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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee required)
For the fiscal year ended December 31, 1997 or
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No fee required)
For the transition period from ___________ to ______________
Commission File Number 0-1052
MILLIPORE CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-2170233
(State or Other Jurisdiction of (I.R.S. Employer
Identification No.)
Incorporation or Organization)
80 Ashby Road, Bedford, MA 01730
(Address of principal executive offices) (Zip Code)
(781) 275-9200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Class Name of Exchange on Which
Registered
Common Stock, $1.00 Par Value New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of Form 10-K or any amendment to this Form
10-K.
As of February 20, 1998, the aggregate market value of the
registrant's voting stock held by non-affiliates of the
registrant was approximately $1,614,052,157 based on the closing
price on that date on the New York Stock Exchange.
As of February 20, 1998, 43,706,556 shares of the registrant's
Common Stock were outstanding.
Documents Incorporated by Reference
Document Incorporated into Form 10-K
1997 Annual Report to Shareholders (pages 26 - 51 only)Parts I
and II
Definitive Proxy Statement, dated March 20, 1998 Part III
Part I
Item 1. Business.
The Company
Millipore Corporation was incorporated under the laws of Massachusetts on
May 3, 1954. 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 separations products are based on a variety of membrane and
other technologies that effect separations through physical and chemical
methods and are applied primarily to biological and environmental
laboratory research and testing, to pharmaceutical research, manufacturing
and quality control and to the purification of fluids for semiconductor
manufacturing. The Company also sells process control equipment for
microelectronics applications. Millipore is an integrated multinational
manufacturer of these products. During 1997 approximately 62% of
Millipore's net sales were made to customers outside the United States.
Industry and geographic segment information is discussed in Note P to the
Millipore Corporation Consolidated Financial Statements (the "Financial
Statements") included in the Millipore Corporation Annual Report to
Shareholders for the year ended December 31, 1997 (the "Annual Report")
which Note is hereby incorporated herein by reference. Unless the context
otherwise requires, the terms "Millipore" or the "Company" mean Millipore
Corporation and its subsidiaries.
During the third quarter of 1994 the Company completed the divestiture of
its analytical and life science instrument divisions. The Company devoted
a substantial portion of the cash proceeds from these divestitures to buy
back Millipore Common Stock. For further information concerning these
transactions, see "Restructuring and Divestitures" on page 6 below. On
December 31, 1996, Millipore acquired the Amicon Separation Science
Business of W. R. Grace & Co. ("Amicon") for a purchase price of
$129,300,000 in cash (including transaction costs). This acquisition added
molecular separation and purification products for the life science
research laboratory and for pharmaceutical/biotechnology manufacturing
applications as well as hollow-fiber membrane ultrafiltration and process
liquid chromatography technologies to Millipore. Amicon's 1996 revenues
were approximately $57,000,000. Effective as of January 27, 1997,
Millipore acquired all of the outstanding shares of common stock of Tylan
General, Inc. ("Tylan") at a price of $16 per share, or approximately
$133,000,000 plus the assumption of approximately $23,600,000 of pre-
existing Tylan debt. The acquisition of Tylan permitted Millipore to
extend its role as a supplier of liquid and process gas purification
products to the semiconductor industry to include the manufacture,
marketing and sale of a broad range of precision mass flow controllers and
pressure and vacuum measurement and control equipment for advanced
integrated circuit ("IC") fabrication processes. Tylan had 1996 sales of
approximately $148,000,000. For financial information concerning the
accounting for the purchase of Amicon and Tylan, see Note C to the
Financial Statements, which Note is hereby incorporated herein by
reference.
Products and Technologies
The Company's products are used in analytical applications to gain
knowledge about a molecule, compound or micro-organism by detecting,
identifying and quantifying the relevant components of a fluid sample and
to provide ultrapure water for critical analytical and clinical
applications. The Company's products are used for purification
applications by pharmaceutical manufacturing and research operations and by
microelectronics manufacturing operations to isolate and purify specific
components or to remove contaminants in a fluid stream. The Company's
products are also used in microelectronics process gas applications to
purify process gases, to measure and control flow rates in process gas
streams and to control pressure and vacuum levels in IC process chambers.
The Company sells more than 10,000 products. The Company's products
include disc filters, filter devices and ancillary equipment and supplies,
filter-based test kits, laboratory water purification systems, cartridge
filters and housings of various sizes and configurations, process liquid
chromatography systems, process filtration systems, precision liquid
dispense filtration pumps, resin based gas purifiers and mass flow and
pressure controllers.
Most of the Company's products are listed in its catalogs and are sold as
standard items, systems or devices. For special applications, the Company
assembles custom products, usually based upon standard modules and
components. In certain instances, the Company also designs and engineers
process filtration systems and process chromatography 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).
The principal separation technologies utilized by the Company's
analytical and purification products are based on membrane filters and on
certain chemistries, resins and enzyme immunoassays as well as 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. The
Company's laboratory water purification products combine membrane, resin
and other separations technologies to provide customers with ultrapure
water for critical laboratory and clinical applications. The Company's IC
process control products use thermal-dynamic, pressure differential and
electromechanical technologies to permit IC manufacturers to precisely
control the purity of and rate at which process gases are introduced into
the IC process chamber, the conditions in the chamber during processing and
the rate at which the gas is evacuated from the process chamber.
Customers and Markets
The Company sells its products primarily to the following customers:
pharmaceutical/biotechnology, microelectronics and food and beverage
companies for use in their manufacturing processes; and to government,
university and private research and testing analytical laboratories.
Within each of these customer groups, the Company focuses its sales efforts
upon those segments where customers have specific requirements which can be
satisfied by the Company's products. The Company also sells its analytical
products, filter cartridges and laboratory water purification systems to
chemical manufacturers and processors.
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. The Company's mass flow and pressure control products are sold
to semiconductor capital equipment suppliers as well as directly to
manufacturers of ICs. Sales to the microelectronics market accounted for
35 percent of Millipore's 1997 consolidated sales. The microelectronics
manufacturing market has experienced historic volatility, and the effect of
such volatility has, in the past, affected Millipore's sales growth.
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 prevent
spoilage by removal of bacteria and yeast from products such as wine and
beer.
Universities, Government Agencies and Private Laboratories.
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 international 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. As of December 31, 1997, the
Company's marketing, sales and service forces consisted of approximately
1,200 employees worldwide.
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, purification and
process control problems which may be addressed by its products and to
adapt its products and technologies to separations and process control
problems identified by its 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. In addition,
the Company maintains a network of service centers located in the United
States and in key international microelectronics markets to support its
process gas measurement and control products.
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. Research
and development activities related to the Company's IC process control
products focuses upon developments which will address the evolving needs of
IC manufacturers and development of enabling technologies which will
anticipate those needs. Introduction of new applications frequently
requires considerable market development prior to the generation of
revenues. Millipore performs most of its own research and development and
does not provide material amounts of research services for others.
Millipore's aggregate research and development expenses (excluding pre-
acquisition amounts spent by Amicon and Tylan) in 1995 and 1996 were,
$36,515,000 and $38,429,000, respectively. In 1997 Millipore's aggregate
research and development expenses were $56,299,000. For a discussion of
research and development write-offs relating to the Amicon and Tylan
acquisitions, see Note C to the Financial Statements, which Note is hereby
incorporated herein by reference.
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 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. Similarly, the Company has a previous agreement with IBC
Advanced Technologies, Inc. to develop a new class of purification products
to be marketed by Millipore. While none of the foregoing agreements are of
a size or scope which is material to the Company, they are examples of the
Company's efforts to supplement its internal research and development
activities.
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 separations competitors include Pall
Corporation, Barnstead Thermolyne Corporation and Sartorius GmbH; the
Company's principal IC process control competitor is MKS Instruments.
Certain of the Company's competitors are larger and have greater resources
than the Company. However, the Company believes that, within the markets
it serves, it offers a broader line of products, making use of a wider
range of separations and IC process control 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. The federal laws and
regulations include the 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.
See the discussion of pending legal proceedings in Item 3 below.
Under the Clean Air Act Amendments of 1990 ("CAA"), the U.S. 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.
Restructuring and Divestitures
In August 1994, Millipore completed the divestiture of its analytical
instrumentation divisions (the Waters Chromatography business and the non-
membrane bioscience instrument business). The Company realized a net loss
of $3.4 million in 1994 upon the disposition of those divisions, including
all costs estimated to be incurred in connection with the divestitures as
well as the pre-tax operating losses generated by those divisions from
November 11, 1993 through the date of completion of the divestitures. A
substantial portion of the cash proceeds from these divestitures was used
by the Company to purchase Millipore Common Stock pursuant to a "Dutch
Auction" self tender and to fund an open market share repurchase program
which continued into 1995.
In partial consideration for the sale of the non-membrane bioscience
instrument division the Company received 4,000 shares of Series A
Redeemable Convertible Preferred Stock ($0.01 Par Value) ("Series A
Preferred Stock") of PerSeptive Biosystems, Inc. ("PerSeptive"). The
Series A Preferred Stock was redeemable in four equal annual installments
of 1,000 shares each, commencing August 1995, either in cash at $10,000 per
share or in the equivalent value as of each redemption date in PerSeptive
Common Stock, at PerSeptive's option. Effective January 22, 1998,
PerSeptive was merged with a subsidiary of The Perkin-Elmer Corporation
("Perkin-Elmer") so that PerSeptive became a wholly owned subsidiary of
Perkin-Elmer. Pursuant to this merger all of the Company's remaining
2,213,357 shares of PerSeptive Common Stock and 1,000 shares of Series A
Preferred Stock were converted into an aggregate of 586,541 shares of
Perkin-Elmer Common Stock. During the first quarter of 1998 the Company
sold these Perkin-Elmer shares for aggregate cash consideration of
approximately $35,690,000.
Other Information
Since April of 1988, the Company has had in place a shareholder rights
plan (the "Rights Plan") pursuant to which Millipore declared a dividend to
its shareholders of the right to purchase (a "Right"), for each share of
Millipore Common Stock owned, one additional share of Millipore Common
Stock at a price of $80 for each share (giving effect to the 1995 two for
one stock split). The Rights Plan is designed to protect Millipore's
shareholders from attempts by others to acquire Millipore on terms or by
using tactics that could deny all shareholders the opportunity to realize
the full value of their investment. The Rights will be exercisable only if
a person or group of affiliated or associated persons acquires beneficial
ownership of 20% or more of the outstanding shares of the Company Common
Stock or commences a tender or exchange offer that would result in a person
or group owning 20% or more of the outstanding Common Stock. In such
event, or in the event that Millipore is subsequently acquired in a merger
or other business combination, each Right will entitle its holder to
purchase, at the then current exercise price, shares of the common stock of
the surviving company having a value equal to twice the exercise price.
Millipore's products are made from a wide variety of raw materials which
are generally available in quantity from alternate sources of supply; as a
result, Millipore is not substantially dependent upon any single supplier.
As of December 31, 1997, Millipore employed 4,754 persons worldwide, of
whom 2,331 were employed in the United States and 2,423 were employed
overseas.
Executive Officers of Millipore
The following is a list, as of March 1, 1998, of the Executive Officers
of Millipore. All of the following individuals were elected to serve until
the Directors Meeting next following the 1998 Annual Stockholders Meeting.
First Elected .
To
An
Present
Name Age Office Officer Office
C. William
Zadel 54 Chairman of the Board, 1996 1996
President and Chief
Executive Officer of
the Corporation
Michael P. Carroll 47 Vice President 1992 1997
of the Corporation and (As President
President of Millipore of Millipore
Asia, Ltd. Asia Ltd.)
Douglas B. Jacoby 51 Vice President 1989 1989
of the Corporation
John E. Lary 51 Vice President 1994 1994
of the Corporation
Francis J. Lunger 52 Vice President 1997 1997
of the Corporation
and Chief Financial Officer
Joanna Nikka 46 Vice President 1996 1996
of the Corporation
Jeffrey Rudin 46 Vice President 1996 1996
of the Corporation
and General Counsel
Hideo Takahashi 56 Vice President of 1996 1979
the Corporation and (As President
President of Nihon of Nihon
Millipore Millipore)
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. 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. In 1997 Mr. Carroll was elected President of Millipore
Asia Ltd.; he remains 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.
Mr. Lary was elected a Corporate Vice President in November 1994, and is
responsible for the worldwide operations of the Company. From May of 1993
until his election as a Corporate Vice President, Mr. Lary served as Senior
Vice President and General Manager of the Americas Operation. For the ten
years prior to that time, he served as Senior Vice President of the
Membrane Operations Division of Millipore.
Mr. Lunger was elected Vice President, Chief Financial Officer and
Treasurer of Millipore upon joining the Company in June 1997. Mr. Lunger
had been, since 1995, Senior Vice President and Chief Financial Officer of
Oak Industries, Inc., a developer, manufacturer and supplier of components
to the telecommunications industry. From 1994 until 1995, Mr. Lunger had
been acting Chief Executive Officer and Chief Administrative Officer of
Nashua Corporation, a conglomerate with diverse businesses ranging from
office supplies to photo finishing. During the period 1983-1994, Mr.
Lunger served in various business operations and financial management
positions with Raychem Corporation, an international material science
company serving the telecommunication, automotive, energy and defense
markets, including Vice President and Group General Manager (1992-1994);
Vice President and Assistant Sector General Manager (1991-1992); Vice
President, Finance (1988-1991) and Corporate Controller (1983-1984).
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, Mr. Rudin served Ciba Corning
Diagnostics Corporation as Senior Vice President and General Counsel (since
1993) and as Vice President and General Counsel (1988 - 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.
Item 2. Properties.
Millipore operates 19 manufacturing sites located in the United States,
France, Japan, Ireland, United Kingdom, Brazil and China. The following
table identifies the major production sites which are owned by Millipore
and describes the purpose, floor space and land area of each.
Floor Space Land Area
Location Facility Sq. Ft. Acres
Bedford, Executive Offices, research, 352,000 31
MA pilot production & warehouse
Danvers Manufacturing and office 65,000 16
MA
Jaffrey, Manufacturing, warehouse 169,000 31
NH and office
Cidra, Manufacturing, warehouse 134,000 36
Puerto Rico and office
Molsheim, Manufacturing, warehouse 148,000 20
France and office
Cork, Manufacturing 83,000 20
Ireland
Yonezawa, Manufacturing and warehouse 144,000 7
Japan
Millipore owns a total of approximately 1.25 million square feet of
facilities worldwide which are used for office, research and development,
manufacturing (including the manufacturing facilities listed above) and
warehouse purposes. All of these facilities are owned in fee and are not
subject to any material encumbrances.
In addition to its owned properties, Millipore currently leases various
manufacturing, sales, warehouse, and administrative facilities throughout
the world. Such leases expire at different times through 2008. The
aggregate area of rented space is approximately 967,800 square feet
(including leased facilities acquired in the Amicon and Tylan transactions)
and cost was approximately $16,423,000 in 1997. While no single lease, in
opinion of Millipore, is material to its operations, the following leased
facilities are the most significant:
A lease for premises abutting the Company's Bedford headquarters; this
lease makes 75,000 square feet of building available to Millipore,
provides for a term expiring in 2005 and contains rights of first
refusal and options with respect to the purchase of the premises by
Millipore and the sale of the premises to Millipore.
A lease of a 134,000 square foot building which is adjacent to the
leased property referred to in preceding paragraph for a term ending in
2006, with renewal options for an aggregate of 20 years, as well as a
purchase option.
A lease of a building of 130,000 square feet located in Burlington,
Massachusetts, approximately 5 miles from Millipore's Bedford
headquarters. This lease was amended during 1997 to, among other
things, extend the initial term until February 2002 and to provide for a
single 3-year extension option.
A 10 year lease of approximately 13 acres of land located in Allen,
Texas (Dallas-Fort Worth vicinity) on which a 178,000 square foot
building is being constructed for the Company's use. This lease
provides for two 5 year extension options. The Company proposes to
consolidate all of its microelectronics gas purification and advanced
integrated circuit process control manufacturing operations in this
single facility. Currently, these operations are located in six
separate leased and rented facilities located in Connecticut, California
and Texas, the most significant of which is an 85,000 square foot
manufacturing facility located in Plano, Texas, currently subject to a
lease expiring in 2012. The Company anticipates that it will occupy the
new Allen, Texas facility in late 1998.
Except for the facilities located in Cidra, Puerto Rico and Yonezawa,
Japan, which are currently underutilized by approximately 25% and 30%,
respectively, none of the above listed owned and leased major facilities
are materially underutilized.
Millipore is of the opinion that all the facilities owned or leased by it
are well maintained, appropriately insured, in good operating condition and
suitable for their present uses.
Item 3. Legal Proceedings.
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")
alleges: (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 the
nitrocellulose membrane scrap as a hazardous waste; and (iii) that such
failure violated EQB regulations. The EQB Order proposes penalties in the
amount of $96,500,000 and orders Millipore Cidra to manage the
nitrocellulose membrane scrap as a hazardous waste. The Company believes
that it has meritorious defenses to the EQB Order and intends to
vigorously contest the EQB Order. While the Company disputes that the
nitrocellulose filter membrane scrap produced by Millipore Cidra's
manufacturing operations is a hazardous waste, since May 1997 it has been
voluntarily managing the nitrocellulose membrane scrap as a hazardous
waste.
Over the past 15 years, Millipore has been alleged by the U.S.
Environmental Protection Agency ("EPA") to be a potentially responsible
party ("PRP") under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 (SARA), or analogous state law ("CERCLA" or
"Superfund") with respect to a release, as defined in Section 101 of
CERCLA, at twelve sites to which chemical wastes generated by the
manufacturing operations of Millipore or one of its divisions may have been
sent. The Company has paid approximately $14 million to date pursuant to
consent decrees with the EPA and relevant state agencies to settle its
liability at all of the Superfund sites at which the Company has been named
a PRP. These consent decrees provide the Company with a release from
further liability with respect to certain covered matters. However, as is
typical with such consent decrees, EPA and the relevant state agencies
reserved the right to maintain actions against the settling parties,
including the Company, in the event certain actions occur or do not occur.
The Company believes that, based upon the number and size of financially
solvent PRPs participating at each Superfund site, the amount and type of
wastes which were potentially disposed of at these sites, and the likely
availability of contribution from other PRPs in the event that the Company
were held jointly and severally liable at any of these sites, the aggregate
of any future remaining potential liabilities should not have a material
adverse effect on the Company's financial condition.
In 1993 the Company brought suit against The Travelers Indemnity Company,
Hartford Accident and Indemnity Company and Insurance Company of North
America in U.S. District Court for the District of Massachusetts with
respect to five of the above Superfund sites at which the Company had been
named a PRP, seeking recovery of the full costs of defending the actions at
such sites, indemnification for its liability and damages for unfair and
deceptive insurance practices. The U.S. District Court ruled that the
Company's insurers were not required to indemnify the Company for costs
incurred at such Superfund sites. This decision was appealed to the U.S.
Court of Appeals for the First Circuit. On May 30, 1997 the Court of
Appeals issued a ruling reversing the District Court's grant of partial
summary judgement against the Company and affirming the District Court's
grant of partial summary judgement in favor of the Company. The case has
been remanded to the District Court for further proceedings.
The Company and Waters Corporation have been engaged in an arbitration
proceeding and a related litigation in the Superior Court, Middlesex
County, Massachusetts since the second quarter of 1995 with respect to the
amount of assets required to be transferred by the Company's Retirement
Plan in connection with the Company's divestiture of its former
Chromatography Division. The Massachusetts Superior Court granted the
Company's motion for summary judgement and dismissed the arbitration
proceeding. Waters filed a notice of appeal from that decision but did not
docket the appeal in a timely fashion under applicable appellate rules so
that the Superior Court's judgement has become final. In the second
quarter of 1996, Waters filed a Complaint in the U.S. District Court for
the District of Massachusetts alleging that the Company's operation of its
Retirement Plan violates ERISA and certain sections of the Internal Revenue
Code. The U.S. District Court granted Millipore's motion for summary
judgement in late 1996. Waters has appealed this ruling to the U.S. Court
of Appeals for the First Circuit, where the appeal is currently pending.
Although there can be no assurance as to the outcome of any judicial appeal
or that any federal agency with jurisdiction over pension benefit transfers
might not review this transaction independently, the Company believes that
it will prevail in any such appeal or review.
Item 4. Submission of Matters to a Vote of Security Holders.
This item is not applicable.
PART II
Item 5. Market for Millipore's Common Stock, and Related Stockholder
Matters.
The information called for by this item is set forth under the caption
"Millipore Stock Prices" on page 51 of Millipore's Annual Report to
Shareholders for the year ended December 31, 1997, which information is
hereby incorporated herein by reference.
Item 6. Selected Financial Data.
The information called for by this item is set forth under the caption
"Millipore Corporation Eleven Year Summary of Operations" on pages 48 and
49 of Millipore's Annual Report to Shareholders for the year ended December
31, 1997, which information is hereby incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The information called for by this item is set forth under the caption
"Management's Discussion and Analysis" on pages 26 through 30 of
Millipore's Annual Report to Shareholders for the year ended December 31,
1997, which information is hereby incorporated herein by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
This item is not applicable.
Item 8. Financial Statements and Supplementary Data.
The information called for by this item is set forth on pages 31 through
47 and under the caption "Quarterly Results (Unaudited)" on page 50 of
Millipore's Annual Report to Shareholders for the year ended December 31,
1997, which information is hereby incorporated herein by reference.
Item 9. Disagreements on Accounting and Financial Disclosure.
This item is not applicable.
PART III
Item 10. Directors and Executive Officers of Millipore.
The information called for by this item with respect to registrant's
directors and compliance with Section 16(a) of the Securities Exchange Act
of 1934 as amended is set forth under the caption "Management and Election
of Directors--Nominees for Election as Directors" in Millipore's definitive
Proxy Statement for Millipore's Annual Meeting of Stockholders to be held
on April 16, 1998, and to be filed with the Securities and Exchange
Commission on or about March 20, 1998, which information is hereby
incorporated herein by reference.
Information called for by this item with respect to registrant's
executive officers is set forth under "Executive Officers of Millipore" in
Item 1 of this report.
Item 11. Executive Compensation.
The information called for by this item is set forth under the caption
"Management and Election of Directors-Executive Compensation" in
Millipore's definitive Proxy Statement for Millipore's Annual Meeting of
Stockholders to be held on April 16, 1998, and to be filed with the
Securities and Exchange Commission on or about March 20, 1998, which
information is hereby incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information called for by this item is set forth under the caption
"Ownership of Millipore Common Stock" in Millipore's definitive Proxy
Statement for Millipore's Annual Meeting of Stockholders to be held April
16, 1998, and to be filed with the Securities and Exchange Commission on or
about March 20, 1998, which information is hereby incorporated herein by
reference.
Item 13. Certain Relationships and Related Transactions.
The information called for by this item is set forth under the caption
"Management and Election of Directors - Executive Compensation" in
Millipore's definitive Proxy Statement for Millipore's Annual Meeting of
Stockholders to be held on April 16, 1998, and to be filed with the
Securities and Exchange Commission on or about March 20, 1998, which
information is hereby incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) 1. Financial Statements.
The financial statements set forth on pages 31 through 47, the Report of
Independent Accounts on Page 47 and the Quarterly Results (Unaudited) set
forth on page 50 of Millipore's Annual Report to Shareholders for the year
ended December 31, 1997, are hereby incorporated herein by reference. No
other portion of such Annual Report to Shareholders shall be deemed to be
incorporated herein or filed with the Commission. Filed as Exhibit 23 to
this report is the Consent of Independent Accountants described under 3B
of this Item 14.
2. Financial Statement Schedules.
No financial statement schedules have been included because they
are not applicable or not required under Regulation S-X.
3. List of Exhibits.
A. The following exhibits are incorporated by reference:
Reg. S-K
Item 601(b) Referenced Document on
Reference Document Incorporated file with
the Commission
(3) (i) Restated Articles of Organization, Form 10-K Report for
as amended May 6, 1996 year ended December 31, 1996
[Commission File No. 0-1052]
(ii) By Laws, as amended Form 10-K Report for year
ended December 31, 1990
[Commission File No. 0-1052]
(4) Indenture dated as of May 3, 1995, Registration Statement on Form S-4
relating to the issuance of $100,000,000 (No. 33-58117) and an
accompanying
principal amount of Company's Form T-1)
6.78% Senior Notes due 2004
Indenture dated as of April 1, 1997, Registration Statement on Form S-
3
relating to the issuance of Debt (No. 333-23025) and an accompanying
Securities in Series Form T-1)
(10) Shareholder Rights Agreement Form 8-K Report for April, 1988
dated as of April 15, 1988 [Commission File No. 0-1052]
between Millipore and The
First National Bank of Boston
Distribution Agreement, dated as of Form 10-K Report for the year
July 1, 1996, by and among Company ended December 31, 1996
and Fisher Scientific Company [Commission File No. 0-1052]
Revolving Credit Agreement, dated as of Form 10-K Report for the year
January 22, 1997, among Millipore ended December 31, 1996
Corporation and The First National [Commission File No. 0-1052]
Bank of Boston, ABM AMRO Bank N.V.
and certain other lending institutions
Long Term Restricted Stock (Incentive) Form 10-K Report for the year ended
Plan for Senior Management* December 31,1984 [Commission File
No. 0-1052]
1985 Combined Stock Option Plan* Form 10-K Report for the year ended
December 31, 1985 [Commission File
No. 0-1052]
Supplemental Savings and Retirement Form 10-K Report for the year
Plan for Key Salaried Employees of ended December 31, 1984
Millipore Corporation* [Commission File No. 0-1052]
Reg. S-K
Item 601(b) Referenced Document on
Reference Document Incorporated file with
the Commission
(10) Executive Termination Form 10-K Report for the year
[Cont'd]Agreement* ended December 31, 1984
[Commission File No. 0-1052]
1995 Employee Stock Purchase Plan Form 10-K Report for the year
ended December 31, 1994
[Commission File No. 0-1052]
1995 Management Incentive Plan* Form 10-K Report for the year
ended December 31, 1994
[Commission File No. 0-1052]
* A "management contract or compensatory plan"
B. The following Exhibits are filed herewith:
(10) 1995 Combined Stock Option Plan, as amended
(11) Computation of Per Share Earnings
(13) Annual Report to Shareholders, December 31, 1997
(21) Subsidiaries of Millipore
(23) Consent of Independent Accountants relating to the incorporation of
their report on the Consolidated Financial Statements into
Company's Securities Act Registration Nos. 2-72124, 2-85698, 2-
91432, 2-97280, 33-37319, 33-37323, 33-11-790, 33-59005 and 33-
10801 on Form S-8 and Securities Act Registration Nos. 2-84252, 33-
9706, 33-22196, 33-47213 and 333-23025 on Form S-3, and 33-58117 on
Form S-4.
(24) Power of Attorney
(27) Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed by Registrant during the
last quarter of the fiscal year ended December 31, 1997.
(c) Exhibits.
The Company hereby files as exhibits to this Annual Report on Form
10-K those exhibits listed in Item 14(a)(3)(B) above, which are
attached hereto.
(d) Financial Statement Schedules.
No financial statement schedules have been included because they
are not applicable or not required under Regulation S-X.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
MILLIPORE CORPORATION
Dated: March 9, 1998 By /s/ Jeffrey Rudin
Jeffrey Rudin, Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacity and on the dates indicated.
SIGNATURE TITLE DATE
C. WILLIAM ZADEL* Chairman, President, March 9, 1998
C. William Zadel Chief Executive Officer,
and Director
/s/ Francis J. Lunger Vice President March 9, 1998
Francis J. Lunger Chief Financial Officer
Treasurer
CHARLES D. BAKER* Director March 9, 1998
Charles D. Baker
SAMUEL C. BUTLER* Director March 9, 1998
Samuel C. Butler
ROBERT E. CALDWELL* Director March 9, 1998
Robert E. Caldwell
MAUREEN A. HENDRICKS* Director March 9, 1998
Maureen A. Hendricks
MARK HOFFMAN* Director March 9, 1998
Mark Hoffman
STEVEN MULLER* Director March 9, 1998
Steven Muller
THOMAS O. PYLE* Director March 9, 1998
Thomas O. Pyle
JOHN F. RENO* Director March 9, 1998
John F. Reno
ROBERT C. BISHOP* Director March 9, 1998
Robert C. Bishop
*By /s/ Jeffrey Rudin
Jeffrey Rudin, Attorney-in-Fact
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT
OF
MILLIPORE CORPORATION
For the Fiscal Year Ended December 31, 1997
****************
EXHIBITS
****************
INDEX TO EXHIBITS
Exhibit Volume
Exhibit No. Description Page No.
3.1 Restated Articles of Organization, **
as amended May 6, 1996
3.2 By Laws, as amended **
4.1 Indenture dated as of May 3, 1995, relating to the issuance of
**
$100,000,000 principal amount of Company's 6.78%
Senior Notes due 2004
4.2 Indenture dated as of April 1, 1997, relating to**
the issuance Debt Securities in Series
10.1 Distribution Agreement, dated as of July 1, 1996, by and among
**
Company and Fisher Scientific Company
10.2 Revolving Credit Agreement, dated as of January 22, 1997,
among **
Millipore Corporation and The First National Bank of Boston,
ABM AMRO Bank N.V. and certain other lending institutions
which are or become parties thereto
10.3 Shareholder Rights Agreement, dated as of April 15, 1988, **
between Millipore and The First National Bank of Boston
10.4 Long Term Restricted Stock (Incentive) Plan for Senior
Management **
10.5 1985 Combined Stock Option Plan **
10.6 Supplemental Savings and Retirement Plan for Key**
Salaried Employees of Millipore Corporation
10.7 Executive Termination Agreement **
10.8 Executive "Sale of Business" Incentive Termination Agreements
**
10.9 1995 Employee Stock Purchase Plan **
10.10 1995 Management Incentive Plan **
10.11 1995 Combined Stock Option Plan, as amended 3
11 Computation of Per Share Earnings 13
13 Annual Report to Shareholders, December 31, 199715
21 Subsidiaries of Millipore Corporation 47
23 Consent of Coopers & Lybrand L.L.P. 49
24 Power of Attorney 51
27 Financial Data Schedule 54***
** Incorporated by Reference to a prior filing with the
Commission
*** EDGAR Filing only