Securities in definitive form, equal in aggregate principal amount to the
Global Debt Securities, in such names and in such principal amounts as the
U.S. Depositary for such Global Debt Securities shall request.
SATISFACTION AND DISCHARGE; DEFEASANCE
At the request of the Company, the Indenture will cease to be in effect as
to the Debt Securities of any series (except for certain obligations to
register the transfer or exchange of such Debt Securities and hold monies for
payment of such Debt Securities in trust) when either (a) all such Debt
Securities have been delivered to the Trustee for cancellation or (b) all such
Debt Securities have become due and payable or will become due and payable at
their stated maturity within one year, or are to be called for redemption
within one year, and the Company has deposited with the trustee in trust,
money, in the currency, currencies or currency unit or units in which such
Debt Securities are payable, in an amount sufficient to pay all the principal
of, premium, if any, and interest, if any, on, such Debt Securities on the
dates such payments are due in accordance with the terms of such Debt
Securities. (Section 501)
Unless otherwise specified in the applicable Prospectus Supplement, the
Company, at its option, (a) will be Discharged after 91 days from any and all
obligations in respect of any series of Debt Securities (except for certain
obligations to register the transfer of or exchange Debt Securities, replace
stolen, lost or mutilated Debt Securities, maintain paying agencies and hold
moneys for payment in trust) or (b) need not comply with certain restrictive
covenants of the Indenture in respect of such series (including those
described under "Certain Covenants of the Company"), in each case if the
Company deposits irrevocably with the trustee in trust, money, or U.S.
Government Obligations, which through the payment of interest thereon and
principal thereof in accordance with their terms will provide money, in an
amount sufficient to pay all the principal (including any mandatory sinking
fund payments) of, and interest on, such series on the dates such payments are
due in accordance with the terms of such series. Among the conditions to the
Company's exercising any such option, the Company is required to deliver to
the Trustee an opinion of counsel to the effect that the deposit and related
defeasance would not cause the holders of such series to recognize income,
gain or loss for United States Federal income tax purposes and that the
holders of such series will be subject to United States Federal income tax in
the same amounts, in the same manner and at the same times as would have been
the case if such option had not been exercised. (Section 503)
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified therein with
respect to any series of Debt Securities shall have happened and be
continuing, either the Trustee or the holders of 25% in principal amount of
the outstanding Debt Securities of such series (in the case of certain events
of bankruptcy, insolvency and reorganization, voting as one class with all
other outstanding Debt Securities) may declare the principal of all
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the Debt Securities of such series, together with accrued interest thereon, if
any, to be immediately due and payable by notice in writing to the Company
(and to the Trustee if given by the holders). (Section 602)
Events of Default in respect of any series are defined in the Indenture as
being: default for 30 days in payment of any interest installment when due;
default in payment of principal of, or premium, if any on, Debt Securities of
such series when due (other than any sinking fund payments) at their stated
maturity, by declaration, when called for redemption or otherwise; default in
the making of any sinking fund payment when due; default for 90 days after
notice to the Company by the Trustee or by holders of 25% in principal amount
of the outstanding Debt Securities of such series in the performance of any
covenant in the Debt Securities of such series or in the Indenture with
respect to Debt Securities of such series; default by the Company in the
payment at final maturity, after the expiration of any applicable grace
period, of debt having a principal amount then outstanding in excess of $25
million, or acceleration of the Company's obligation to pay any indebtedness
in such principal amount; certain events of bankruptcy, insolvency and
reorganization; and any other Event of Default provided with respect to the
Debt Securities of such series, if so specified in the applicable Prospectus
Supplement. No Event of Default with respect to a single series of
indebtedness issued under the Indenture (and any supplemental indentures)
necessarily constitutes and Event of Default with respect to any other series
of indebtedness issued thereunder. (Section 601)
The Indenture provides that the trustee will, within 90 days after the
occurrence of a default with respect to the Debt Securities of any series,
give to the holders of the Debt Securities of such series notice of all
uncured and unwaived defaults known to it; provided that, except in the case
of default in the payment of principal of, premium, if any, of interest, if
any, on, or a sinking fund installment, if any, with respect to, any of the
Debt Securities of such series, the Trustee will be protected in withholding
such notice if it in good faith determines that the withholding of such notice
is in the interest of the holders of the Debt Securities of such series. The
term "default" for the purpose of this provision only means the happening of
any of the Events of Default specified above, except that any grace period or
notice requirement is eliminated. (Section 702)
The Indenture contains provisions entitling the Trustee, subject to the duty
of the Trustee during an Event of Default to act with the required standard of
care, to be indemnified by the holders of the Debt Securities before
proceeding to exercise any right or power under the Indenture at the request
of holders of the Debt Securities. (Section 703)
The Indenture provides that the holders of a majority in principal amount of
the outstanding Debt Securities of any series may in certain circumstances
direct the time, method and place of conducting proceedings for remedies
available to the Trustee or exercising any trust or power conferred on the
Trustee in respect of such series; provided that the Trustee may decline to
follow any such direction if (i) such direction would involve the Trustee in
personal liability or (ii) such direction would be unduly prejudicial to
holders of the Debt Securities of such series not joining in such direction.
(Section 612)
The Indenture includes a covenant that the Company will file annually with
the Trustee an Officers' Certificate stating whether any default exists and
specifying any default that exists. (Section 1106)
In certain cases, the holders of a majority in principal amount of the
outstanding Debt Securities of any series may on behalf of the holders of all
Debt Securities of such series waive any past default or Event of Default with
respect to the Debt Securities of such series or compliance with certain
provisions of the Indenture, except a default (i) not theretofore cured in
payment of the principal of, or premium, if any, or interest, if any, on, any
of the Debt Securities of such series; or (ii) in respect of a covenant or
provision of the Indenture which cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security of a series affected.
(Section 613) The holders of a majority in principal amount of a series of
outstanding Debt Securities also have certain rights to rescind any
declaration of acceleration with respect to such series after all Events of
Default with respect to such series not arising from such declaration shall
have been cured. (Section 602)
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MODIFICATION OF THE INDENTURE
The Indenture provides that the Company and the Trustee thereunder may,
without the consent of any holders of Debt Securities, enter into supplemental
indentures for the purposes, among other things, of adding to the Company's
covenants, adding additional Events of Default, establishing the form or terms
of any series of Debt Securities issued under such supplemental indentures or
curing ambiguities or inconsistencies in the Indenture or making other
provisions, provided such other provisions shall not adversely affect the
interests of the holders of any series of Debt Securities in any material
respect. (Section 1001)
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in principal
amount of the outstanding Debt Securities of all affected series (acting as
one class), to execute supplemental indentures adding any provisions to or
changing or eliminating any of the provisions of the Indenture or modifying
the rights of the holders of the Debt Securities of such series, except that
no such supplemental indenture may, without the consent of the holders of all
the outstanding Debt Securities affected thereby, among other things: (i)
change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Debt Security; (ii) reduce the principal
amount of, the rate of interest on, or any premium payable upon the redemption
of, any Debt Security; (iii) reduce the amount of the principal of an Original
Issue Discount Security that would be due and payable upon acceleration of the
Maturity thereof; (iv) change any Place of Payment where, or the currency or
currencies or currency unit or units in which, any Debt Security or any
premium or interest thereon is payable; (v) impair the right to institute suit
for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date); (vi)
affect adversely the terms, if any, of conversion of any Debt Security into
stock or other securities of the Company or of any other corporation; (vii)
reduce the percentage in principal amount of the outstanding Debt Securities
of any series, the consent of whose holders is required for any such
supplemental indenture, or the consent of whose holders is required for any
waiver (of compliance with certain provisions of the Indenture or certain
defaults thereunder and their consequences) provided for in the Indenture;
(viii) change any obligation of the Company, with respect to outstanding Debt
Securities of a series, to maintain an office or agency in the places and for
the purposes specified in the Indenture for such series; (ix) modify any of
the foregoing provisions or the provisions for the waiver of certain covenants
and defaults, except to increase any applicable percentage of the aggregate
principal amount of outstanding Debt Securities the consent of the holders of
which is required or to provide with respect to any particular series the
right to condition the effectiveness of any supplemental indenture as to that
series on the consent of the holders of a specified percentage of the
aggregate principal amount of outstanding Debt Securities of such series or to
provide that certain other provisions of the Indenture cannot be modified or
waived without the consent of the holder of each outstanding Debt Security
affected thereby. (Section 1002)
WAIVER OF CERTAIN COVENANTS
The Indenture provides that the Company may omit to comply with the
restrictive covenants described above under "Certain Covenants of the Company"
if the holders of not less than a majority in principal amount of all series
of outstanding Debt Securities affected thereby (acting as one class) waive
compliance with such restrictive covenants. (Section 1107)
MEETINGS
The Indenture contains provisions for convening meetings of the holders of
Debt Securities of any series. (Section 1401) A meeting may be called at any
time by the Trustee under the Indenture, and also, upon request, by the
Company or the holders of at least 10% in principal amount of the outstanding
Debt Securities of such series, in any such case upon notice given in
accordance with "Notices" below. (Section 1402) Persons entitled to vote a
majority in principal amount of the outstanding Debt Securities of a series
will constitute a quorum at a meeting of holders of Debt Securities of such
series, except that in the absence of a quorum, if the meeting was called by
the Company or the Trustee, it may be adjourned for a period of not less than
10 days, and in the absence of a quorum at any such adjourned meeting, the
meeting may be further adjourned for a period of not
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less than 10 days. Except for any consent which must be given by the holder of
each outstanding Debt Security affected thereby, as described above under
"Modification of the Indenture," and subject to the provisions described in
the last sentence under this subheading, any resolution presented at a meeting
or adjourned meeting duly reconvened at which a quorum is present may be
adopted by the affirmative vote of the holders of a majority in principal
amount of the outstanding Debt Securities of that series; provided, however,
that any resolution with respect to any request, demand, authorization,
direction, notice, consent, waiver or other action which may be made, given or
taken by the holders of a specified percentage, which is equal to or less than
a majority, in principal amount of outstanding Debt Securities of a series may
be adopted at a meeting or an adjourned meeting duly reconvened at which a
quorum is present by the affirmative vote of the holders of such specified
percentage in principal amount of the outstanding Debt Securities of that
series. Any resolution passed or decision taken at any meeting of holders of
Debt Securities of any series duly held in accordance with the Indenture will
be binding on all holders of Debt Securities of that series. With respect to
any consent, waiver or other action which the Indenture expressly provides may
be given by the holders of a specified percentage of outstanding Debt
Securities of all series affected thereby (acting as one class), only the
principal amount of outstanding Debt Securities of any series represented at a
meeting or an adjourned meeting duly reconvened at which a quorum is present
as aforesaid and voting in favor of such action will be counted for purposes
of calculating the aggregate principal amount of outstanding Debt Securities
of all series affected thereby favoring such action. (Section 1404)
NOTICES
Notices to holders of Debt Securities will be given by first-class mail or
by overnight courier to the addresses of such holders as they appear in the
Security Register. (Section 106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat, prior to due presentment for registration of transfer, the registered
owner of any Debt Security (including Debt Securities in global registered
form), as the absolute owner thereof (whether or not such Debt Security shall
be overdue and notwithstanding any notice to the contrary) for the purpose of
making payment and for all other purposes. (Section 407)
REPLACEMENT OF SECURITIES
Any mutilated Debt Security will be replaced by the Company at the expense
of the holder upon surrender of such mutilated Debt Security to the Security
Registrar. Debt Securities that become destroyed, stolen or lost will be
replaced by the Company at the expense of the holder upon delivery to the
Security Registrar of evidence of the destruction, loss or theft thereto
satisfactory to the Company and the Security Registrar. In the case of a
destroyed, lost or stolen Debt Security, an indemnity satisfactory to the
Security Registrar and the Company may be required at the expense of the
holder of such Debt Security before a replacement Debt Security will be
issued. (Section 405)
GOVERNING LAW
The Indenture and the Debt Securities will be governed by, and construed in
accordance with, the laws of the State of New York.
CONCERNING THE TRUSTEE
State Street Bank and Trust Company, as successor to The First National Bank
of Boston, also serves as the indenture trustee with respect to the Company's
Indenture dated as of May 3, 1995, under which are issued and outstanding the
Company's 6.78% Senior Notes due 2004. Boston EquiServe, L.P., a joint venture
of which the Trustee is an affiliate, serves as Transfer Agent and Registrar
for the Company's Common Stock. The State Street Bank and Trust Company also
is a lending party to a January 22, 1997 $450,000,000 Revolving Credit
Agreement among the Company and a syndicate of lending institutions.
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PLAN OF DISTRIBUTION
The Company may sell the Debt Securities in any of three ways: (i) through
underwriters, (ii) through agents or (iii) directly to a limited number of
institutional purchasers or to a single purchaser. The Prospectus Supplement
with respect to each series of Debt Securities will set forth the terms of the
offering of the Debt Securities of such series, including the name or names of
any underwriters, the purchase price and the proceeds to the Company from such
sale, any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers and any securities
exchanges on which the Debt Securities of such series may be listed.
If underwriters are used in the sale, the Debt Securities will be acquired
by the underwriters for their own account and may be resold from time to time
in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale. The
Debt Securities may be either offered to the public through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. Unless otherwise set forth in the Prospectus Supplement, the
obligations of the underwriters to purchase Debt Securities will be subject to
certain conditions precedent and the underwriters will be obligated to
purchase all the Debt Securities of a series if any are purchased. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time.
The managing underwriter, on behalf of the underwriters, may engage in
stabilizing transactions in accordance with Rule 104 under the Securities
Exchange Act of 1934. Stabilizing transactions permit bids to purchase the
Debt Securities so long as the stabilizing bids do not exceed a specified
maximum. Such stabilizing transactions may cause the price of the Debt
Securities to be higher than it would otherwise be in the absence of such
transactions.
Debt Securities may be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer
or sale of the Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a
best efforts basis for the period of its appointment.
If so indicated in the Prospectus Supplement, the Company will authorize
agents or underwriters to solicit offers by certain types of institutions to
purchase Debt Securities from the Company at the public offering price set
forth in the Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the Prospectus
Supplement, and the Prospectus Supplement will set forth the commissions
payable for solicitation of such contracts.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933, or to
contribution with respect to payments which the agents or underwriters may be
required to make in respect thereof. Agents and underwriters may be customers
of, engage in transactions with, or perform services for, the Company in the
ordinary course of business.
Each series of Debt Securities will be a new issue of securities with no
established trading market. Any underwriters to whom Debt Securities are sold
by the Company for public offering and sale may make a market in such Debt
Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Debt Securities.
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EXPERTS
The consolidated financial statements of the Company and its subsidiaries as
of December 31, 1996 and 1995 and for each of the years in the three-year
period ended December 31, 1996 have been incorporated by reference herein in
reliance upon the report of Coopers & Lybrand L.L.P., independent accountants,
and upon the authority of said firm as experts in accounting and auditing.
The financial statements of Amicon Bioseparations as of December 31, 1996
and for the year then ended incorporated herein by reference have been audited
by Price Waterhouse L.L.P., independent accountants, as indicated in their
reports with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in accounting and
auditing.
The financial statements of Tylan General, Inc., as of October 31, 1996 and
for the year then ended incorporated herein by reference have been audited by
Ernst & Young, independent public accountants, as indicated in their report
thereto, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said report.
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