FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from to
COMMISSION FILE NUMBER 0-1052
Millipore Corporation
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
04-2170233
(I.R.S. Employer Identification No.)
80 Ashby Road
Bedford, Massachusetts 01730
(Address of principal executive offices)
Registrant's telephone number, include area code (781) 533-6000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities and Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
The Company had 43,808,352 shares of common stock outstanding as of
April 24, 1998.
<PAGE>
MILLIPORE CORPORATION
INDEX TO FORM 10-Q
Page No.
Part I. Financial Information
Item 1. Condensed Financial Statements
Consolidated Balance Sheets --
March 31,1998 and December 31, 1997 2
Consolidated Statements of Income --
Three Months Ended March 31, 1998 and 1997 3
Consolidated Statements of Cash Flows --
Three Months Ended March 31, 1998 and 1997 4
Notes to Consolidated Condensed
Financial Statements 5-7
Item 2. Management's Discussion and Analysis 8-10
of Financial Condition and Results of Operations
Part II. Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
MILLIPORE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
1998 1997
ASSETS (Unaudited)
Current assets
Cash $ 1,381 $ 2,240
Short-term investments 32,358 18,029
Accounts receivable, net 178,029 176,585
Inventories 141,677 127,192
Other current assets 15,860 28,362
Total Current Assets 369,305 352,408
Property, plant and equipment, net 213,858 220,094
Intangible assets 86,206 77,394
Deferred income taxes 80,010 88,760
Other assets 27,337 27,588
Total Assets $776,716 $766,244
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Notes payable $158,750 $165,576
Accounts payable 48,830 46,088
Accrued expenses 82,703 74,856
Dividends payable 4,380 4,369
Accrued retirement plan 3,763 7,088
contributions
Accrued income taxes payable 4,933 6,896
Total Current Liabilities 303,359 304,873
Long-term debt 287,825 286,844
Other liabilities 25,648 25,533
Shareholders' equity
Common stock 56,988 56,988
Additional paid-in capital 10,927 10,927
Retained earnings 516,357 490,289
Accumulated other comprehensive (39,823) (21,720)
loss
544,449 536,484
Less: Treasury stock, at cost,
13,184 shares in 1998 and 13,291 in (384,565) (387,490)
1997
Total Shareholders' Equity 159,884 148,994
Total Liabilities and Shareholders' $776,716 $766,244
Equity
The accompanying notes are an integral part of the consolidated
condensed financial statements.
-2-
<PAGE>
MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
(Unaudited)
Three Months Ended
March 31,
1998 1997
Net sales $185,662 $178,839
Cost of sales 86,429 80,634
Gross profit 99,233 98,205
Selling, general & 61,687 59,777
administrative expenses
Research & development 13,135 13,151
expenses
Purchased research &
development expense - 114,091
Settlement of litigation 11,766 -
Operating income / (loss) 12,645 (88,814)
Gain on sale of equity
securities 35,594 1,769
Interest income 614 761
Interest expense (7,073) (6,024)
Income / (loss) before
income taxes 41,780 (92,308)
Provision for income taxes 10,370 5,454
Net income / (loss) $31,410 $ (97,762)
Net income / (loss) per
common share:
Basic $ 0.72 $ (2.25)
Diluted $ 0.71 $ (2.25)
Cash dividends declared per $ 0.10 $ 0.09
common share
Weighted average common
shares:
Basic 43,727 43,391
Diluted 44,307 43,391
The accompanying notes are an integral part of the consolidated
condensed financial statements.
-3-
<PAGE>
MILLIPORE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
<S> <C> <C>
1998 1997
Cash Flows From Operating Activities:
Net income (loss) $31,410 $(97,762)
Adjustments to reconcile net income
(loss) to net
cash provided:
Purchased research and development - 114,091
expense
Write-off of acquired inventory step- - 5,000
up
Depreciation and amortization 10,716 8,666
Gain on sale of equity securities (35,594) (1,769)
Deferred tax provision 8,750 -
Change in operating assets and
liabilities:
(Increase) in accounts receivable (924) (12,500)
(Increase) in inventories (16,945) (4,515)
(Increase) in other current assets (4,595) (6,594)
Decrease in other assets 610 8,059
Increase (decrease) in accounts
payable and accrued expenses 10,115 (6,073)
(Decrease) in accrued retirement (3,307) (1,567)
plan contributions
(Decrease) in accrued income taxes (1,963) (870)
Other 924 2,186
Net cash (used in) provided by (803) 6,352
operating activities
Cash Flows From Investing Activities:
Additions to property, plant and (10,735) (7,144)
equipment
Acquisition of Tylan, net of cash - (161,267)
acquired
Proceeds from sale of equity 35,594 1,769
securities
Net cash used by discontinued (78) (2,009)
operations
Net cash provided by (used) in 24,781 (168,651)
investing activities
Cash Flows From Financing Activities:
Issuance of treasury stock under stock 1,851 3,127
plans
(Decrease) increase in short-term debt (6,821) 92,073
Proceeds from issuance of long-term - 197,950
debt
Payments on long-term debt - (123,532)
Dividends paid (4,369) (3,899)
Net cash (used in) provided by (9,339) 165,719
financing activities
Effect of foreign exchange rates on
cash and short-term investments (1,169) (3,025)
Net increase in cash and short-term 13,470 395
investments
Cash and short-term investments on 20,269 46,870
January 1
Cash and short-term investments on $33,739 $47,265
March 31
</TABLE>
The accompanying notes are an integral part of the consolidated
condensed financial statements.
-4-
<PAGE>
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(In thousands)
1.The accompanying unaudited consolidated condensed financial
statements have been prepared in accordance with the instructions
to Form 10-Q and, accordingly, these footnotes condense or omit
certain information and disclosures normally included in financial
statements. These financial statements, which in the opinion of
management reflect all adjustments necessary for a fair
presentation, should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997. The
accompanying unaudited consolidated condensed financial statements
are not necessarily indicative of future trends or the Company's
operations for the entire year.
2. Inventories consisted of the following:
March 31, 1998 December 31, 1997
Raw materials $39,738 $42,518
Work in process 22,656 16,545
Finished goods 79,283 68,129
$141,677 $127,192
3. Accumulated depreciation on property, plant and equipment was
$169,242 at March 31, 1998, and $166,585 at December 31, 1997.
4.During the first quarter of 1998, the Company finalized the
allocation of the purchase price relating to the acquisition of
Tylan General, Inc. as discussed in Note C to the Company's
financial statements for the year ended December 31, 1997. The
final accrual for additional costs associated with the acquisition
is $32,000. The final purchase price included current assets of
$42,544, property and equipment of $15,559, other assets of $16,477
and liabilities of $22,042. Intangible assets valued at
$28,742 are being amortized over their estimated useful lives ranging
from 6 to 20 years.
5.On May 2, 1997, the Environmental Quality Board (EQB) of Puerto
Rico served an administrative order on Millipore Cidra, Inc., a
wholly-owned subsidiary of the Company. The administrative order
(EQB order) alleged: (i) that the nitrocellulose filter membrane
scrap produced by Millipore Cidra's manufacturing operations is a
hazardous waste as defined in EQB regulations; (ii) that Millipore
Cidra, Inc. failed to manage, transport and dispose of the
nitrocellulose membrane scrap as a hazardous waste; and (iii) that
such failure violated EQB regulations. The EQB order proposed
penalties in the amount of $96,500 and ordered Millipore Cidra,
Inc. to manage the nitrocellulose membrane scrap as a hazardous
waste.
The Company has recorded a charge of $5,000 (including legal fees)
in the first quarter of 1998 reflecting its costs to settle this
matter.
The Company also recorded a charge of $3,100 in the first quarter
of 1998 reflecting its costs in settling a separate lawsuit
(subject to court approval) with an intervening party in the EQB
administrative case described above.
-5-
<PAGE>
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(In thousands)
6.The Company and Waters Corporation were engaged in an arbitration
proceeding and a related litigation in the Superior Court,
Middlesex, Massachusetts, both of which commenced in the second
quarter of 1995 with respect to the amount of assets required to
be transferred by the Company's Retirement Plan in connection with
the Company's divestiture of its former Chromatography Division.
In the second quarter of 1996, Waters filed a Complaint in the
Federal District Court of Massachusetts alleging that the
Company's operation of the Retirement Plan violates ERISA and
certain sections of the Internal Revenue Code. Judgments in the
Company's favor were handed down by both the Massachusetts
Superior Court and the Federal District Court in May 1997 and July
1997, respectively. Waters appealed the federal court judgment,
which was affirmed by the United States Court of Appeals for the
First Circuit in April 1998.
7. The Company recorded a charge of $3,666 in the first quarter of
1998 to settle a patent lawsuit with Mott Metallurgical
Corporation. In the lawsuit, each party claimed infringement of
one of its patents by the other. As part of the settlement, the
parties agreed to cross license the two patents at issue.
8.In partial consideration for the sale of its non-membrane
bioscience instrument division in 1994, the Company received four
thousand shares of preferred stock of PerSeptive Biosystems, Inc.
("PerSeptive"). The preferred stock was redeemable in four equal
annual installments of $10,000, commencing in August 1995, in the
equivalent value as of each redemption date in common stock, $0.01
par value of PerSeptive. Effective January 22, 1998, PerSeptive
completed a merger with Perkin-Elmer Corporation ("Perkin-Elmer")
and became a wholly-owned subsidiary of Perkin-Elmer. Pursuant to
this merger all of the Company's remaining holdings in PerSeptive,
which consisted of 2,213,357 shares of common stock and one
thousand shares of preferred stock were converted into 586,541
shares of Perkin-Elmer common stock. The Company sold all 586,541
shares of its Perkin-Elmer common stock holdings in the first
quarter of 1998 and recognized a net gain of $32.5 million.
9.For March 31, 1997 basic and diluted earnings per share are the
same, as the Company was in a loss position. The effect of anti-
dilutive securities in 1997 amounted to 836 shares. The following
is a reconciliation for March 31, 1998 of the numerator and
denominator for basic and diluted earnings per share:
Net Income Shares EPS
Basic earnings per share $ 31,410 43,727 $0.72
Effect of dilutive securities:
Stock options 580
Diluted earnings per share $ 31,410 44,307 $0.71
-6-
<PAGE>
MILLIPORE CORPORATION
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(In thousands)
10. The Company has adopted SFAS No. 130, "Reporting Comprehensive
Income", which requires that all components of comprehensive
income and total comprehensive income be reported and that
changes be shown in a financial statement displayed with the same
prominence as other financial statements. The Company has
elected to disclose this information in its statement of
stockholders' equity. Total comprehensive income/(loss) for the
quarters ended March 31, was comprised of the following:
March 31, March 31,
1998 1997
Net income/(loss) $31,410 $(97,762)
Foreign currency translation (808) (14,086)
Unrealized holding gain on
equity securities, net of tax (17,295) (125)
Total comprehensive income/(loss) $13,307 $(111,973)
11.In July 1997, the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", which is
effective for fiscal years beginning after December 15, 1997. The
interim reporting disclosures are not required in the first year
of adoption. SFAS 131 specifies revised guidelines for
determining an entity's operating segments and the type and level
of financial information to be disclosed. SFAS 131 changes
current practice under SFAS 14 by establishing a new framework on
which to base segment reporting. The "management" approach
expands the required disclosures for each segment. The Company
will adopt SFAS 131 in the fourth quarter ended December 31, 1998
and has not yet determined the impact of such adoption on its
segment reporting as currently presented.
In February 1998, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard (SFAS) No. 132,
"Employers' Disclosures about Pensions and Other Postretirement
Benefits". SFAS No. 132 establishes new increased requirements
for disclosure of a Company's pensions and other postretirement
benefit obligations. SFAS No. 132 is effective for fiscal years
beginning after December 15, 1997, but may be adopted earlier.
The Company will adopt the increased disclosure requirements of
SFAS No. 132 in the fourth quarter ended December 31, 1998.
In March 1998, Statement of Position 98-1, "Accounting for the
Cost of Computer Software Developed or Obtained for Internal Use"
("SOP 98-1"), was issued which provides guidance on applying
generally accepted accounting principles in addressing whether and
under what conditions the costs of internal-use software should be
capitalized. SOP 98-1 is effective for transactions entered into
in fiscal years beginning after December 15, 1998, however,
earlier adoption is encouraged. The Company adopted the
guidelines of SOP 98-1 as of January 1, 1998 and the impact of
such adoption was not material to the results of operations or
cash flows for the quarter ended March 31, 1998.
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In thousands)
Forward Looking Statements
The following Discussion and Analysis includes certain forward-
looking statements which are subject to a number of risks and
uncertainties as described in Management's Discussion and Analysis in
the Company's Annual Report on Form 10-K for the year ended December
31, 1997. Such forward-looking statements are based on current
expectations and actual results may differ materially.
Recent Developments
On May 2, 1997, the Environmental Quality Board (EQB) of Puerto Rico
served an administrative order on Millipore Cidra, Inc., a wholly-
owned subsidiary of the Company. The administrative order (EQB
order) alleged: (i) that the nitrocellulose filter membrane scrap
produced by Millipore Cidra's manufacturing operations is a hazardous
waste as defined in EQB regulations; (ii) that Millipore Cidra, Inc.
failed to manage, transport and dispose of the nitrocellulose
membrane scrap as a hazardous waste; and (iii) that such failure
violated EQB regulations. The EQB order proposed penalties in the
amount of $96,500 and ordered Millipore Cidra, Inc. to manage the
nitrocellulose membrane scrap as a hazardous waste.
The Company has recorded a charge of $5,000 (including legal fees) in
the first quarter of 1998 reflecting its costs to settle this matter.
The Company also recorded a charge of $3,100 in the first quarter of
1998 reflecting its costs in settling a separate lawsuit (subject to
court approval) with an intervening party in the EQB administrative
case described above.
Results of Operations
Consolidated net sales for the first quarter of 1998 were $185,662,
an increase of 4% over sales for the same period last year. Sales
growth measured in local currency terms was 9% in the first quarter
of 1998. Sales growth in the first quarter of 1998, excluding the
Tylan acquisition, would have been 3% or 8% in local currency. First
quarter earnings per share, excluding non-recurring items, were $0.32
per share, compared to $0.45 per share last year. There were three
one-time events that affected earnings performance in the first
quarter of 1998 including the sale of equity securities, which had a
positive impact of $0.63 per share; the settlement of a patent
dispute with Mott Metallurgical Corporation, which reduced earnings
per share by $0.07; and a reduction to earnings of $8.1 million, or
$0.17 per share, reflecting the costs, including legal fees,
associated with settling both its administrative dispute with the
Environmental Quality Board in Puerto Rico and a separate lawsuit
with an intervening party in that administrative case. Including
these one-time items, the earnings per share for the first quarter
was $0.71. The following table summarizes sales growth by geography
and market in the first quarter of 1998:
% Growth
Q1-1997 Q1-1998 % Growth Local
Currency
Microelectronics $ 57 $ 59 3% 10%
BioPharmaceutical $ 54 $ 58 6% 10%
Analytical $ 68 $ 69 2% 8%
Laboratory
TOTAL $ 179 $ 186 4% 9%
Americas $ 75 $ 82 9% 10%
Europe $ 53 $ 56 5% 13%
Asia/Pacific $ 51 $ 48 (6)% 5%
TOTAL $ 179 $ 186 4% 9%
-8-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In thousands)
Results of Operations (continued)
Sales to microelectronics customers increased 10%, in local currency,
in the first quarter of 1998 compared to the first quarter of 1997.
This growth rate includes incremental sales related to Tylan General,
which was acquired in late January 1997. The Company continues
to be negatively impacted by the downturn in the semiconductor
industry which started in 1996. Although the growth in the first
quarter of 1998 was 10%, we experienced a slowing in the microelectronics
business midway through the quarter. This trend is expected to continue
throughout the second quarter of 1998. Sales growth in the Bio-
Pharmaceutical market was 10%, in local currency, representing strong
growth in sales to Biotechnology customers offset by a decline in sales
to the food and beverage industry. Sales to Biotechnology
customers represents approximately 50% of sales in the Bio-
Pharmaceutical market. Sales growth in the Analytical Laboratory
market was 8%, in local currency, reflecting an increase in market
penetration of core products, continued growth of rapid detection
products and new products introduced to ultra pure water customers.
In the first quarter of 1998, the U.S. dollar continued to strengthen
against all European currencies and most Asian currencies. If
foreign exchange rates remain at March 31, 1998 levels, the affect of
foreign exchange currencies is expected to reduce reported second
quarter and full year 1998 sales growth by approximately 4 to 5
percentage points when compared to local currency growth rates.
Gross profit margins in the first quarter of 1998 were 53.4% of
sales, compared to 57.7% in the first quarter of 1997, excluding non-
recurring charges in the first quarter of 1997 associated with the
acquisitions of both Tylan General and Amicon. Gross margin
percentages were lower than those in the same period last year
reflecting the impact of a stronger U.S. dollar and a higher
concentration of lower margin Tylan business. The Company expects
that gross margin percentages in the second quarter of 1998 will
approximate those reported in the first quarter of 1998.
Operating expenses excluding the settlement of litigation in the
first quarter of 1998 increased 2.6% over operating expenses for the
first quarter of 1997. Included in the settlement of litigation is
the costs to settle with the EQB and the intervening party, as
discussed in Footnote 5 to the Consolidated Condensed Financial
Statements. In addition the Company recorded a charge of $3,666 in
the first quarter of 1998 to settle a patent lawsuit with Mott
Metallurgical Corporation. In the lawsuit, each party claimed
infringement of one of its patents by the other. As part of the
settlement, the parties agreed to cross license the two patents at
issue.
The gain on sale of equity securities in the first quarter of 1998,
reflects the sale of the Company's holdings in Perkin-Elmer
Corporation as discussed in Footnote 8 to the Consolidated Condensed
Financial Statements. The Company also sold all of its common shares
of Glyko Biomedical in the first quarter of 1998 and recognized a
gain of $3.1 million.
Net interest expense in the first quarter of 1998 was higher than
that of the first quarter of 1997 due to increased interest rates.
Interest on borrowings required to complete the acquisition, as well
as interest on Tylan's assumed debt, are included in the Company's
statement of income from January 22, 1997. The Company expects that
interest expense in the second quarter and for the year ended 1998
will be slightly lower than 1997 as cash generated from operating
activities and the proceeds from the sale of equity securities will
be used to reduce outstanding borrowings.
The Company's effective income tax rate for the first three months of
1998, excluding the non-tax deductible expense for the EQB settlement
was 21.0%, the same as the full year of 1997, excluding the non-tax
deductible write-offs associated with the Tylan acquisition. The
Company expects to sustain the 21.0% tax rate for the remainder of
1998.
-9-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(In thousands)
Results of Operations (continued)
The Company utilizes a common worldwide software system for its
financial and business reporting. The Company believes that its
system is Year 2000 compliant and that future costs necessary to
ensure successful Year 2000 compliance will not have a material
effect on the Company's results of operations.
A substantial portion of the Company's business is conducted outside
of the United States through its foreign subsidiaries. This exposes
the Company to risks associated with foreign currency rate
fluctuations, which can impact the Company's revenue and net income.
The Company had entered into foreign currency option transactions to
sell Yen, on a continuing basis in amounts and timing consistent with
the underlying currency exposure so that the gains or losses on these
transactions partially offset the realized foreign exchange gains or
losses on the underlying exposure. In the first quarter of 1998, a
gain of $681 was realized on the Company's foreign exchange contracts
and was recorded in cost of sales, compared to a gain of $1,575 in
the first quarter of 1997. As of March 31, 1998, the Company has
only forward option contracts to sell yen. In the event of a
significant strengthening of the U.S. dollar against the yen, the
exercise of these forward options will partially mitigate losses
incurred by the Company on the underlying currency exposure. The
Company does not engage in speculative trading activity.
Capital Resources And Liquidity
Cash used by operations in the first three months of 1998 was $803
compared to cash generated from operations of $6,352 in the first
three months of 1997. Cash flow from operations in the first quarter
of 1998 included outflows of $1,861 of employee costs, $75 of
facilities-related costs, $1,184 of contract termination costs, and
$1,556 of other integration expenses against the acquisition
accruals.
Cash generated by the Company during the three months of 1998 was
used to pay down short-term debt, invest in property, plant and
equipment, and pay dividends. Property, plant and equipment
expenditures for the first three months of 1998 exceeded those for
the same period in 1997. The Company expects property, plant and
equipment expenditures to increase over the remainder of 1998 as it
completes the construction of its new manufacturing facility in
Allen, Texas.
Refer to Footnote 5 to the Consolidated Condensed Financial
Statements regarding the Company's notification from the
Environmental Quality Board of Puerto Rico.
-10-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On May 2, 1997, the Environmental Quality Board (EQB) of Puerto Rico
served an administrative order on Millipore Cidra, Inc., a wholly-
owned subsidiary of the Company. The administrative order (EQB
Order) alleged: (i) that the nitrocellulose filter membrane scrap
produced by Millipore Cidra's manufacturing operations is a hazardous
waste as defined in EQB regulations; (ii) that Millipore Cidra, Inc.
failed to manage, transport and dispose of the nitrocellulose
membrane scrap as a hazardous waste; and (iii) that such failure
violated EQB regulations. The EQB Order proposed penalties in the
amount of $96,500,000 and ordered Millipore Cidra, Inc. to manage
the nitrocellulose membrane scrap as a hazardous waste.
On March 12, 1998 Millipore Cidra and the EQB entered into a Stipulation
settling the administrative proceeding with respect to the EQB Order.
On March 27, 1998 the Governing Board of the EQB voted to approve the
recommendation of the hearing examiner for this proceeding that the
Stipulation be ratified. Formal notice of this EQB Governing Board vote
was mailed to Millipore Cidra on May 7, 1998. The Stipulation provides
that: (i) it does not constitute any admission or determination of
fact or any conclusion of law with respect to any of the allegations
contained in the EQB Order; (ii) Millipore Cidra and its affiliates are
released and exonerated from any claims related to the EQB Order; (iii)
Millipore Cidra shall pay the EQB $4,600,000 in full satisfaction of all
claims under the EQB Order; and (iv) Millipore Cidra shall manage the
nitrocellulose membrane scrap as if it were a hazardous waste.
On March 12, 1998 the Company entered into a settlement agreement with
respect to a separate lawsuit (subject to court approval) with Redondo
Waste Systems, Inc. d/b/a Celsius, an intervening party in the
administrative proceeding with respect to the EQB Order. This suit was
filed in the Superior Court for Caguas County, Puerto Rico in 1991 and
related to damages claimed to result from a fire at a landfill owned by
such intervening party. Under this settlement agreement the Company
agreed to pay $3,000,000 to such intervening party in complete
satisfaction of all claims under such lawsuit.
The Company and Waters Corporation were engaged in an arbitration
proceeding and a related litigation in the Superior Court, Middlesex,
Massachusetts, both of which commenced in the second quarter of 1995
with respect to the amount of assets required to be transferred by
the Company's Retirement Plan in connection with the Company's
divestiture of its former Chromatography Division. In the second
quarter of 1996, Waters filed a Complaint in the Federal District
Court of Massachusetts alleging that the Company's operation of the
Retirement Plan violates ERISA and certain sections of the Internal
Revenue Code. Judgments in the Company's favor were handed down by
both the Massachusetts Superior Court and the Federal District Court
in May 1997 and July 1997, respectively. Waters appealed the federal
court judgment, which was affirmed by the United States Court of
Appeals for the First Circuit by opinion dated April 3, 1998.
On October 15, 1996 the Company commenced an action for declaratory
judgement in the U.S. District Court for the District of
Massachusetts against Mott Metallurgical Corporation (Mott) seeking a
determination that U.S. Patent No. 5,114,447 was invalid and that the
Company did not infringe such patent. On December 16, 1996 Mott
filed a counterclaim seeking declaratory, injunctive and monetary
relief from the alleged infringement by the Company of the foregoing
patent. On January 6, 1997, the Company filed a reply to the
counterclaim, asserting the invalidity of U.S. Patent No. 5,114,447
and that Mott infringed the Company's U.S. Patent No. 5,487,771. Both
patents relate to porous metal filters for high purity gas filtration
for semiconductor manufacturing applications. On February 18, 1998,
the Company entered into a settlement agreement with Mott pursuant to
which Mott and the Company agreed to cross license their respective
patents and the Company agreed to a one time payment to Mott of
$3,500,000.
Item 6. Exhibits and Reports on Form 8-K.
a.Exhibits
27 Article 5 Financial Data Schedule - First Quarter 1998
b. Reports on Form 8-K
None.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Millipore Corporation
Registrant
May 15, 1998 /s/ Francis J. Lunger
Date Francis J. Lunger
Corporate Vice President, Chief
Financial Officer and Treasurer
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,381
<SECURITIES> 32,358
<RECEIVABLES> 180,811
<ALLOWANCES> 2,782
<INVENTORY> 141,677
<CURRENT-ASSETS> 369,305
<PP&E> 383,100
<DEPRECIATION> 169,242
<TOTAL-ASSETS> 776,716
<CURRENT-LIABILITIES> 303,359
<BONDS> 0
<COMMON> 56,988
0
0
<OTHER-SE> 102,896
<TOTAL-LIABILITY-AND-EQUITY> 776,716
<SALES> 185,662
<TOTAL-REVENUES> 185,662
<CGS> 86,429
<TOTAL-COSTS> 86,429
<OTHER-EXPENSES> 86,588
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,073
<INCOME-PRETAX> 41,780
<INCOME-TAX> 10,370
<INCOME-CONTINUING> 31,410
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,410
<EPS-PRIMARY> 0.72
<EPS-DILUTED> 0.71
</TABLE>
