-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PSQDXRDQNj+C+z05roNtRSMUUbeVQqIQoe3tV2xaJ+nSa7uzMr7XHNl5GgPP7mGh LrJu+FVxed6RDwfH/a7n4w== 0000927016-00-000847.txt : 20000314 0000927016-00-000847.hdr.sgml : 20000314 ACCESSION NUMBER: 0000927016-00-000847 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000313 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MILLIPORE CORP CENTRAL INDEX KEY: 0000066479 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 042170233 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-09781 FILM NUMBER: 567831 BUSINESS ADDRESS: STREET 1: 80 ASHBY RD CITY: BEDFORD STATE: MA ZIP: 01730 BUSINESS PHONE: 7815336000 MAIL ADDRESS: STREET 1: 80 ASHBY ROAD CITY: BEDFORD STATE: MA ZIP: 01730 FORMER COMPANY: FORMER CONFORMED NAME: MILLIPORE FILTER CORP DATE OF NAME CHANGE: 19661116 10-K 1 FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X]Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended December 31, 1999 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 04-2170233 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 80 Ashby Road, Bedford, MA 01730 (Address of principal executive (Zip Code) offices) (781) 533-6000 (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 March 3, 2000, the aggregate market value of the registrant's voting stock held by non-affiliates of the registrant was approximately $2,709,745,162 based on the closing price on that date on the New York Stock Exchange. As of March 3, 2000, 45,663,624 shares of the registrant's Common Stock were outstanding. Documents Incorporated by Reference
Document Incorporated into Form 10-K -------- --------------------------- Definitive Proxy Statement, dated March 17, 2000 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 market leader in the field of separations technology and develops, manufactures and sells products which are used primarily for the analysis, identification and purification of liquids and gases. In addition, Millipore sells products to monitor and control critical aspects of the manufacturing process for integrated circuits (semiconductors). 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 and food and beverage research, manufacturing and quality control operations and to the purification and control of process liquids and gases for integrated circuit ("IC") manufacturing operations. Millipore's IC process control products use electro-mechanical, pressure differential and related technologies to permit IC manufacturers to monitor and control the flow and condition of process gases used in the IC fabrication process. Millipore is an integrated multinational manufacturer of these products. Millipore's role as a market leader has been recognized by independent surveys of filtration markets. Unless the context otherwise requires, the terms "Millipore" or the "Company" mean Millipore Corporation and its subsidiaries. Information About Operating Segments Millipore operates in two business segments: Biopharmaceutical & Research and Microelectronics. Millipore has traditionally organized its business and management structures around the markets and customers which it serves. The Biopharmaceutical & Research segment includes products and services sold to pharmaceutical companies, biotechnology companies, food and beverage companies, university and government laboratories and research institutes; the Microelectronics segment includes products and services sold to semiconductor fabrication companies as well as OEM and material suppliers to those companies. While there is some overlap in the products sold to each business segment, the economic environments in which these two segments operate are distinct. The Biopharmaceutical & Research business segment is characterized by customer needs for reliability and consistency of standardized products used in validated production processes and for assured continuity and comparability of analytical results; this segment has demonstrated relatively stable patterns of revenue growth and profitability. While technical innovation is important to the Biopharmaceutical & Research business segment, the adoption of new technologies and products often requires that a lengthy validation process be completed prior to adoption. On the other hand, the Microelectronics business segment is characterized by rapid technological change and economic cycles with dramatic shifts in revenue growth and decline with corresponding impacts on profitability. During 1999 approximately 73% of Millipore's net sales were made to customers in the Biopharmaceutical & Research segment and approximately 27% to customers in the Microelectronics segment. In addition, approximately 60% of Millipore's net sales were made to customers outside the Americas. Industry and geographic segment information is discussed in Note P to the Millipore Corporation Consolidated Financial Statements (the "Financial Statements") included in Item 8 below, which Note is hereby incorporated herein by reference. Products, Technologies and Applications Millipore sells approximately 7,000 products which 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 and gas monitoring equipment). 1 Biopharmaceutical & Research Business Segment. The products sold to customers in the Biopharmaceutical & Research business segment include disc filters, OEM membranes, 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 media and systems and process filtration systems. The principal separation technologies utilized by products sold to Biopharmaceutical & Research segment customers are based on membrane filters and on certain chemistries and resins as well as liquid chromatography. Membranes are used to filter either the wanted or the unwanted particulate, bacterial, molecular or viral entities from fluids. Some of the Company's newer membrane materials also use affinity, ion-exchange or electrical charge mechanisms to effect the desired separation. Membranes are incorporated into both microfiltration and ultrafiltration devices, cartridges and modules of different configurations to address a variety of customer fluid separation needs. Liquid chromatography media is used in process chromatography systems to remove contaminants at the molecular level from biopharmaceutical products. The Company's laboratory water purification products combine membrane, resin and other separations technologies to provide ultrapure water for critical applications. Customers use the Company's products in the Biopharmaceutical & Research segment to gain knowledge about a molecule, compound or microorganism by detecting, identifying and quantifying the relevant components of a fluid sample. In addition Millipore products are used for the purification of small and large volumes of critical fluids. The Company's products are also used by pharmaceutical manufacturing and research operations to isolate and purify specific components of fluid streams for analysis and to concentrate identified compounds for further processing. Biopharmaceutical & Research segment customers use the Company's laboratory water purification products to provide ultrapure water for critical laboratory analysis and for clinical testing. Microelectronics Business Segment. The products sold to customers in the Microelectronics business segment include polymeric cartridge filters and housings of various sizes, materials and configurations, metal filters, precision liquid dispense filtration pumps, resin based gas purifiers and gas monitors as well as mass flow controllers and pressure and vacuum control products. Membrane products sold to customers in the Microelectronics business segment are based on essentially the same membrane technologies described above but with membranes and housings made from distinct polymers as required by the nature of the liquids being purified. Gas purification and monitoring products rely on resin based chemistries which react with process gases to either remove contaminants or to monitor the purity of the process gas. Gas purification products also include metal filters which operate as both screen and depth filters to exclude contaminants from process gas streams. In addition, the Company's IC process control products use electro-mechanical, pressure differential and thermal-dynamic technologies to create pressurized or vacuum environments to precisely measure and control the flow of IC process gases. The Company's separations products are used by Microelectronics customers in manufacturing operations to remove contaminants in a process liquid stream and to purify and precisely dispense process liquids during critical IC fabrication operations. The Company's products are also used in process gas applications to precisely monitor and 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 IC process chamber. Customers and Markets Within each customer group served by Millipore, the Company focuses its sales efforts upon those segments where customers have specific requirements which can be satisfied by the Company's products. Biopharmaceutical & Research Business Segment. Major customer groups served by this business segment include pharmaceutical/biotechnology and food and beverage companies and government, university 2 and private research and testing analytical laboratories. 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 protein products; cell harvesting; isolation and purification of compounds from complex mixtures and the purification of water for laboratory use. The Company's membrane and chromatography products also play an important role in the development of new drugs by offering customers a continuum of products capable of being scaled-up to match customer needs at different stages during the development process from laboratory research through full scale drug production. In addition, Millipore has developed and is developing products for biopharmaceutical applications in order to meet the purification requirements of the biotechnology industry. The Company also sells its analytical products, filter cartridges and laboratory water purification systems to chemical manufacturers and processors. The Food and Beverage Industry uses the Company's products for 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, beer, bottled juices and water. 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 to the Biopharmaceutical & Research business segment accounted for approximately 73% of Millipore's 1999 and 1998 consolidated sales, and 65% of 1997 consolidated sales. Microelectronics Business Segment. Major customer groups served by this business segment include IC manufacturers and OEM manufacturers that sell a variety of equipment used in the manufacture of ICs to IC manufacturers. IC manufacturers use the Company's products to purify (by removing particles and unwanted contaminating molecules), deliver, control 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 and precision liquid dispense filtration products are sold to OEM capital equipment suppliers to semiconductor manufacturers as well as directly to manufacturers of ICs. Sales to the Microelectronics business segment accounted for approximately 27% of Millipore's 1999 and 1998 consolidated sales as contrasted with 35% of 1997 consolidated sales. As noted above, this business segment has experienced historic volatility, and the effect of such volatility has, in the past, affected Millipore's sales growth. While no single customer is material to the Company taken as a whole, the Microelectronics business segment does rely on a relatively narrow group of customers, some of whom purchase significant quantities of the Company's products. Sales and Marketing The Company sells its products to both business segments 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 to both business segments 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, 1999, the Company's marketing, sales and service forces consisted of approximately 1,300 employees worldwide of which approximately 1,000 were employed in the Biopharmaceutical & Research business segment and approximately 300 were employed in the Microelectronics business segment. 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 3 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 markets to support its process gas measurement/control products as well as its laboratory water products. Research and Development In its role as a pioneer of membrane separations, Millipore has traditionally placed heavy emphasis on research and development. This emphasis has permitted Millipore to be the first company to introduce a number of major new enabling separations membranes and membrane devices (examples include: nitrocellulose microfiltration membrane in 1954, compact high purity laboratory water systems in 1972, membrane based syringe filter devices in 1973, membrane based filters for intravenous drug therapy in 1975, tangential flow filtration cassette devices in 1975, polyvinylidene fluoride membrane in 1978, continuous electro-deionization water purification systems in 1988, composite ultrafiltration membranes in 1989, melt-cast PFA membranes in 1990, composite microfiltration membranes for the removal of viruses from solution in 1991, ultra-high weight polythylene membrane in 1993, high flow high efficiency metal membrane for gas filtration in 1996 and non-dewetting PTFE membrane in 1997). 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 in 1999, 1998 and 1997 were $52,140,000, $53,578,000 and $55,899,000, respectively. For discussion of research and development write-offs relating to the Tylan acquisition, see Management's Discussion and Analysis of Financial Condition and Results of Operations--Acquisitions and Note C to the Financial Statements, which discussions are hereby incorporated herein by reference. In addition, the Company has followed a practice of supplementing its internal research and development efforts by licensing newly developed technology from unaffiliated third parties and/or acquiring distribution rights with respect thereto, when it believes it is in its long term interests to do so. 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 in the Biopharmaceutical & Research business segment include Pall Corporation, Barnstead Thermolyne Corporation, Sartorius GmbH, Qiagen NV, Amersham Pharmacia Biotech A.B. and United States 4 principal competitors in the Microelectronics business segment are Pall Corporation, United States Filter Corporation, Aera and 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 Company is in substantial compliance with all applicable environmental requirements. Compliance with the foregoing environmental laws during 1999, 1998 and 1997 has had no material effect on the Company's capital expenditures, earnings or competitive position. However, because regulatory standards under environmental laws and regulations are becoming increasingly stringent, there can be no assurance that future developments will not cause the Company to incur material environmental liabilities or costs. 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") one additional share of Millipore Common Stock for each share of Millipore Common Stock owned, at a price of $80 for each share (after giving effect to the 1995 two for one stock split). In April of 1998, the Rights Plan was amended and restated to, among other things, extend the expiration date until April 30, 2008, to increase the purchase price on the exercise of a Right to $200, to permit the Directors to exchange certain of the Rights for shares of Company Common Stock (on a 1 for 1 basis) under certain circumstances and to make certain other updating changes. The Rights Plan, as amended and restated, 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. Accordingly, as a general matter, Millipore is not substantially dependent upon any single supplier. However, see Management's Discussion and Analysis of Financial Condition and Results of Operations--Business Outlook and Uncertainties, for a discussion of the Company's need to develop alternate sources for a critical raw material used to manufacture one of the Company's membranes, which discussion is hereby incorporated herein by reference. As of December 31, 1999, Millipore employed approximately 4,600 persons worldwide, of whom approximately 2,050 were employed in the United States and approximately 2,550 were employed overseas. Executive Officers of Millipore The following is a list, as of March 3, 2000, of the Executive Officers of Millipore. All of the officers of Millipore Corporation listed below were elected to serve until the first Directors Meeting following the 5 2000 Annual Stockholders Meeting; Divisional officers were appointed to the Corporate Executive Committee (the Company's senior policy setting management body) effective January 10, 2000.
First Elected -------------------------- An Executive To Present Name Age Office Officer Office ---- --- ------ ------------ ------------- C. William Zadel 57 Chairman of the Board, President and 1996 1996 Chief Executive Officer of Millipore Corporation Francis J. Lunger 54 Executive Vice President, and Chief 1997 2000 Operating Officer of Millipore Corporation Kathleen B. Allen 44 Vice President, Treasurer and Chief 2000 2000 Financial Officer of Millipore Corporation Michael P. Carroll 49 Vice President of Millipore 1992 1999 Corporation; General Manager, Gas Division of Microelectronics Divisions John E. Lary 53 Vice President of Millipore 1994 1994 Corporation Joanna Nikka 48 Vice President of Millipore 1996 1996 Corporation Jeffrey Rudin 48 Vice President and General Counsel of 1996 1996 Millipore Corporation; Clerk of the Corporation Hideo Takahashi 59 Vice President of Millipore 1996 1979 Corporation and President of Nihon Millipore (As President of Nihon Millipore) Dominique F. Baly 50 Vice President, Analytical Divisions 2000 1994 Vinay Goel 51 Vice President, Corporate Technology 2000 1999 Operations Nicholas Lambo 55 Vice President & General Manager, 2000 1993 BioProcess Division Jean-Marc Pandraud 46 Vice President & General Manager, 2000 1999 Microelectronics Divisions Susan Vogt 46 Vice President & General Manager, 2000 1999 Laboratory Water Division
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. and Matritech, Inc. Mr. Zadel is Chairman of the Board of Directors of the Massachusetts High Technology Council (February 1999). He has also served as the Chairman of the Health Industry Manufacturers Association (1994-1995). Mr. Lunger was elected Executive Vice President, Chief Operating Officer of Millipore in January 2000; prior to that Mr. Lunger was Vice President, Chief Financial Officer and Treasurer of Millipore, a position he 6 assumed upon joining the Company in June 1997. Prior to joining Millipore, 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) and Vice President, Finance (1988-1991). Ms. Allen was elected Vice President, Treasurer and Chief Financial Officer of Millipore in January 2000. Since joining Millipore in 1983 she held a wide variety of positions in the Company's financial organization, most recently as Corporate Controller and Chief Accounting Officer of Millipore. Prior to joining Millipore, Ms. Allen practiced public accounting for six years with Arthur Young and Company. 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 Corporate Vice President, Chief Financial Officer and Treasurer in February, 1992. In 1997 Mr. Carroll was elected President of Millipore Asia Ltd. in which position he served until 1999 when he was appointed to his current position as General Manager, Gas Division of the Microelectronics Divisions. Mr. Carroll remains a Vice President of Millipore Corporation. Mr. Lary was elected a Vice President of Millipore Corporation 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 Vice President for Human Resources of Millipore Corporation 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 Vice President and General Counsel of Millipore Corporation 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). Prior to that, Mr. Rudin was Assistant Division Counsel for the Pharmaceutical Division of Ciba-Geigy Corporation. Mr. Rudin was appointed Clerk of Millipore Corporation in 1999. 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 Millipore Corporation on February 8, 1996. Mr. Baly joined Millipore's French subsidiary in 1972 as an Application Specialist. From 1984 until 1991 Mr. Baly served as Vice President and General Manager for Europe; in 1991 he was appointed President of Millipore Asia Ltd. Mr. Baly has served in his current position as the Vice President of the Analytical Divisions of Millipore since July of 1994. Mr. Goel joined Millipore in 1977 as a product development engineer for high purity water products. From 1988 through 1998 Mr. Goel served as Vice President Membrane Research & Development, Analytical Laboratory. In January 1999 Mr. Goel was appointed to his current position of Vice President, Corporate Technology Operations. Mr. Lambo joined Millipore in 1977 as Product Manager for its Biochemical Product Line. Since June of 1993 Mr. Lambo has served as the Vice President & General Manager of the BioProcess Division. 7 Mr. Pandraud joined Millipore's French subsidiary in 1978 as an Application Specialist for the contamination laboratory market. From 1994 until 1999 Mr. Pandraud served as the Vice President & General Manager of the Laboratory Water Division. In July 1999 he was appointed to his current position as Vice President & General Manager, Microelectronics Divisions. Ms. Vogt joined Millipore in 1981 as a Financial Analyst. In 1990 Ms. Vogt was appointed Vice President of Marketing for the Analytical Division and in 1995 she was made Vice President of Marketing and Research & Development for the Analytical Division. From 1997 until 1999 she served as General Manager of the Analytical Products Division of the Millipore Analytical Divisions. In July 1999 Ms. Vogt was appointed to her current position of Vice President & General Manager, Laboratory Water Division. Item 2. Properties. Millipore operates 15 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.
Business Floor Space Land Area Segment Location Facility Sq. Ft. Acres Served -------- -------- ----------- --------- ----------- Bedford, MA Executive Offices, research, membrane 352,000 31 B&R; Micro. manufacturing & warehouse Danvers, MA Manufacturing and office 65,000 16 B&R. Jaffrey, NH Manufacturing, warehouse & office 177,000 31 B&R; Micro. Cidra, Puerto Rico Manufacturing, warehouse & office 125,000 29 B&R. Molsheim, France Manufacturing, warehouse & office 148,000 20 B&R. Cork, Ireland Manufacturing 98,000 20 B&R. Yonezawa, Japan Manufacturing & warehouse 169,000 7 B&R; Micro.
- ------------------------------------------------------------------------------- B&R = Biopharmaceutical & Research business segment Micro. = Microelectronics Business Segment 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 1,000,000 square feet and cost was approximately $12,325,000 in 1999. The following leased facilities are the most significant: 1. A lease of a 198,000 square foot building located on 13 acres in Allen, Texas (Dallas-Fort Worth vicinity). This lease expires in 2008 and provides for two 5 year extension options. This facility is used to support the Microelectronics business segment. 2. A lease of 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. This building supports both business segments. 3. A lease of a 134,000 square foot building which is adjacent to the leased property referred to in the preceding paragraph for a term ending in 2006, with renewal options for an aggregate of 20 years, as 8 well as a purchase option. This building is used primarily to serve the Biopharmaceutical & Research business segment 4. 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. This building supports both business segments. With the exception of the Allen lease described above, in the opinion of Millipore, no single lease is material to the Company's operations. The facilities located in Allen, Texas, Cidra, Puerto Rico, Danvers, Massachusetts and Yonezawa, Japan currently operate at approximately 50%, 60%, 70% and 70%, of capacity, respectively. All of the other above listed owned and leased major facilities are fully utilized. 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. The Company currently is not a party to any material legal proceeding and the Company knows of no material legal proceeding contemplated by any governmental authority. On July 21, 1999 Amersham Pharmacia Biotech AB ("APB") of Sweden filed a complaint in the High Court of Justice in the United Kingdom against the Company and two of its subsidiaries alleging that the sale of the Company's ISOPAK chromatography valve infringed one or more of the claims contained in certain APB patents. APB is seeking an injunction against the alleged infringement as well as damages. The Company believes that its ISOPAK product does not infringe the patents in question. The Company intends to vigorously defend this action. In any event, the outcome of this suit will not have a material adverse impact on the Company's financial condition or results of operations. The Company first disclosed this matter in a press release issued during the third quarter of 1999. 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. Millipore's Common Stock, $1.00 par value, is listed on the New York Stock Exchange and is traded under the symbol "MIL". The following table sets forth, for the indicated fiscal periods, the high and low sales prices of Millipore's Common Stock (as reported on the New York Stock Exchange Composite Tape) and the dividends declared (on a per share basis). As of March 3, 2000 there were approximately 2,962 shareholders of record.
Dividends Range of Stock Prices Declared --------------------------- ----------- 1999 1998 1999 1998 ------------- ------------- ----- ----- High Low High Low (Per Share) ------ ------ ------ ------ First Quarter........................... $33.88 $23.75 $38.44 $30.00 $0.11 $0.10 Second Quarter.......................... $40.81 $23.44 $36.94 $26.82 $0.11 $0.11 Third Quarter........................... $42.13 $34.75 $27.50 $17.50 $0.11 $0.11 Fourth Quarter.......................... $40.00 $30.00 $29.88 $17.25 $0.11 $0.11
Item 6. Selected Financial Data. The following selected consolidated financial data for Millipore are derived from the Company's Financial Statements and related notes thereto. The following selected consolidated financial data should be read in connection with and is qualified in its entirety by Millipore's Financial Statements and related notes thereto and other financial information included elsewhere in this Form 10-K report. 9 Millipore Corporation--Five-year Summary of Operations
1999 1998 1997(2) 1996 1995 -------- -------- --------- -------- -------- (In thousands, except per share data) Net sales............... $771,188 $699,307 $ 758,919 $618,735 $594,466 Cost of sales........... 358,169 364,467 342,237 249,443 243,849 -------- -------- --------- -------- -------- Gross profit.......... 413,019 334,840 416,682 369,292 350,617 Selling, general and administrative expenses............... 256,598 236,521 245,585 202,140 195,026 Research and development expenses............... 52,140 53,578 55,899 38,429 36,515 Purchased research & development expense.... -- -- 114,091 68,311(2) -- Settlement of litigation............. -- 11,766(1) -- -- -- Restructuring items..... (5,200) 33,641(1) -- -- -- -------- -------- --------- -------- -------- Operating income (loss)............... 109,481 (666) 1,107 60,412 119,076 Gain on sale of equity securities............. -- 35,594(1) 8,330 5,329 -- Interest income......... 3,025 3,090 2,937 2,780 1,682 Interest expense........ (30,155) (29,474) (30,484) (11,498) (10,623) -------- -------- --------- -------- -------- Income (loss) from continuing operations before income taxes.. 82,351 8,544 (18,110) 57,023 110,135 Provision (benefit) for income taxes .......... 18,023 (1,320) 20,674 13,401 24,781 -------- -------- --------- -------- -------- Income (loss) from continuing operations........... 64,328 9,864 (38,784) 43,622 85,354 Loss on disposal of discontinued operations............. -- -- -- 2,036(3) -- -------- -------- --------- -------- -------- Net income (loss)....... $ 64,328 $ 9,864 $ (38,784) $ 41,586 $ 85,354 ======== ======== ========= ======== ======== Basic net income (loss) per share: Income (loss) from continuing operations........... $ 1.44 $ 0.22 $ (0.89) $ 1.00 $ 1.90 Net income (loss) per share................ $ 1.44 $ 0.22 $ (0.89) $ 0.95 $ 1.90 Diluted net income (loss) per share: Income (loss) from continuing operations........... $ 1.42 $ 0.22 $ (0.89) $ 0.98 $ 1.86 Net income (loss) per share................ $ 1.42 $ 0.22 $ (0.89) $ 0.94 $ 1.86 Cash dividends declared per share.............. $ 0.44 $ 0.43 $ 0.39 $ 0.35 $ 0.315 Weighted average shares outstanding: Basic................. 44,731 43,864 43,527 43,602 44,985 Diluted............... 45,274 44,289 43,527 44,457 45,887 Financial Data Working capital....... $ 89,164 $ 6,071 $ 36,169 $ 90,708 $ 88,160 Total assets.......... 792,733 759,323 769,963 680,305 528,685 Long-term debt........ 313,017 299,110 286,844 224,359 105,272 Shareholders' equity.. $176,851 $133,791 $ 140,809 $209,676 $221,500
- -------- (1) See Note K on page F-16 below, Note B on page F-9 below, Note O on page F-22 below of the Notes to the Financial Statements. (2) Reflects the acquisitions of Tylan General Inc. in January 1997 and Amicon Separation Science Business in December 1996. (3) Represents a loss on the disposal of discontinued operations related to the sale of the Company's Waters Chromatography Division and certain assets of its non-membrane bioscience business. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in connection with Millipore's Consolidated Financial Statements and related notes thereto and other financial information included elsewhere in this Form 10-K report. 10 Results of Operations The Company reported a profit per share of $1.42 and $0.22 for 1999 and 1998, respectively, compared to a loss of $0.89 per share for 1997. Excluding unusual items, the Company would have reported diluted earnings per share of $1.35, $0.60 and $1.65 for 1999, 1998 and 1997, respectively. The Company initiated a restructuring program in 1998 to streamline worldwide operations and reduce the overall cost structure. This program is discussed in its entirety in Restructuring Items. Reference is also made to the discussion of Gross Margins, Gain on Sale of Equity Securities, Acquisitions and Legal Proceedings below for additional information related to the other unusual items on the following schedule. Summary of Unusual Items:
Year Ended December 31, ---------------------------------------- 1999 1998 1997 ------------ ------------ ------------- (In millions, except per share data) Cost of sales Write-off of inventory and manufacturing equipment........... $ -- $ 9.2 $ -- Provision for excess and obsolete inventory......................... -- 6.0 -- Purchase accounting adjustment..... -- -- 5.0 ----------- ------------ ------------- Impact on gross margin............... -- (15.2) (5.0) Operating expenses Purchased research and development expenses.......................... -- -- 114.1 Restructuring items................ (5.2) 33.6 -- Litigation settlements............. -- 11.8 -- ----------- ------------ ------------- Income (loss) before income taxes.... 5.2 (60.6) (119.1) Gain on sale of equity securities.... -- 35.6 8.3 ----------- ------------ ------------- Impact on income (loss) before income taxes............................... 5.2 (25.0) (110.8) Tax impact of unusual items.......... 1.8 (8.4) 1.2 ----------- ------------ ------------- Net income (loss) from unusual items............................... $ 3.4 $ (16.6) $ (112.0) =========== ============ ============= Net income (loss) per share from unusual items....................... $ 0.07 $ (0.37) $ (2.54) =========== ============ =============
Local Currency Results The following discussion of Net Sales, Gross Profit Margins and Operating Expenses refers to revenue, margins and expenses in "local currencies". Local currency results represent the foreign currency balances translated, in all periods presented, at Millipore's 1999 budgeted exchange rates, thus excluding the impact of fluctuations in the actual foreign currency rates. The Company's management uses this presentation for internal evaluation of the financial performance of the Company's business segments because it believes that the local currency results provide a clearer presentation of the underlying business trends. The U.S. dollar results represent the foreign currency balances translated at actual exchange rates. Net Sales Net sales, measured in U.S. dollars, increased 10 percent in 1999, compared to a decrease of 8 percent in 1998. The net sales increase in 1999 as compared to 1998 was primarily due to the beginning of a recovery in the semiconductor industry coupled with continued growth in the biopharmaceutical business and positive net currency effects. Growth in the Americas and Asia/Pacific regions was heavily influenced by the improvements in the semiconductor industry. The net sales decrease in 1998 compared to 1997 was primarily due to the downturn in the semiconductor industry, economic difficulties in Asian markets and negative currency effects. 11 During 1999 as compared to 1998 the Japanese yen strengthened against the U.S. dollar by approximately 13 percent and the Euro weakened against the U.S. dollar by approximately 5 percent. The positive effect from the stronger yen more than offset the decline in the Euro resulting in an increase in reported sales growth by 2 percentage points over the preceding year. In 1998 the reported sales growth was negatively impacted by 3 percent as a result of the Japanese yen which weakened against the U.S. dollar by approximately 8 percent, as did the European currencies, although to a lesser extent. As a general matter, a stronger U.S. dollar will adversely affect the sales growth of both business segments. However, since the Microelectronics segment has a higher percentage of sales in Asia, strengthening of the dollar against Asian currencies will have a somewhat larger impact on that segment. Similarly, the Biopharmaceutical & Research segment has a higher percentage of sales in Europe than the Microelectronics segment. Therefore, strengthening of the dollar against the European currencies will have a larger impact on the Biopharmaceutical & Research segment sales growth. Non-currency related price changes have not significantly affected the comparability of sales during the past three years. Sales growth by business segment and geography, measured in local currencies and U.S. dollars, is summarized in the table below.
Sales Growth Sales Growth in Local in U.S. ------------ ------------ Currencies Dollars --------------- ---------------- 1999 1998 1999 1998 ------ ------ ------ ------ Biopharmaceutical & Research............... 8% 7% 9% 5% Microelectronics........................... 9% (28)% 15% (32)% ------ ------ ------ ------ Consolidated............................. 8% (5)% 10% (8)% ------ ------ ------ ------ Americas................................... 10% (9)% 10% (9)% Europe..................................... 2% 8% (2)% 7% Asia/Pacific............................... 14% (13)% 29% (21)% ------ ------ ------ ------ Consolidated............................. 8% (5)% 10% (8)% ------ ------ ------ ------
Biopharmaceutical & Research sales, measured in local currencies, increased 8 percent in 1999 compared to 1998. The growth was broad-based across product lines and geographies. Sales growth was strongest for the biotechnology and pharmaceutical markets utilizing laboratory research applications, water filtration devices and consumable filtration products and systems used in drug production. Revenue growth from the sale of process systems was positive, although to a lesser extent than other product lines. However, the order pattern for process systems is variable and large orders are received on a periodic basis which may positively or negatively impact growth comparisons. The growth for this segment was positively impacted in 1999 by the increase in new drugs approved and in production. Biopharmaceutical & Research sales, measured in local currencies, increased 7 percent in 1998 compared to 1997. The growth of the Biopharmaceutical & Research segment in 1998 reflected the combination of increased demand for consumable products and process equipment used in the production of sterile drugs and analytical and water filtration devices used in research laboratories. The growth in the Americas and Europe for this segment was attributed to an increase in the number of new drugs approved and in production. This segment was adversely affected in Asia by a decrease in demand as a result of region-wide recessionary pressures. Microelectronics segment sales growth measured in local currency increased 9 percent in 1999 compared to 1998. During 1999, the Company's sales growth has been positively impacted by improvements in the semiconductor industry and strengthening of the Asian economies. Recent industry results and published reports indicate a reduction in excess capacity in the semiconductor industry and increase in overall semiconductor demand which generally signals an upturn in this market. Sales growth for this segment was positive in the Asia/Pacific region and, to a lesser extent, the Americas region offset by a decline in sales in Europe. 12 Microelectronics segment sales growth, measured in local currency, decreased 28 percent in 1998 as compared to 1997. The decrease in 1998 sales was directly attributable to the continuation of the semiconductor industry slump, which began in the middle of 1996. The reduction in equipment sales from the Microelectronics segment was the result of a decrease in new plant construction and upgrades. Sales of consumable purification devices also declined although to a lesser extent, consistent with lower worldwide semiconductor plant capacity utilization. Gross Profit Margins Gross profit margins in local currencies were 53.9 percent in 1999, 48.1 percent in 1998, and 53.3 percent in 1997. Excluding unusual items, gross profit margins in 1998 were 50.2 percent and 54.0 percent in 1997. The unusual items recorded in 1998 were a $9.2 million charge for the write-off of inventory and manufacturing equipment associated with product line rationalization activities and a provision of $6.0 million for excess and obsolete inventory. The unusual item recorded in 1997 was the effect of an inventory write-up to net realizable value of $5.0 million related to acquisition accounting for Tylan General Inc. ("Tylan"). Gross profit margin percentages were higher in 1999 than those in 1998 as a result of Company-wide increased volume as well as savings realized from the restructuring initiatives which began in the third quarter of 1998. Gross profit margin percentages were lower in 1998 as compared to 1997, excluding the unusual items recorded in both years, reflecting the impact of significantly reduced volumes in the Company's manufacturing plants serving the Microelectronics segment combined with duplicative manufacturing costs resulting from concurrent operations at three existing plants located in California and Texas and operations at the new manufacturing facility in Allen, Texas. The redundant facilities were closed in September 1998 and their operations consolidated into the Allen, Texas facility. Operating Expenses Selling, general and administrative ("S,G&A") expenses in local currencies increased 7 percent in 1999 and decreased 1 percent in 1998. The increase in 1999 compared to 1998 was primarily attributable to $14.7 million of incremental variable employee compensation earned in 1999 over amounts earned in the preceding year. The decrease in 1998 compared to 1997 was due to cost containment programs initiated as part of the restructuring activities and reductions in employee compensation programs due to the financial performance of the Company in that year. The Company continues to invest in sales, service and marketing resources focused on maintaining or improving customer services, supporting the launch of new products and development of future sales initiatives aimed at improving the Company's competitive positions. As a percentage of sales S,G&A expenses decreased slightly in 1999 as compared to 1998 and increased 1 percent in 1998 as compared to 1997. Research and development expenses in local currencies decreased 3 percent in 1999 and 4 percent in 1998. The decreases in 1999 and 1998 were primarily due to the elimination of research and development expenses for non-strategic product lines in the Microelectronics segment and the Microelectronics consolidation into the Allen, Texas facility thus eliminating duplicate operations. Litigation settlements totaling $11.8 million were recorded in the first quarter of 1998 and are described under "Legal Proceedings" below. Restructuring Items In the second quarter of 1998, the Company announced a restructuring program to improve the competitive position of the Company by streamlining worldwide operations and reducing the overall cost structure. The restructuring program was initiated to bring operating costs in line with lower revenues resulting from the financial difficulties in Asian economies, the strong U.S. dollar and the continuation of the semiconductor industry slump. The combination of the restructuring programs and the 1998 Microelectronics plant consolidation resulted in estimated savings of approximately $40.0 million in 1999. The savings resulted from reduced wages, facility related costs, depreciation and amortization and were primarily reflected as reductions in cost of sales. 13 Key initiatives of the restructuring program included: 1. Discontinue non-strategic product lines and rationalize product offerings to improve product line focus. The non-strategic product lines consisted of high pressure liquid chromatography equipment, semiconductor fab monitoring and control software and various filtration devices. The rationalization of product offerings was a result of management's review which identified specific products with limited profitability or products which were inconsistent with current strategic marketing plans, such as non-standard products. These actions to improve product line focus were completed by September 30, 1998. 2. Consolidate certain manufacturing operations to eliminate duplicate manufacturing processes. Identified manufacturing operations in Ireland and the U.S. are in the process of being consolidated into existing facilities within the Company, which will result in similar production activities occurring at the same location. The consolidation of manufacturing operations will be completed in 2000. 3. Realign European country organizational structure to focus on operating business units and establish a regional transaction service center, resulting in the consolidation of financial and administrative activities into a single location. The Company completed the transition to the service center during 1999. 4. Reduce administrative and management infrastructure costs in Asia. These cost reductions resulted in a lower overhead structure for administrative and management infrastructure in Asia and were achieved through reduced facility costs and administrative positions as offices in the region were consolidated during 1998. 5. Renegotiate marketing, research and development and supply agreements. These agreements were amended to eliminate the cost of maintaining certain exclusivity rights and to reduce purchasing commitments for non-strategic products. These actions were completed during 1999. 6. Streamline the supply chain management function through the centralization of worldwide procurement functions and the consolidation of vendors to significantly reduce the aggregate number of vendors, resulting in cost savings and shorter cycle time within the procurement function as well as materials cost reductions. These actions were completed during 1999. In the third quarter of 1998, the Company recorded an expense associated with these activities of $42.8 million ($29.1 million after tax) including a restructuring charge of $33.6 million and a $6.2 million charge for inventory and $3.0 million of fixed asset write-offs against cost of sales. The $33.6 million restructuring charge included $18.3 million of employee severance costs, $9.5 million write-off of real and intangible assets associated with discontinued product lines and with the termination of certain rights under two technology development collaboration agreements, $3.8 million of lease cancellation costs and $2.0 million of contract termination costs. During 1999, approximately $5.7 million of restructuring costs, consisting primarily of severance, were paid. The Company reevaluated the accrual for the restructuring program and in the third quarter of 1999 reversed $5.2 million of the remaining balance. The reversal reflects a lower estimate for employee severance and lease cancellation costs. Although the planned number of employee positions had been eliminated, the reduction in severance cost is attributed to higher levels of attrition than originally anticipated and to impacted employees filling open positions as demand increased due to improved sales volume. At December 31, 1999, approximately $7.6 million remains accrued and will be substantially paid in 2000. The restructuring initiatives combined with the 1998 consolidation of the Company's Microelectronics plants resulted in the elimination of 620 positions worldwide. Notification to employees was completed in the third quarter of 1998, however a small number of these employees will continue in their existing positions through 2000 with their related salary costs charged to operations as incurred. Under the terms of the severance agreements, the Company expects to pay severance and associated benefits through 2000. 14 During the third quarter of 1998, the Company also recorded in Cost of Sales an incremental provision for excess and obsolete inventory of $6.0 million in response to adverse changes in demand attributable to declining business conditions in Asia and the slowdown in the semiconductor industry. Gain on Sale of Equity Securities The gain on sale of equity securities in 1998 primarily reflects the sale of the Company's equity holdings in PerSeptive Biosystems. As of December 31, 1997, the Company held 2.2 million shares of PerSeptive Biosystems common stock and 1,000 shares of PerSeptive Biosystems preferred stock. On January 22, 1998, PerSeptive merged with The Perkin-Elmer Corporation. Pursuant to the merger, all of the Company's holdings of common and preferred shares in PerSeptive were converted into an aggregate of 587,000 shares of Perkin-Elmer common stock. In the first quarter of 1998, the Company sold all of its shares of Perkin-Elmer stock for approximately $32.5 million in cash. The Company also sold all of its common shares of Glyko Biomedical Ltd. in the first quarter of 1998 and recognized a gain of $3.1 million. Gain on sale of equity securities in 1997 reflected the sale of a portion of the Company's holdings in PerSeptive Biosystems common shares. Net Interest Expense Net interest expense in 1999 was $0.7 million more than 1998. This increase is attributed to higher average interest rates resulting from the 1998 renegotiation of the Company's revolving Credit Agreement and higher effective interest due to the impact of foreign exchange under the yen debt swap agreements which was somewhat offset by lower average borrowings. Net interest expense in 1998 was $1.2 million less than 1997, primarily as a result of the yen debt swap agreement entered into during December 1997. Provision for Income Taxes The effective income tax rate in 1999, 1998 and 1997 was 21.0 percent, excluding the effect of the restructuring items recorded in 1999 and 1998 and the non-tax deductible write-off of purchased research and development associated with the Tylan acquisition in 1997. Earnings Per Share Earnings per share in 1999 were impacted by the reversal of the restructuring charges. Earnings per share in 1998 were impacted by restructuring charges and several unusual items and 1997 earnings per share included write-offs of purchased research and development associated with the Company's acquisition of Tylan. The impact of these items is reflected in the Summary of Unusual Items on page 11 above. Additionally, in 1999 as compared to 1998, earnings per share were positively impacted by $0.02 per share as a result of the net currency impact of the stronger Japanese yen offset by the weaker European currencies. Earnings per share were adversely impacted in 1998 by the comparatively stronger U.S. dollar, reducing earnings by $0.33 per share as compared to 1997. Acquisitions On January 22, 1997, the Company completed its cash tender offer for all of the outstanding common shares of Tylan General, Inc. ("Tylan") for $16.00 per share. Tylan became a wholly owned subsidiary of the Company on January 27, 1997. The aggregate purchase price was $133.0 million, plus the assumption of Tylan's outstanding debt, net of cash, totaling $23.6 million. This acquisition was accounted for as a purchase and resulted in a write-off for in-process research and development ("IPR&D") of $114.1 million in the first quarter of 1997. 15 Included in the IPR&D write-off were two major IPR&D projects acquired as a part of Tylan. The first of these was a project to develop intracavity laser spectroscopy technologies for application in semiconductor and related industries. This project had an estimated fair value of $53.5 million, was expected to require the investment of an additional $3.2 million and twenty- two man years to complete (generally, the Company regards 2,000 hours as comprising one "man year"). If proven to be technologically feasible, it was expected that this project would yield a break-through enabling technology and would become a major revenue source for the Company. The products expected to result from this project were to be used in monitoring moisture and other contaminant levels within vacuum deposition chambers for semiconductor manufacturing. The valuable element of this project was that the expected future products would be differentiated from Tylan's current products, would offer enhanced sensitivity and the ability to monitor corrosive gas streams and would also have applications for different target gases and sample environments. While Tylan retained management direction over this project, development was performed by a third party pursuant to a development and license agreement. Under this development and license agreement Tylan directed the research with the objective of developing intracavity laser spectroscopy technologies for application in semiconductor, flat panel, and fiber optic manufacturing industries. According to this agreement, Tylan was to have the rights and responsibilities to utilize the technology, were it to be successfully developed, and to manufacture products for sale to the above industries. This agreement provided for aggregate development fees of $8.0 million, payable $0.3 million at signing and the balance in equal quarterly installments thereafter over the five year term of the agreement. The agreement was terminable at will by Tylan but required the payment of a termination fee equal to six quarters of development fees ($2.4 million). Development fees were charged against research and development expense. This project was written off because, at the time of the Tylan acquisition, it was very early in the development process and had not achieved technological feasibility. There was also significant uncertainty as to the precise configuration and market requirements of the expected products based on the intracavity laser spectroscopy technology. In addition, there was considerable uncertainty as to how long it would take to develop a commercializable product from this technology. Further, technological feasibility for potential alternative future uses of this technology had not been achieved. As a result of the prolonged downturn in the microelectronics industry, the Company reprioritized research and development programs and further development of this project was suspended in late 1997. This resulted in a decision to terminate the third party development and license agreement in December 1997 and the termination fee was charged to the acquisition reserve. The Company retains certain post-termination residual rights to this technology and is currently re-evaluating the future of this project. The second significant IPR&D project acquired with Tylan which has been written off was the development of a new more versatile, sensitive and easily manufactured transducer based on thin film technology. This project had an estimated fair value of $15.0 million, was expected to require the investment of an additional $1.2 million and ten man years to complete and was anticipated to generate significant revenues over the estimated life of the resulting products. If proven technologically feasible, the valuable element of this project was that it was expected to generate a transducer which was superior to current transducers in that it could operate in both high and low pressure environments with enhanced sensitivity and would be easier and less expensive to manufacture. This project was written off because, as of the date of the Tylan acquisition, it was unknown whether or not the thin film transducer technology could be manufactured successfully on a large scale. Significant issues relating to manufacturability and whether product physical dimensions and other product criteria could be achieved remained to be resolved. In addition, there was uncertainty concerning customer acceptance of this product. Further, the technology underlying this project had no alternative future uses not included in its estimated fair value within the markets served by the Company. This project successfully achieved technological feasibility and yielded one commercializable product which was launched during 1999. However, the objective of ease and cost effectiveness to manufacture continues to be a challenge. Accordingly, the current revenue projection for the resulting products is approximately one-third of 16 the original estimate. The estimated cost to complete this project is currently expected to be less than one-half of the original estimate. In addition, to the foregoing IPR&D projects, the Tylan acquisition included eight other IPR&D projects with an aggregate value of $45.6 million, not considered to be individually significant and which were expected to cost an aggregate of $2.5 million and twenty-nine man years to complete. These projects were written off because technological feasibility had not been demonstrated as of the date of the acquisition of Tylan. As of December 31, 1999, three of these eight projects have been completed, two have been cancelled, one is ongoing, one has had a major change in its scope and has been integrated into a post acquisition project and one has been suspended. As of December 31, 1999, an aggregate of $5.4 million had been invested on these individually insignificant Tylan IPR&D projects and it was estimated that an additional $0.2 million would be required to achieve technological feasibility for the one ongoing project. The reasons for the aggregate increase in investment in these insignificant IPR&D projects included the change in the direction of three of these IPR&D projects to adapt to the evolving needs of the target customer base, the unanticipated technical complexity in adapting promising miniaturization technologies from other industries to Tylan product applications and the expansion of the scope of certain of these projects since the date of the Tylan acquisition. On May 18, 1999, the Company acquired all outstanding shares of Bioprocessing Corporation Limited ("Bioprocessing") in exchange for 660,000 shares of Millipore common stock. The transaction was accounted for as a pooling-of-interests. The consolidated financial statements for prior periods were not restated because the addition of Bioprocessing did not have a material impact on the Company's results of operations. Bioprocessing develops, manufactures and sells a wide range of proprietary products and services for the chromatographic purification of proteins. Market Risk The Company is exposed to market risks, which include changes in interest rates and changes in foreign currency exchange rates as measured both against the U.S. dollar and each other. The Company manages these market risks through its normal financing and operating activities and, when appropriate, through the use of derivative financial instruments. The Company does not invest in derivative financial instruments for speculative purposes. Foreign Exchange The Company derives approximately 60 percent of its revenues from customers outside of the Americas. This business is transacted through the Company's network of international subsidiaries generally in the local currency. This exposes the Company to risks associated with changes in foreign currency that can impact revenues, net income and cash flow. Approximately 30% of the Company's sales are derived from Europe where the U.S. dollar strengthened against the Euro during 1999. Continued strengthening of the U.S. dollar against the Euro may negatively impact the results of operations of the Company. The Company is able to partially mitigate the impact of fluctuations in the Euro by active management of cross border currency flows and material sourcing. The Company has significant exposure against the Japanese yen which strengthened against the U.S. dollar in 1999. Generally, a stronger yen has a positive impact on results of operations. The Company is exposed to changes in the Japanese yen that can not be mitigated through normal financing or operating activities. Accordingly, the net equity exposure risk is managed through the use of debt swap agreements. Historically, the Company entered into foreign currency option contracts to sell yen on a continuing basis in amounts and timing consistent with the underlying currency transactions. This program was discontinued in 1999. The gains on these transactions, if any, partially offset the realized foreign exchange losses on the underlying exposure. In 1998 and 1997, gains, net of premium costs, of $2.2 million and $4.4 million, 17 respectively were realized from these contracts and were recorded in cost of sales. At December 31, 1999, the Company had open option contracts to sell yen aggregating $27.1 million. All open options expire within 12 months. Premiums to purchase foreign currency option contracts are amortized over the life of the contract. The Company's net equity exposure to the Japanese yen has been hedged through debt swap agreements covering both principal and interest. Pursuant to these agreements $110,000 of debt with a weighted average fixed interest rate of 6.7 percent was swapped for an equivalent value of yen at a weighted average exchange rate of 114.6 yen to the dollar and a weighted average fixed interest rate of 3.6 percent. The swap agreements mature in 2003 and 2004. See Capital Resources and Liquidity below for a discussion of cash collateralization requirements under these agreements. Although the Company manages its foreign currency exchange risk through the above activities, when the U.S. dollar strengthens against the basket of currencies in which the Company transacts its business, generally sales and net income will be adversely impacted. Credit Risk The Company is exposed to concentrations of credit risk in cash and cash equivalents, trade receivables and derivative financial instruments. Cash and cash equivalents are placed with major financial institutions with high quality credit ratings. The amount placed with any one institution is limited by policy. Trade receivables credit risk exposure is limited due to the large number of customers and their dispersion across different industries and geographies. The Company is exposed to credit related risks associated with the potential nonperformance by counterparties to the debt swap agreements. The counterparties to these contracts are major financial institutions. The Company continually monitors its positions and the credit ratings of its counterparties and limits the amount of contracts it enters into with any one party. Capital Resources and Liquidity Cash flow provided from operations was $105.1 million in 1999, $51.3 million in 1998 and $51.8 million in 1997. Reported cash flow from operations was reduced by $9.9 million in 1999, $28.1 million in 1998 and $23.3 million in 1997 for costs associated with the 1998 restructuring program and the integration of acquisitions made during 1996 and 1997. Excluding the restructuring and acquisition related expenditures, cash flow from operations was $115.0 million in 1999, $79.4 million in 1998 and $75.1 million in 1997. The increase in cash flow from operations in 1999 over 1998, excluding the restructuring and acquisition expenditures, is primarily a result of improved income from operations, increases in accounts payable due to higher revenues in the fourth quarter of 1999, accrued expenses primarily resulting from variable compensation programs and continued asset management initiatives launched in 1998. Partially offsetting this is an increase in account receivables resulting from significantly higher sales volume in the second half of 1999 combined with the increased revenues in geographies with traditionally longer payment cycles. This has resulted in days sales outstanding in accounts receivable increasing from 77 days in 1998 to 82 days in 1999. The Company continues to aggressively manage its collection activities and does not anticipate increased collections risk. The improvement in 1998 cash flow from operations over 1997, excluding the restructuring and acquisition related expenditures, is the result of a decrease in working capital offset by a significant decline in operating income before restructuring charges and unusual items. The favorable working capital comparisons were a combination of a decrease in accounts receivable balances, lower inventory levels and a reduction in other current 18 assets. The improvement in receivables reflects the impact of the lower sales volume and improved collection experience. The improvement in inventory utilization was attributable to asset management initiatives launched in 1998 and reserve actions taken as part of the 1998 restructuring program. The reduction in other current assets reflects the sale of equity securities in 1998. The decline in 1998 operating income resulted from the downturn in the semiconductor industry, the financial difficulties in Asia and the strength of the U.S. dollar. During 2000 the Company expects to spend approximately $9.0 million in cash for costs accrued in connection with the restructuring program and for costs to complete the integration of acquisitions acquired in 1996 and 1997. This will be funded by cash flow from operating activities. Cash generated by the Company during 1999 was used to reduce short-term debt, to invest in property, plant and equipment and to pay dividends. Property, plant and equipment expenditures for 1999 were less than 1998 expenditures by $28.5 million primarily due expenditures in 1998 of $10.0 million for the expansion of the Biopharmaceutical membrane manufacturing facility in Cork, Ireland and $24.4 million for the construction of the new Microelectronics manufacturing facility in Allen, Texas. This decrease was offset in part by $4.0 million for expenditures made in 1999 to complete the membrane manufacturing facility. The Company expects capital expenditures for 2000 to be in the range of $50.0 to $55.0 million. Depreciation expense in 2000 is expected to be slightly higher than in 1999 as a result of the increased capital expenditures in 2000. The Company has no significant commitments for capital expenditures at December 31, 1999. The Company also received $9.5 million in cash for the sale of securities in Waters Corporation. Cash generated by the Company during 1998 was used to invest in property, plant and equipment, and to pay dividends. Property, plant and equipment expenditures for 1998 exceeded 1997 expenditures by $18.7 million primarily due to $10.0 million spent for the expansion of the Biopharmaceutical membrane manufacturing facility in Cork, Ireland and $24.4 million spent for the construction of the new Microelectronics manufacturing facility in Allen, Texas. The total cost of the Allen facility was approximately $28.0 million. In 1997, cash generated from operating activities, along with increased borrowings, was used for the acquisition of Tylan, the purchase of certain other assets and technology and capital expenditures. During 1997 the Company continued to invest in capacity expansions and the upgrade of manufacturing facilities and in information technology systems and equipment. The Company maintains an unsecured Revolving Credit Agreement, dated January 22, 1997, with a consortium of commercial banks (the "Credit Agreement") which currently makes $250 million available to the Company. During 1999 the Company reduced its borrowings under the Credit Agreement by $55.0 million so that, at December 31, 1999, the Company had additional borrowing capacity thereunder of $135 million. The Credit Agreement was renegotiated during 1998 to waive defaults under certain financial covenants relating to operating cash flow and interest coverage and to permit less restrictive operating cash flow and interest coverage covenants for 1999 and a portion of 2000. The Company also agreed to an additional minimum earnings covenant as well as to increases in both the interest rate and the facility fees. As renegotiated, interest is payable under the Credit Agreement at a floating U.S. dollar deposit rate, defined as LIBOR, plus a margin in the range of 0.23 to 1.125 percent. The Company also has an additional $10.0 million of other short-term borrowing capacity available of which $0.7 million was outstanding at December 31, 1999. In November 1998 Moody's Investor Services and Standard & Poors Corporation graded the Company's debt at a rating of Ba2 and BB+, respectively. Both ratings are characterized as below "investment grade". The Company expects that these ratings may make it more difficult for the Company to access money markets should it become necessary to do so. In addition, the foregoing debt ratings coupled with the strengthening of the Japanese yen triggered a requirement to provide cash collateralization under one of the Company's yen denominated debt swap 19 agreements in the event that the net value of its position was below the net value of the counterparty's position. In the event that the Company's debt rating improves, these agreements provide for less stringent collateralization requirements. While this collateralization requirement will not impact the Company's foreign exchange exposure, it could impact short-term liquidity if there were a serious deterioration in the value of the Company's swap position. The amount of the cash collateral is dependent, among other things, on the exchange rate of the yen to the U.S. dollar; generally, as the yen strengthens, the amount of cash collateral required from the Company increases. At December 31, 1999, this cash collateralization amount was $18.6 million. The Company believes that its balances of cash and cash equivalents, funds available under the Credit Agreement and cash flows expected to be generated by future operating activities will be sufficient to meet its cash requirements over the next twelve to twenty-four months. Dividends The quarterly dividend was $0.11 per share throughout 1999. The Company paid dividends of $19.6 million in 1999. Euro On January 1, 1999, several member countries of the European Union established fixed conversion rates between their existing sovereign "legacy" currencies, and adopted the Euro as their new common legal currency. As of that date, the Euro began trading on currency exchanges and the legacy currencies will remain legal tender in the participating countries for a transition period between January 1, 1999 and January 1, 2002. In the first quarter of 1999, the Company began invoicing certain customers and intercompany transactions in the Euro. Year 2000 The Company has been aware of the "Year 2000" issue that had the potential to affect products and systems that were not designed to properly handle the transition between the twentieth and twenty-first centuries. The Company recognized the need to ensure that its business operations would not be adversely impacted by the Year 2000, and it authorized an internal team to assess the Company's Year 2000 readiness, to determine the steps necessary to achieve readiness, and to facilitate the necessary readiness preparations. Through December 31, 1999, the Company incurred approximately $1.5 million in its Year 2000 assessment and remediation program, and it does not expect to incur any further costs in this program. Prior to the end of 1999, the Company completed its readiness assessment and its implementation of all steps that it determined necessary to make the Company ready for the Year 2000, including its contingency plans for handling anticipated readiness risks. The Company's transition from 1999 to 2000 occurred without any business disruption. With the transition into the Year 2000 complete, the Year 2000 issue has not had, and the Company believes it will not have, a material impact on the Company's business, financial conditions or results of operations. Legal Proceedings The $11.8 million settlement of litigation charge taken in 1998 related to 3 matters: 1. A proceeding arising out of an administrative order issued by the Environmental Quality Board ("EQB") of Puerto Rico alleging that the Company's wholly owned subsidiary failed to properly manage, transport and dispose of nitrocellulose membrane scrap as a hazardous waste; and proposed penalties in the amount of $96.5 million. The Company settled this proceeding in 1998 and recorded a charge of $5.0 million. 20 2. A private lawsuit brought by an intervening party in the EQB administrative case described above; the Company recorded a charge of $3.1 million in the 1998 reflecting its costs to settle this suit. 3. A patent lawsuit with Mott Metallurgical Corporation in which each party claimed infringement of one of its patents by the other. The Company recorded a charge of $3.7 million in 1998 to settle this suit; the parties also agreed to cross license the two patents at issue. As has been previously disclosed, Millipore has, in the past, been named as 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 ("Superfund") by the U.S. Environmental Protection Agency ("EPA") with respect to a "release" (as defined in Section 101 of Superfund), 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 settled its liability pursuant to consent decrees releasing Millipore from further liability with respect to certain covered matters at all of these Superfund sites. However, as is typical with consent decrees in such Superfund proceedings, EPA and the relevant state agencies have reserved the right to maintain actions against the settling parties, including the Company, in the event certain events occur or do not occur at those sites. The Company does not expect that the conditions in the consent decrees permitting these governmental parties to "re-open" the cases will occur. In any event, the Company believes that the aggregate of any future potential liabilities should not have a material adverse effect on the Company's future results of operations or financial condition in light of the advanced stage of funded remedial action at each site and the likely availability of contribution from numerous other financially solvent PRPs participating at each such Superfund site. Business Outlook and Uncertainties The following statements are based on current expectations. These statements are forward looking and actual results may differ materially. Sales: The semiconductor industry in which the Microelectronics business segment participates is highly cyclical. The downturn, which began in the middle of 1996, continued into 1999. This business segment reported four sequential quarters of increased sales during 1999. Additionally, recent industry results and published reports indicate that an industry wide growth cycle has begun. While some published reports suggest that this growth cycle could last for up to three years, there can be no assurance as to the extent and duration of this growth cycle or as to its positive impact on Millipore. The Company does anticipate, however, that these industry wide improvements will result in stronger sales growth in 2000. The Biopharmaceutical & Research segment has demonstrated relatively stable patterns of revenue growth. Customers in this segment, particularly those involved in the production of sterile drugs, purchase products for use in validated production processes. Accordingly, it is important to participate in the development of new drugs in order to be designed into the ultimate manufacturing process. Adoption of new technologies and products requires a lengthy validation process prior to adoption. The growth of this segment is highly dependent on the development and approval of new drugs. It is difficult to ascertain the number or timing of such approvals, however, the number of drugs at various stages in the approval process has increased over the past two years. The remaining driver of this segment is research and development spending. Recently published industry reports in the area of life science anticipate increased research and development spending. However the impact on the Company is unknown. 21 During 1999, the Company has seen reduced sales growth in the European region, an area which impacts the Biopharmaceutical & Research segment more than the Microelectronics segment. The economic pressures in Europe combined with the U.S. dollar strengthening against most European currencies may adversely affect the Biopharmaceutical & Research segment in 2000. Both of the Company's business segments were adversely impacted by the financial difficulties in the Asian economies, which began in late 1997 and continued through 1998. During 1999, this region has shown some recovery, although the economic pressures in Europe have offset it. The continuation of these conditions in Europe would moderate the growth rate of both segments. Approximately 60 percent of the Company's sales are to customers outside of the Americas and are generally made in local currency. As previously noted, currencies had a net positive impact to both sales and earnings in 1999 as compared to 1998. This was the composite result of a stronger yen in 1999 mostly offset by the weak Euro. Since the end of 1999, the dollar has begun to strengthen against the yen and the Euro. Therefore, if rates of exchange remain at the March 3, 2000 level, there could be a slight negative impact on sales for the first quarter and full year 2000 as compared to 1999. Gross Margins: The Company expects gross margin percentages in 2000 to improve as compared with those of 1999. Margins will benefit from the impact of increased volume in the Company's manufacturing plants to support anticipated sales growth. Somewhat offsetting the increased volume impact will be margin reductions due to sales growth for process systems which traditionally have lower gross margins. To the extent that foreign currency exchange rates relative to the U.S. dollar remain at March 3, 2000 levels, first quarter 2000 and full year margins will not be significantly impacted by foreign currency exchange rate fluctuations. In December 1999 the Company's sole supplier of a critical raw material used in the manufacture of one type of membrane incorporated into products sold by the Biopharmaceutical & Research business segment advised the Company that it would discontinue manufacture of that raw material during the second half of 2000. This raw material is also used as a critical component in the production of other widely used industrial products. Millipore products which use this membrane accounted for approximately $100 million in 1999 sales. The Company does not currently anticipate difficulty in establishing satisfactory transitional supply arrangements or in establishing alternative sources of supply for this raw material. However, while the Company is diligently pursuing transitional and alternative supply arrangements, there can be no assurance that it will be successful. Operating Expenses: The Company expects that operating expenses in local currencies, as a percentage of sales, in 2000 may somewhat improve as compared to the percentage achieved in the previous year. Interest Expense: The Company expects net interest expense in 2000 will be slightly lower than 1999 as a result of lower average debt. Provision for Income Taxes: The effective tax rate in 2000 is projected to be in the range of 21 percent, consistent with the effective rate for 1999, excluding the effect of restructuring items. The tax rate estimate is based on the Company's current expectations for 2000 income and current tax law and, therefore is subject to change. In addition, since the Company's revenues are expected to reflect a higher proportion of income generated by its Microelectronics business segment, the products of which are primarily manufactured in the United States, it is anticipated that a trend increasing the effective income tax rate will develop during subsequent years as less revenue is derived from manufacturing sites located in foreign lower tax rate jurisdictions. Further, in the event that the Company's cash needs significantly increase above those currently projected and outstrip the resources identified under Capital Resources and Liquidity above, then an additional upward influence on the Company's tax rate could develop if the Company chose to meet this need by the repatriation of cash indefinitely re- invested in foreign operations. Capital Spending: The Company expects to spend between $50.0 to $55.0 million for fixed asset additions in 2000. The Company does not believe it needs to significantly expand or add manufacturing capacity in 2000 to handle its anticipated 2000 sales growth. The Company will continue to invest in tooling within its manufacturing plants, upgrades of its research and development labs and in information technology. Accordingly, the Company also expects that 2000 depreciation expense will be higher than reported in 1999. 22 Capital Resources and Liquidity: The Company expects that the ongoing cash collateralization requirement under the yen denominated debt swap agreement discussed under Capital Resources and Liquidity above will likely require the renegotiation of a debt covenant under the Credit Agreement if the value of the Company's swap position deteriorates below that at December 31, 1999. Further, if the deterioration in the value of that position were substantial then the resulting increase in the cash deposited as collateral under that swap agreement would result in an adverse impact on short-term liquidity. Forward-Looking Statements The matters discussed in this Form 10-K Annual Report, as well as in future oral and written statements by management of the Company, that are forward- looking statements, are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. When used herein or in 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. In addition to the matters discussed herein, 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 raw materials or component products on a timely basis; inventory risks due to shifts in market demand; change in product mix; conditions in the economy in general, including uncertainties in the microelectronics manufacturing market in particular; potential environmental liabilities; the inability to utilize technology in current or planned products due to overriding rights by third parties, and the other risk factors described elsewhere in this Form 10-K Annual Report, and in particular the matters described in Item 1 above under the heading "Environmental Matters". Specific reference is also made to the risks and uncertainties described in the Registration Statement on Form S-3 (Registration 333-80781) filed by the Company in connection with its offering of 660,000 shares of its Common Stock, $1.00 par value in November 1999 (in particular, to those risks described under "Risk Factors") and to the Registration Statement on Form S-3 (Registration 333-23025) filed by the Company in connection with its offering of $300 million of Debt Securities in May 1997 (in particular, to those risks described under "Factors Which May Affect Future Results"). See also "Legal Proceedings" and "Business Outlook and Uncertainties" above. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The information called for by this item is set forth under the heading "Market Risk" in Management's Discussion and Analysis contained in Item 7 above which information is hereby incorporated by reference. Item 8. Financial Statements and Supplementary Data. The information called for by this item is set forth in the Financial Statements at the end of this report commencing at the pages indicated below: Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997.......................................................... F-2 Consolidated Balance Sheets for the years ended December 31, 1999 and 1998................................................................... F-3 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997....................................... F-4 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997.................................................... F-5 Notes to Consolidated Financial Statements.............................. F-6 Report of Independent Accountants....................................... F-25 Quarterly Results (Unaudited)........................................... F-26
All of the foregoing Financial Statements are hereby incorporated by reference. 23 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 27, 2000, and to be filed with the Securities and Exchange Commission on or about March 17, 2000, 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 27, 2000, and to be filed with the Securities and Exchange Commission on or about March 17, 2000, 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 27, 2000, and to be filed with the Securities and Exchange Commission on or about March 17, 2000, which information is hereby incorporated herein by reference. Item 13. Certain Relationships and Related Transactions. The information called for by this item with respect to registrant's directors relationships and related transactions 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 27, 2000, and to be filed with the Securities and Exchange Commission on or about March 17, 2000, which information is hereby incorporated herein by reference. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K. (a) The following documents are filed as a part of this Report: 1. Financial Statements. The following Financial Statements are filed as part of this report (See index on page F-1): Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997 Consolidated Balance Sheets for the years ended December 31, 1999 and 1998 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997 Notes to Consolidated Financial Statements Report of Independent Accountants Quarterly Results (Unaudited)
24 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, as Form 10-K Report for year ended amended May 6, 1996 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 (No. 33-58117) $100,000,000 principal amount of the Company's 6.78% Senior Notes due 2004 (4) Indenture dated as of April 1, 1997, Registration Statement on Form S-3 relating to the issuance of Debt (No. 333-23025) Securities in Series (10) Shareholder Rights Agreement dated as Form 8-K Report for April, 1998 of April 15, 1988, as amended and [Commission File No. 0-1052] restated April 16, 1998 between Millipore and The First National Bank of Boston Distribution Agreement, dated as of Form 10-K Report for the year ended July 1, 1996, by and among the Company December 31, 1996 [Commission File and Fisher Scientific Company No. 0-1052] Revolving Credit Agreement, dated as Form 10-K Report for the year ended of January 22, 1997, among Millipore December 31, 1996 [Commission File Corporation and The First National No. 0-1052] Bank of Boston, ABN 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] 1995 Combined Stock Option Plan, as Form 10-K Report for the year ended amended* December 31, 1997 [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]
- -------- *A "management contract or compensatory plan" 25
Reg. S-K Item 601(b) Referenced Document on Reference Document Incorporated file with the Commission ----------- --------------------- ------------------------ (10) [Cont'd] Supplemental Savings and Retirement Form 10-K Report for the year ended Plan for Key Salaried Employees of December 31, 1984 [Commission File Millipore Corporation* No. 0-1052] 1995 Management Incentive Plan* Form 10-K Report for the year ended December 31, 1994 [Commission File No. 0-1052] Second Amendment, effective as of Form 10-K Report for the year ended September 30, 1998, to Revolving December 31, 1998 [Commission File Credit Agreement, dated as of January No. 0-1052] 22, 1997, among Millipore Corporation and The First National Bank of Boston, ABN AMRO Bank N.V. and certain other lending institutions Note Purchase and Exchange Agreement, Form 10-K Report for the year ended as amended through November 2, 1998, December 31, 1998 [Commission File between Millipore Corporation and No. 0-1052] Metropolitan Life Insurance Company Form of letter agreement with Form 10-K Report for the year ended directors relating to the deferral of December 31, 1998 [Commission File directors fees and conversion into No. 0-1052] phantom stock units* 1989 Stock Option Plan for Non- Form 10-K Report for the year ended Employee Directors* December 31, 1998 [Commission File No. 0-1052] Commercial Lease Agreement between EBP Form 10-K Report for the year ended 3, Ltd. and Millipore Corporation with December 31, 1998 [Commission File respect to Premises located in Allen, No. 0-1052] TX ISDA Master Agreement, dated January Form 10-K/A Report for the year ended 27, 1994, as amended, with Morgan December 31, 1998 [Commission File Guaranty Trust Company of New York No. 0-1052] (11) Computation of Per Share Earnings The computation can be clearly determined from the material set forth in Note D to the Financial Statements contained on page F-12.
26 B. The following Exhibits are filed herewith:
Reg. S-K Item 601(b) Reference Documents Filed Herewith ----------- ------------------------ (10) Standard Executive Termination Agreement, as amended* Millipore Corporation 1999 Stock Incentive Plan* Millipore Corporation 1995 Employees' Stock Purchase Plan, as amended* Millipore Corporation 1999 Stock Option Plan for Non-Employee Directors* Employment and Relocation Agreement, dated November 10, 1999, between Millipore Corporation and Michael P. Carroll* (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, 33-10801, 333-79227, 333-90127 and 333-30918 on Form S-8, Securities Act Registration Nos. 2-84252, 33-9706, 33-22196, 33-47213, 333-23025 and 333-80781 on Form S-3, and Securities Act Registration No. 33- 58117 on Form S-4 (24) Power of Attorney (27) Financial Data Schedule
- -------- *A "management contract or compensatory plan" (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, 1999. (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 are not required under Regulation S-X. 27 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 10, 2000 /s/ Jeffrey Rudin By: _________________________________ 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, Chief March 10, 2000 ______________________________________ Executive Officer, and C. William Zadel Director /s/ Kathleen B. Allen Vice President, Treasurer March 10, 2000 ______________________________________ and Chief Financial Kathleen B. Allen Officer (Chief Accounting Officer) Director March , 2000 ______________________________________ Daniel Bellus Robert C. Bishop* Director March 10, 2000 ______________________________________ Robert C. Bishop Robert E. Caldwell* Director March 10, 2000 ______________________________________ Robert E. Caldwell Elaine L. Chao* Director March 10, 2000 ______________________________________ Elaine L. Chao Maureen A. Hendricks* Director March 10, 2000 ______________________________________ Maureen A. Hendricks Mark Hoffman* Director March 10, 2000 ______________________________________ Mark Hoffman Thomas O. Pyle* Director March 10, 2000 ______________________________________ Thomas O. Pyle Richard J. Lane* Director March 10, 2000 ______________________________________ Richard J. Lane John F. Reno* Director March 10, 2000 ______________________________________ John F. Reno /s/ Jeffrey Rudin *By: _________________________________ Jeffrey Rudin, Attorney-in-Fact
28 MILLIPORE CORPORATION INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997........................................................... F-2 Consolidated Balance Sheets for the years ended December 31, 1999 and 1998.................................................................... F-3 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997........................................ F-4 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997..................................................... F-5 Notes to Consolidated Financial Statements............................... F-6 Report of Independent Accountants........................................ F-25 Quarterly Results (Unaudited)............................................ F-26
F-1 MILLIPORE CORPORATION CONSOLIDATED STATEMENTS OF INCOME
Year ended December 31 ----------------------------- 1999 1998 1997 -------- --------- -------- (In thousands except per share data) Net sales....................................... $771,188 $ 699,307 $758,919 Cost of sales................................... 358,169 364,467 342,237 -------- --------- -------- Gross profit................................ 413,019 334,840 416,682 Selling, general and administrative expenses.... 256,598 236,521 245,585 Research and development expenses............... 52,140 53,578 55,899 Purchased research and development expense...... -- -- 114,091 Restructuring items............................. (5,200) 33,641 -- Settlement of litigation........................ -- 11,766 -- -------- --------- -------- Operating income (loss)..................... 109,481 (666) 1,107 Gain on sale of equity securities............... -- 35,594 8,330 Interest income................................. 3,025 3,090 2,937 Interest expense................................ (30,155) (29,474) (30,484) -------- --------- -------- Income (loss) before income taxes............... 82,351 8,544 (18,110) Provision (benefit) for income taxes............ 18,023 (1,320) 20,674 -------- --------- -------- Net income (loss)............................... $ 64,328 $ 9,864 $(38,784) ======== ========= ======== Net income (loss) per share Basic......................................... $ 1.44 $ 0.22 $ (0.89) Diluted....................................... $ 1.42 $ 0.22 $ (0.89) Weighted average shares outstanding Basic......................................... 44,731 43,864 43,527 Diluted....................................... 45,274 44,289 43,527
The accompanying notes are an integral part of the consolidated financial statements F-2 MILLIPORE CORPORATION CONSOLIDATED BALANCE SHEETS
December 31 -------------------- 1999 1998 --------- --------- (In thousands) ASSETS Current assets: Cash and cash equivalents.............................. $ 32,420 $ 36,022 Cash held as collateral................................ 18,640 -- Accounts receivable (less allowance for doubtful accounts of $4,323 in 1999 and $3,149 in 1998)........ 195,751 154,258 Inventories............................................ 105,040 107,241 Other current assets................................... 7,096 7,231 --------- --------- Total current assets................................. 358,947 304,752 Property, plant and equipment, net....................... 226,477 237,414 Deferred income taxes.................................... 109,822 108,545 Intangible assets (less accumulated amortization of $25,683 in 1999 and $17,289 in 1998).................... 70,238 76,507 Other assets............................................. 27,249 32,105 --------- --------- Total assets......................................... $ 792,733 $ 759,323 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable.......................................... $ 115,645 $ 171,340 Accounts payable....................................... 63,053 39,729 Accrued expenses....................................... 73,512 75,544 Dividends payable...................................... 4,970 4,847 Accrued retirement plan contributions.................. 7,333 6,931 Accrued income taxes payable........................... 5,270 290 --------- --------- Total current liabilities............................ 269,783 298,681 Long-term debt........................................... 313,107 299,110 Other liabilities........................................ 32,992 27,741 Commitments and contingent liabilities................... -- -- Shareholders' equity: Common stock, par value $1.00 per share, 120,000 shares authorized; 56,988 shares issued as of December 31, 1999 and 1998......................................... 56,988 56,988 Additional paid-in capital............................. 18,272 11,780 Retained earnings...................................... 491,429 472,746 Unearned compensation.................................. (4,041) (3,117) Accumulated other comprehensive loss................... (42,292) (27,668) --------- --------- 520,356 510,729 Less: Treasury stock at cost, 11,794 and 12,921 shares as of December 31, 1999 and 1998, respectively........ (343,505) (376,938) --------- --------- Total shareholders' equity........................... 176,851 133,791 --------- --------- Total liabilities and shareholders' equity............... $ 792,733 $ 759,323 ========= =========
The accompanying notes are an integral part of the consolidated financial statements F-3 MILLIPORE CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Year Ended December 31, 1999, 1998 and 1997 (In thousands, except per share data)
Accumulated Other Common Stock Comprehensive Income (Loss) Treasury Stock -------------- ----------------------------------- ------------------ Additional Unrealized Par Paid-in Retained Unearned gain (loss) Translation Shares Value Capital Earnings Compensation on securities Adjustments Total Shares Cost ------ ------- ---------- -------- ------------ ------------- ----------- --------- ------- --------- Balance at December 31, 1996............ 56,988 $56,988 $ 8,800 $542,751 $(2,082) $ 9,536 $ (8,280) $ 1,256 (13,666) $(398,037) ====== ======= ======= ======== ======= ======= ======== ========= ======= ========= Comprehensive loss: Net loss........ (38,784) Unrealized holding gains arising during period, net of tax of $10,107........ 15,160 Less: reclassification adjustment for gains realized in net income, net of tax of $1,749......... (6,581) ------- Net unrealized gain on securities available for sale, net of tax of $5,719 ............... 8,579 8,579 Translation adjustments.... (31,555) (31,555) Total comprehensive loss........... Cash dividends declared, $0.39 per share....... (17,028) Stock issued under stock plans........... (2,497) (928) 375 10,547 Amortization of unearned compensation.... 672 U.S. tax benefit from stock plan activity........ 2,127 ------- -------- ------- ------- -------- --------- ------- --------- Balance at December 31, 1997............ 56,988 $56,988 $10,927 $484,442 $(2,338) $18,115 $(39,835) $ (21,720) (13,291) $(387,490) ====== ======= ======= ======== ======= ======= ======== ========= ======= ========= Comprehensive income: Net income...... 9,864 Unrealized holding gains arising during period, net of tax of $6,564.. 9,846 Less: reclassification adjustment for gains realized in net income, net of tax of $7,475......... (28,119) ------- Net unrealized loss on securities available for sale, net of tax of $(12,182)...... (18,273) (18,273) Translation adjustments.... 12,325 12,325 Total comprehensive income......... Cash dividends declared, $0.43 per share....... (18,905) Stock issued under stock plans........... (2,655) (1,579) 370 10,552 Amortization of unearned compensation.... 800 U.S. tax benefit from stock plan activity........ 853 ------- -------- ------- ------- -------- --------- ------- --------- Balance at December 31, 1998............ 56,988 $56,988 $11,780 $472,746 $(3,117) $ (158) $(27,510) $ (27,668) (12,921) $(376,938) ====== ======= ======= ======== ======= ======= ======== ========= ======= ========= Comprehensive income: Net income...... 64,328 Unrealized holding gains arising during period, net of tax of $325.... 1,221 Less: reclassification adjustment for gains realized in net income, net of tax of $63............ (238) ------- Net unrealized gains on securities available for sale, net tax of $262........ 983 983 Translation adjustments.... (15,607) (15,607) Total comprehensive income......... Cash dividends declared, $0.44 per share....... (19,736) Stock issued under stock plans........... (3,189) (2,144) 467 13,516 Amortization of unearned compensation.... 1,220 Shares issued to pooled company.. 4,763 (22,720) 660 19,917 U.S. tax benefit from stock plan activity........ 1,729 ------- -------- ------- ------- -------- --------- ------- --------- Balance at December 31, 1999............ 56,988 $56,988 $18,272 $491,429 $(4,041) $ 825 $(43,117) $ (42,292) (11,794) $(343,505) ====== ======= ======= ======== ======= ======= ======== ========= ======= ========= Total Shareholders' Equity ------------- Balance at December 31, 1996............ $209,676 ============= Comprehensive loss: Net loss........ (38,784) Unrealized holding gains arising during period, net of tax of $10,107........ Less: reclassification adjustment for gains realized in net income, net of tax of $1,749......... Net unrealized gain on securities available for sale, net of tax of $5,719 ............... 8,579 Translation adjustments.... (31,555) ------------- Total comprehensive loss........... (61,760) Cash dividends declared, $0.39 per share....... (17,028) Stock issued under stock plans........... 7,122 Amortization of unearned compensation.... 672 U.S. tax benefit from stock plan activity........ 2,127 ------------- Balance at December 31, 1997............ $140,809 ============= Comprehensive income: Net income...... 9,864 Unrealized holding gains arising during period, net of tax of $6,564.. Less: reclassification adjustment for gains realized in net income, net of tax of $7,475......... Net unrealized loss on securities available for sale, net of tax of $(12,182)...... (18,273) Translation adjustments.... 12,325 ------------- Total comprehensive income......... 3,916 Cash dividends declared, $0.43 per share....... (18,905) Stock issued under stock plans........... 6,318 Amortization of unearned compensation.... 800 U.S. tax benefit from stock plan activity........ 853 ------------- Balance at December 31, 1998............ $133,791 ============= Comprehensive income: Net income...... 64,328 Unrealized holding gains arising during period, net of tax of $325.... Less: reclassification adjustment for gains realized in net income, net of tax of $63............ Net unrealized gains on securities available for sale, net tax of $262........ 983 Translation adjustments.... (15,607) ------------- Total comprehensive income......... 49,704 Cash dividends declared, $0.44 per share....... (19,736) Stock issued under stock plans........... 8,183 Amortization of unearned compensation.... 1,220 Shares issued to pooled company.. 1,960 U.S. tax benefit from stock plan activity........ 1,729 ------------- Balance at December 31, 1999............ $176,851 =============
The accompanying notes are an integral part of the consolidated financial statements F-4 MILLIPORE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31 ----------------------------- 1999 1998 1997 -------- -------- --------- (In thousands) Cash Flows from Operating Activities: Net income (loss).............................. $ 64,328 $ 9,864 $ (38,784) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Restructuring items........................... (5,200) 42,816 -- Purchased research and development expense.... -- -- 114,091 Write-off of acquired inventory step-up....... -- -- 5,000 Gain on sale of securities.................... -- (35,594) (8,330) Depreciation and amortization................. 44,291 44,409 40,661 Deferred income tax provision (benefit)....... 5,673 (12,762) 5,835 Change in operating assets and liabilities: (Increase) decrease in accounts receivable... (39,259) 32,327 (24,468) (Increase) decrease in inventories........... (663) 21,053 (13,361) Decrease (increase) in other current assets.. 44 3,558 (6,937) Increase in other assets..................... (3,472) (1,952) (8,648) Increase (decrease) in accounts payable and accrued expenses............................ 30,244 (38,177) (21,629) Increase (decrease) in accrued retirement plan contributions.......................... 602 (342) 2,557 Increase (decrease) in accrued income taxes.. 3,369 (14,713) (68) Other........................................ 5,102 808 5,921 -------- -------- --------- Net cash provided by operating activities... 105,059 51,295 51,840 Cash Flows from Investing Activities: Additions to property, plant and equipment..... (31,271) (59,787) (41,063) Additions to intangible assets................. (1,201) (3,953) (6,135) Acquisition, net of cash acquired.............. -- -- (159,158) Other investments.............................. -- -- (1,646) Net cash used by discontinued businesses....... -- (2,255) (3,516) Proceeds from sale of securities............... 9,500 35,594 8,330 -------- -------- --------- Net cash used in investing activities....... (22,972) (30,401) (203,188) Cash Flows from Financing Activities: Issuance of treasury stock under stock plans... 8,574 6,274 6,956 Net change in short-term debt.................. (55,695) 5,821 65,036 Proceeds from issuance of long-term debt....... -- -- 197,950 Payments on long-term debt..................... -- -- (126,018) Cash held as collateral........................ (18,640) -- -- Dividends paid................................. (19,614) (18,427) (16,558) -------- -------- --------- Net cash (used in) provided by financing activities................................. (85,375) (6,332) 127,366 Effect of foreign exchange rates on cash and cash equivalents............................... (314) 1,191 (2,619) -------- -------- --------- Net (decrease) increase in cash and cash equivalents.................................... (3,602) 15,753 (26,601) Cash and cash equivalents on January 1.......... 36,022 20,269 46,870 -------- -------- --------- Cash and cash equivalents on December 31........ $ 32,420 $ 36,022 $ 20,269 ======== ======== =========
The accompanying notes are an integral part of the consolidated financial statements F-5 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands except share and per share data) NOTE A--Summary of Significant Accounting Policies Nature of Operations Millipore Corporation and its subsidiaries are engaged primarily in the development, manufacture and sale of products which are based on separations technology and which are used for the analysis, identification and purification of liquids and gases. Millipore also generates revenues from the manufacture and sale of products based on electro-mechanical and pressure differential technologies to monitor and control critical aspects of the manufacturing process for integrated circuits (semiconductors). Millipore is an integrated multinational manufacturer and markets its products throughout the world. The principal customer groups to which the Company's products are sold include pharmaceutical companies, biotechnology companies, food and beverage companies, university and government laboratories and research institutes as well as semiconductor fabrication companies and OEM and material suppliers to the semiconductor industry. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly-owned. Intercompany balances and transactions have been eliminated. Translation of Foreign Currencies For all of the Company's foreign subsidiaries, assets and liabilities are translated at exchange rates prevailing on the balance sheet date, revenues and expenses are translated at average exchange rates prevailing during the period, and elements of shareholders' equity are translated at historical rates. Any resulting translation gains and losses are reported separately in shareholders' equity. The aggregate transaction gains and losses included in the consolidated statements of income are not material. Cash Equivalents Cash equivalents consisting primarily of time deposits are carried at cost plus accrued interest, which approximates market value. All cash equivalents have maturities of three months or less. Cash Held as Collateral The Company is required to provide cash collateralization on one of its yen denominated debt swap agreements. The amount of the collateral is dependent, among other things, on the exchange rate of the yen to the U.S. dollar and is restricted as to withdrawal or alternative usage. Inventories The Company values its inventories at actual cost on a first-in, first-out (FIFO) basis. Property, Plant and Equipment Property, plant and equipment is recorded at cost. Expenditures for maintenance and repairs are charged to expense while the costs of significant improvements which extend the life of the underlying asset are capitalized. Assets are primarily depreciated using straight-line methods. Upon retirement or sale, the cost of assets disposed and the related accumulated depreciation are eliminated and related gains or losses are reflected in income. F-6 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) The estimated useful lives of the Company's depreciable assets are as follows: Leasehold Improvements..................................... Life of the Lease Buildings and Improvements................................. 10-40 Years Production and Other Equipment............................. 3-15 Years
Intangible Assets Intangible assets consist primarily of patents, acquired technology, trade names, licenses and goodwill. The assets are recorded at cost and amortized on a straight-line basis over periods ranging from 3 to 20 years. On a periodic basis the value of the intangible assets is reviewed to determine if impairment has taken place due to changed business conditions or technological obsolescence. The amount of such impairment, if any, is computed by comparing the future cash flows associated with the underlying intangible asset to the then current net book value. If an impairment exists, the net book value of the intangible asset is reduced accordingly. Marketable Securities The Company's investments in equity securities are categorized as available- for-sale as defined by Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities". Equity securities are included in Other Assets in the accompanying consolidated balance sheets and are recorded at fair value. The cost of each investment is determined primarily on a specific identification method. Unrealized holding gains and losses are reflected, net of income tax, as a separate component of accumulated other comprehensive income (loss). As of December 31, 1999, marketable securities had a fair value of $2,193, and a cost of $1,201. Financial Instruments The Company has entered into U.S. dollar to Japanese yen debt swap agreements and had entered into foreign exchange option contracts to manage interest and foreign currency exchange rate exposures. The Company does not hold or issue derivative financial instruments for trading purposes. The cash differential paid or received under the interest rate component of the debt swap agreements are accrued and recognized as an adjustment to interest expense. Net amounts receivable or payable to counterparties are included in Long-Term Debt. Cash flows related to the interest rate swap are classified as part of Operating Activities in the Consolidated Statement of Cash Flows consistent with the interest payments on the underlying debt. The U.S. dollar to Japanese yen swap is designated and is effective as a hedge of the Company's net investment exposure. Unrealized gains and losses are recorded as an adjustment of the underlying Long-Term Debt and the cumulative Translation Adjustments in Shareholders' Equity. The ultimate gain or loss realized upon maturity of the agreements is recognized as a translation adjustment in Shareholders' Equity. The Company had entered into option contracts to hedge against significant fluctuations in the value of the U.S. dollar versus the Japanese yen. Gains realized on the exercise of the option contracts are recorded as an offset to the loss on the underlying transactions. Contract premiums are recorded in Other Current Asset and amortized over the term of the contract. The realized gains and the amortization of the contract premiums are recorded in cost of sales. Cash flows related to the exercise of the option contracts are included in Operating Activities in the Consolidated Statement of Cash Flows. F-7 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) Income Taxes Deferred tax assets reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. With respect to the unremitted earnings of the Company's foreign and Puerto Rican subsidiaries, deferred taxes are provided only on amounts expected to be repatriated. Treasury Stock Treasury stock is recorded at its cost on the date acquired and is reissued at its weighted average cost. The excess of cost over the proceeds of reissued treasury stock is charged to retained earnings. Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing the net income (loss) for the period by the weighted average number of shares outstanding for the period. Diluted net income (loss) per share is calculated by considering the impact of common stock equivalents (outstanding stock options) as if they were converted into common stock at the beginning of the period. Common stock equivalents are not included in periods of net losses as they are anti- dilutive. Revenue Recognition Sales of products and services are recorded principally at the time of product shipment or performance of services. Certain contract revenues associated with the Company's process equipment business are recorded on the percentage of completion method. Revenue is recognized based on the ratio of hours expended compared to the total estimated hours to complete the construction of the process equipment. The cumulative impact of any revisions in estimates of the percent complete is reflected in the period in which the changes become known. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash and cash equivalents, accounts receivable and debt swap agreements. The Company places its temporary cash and cash equivalents with high credit qualified financial institutions, and, by policy, limits the amount of credit exposure to any one financial institution. Concentrations of credit risk with respect to accounts receivable is limited due to the large number of customers comprising the Company's customer base, and their dispersion across different industries and geographies. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The counterparties to these contracts are major financial institutions. The Company continually monitors its positions and the credit ratings of its counterparties and limits the amount of contracts it enters into with any one party. Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and F-8 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to prior years' financial statements to conform with the 1999 presentation. New Accounting Pronouncements In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" effective January 1, 2001 for the Company. SFAS 133 establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The Company is currently assessing the impact of this new statement on its consolidated financial position, liquidity and results of operations. NOTE B--Restructuring Program and Provision for Excess Inventory In the second quarter of 1998, the Company announced a restructuring program which was undertaken to improve the competitive position of the Company by streamlining worldwide operations and reducing the overall cost structure. The program included the consolidation of certain manufacturing operations, realignment of various international subsidiary organizations to focus on operating business units, discontinuance of non-strategic product lines and the rationalization of its product offerings to improve product line focus. This rationalization process included a management review of product offerings to identify and eliminate specific products with limited profitability as well as products which were inconsistent with current strategic marketing plans, such as non-standard products. In the third quarter of 1998, the Company recorded an expense associated with these activities of $42,816 ($29,115 after tax) including a restructuring charge of $33,641 and a $6,244 charge against cost of sales for inventory provisions and $2,931 for fixed asset write-offs. The non-strategic product lines consisted of high pressure liquid chromatography equipment, semiconductor fab monitoring and control software and various filtration devices. The $33,641 restructuring charge included $18,290 of employee severance costs, $3,847 of lease cancellation costs, $2,049 of marketing, research and supply contract termination costs, $7,667 for the write-off of intangible assets including those associated with the discontinued product lines consisting of both unpatented completed technology and tradenames as well as with termination of certain rights under two technology development collaborations and $1,788 for the write-off of fixed assets. As of September 30, 1998, there were no assets that remained in use which had been written off. During the fourth quarter of 1998 assets which had been held for disposal relating to one of the non-strategic product lines were divested. There are no remaining assets being held for disposal. During the third quarter of 1999, the Company reevaluated the accrual for the restructuring program and reversed $5,200 of the remaining balance. The reversal reflected a lower estimate for severance pay and lease cancellation costs. Although the planned number of employee positions had been eliminated, the reduction in severance cost was attributed to higher levels of attrition than originally anticipated and impacted employees filling open positions as demand increased due to improved sales volume. The restructuring initiatives combined with the consolidation of the Company's Microelectronics plants resulted in the elimination of 620 positions worldwide (400 positions in manufacturing operations, 160 in selling, F-9 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) general and administrative positions and 60 in research and development). Notification to employees was completed in 1998, although a small number of the employees affected will continue working in their existing positions through 2000 with their related salary costs charged to operations as incurred. As of December 31, 1999, 600 employees had left the Company pursuant to this initiative. Under the terms of the severance agreements, the Company expects to pay severance and associated benefits through 2000. Following is a summary of the restructuring charges and related reserve balances at December 31, 1998 and 1999:
1998 Balance at Restructuring Other Cash December 31, Charge Activity Disbursements 1998 ------------- -------- ------------- ------------ Employee severance costs................... $18,290 $ -- $5,447 $12,843 Lease cancellation costs................... 3,847 -- 169 3,678 Contract terminations and other costs............. 2,049 86 -- 1,963 Write-off of intangible assets.................. 7,667 7,667 -- -- Write-off of fixed assets.................. 1,788 1,788 -- -- ------- ------ ------ ------- Total.................. $33,641 $9,541 $5,616 $18,484 ======= ====== ====== =======
Balance at Balance at December 31, Reversal of Cash December 31, 1998 Reserve Disbursements 1999 ------------ ----------- ------------- ------------ Employee severance costs.................. $12,843 $4,700 $4,614 $3,529 Lease cancellation costs.................. 3,678 500 704 2,474 Other costs............. 1,963 -- 376 1,587 ------- ------ ------ ------ Total................. $18,484 $5,200 $5,694 $7,590 ======= ====== ====== ======
The Company also recorded an incremental provision for excess and obsolete inventory of $6,000 during the third quarter of 1998 in response to adverse changes in demand attributable to recessionary conditions in Asia and the slowdown in the semiconductor industry. NOTE C--Acquisitions On May 18, 1999, the Company acquired all outstanding shares of Bioprocessing Corporation Limited ("Bioprocessing") in exchange for 660,000 shares of Millipore common stock. The transaction was accounted for as a pooling-of-interests. The consolidated financial statements for prior periods were not restated because the addition of Bioprocessing did not have a material impact on the Company's results of operations and financial position. Bioprocessing develops, manufactures and sells a wide range of proprietary products and services for the chromatographic purification of proteins. In 1996 and 1997 the Company acquired Amicon Separation Science Business ("Amicon") and Tylan General, Inc. ("Tylan"), respectively. The integration activities relating to the Amicon business were substantially completed as of December 31, 1999 except for the integration of a manufacturing operations which was delayed pending the construction of a facility to receive this operation and the resolution of certain vendor agreement termination disputes both of which the Company expects complete in 2000. The remaining liability as of December 31, 1999 consists of $1,651 for the integration of the manufacturing operations and costs associated with the termination of a supply agreement. The integration activities for Tylan were completed with final cash payments of $1,200 for contractual agreements continuing through 2000. F-10 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) Following is a summary of the remaining reserve as of December 1998 and 1999 for the acquisitions of Tylan and Amicon:
Other Reserve Balance Cash Payments Activity Reserve Balance at December 31, -------------- ------------- at December 31, 1997 Tylan Amicon Tylan Amicon 1998 --------------- ------- ------ ------ ------ --------------- Employee costs.......... $17,102 $13,207 $395 $ -- $-- $3,500 Facilities-related costs.................. 5,521 4,424 183 -- -- 914 Contract termination costs.................. 4,147 2,257 -- -- -- 1,890 Write-off of assets..... 4,004 -- -- 3,276 243 485 Other integration expenses............... 2,294 1,824 155 -- -- 315 ------- ------- ---- ------ ---- ------ Total................. $33,068 $21,712 $733 $3,276 $243 $7,104 ======= ======= ==== ====== ==== ======
Reserve Balance Cash Payments Reserve Balance at December 31, ------------- at December 31, 1998 Tylan Amicon 1999 --------------- ------ ------ --------------- Employee costs............... $3,500 $2,523 $312 $ 665 Facilities-related & other costs....................... 1,714 706 162 846 Contract termination costs... 1,890 550 -- 1,340 ------ ------ ---- ------ Total...................... $7,104 $3,779 $474 $2,851 ====== ====== ==== ======
The acquisition of Tylan General Inc. included in-process research and development for which technological feasibility had not been achieved resulting in charges to earnings of $114,000 in the first quarter of 1997. This charge was taken because neither the projects nor any potential alternative future uses for the technology on which the projects were based had achieved technological feasibility. The estimation of the fair value of the purchased in-process research and development is primarily the responsibility of management. In determining the valuation of in-process research and development projects for the acquisition, the discounted cash flow approach was used. A range of discount rates from 25 percent to 35 percent was applied depending upon the relative risk of the in-process technology and the market risks for the related product. Revenue projections reflected the estimated useful life of the technology and ranged from 5 to 12 years. Cash flows were reduced in contemplation of on-going operating needs (including working capital) to support the technology and by amounts associated with the use of "core technology" in products under development. The assumptions made regarding pricing, margins and expenses were consistent with the acquired company's historical trends. F-11 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) NOTE D--Basic and Diluted Earnings per Share For 1997, basic and diluted earnings per share are the same, as the Company was in a loss position. The following table sets forth the computation of basic and diluted earnings per share for 1999, 1998 and 1997:
1999 1998 1997 ------- ------- -------- Numerator: Net income (loss)............................... $64,328 $ 9,864 $(38,784) ======= ======= ======== Denominator: Basic weighted average shares outstanding....... 44,731 43,864 43,527 Effect of dilutive securities-stock options..... 543 425 -- ------- ------- -------- Diluted weighted average shares outstanding..... 45,274 44,289 43,527 ======= ======= ======== Net income (loss) per share: Basic........................................... $ 1.44 $ 0.22 $ (0.89) Diluted......................................... $ 1.42 $ 0.22 $ (0.89)
NOTE E--Inventories Inventories at December 31, stated at the lower of first-in, first-out (FIFO) cost or market, consisted of the following:
1999 1998 -------- -------- Raw materials.............................................. $ 38,132 $ 35,433 Work in process............................................ 26,069 18,620 Finished goods............................................. 40,839 53,188 -------- -------- $105,040 $107,241 ======== ========
NOTE F--Property, Plant and Equipment Property, plant and equipment at December 31 consisted of the following:
1999 1998 -------- -------- Land...................................................... $ 8,786 $ 9,248 Leasehold improvements.................................... 35,722 30,154 Buildings and improvements................................ 134,714 132,783 Production and other equipment............................ 240,295 229,115 Construction in progress.................................. 13,874 24,375 -------- -------- 433,391 425,675 Less: accumulated depreciation............................ 206,914 188,261 -------- -------- $226,477 $237,414 ======== ========
Depreciation expense for the years ended 1999, 1998, and 1997 was $34,151, $36,778 and $32,797, respectively. F-12 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) NOTE G--Notes Payable Short-term borrowings and related lines of credit at December 31 are summarized as follows:
1999 1998 --------- -------- Notes payable......................................... $ 115,645 $171,340 --------- -------- Unused lines of credit................................ $ 144,355 $ 90,000 Average amount outstanding at month-end during the year................................................. $ 162,790 $184,239 Maximum amount outstanding at month-end during the year................................................. $ 175,068 $214,113 Weighted average interest rate during the year........ 6.4% 6.1% Weighted average interest rate at year-end............ 6.9% 6.3%
The Company has entered into an unsecured Revolving Credit Agreement ("the agreement") with a group of banks. The agreement allows for borrowings of up to a maximum $250,000 and expires on January 22, 2002. Individual borrowings under the agreement are made on terms not to exceed six months. At December 31, 1999 the Company had $135,000 available under this facility. Interest is payable on outstanding borrowings at a floating rate of LIBOR plus a margin. The agreement also calls for a facility fee. The exact amount of the margin and the facility fee is dependent on the Company's debt rating. The agreement calls for the Company to maintain certain financial covenants relating to operating cash flow, interest coverage and minimum earnings. As of December 31, 1999 and 1998, the Company was in compliance with all covenants. The Company also has an additional $10,000 of other short-term borrowing capacity available of which $645 was outstanding at December 31, 1999. NOTE H--Long-term Debt Long-term debt at December 31 consisted of the following:
1999 1998 -------- -------- 7.2% unsecured notes due in 2002....................... $100,000 $100,000 7.5% unsecured notes due in 2007....................... 100,000 100,000 7.23% note payable due in 2004......................... 100,000 100,000 Unrealized (gain) loss on revaluation of yen- denominated debt...................................... 13,107 (890) -------- -------- Long-term debt......................................... $313,107 $299,110 ======== ======== Weighted average interest rate, net of impact of swap agreements............................................ 6.4% 6.1%
Interest on the 7.2% unsecured notes and the 7.5% unsecured notes is payable semi-annually in April and October. At December 31, 1999, these notes had a fair market value of $96,820 and $90,480, respectively. Interest on the 7.23% notes is payable semi-annually in March and September. As this note is not publicly traded, a determination of the fair value is not readily determinable. However, the Company believes that the above carrying values approximate fair value. The 7.23% notes call for the Company to maintain the same covenants as the Revolving Credit Agreement disclosed in Note G. The Company has two yen denominated swap agreements including a swap of $80,000 in debt service obligations for a yen denominated obligation of 8,760,000 yen, bearing interest at a rate of 4.49 percent and maturing in 2004 and a swap of $30,000 in debt service obligations for a yen denominated obligation of F-13 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) 3,840,000 yen, bearing interest at a rate of 1.39 percent and maturing in 2003. The effect of foreign currency exchange rate fluctuations resulting from the yen swap agreements open at December 31, 1999 are included in translation adjustments. In November 1998 Moody's Investor Services and Standard & Poors Corporation graded the Company's debt at a rating of Ba2 and BB+, respectively. Both ratings are characterized as below "investment grade". This rating coupled with the strengthening of the yen triggered a requirement to provide cash collateralization under one of the Company's yen denominated debt swap agreements in the event that the net value of the Company's position falls below the net value of the counterparty's position. In the event that the Company's debt rating improves, these agreements provide for less stringent collateralization requirements. The amount of the cash collateral is dependent, among other things, on the exchange rate of the yen to the U.S. dollar; generally, as the yen strengthens, the amount of cash collateral required from the Company increases. At December 31, 1999, this cash collateralization amount was $18,640. The Company capitalized interest costs associated with the construction of certain capital assets of $1,121 in 1999, $1,282 in 1998 and $753 in 1997. Interest paid on short-term and long-term debt during 1999, 1998, and 1997 amounted to $30,804, $30,690 and $25,579 respectively. NOTE I--Foreign Exchange A significant volume of the Company's business is transacted in currencies other than the U.S. dollar. This exposes the Company to risks associated with currency rate fluctuations, which impact the Company's sales and net income. From time to time, the Company had entered into foreign currency option contracts to sell yen, on a continuing basis in amounts and timing consistent with the underlying currency exposure so that gains on these transactions partially offset the realized foreign exchange losses on the underlying exposure. In 1998 and 1997, the Company realized gains, net of premiums under these contracts, of $2,232 and $4,375, respectively. At December 31, 1999, the Company had option contracts to sell yen aggregating $27,101. In the event of a significant strengthening of the U.S. dollar against the yen, the exercise of these options will partially mitigate losses which would be incurred by the Company on the underlying currency exposure. The unamortized premiums associated with these option contracts was $308 as of December 31, 1999. F-14 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) NOTE J--Income Taxes The Company's provisions for income taxes are summarized as follows:
1999 1998 1997 -------- -------- --------- Domestic and foreign income (loss) before income taxes: Domestic.................................. $ 10,985 $(27,116) $ (69,479) Foreign................................... 71,366 35,660 51,369 -------- -------- --------- Income (loss) before income taxes......... $ 82,351 $ 8,544 $ (18,110) ======== ======== ========= Domestic and foreign provision (benefit) for income taxes: Domestic.................................. $ 448 $ (4,801) $ 6,873 Foreign................................... 18,085 3,295 13,011 State..................................... (510) 186 790 -------- -------- --------- $ 18,023 $ (1,320) $ 20,674 ======== ======== ========= Current and deferred provision (benefit) for income taxes: Current................................... $ 12,350 $ 9,747 $ 14,839 Deferred.................................. 5,673 (11,067) 5,835 -------- -------- --------- $ 18,023 $ (1,320) $ 20,674 ======== ======== =========
A summary of the differences between the Company's consolidated effective tax rate and the United States statutory federal income tax rate is as follows:
1999 1998 1997 ----- ----- ----- U.S. statutory income tax rate....................... 35.0% 35.0% 35.0% Puerto Rico tax rate benefit......................... (5.0) (10.8) (4.0) Ireland tax rate benefit............................. (12.4) (25.8) (8.2) State income tax, net of federal income tax benefit.. (0.4) 1.4 0.5 Foreign Sales Corporation income not taxed........... (2.6) (15.2) (2.3) Change in valuation allowance........................ 7.3 -- -- ----- ----- ----- Effective tax rate applicable to operations.......... 21.9 (15.4) 21.0 Non-deductible charge for purchased research and development......................................... -- -- 93.2 ----- ----- ----- Effective tax rate................................... 21.9% (15.4)% 114.2% ===== ===== =====
Tax exemptions relating to Puerto Rico and Ireland operations are effective through 2004 and 2010, respectively. Income taxes paid (net of refunds) during 1999, 1998, and 1997 were $5,700, $20,359, and $18,704, respectively. The Company has not recorded deferred income taxes applicable to undistributed earnings of foreign subsidiaries that are indefinitely reinvested in foreign operations. These earnings amounted to approximately $169,500 at December 31, 1999. If earnings of such foreign subsidiaries were not indefinitely reinvested, a deferred tax liability of approximately $47,083 would have been required. At December 31, 1999, the Company has foreign tax credit carryforwards of approximately $16,900 that expire in the years 2000 through 2004. General business credit carryforwards of approximately $4,889 expire in the years 2001 through 2010. Net operating loss carryforwards of $99,431 expire through the year 2019. In addition, the Company has alternative minimum tax credit carryforwards of approximately $15,666, which can be carried forward indefinitely. F-15 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) Significant components of the Company's net deferred tax assets are as follows:
1999 1998 -------- -------- Intercompany and inventory related transactions........ $ 16,254 $ 18,467 Postretirement benefits other than pensions............ 3,859 3,555 Tax credits (including foreign tax credits on unremitted earnings).................................. 55,752 44,396 Net operating loss carryforwards....................... 34,811 30,399 Restructuring and divestiture related costs............ 5,250 12,484 Amortization of intangible assets...................... 19,007 20,483 Depreciation........................................... (7,648) (4,610) Other, net............................................. 1,671 (3,508) -------- -------- 128,956 121,666 Valuation allowance.................................... (19,134) (13,121) -------- -------- Net deferred tax asset................................. $109,822 $108,545 ======== ========
The valuation allowance is provided primarily against foreign tax credit carryforwards and foreign tax credits on unremitted earnings which can be utilized against future taxable income in the United States. The increase in valuation allowance for the year results from the growth in foreign tax credits and changes in the geographic mix of income. Although realization is not assured, the Company believes it is more likely than not that the remainder of the deferred tax asset, net of the valuation allowance, will be realized. The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income are reduced. NOTE K--Legal Proceedings The $11,766 settlement of litigation charge taken in 1998 was for the following 3 matters: 1. A proceeding related to an administrative order issued by the Environmental Quality Board ("EQB") of Puerto Rico alleging that the Company's wholly owned subsidiary failed to properly manage, transport and dispose of nitrocellulose membrane scrap as a hazardous waste; and proposed penalties in the amount of $96,500. The Company settled this proceeding in 1998 and recorded a charge of $5,000. 2. A private lawsuit brought by an intervening party in the EQB administrative case described above; the Company recorded a charge of $3,100 in the 1998 reflecting its costs to settle this suit. 3. A patent lawsuit with Mott Metallurgical Corporation in which each party claimed infringement of one of its patents by the other. The Company recorded a charge of $3,666 in 1998 to settle this suit; the parties also agreed to cross license the two patents at issue. Millipore has, in the past, been named as 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 ("Superfund") by the U.S. Environmental Protection Agency ("EPA") with respect to a "release" (as defined in Section 101 of Superfund), 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 settled its liability pursuant to consent decrees releasing Millipore from further liability with respect to certain covered matters at all of these Superfund sites. However, as is typical with consent decrees in such Superfund proceedings, EPA and the relevant state agencies have reserved the right to maintain actions against the settling F-16 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) parties, including the Company, in the event certain events occur or do not occur at those sites. The Company does not expect that the conditions in the consent decrees permitting these governmental parties to "re-open" the cases will occur. In any event, the Company believes that the aggregate of any future potential liabilities should not have a material adverse effect on the Company's future results of operations or financial condition in light of the advanced stage of funded remedial action at each site and the likely availability of contribution from numerous other financially solvent PRPs participating at each such Superfund site. The Company is also subject to a number of other claims and legal proceedings which, in the opinion of the Company's management, are incidental to the Company's normal business operations. In the opinion of the Company, although final settlement of these suits and claims may impact the Company's financial statements in a particular period, they will not, in the aggregate, have a material adverse effect on the Company's financial position. NOTE L--Leases Operating lease agreements cover sales offices, manufacturing and warehouse space. These leases have expiration dates through 2008. Certain land and building leases contain renewal options for periods ranging from one to ten years and purchase options at fair market value. Rental expense was $12,325 in 1999, $12,033 in 1998, and $11,849 in 1997. At December 31, 1999 future minimum rents payable under noncancelable leases with initial terms exceeding one year were as follows: 2000.............................................................. $9,319 2001.............................................................. 6,246 2002.............................................................. 4,584 2003.............................................................. 3,678 2004.............................................................. 3,285 2005-2008......................................................... 7,115
At December 31, 1999, the Company had long-term lease obligations related to two Tylan General, Inc. manufacturing sites vacated as part of the acquisition integration. Amounts associated with these leases are excluded from the above presentation. Costs expected to be incurred by the Company to vacate these premises prior to completion of each respective lease term are accrued as discussed in Note C. As part of the restructuring program the Company established regional transaction service centers resulting in the elimination of duplicate facilities. The Company will vacate these facilities in 2000. Accordingly, future rents payable under these leases are included through 2000. Costs expected to be incurred by the Company to vacate these premises prior to completion of each respective lease term are accrued as discussed in Note B. NOTE M--Stock Plans 1999 Stock Incentive Plan During 1999, the Company adopted the "1999 Stock Incentive Plan" (the 1999 Plan), which combined the features of the "1995 Combined Stock Option Plan" and the "Long Term Restricted Stock Incentive Plan". The 1999 Plan provides for the issuance of stock options and restricted stock to key employees as incentive compensation. The 1999 Plan allows for the issuance of 4,000,000 shares of common stock of which a maximum of 250,000 shares can be issued as restricted stock. The exercise price of the stock options may not be less than the fair market value of the stock at the date of grant and the stock options must expire no later than 10 years from the date of grant. F-17 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) The 1999 Plan provides that the restricted stock, which is awarded to key members of senior management at no cost to them, cannot be sold, assigned, transferred or pledged during a restriction period which is normally four years but in some cases may be less. In most instances, shares are subject to forfeiture should employment terminate during the restriction period. The restricted stock is recorded at its fair market value on the award date; the related deferred compensation is amortized to Selling, General and Administrative expenses over the restriction period. At the end of 1999, 1998 and 1997, 167,000, 139,000 and 117,000 shares, respectively, were outstanding as restricted shares. As of December 31, 1999, 187,000 shares of Millipore common stock were available for future awards of restricted stock under this plan. Non-Employee Director Stock Option Plan During 1999, the Company adopted the 1999 Stock Option Plan for Non-Employee Directors (the "Directors Plan") which replaced the 1989 Non-Employee Director Stock Option Plan. The Directors Plan allows for the issuance of 250,000 shares of common stock. Each newly elected eligible director is awarded a stock option to purchase 4,000 shares of common stock on the date of his or her first election. Following the initial grant, each director shall automatically be awarded options to purchase 2,000 shares of common stock for each subsequent year of service as a director. The exercise price of the stock options may not be less than the fair market value of the stock at the date of grant. At December 31, 1999, 130,000 options were outstanding. Employees' Stock Purchase Plan During 1999, the Company's Employees' Stock Purchase Plan ("ESPP") was amended to allow for the issuance of up to 1,300,000 shares of common stock. The amended plan allows eligible employees to purchase the stock at 85% of the lesser of the fair market value of the common stock on June 1, the beginning of the plan year, or the closing price at the end of each subsequent quarter. Each employee may purchase up to 10% (up to a maximum of $25,000) of eligible compensation. In 1999, 1998 and 1997, shares issued under the ESPP were 51,000, 38,000 and 33,000, respectively. As of December 31, 1999, 1,249,000 shares of Millipore common stock were available for sale to employees under the ESPP. F-18 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) Stock option activity under both the 1999 Stock Option Plan and the Non- Employee Director Stock Option Plan is presented as follows:
Weighted Average Option Option Exercise Price Shares Price Per Share --------- ------------- -------------- Outstanding at December 31, 1996... 3,089,000 $13.81-$42.00 $24.28 --------- ------------- ------ Granted.......................... 699,000 $36.94-$44.13 $37.98 Exercised........................ (303,000) $13.81-$37.63 $18.25 Canceled......................... (24,000) $17.44-$42.00 $29.19 --------- ------------- ------ Outstanding at December 31, 1997... 3,461,000 $13.81-$44.13 $27.54 --------- ------------- ------ Granted.......................... 884,000 $18.88-$48.13 $29.07 Exercised........................ (155,000) $14.50-$23.69 $17.32 Canceled......................... (79,000) $17.25-$43.50 $36.74 --------- ------------- ------ Outstanding at December 31, 1998... 4,111,000 $13.81-$48.13 $28.08 --------- ------------- ------ Granted.......................... 1,239,000 $29.63-$37.13 $36.23 Exercised........................ (349,000) $25.63-$41.38 $35.94 Canceled......................... (171,000) $16.88-$43.50 $34.89 --------- ------------- ------ Outstanding at December 31, 1999... 4,830,000 $13.81-$48.13 $30.28 --------- ------------- ------ Exercisable at: December 31, 1999................ 2,605,000 December 31, 1998................ 2,408,000 December 31, 1997................ 2,092,000
The following table summarizes information about stock options at December 31, 1999:
Options Outstanding Options Exercisable ----------------------------------------------------------------------------- Weighted Average Range of Options Remaining Weighted Weighted Exercise Outstanding Contractual Average Exercisable Average Price at 12/31/99 Life in years Exercise Price at 12/31/99 Exercise Price -------- ----------- ------------- -------------- ----------- -------------- $13.81- $20.75 1,043,000 3 $17.22 1,040,000 $17.21 $22.06- $34.50 1,232,000 8 $27.16 635,000 $25.47 $35.12- $36.94 1,709,000 9 $35.64 250,000 $36.92 $37.63- $48.13 846,000 7 $40.07 680,000 $39.75 ------- --------- --------- $13.81- $48.13 4,830,000 2,605,000
Accounting for Stock Based Compensation The Company has adopted the disclosure-only provisions of SFAS No. 123 "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized. Had compensation cost been determined based on the fair value at the grant date consistent with the provisions of SFAS 123, the Company's net income and basic earnings per share would have been reduced by $5,174 or $0.11 per share in 1999, $3,748 or $0.08 per share in 1998, and $2,112 or $0.05 per share in 1997. The weighted average fair value of options granted under the stock option plan was $12.86 in 1999, $8.29 in 1998, and $11.13 in 1997. The weighted average fair value of shares issued under the employee stock purchase plan was $9.07 in 1999, and $4.61 in F-19 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) 1998 and 1997. The pro forma expense amounts assume that the fair value assigned to the option grants was amortized over the vesting period of the options, which is four years, while the fair value assigned to grants under the stock purchase plan is recognized in full at the date of grant. The fair value of each option grant is estimated on the date of the grant using the Black-Scholes model with the following assumptions in 1999, 1998 and 1997: expected life of five years and an expectation of no annual dividend increase per year. The expected volatility was 35 percent in 1999, 30 percent in 1998 and 25 percent in 1997. The weighted average risk-free interest rate was 6.2 percent in 1999, 4.5 percent in 1998 and 5.9 percent in 1997. This rate approximated that of 5 year U.S. government interest bearing securities. Non-Employee Director Deferred Compensation Agreements Non-Employee Directors may elect to defer their fees earned as Directors. The fees are converted to deferred compensation phantom stock units based on 100% of the fair market value of Millipore Common Stock on the semi-annual conversion dates. Upon retirement or earlier termination of service from the Board of Directors, the phantom stock units are converted at fair market value of Millipore Common Stock on the date of conversion to cash equivalents and distributed in annual installments over ten years. NOTE N--Employee Retirement Plans Participation and Savings Plan The Millipore Corporation Employees' Participation and Savings Plan ("Participation and Savings Plan"), maintained for the benefit of all U.S. employees, combines both a defined contribution plan ("Participation Plan") and an employee savings plan ("Savings Plan"). Contributions to the Participation Plan are allocated among the U.S. employees of the Company who have completed at least two years of continuous service on the basis of the compensation they received during the year for which the contribution is made. The Savings Plan allows employees to make certain tax-deferred voluntary contributions upon hire date which the Company matches after 1 year of service with a 25 percent contribution (50 percent contribution for employees with 10 or more years of service). Total expense under the Participation and Savings Plan was $6,979 in 1999, $7,392 in 1998 and $6,700 in 1997. Retirement Plan The Company's Retirement Plan for Employees of Millipore Corporation ("Retirement Plan") is a defined benefit plan for all U.S. employees which provides benefits to the extent that assets of the Participation Plan, described above, do not provide guaranteed retirement income levels. Guaranteed retirement income levels are determined based on years of service and salary level as integrated with Social Security benefits. Employees are eligible under the Retirement Plan after one year of continuous service and are vested after five years of service. For accounting purposes, the Company uses the projected unit credit method of actuarial valuation. The actuarial method for funding purposes is the entry age normal method. The Company contributes annually to the Retirement Plan, subject to Internal Revenue Service and ERISA funding limitations. No contributions were required for 1999, 1998 and 1997. Plan assets are invested primarily in mutual funds and money market funds. In addition to the Retirement Plan, the Company sponsors several unfunded defined benefit postretirement plans covering all U.S. employees, which are included in Other Benefits. The plans provide medical and life insurance benefits and are, depending on the plan, either contributory or non- contributory. F-20 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) Plan data as of December 31, 1997 includes assets and obligations pertaining to employees of the Company's former Waters Division, as the assets subject to these former employees had not yet been transferred to Waters Corporation. In the second quarter of 1998, the Company transferred $2,440 of plan assets (including interest through the date of the transfer) and $400 of benefit obligations from its Retirement Plan to the Waters Retirement Plan. In order to fund the transfer, the Company made a contribution of $2,255 to its Retirement Plan in accordance with ERISA funding requirements. These amounts had been previously accrued and included in net loss on disposal of discontinued operations in 1994. The following tables summarize the funded status of the Employee Retirement Plans and amounts reflected in the Company's consolidated balance sheets at December 31, based on Statement No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits.
Pension Benefits Other Benefits --------------- ------------------ 1999 1998 1999 1998 ------ ------- -------- -------- Change in benefit obligation: Benefit obligation at beginning of year............................... $7,842 $ 7,824 $ 7,573 $ 6,584 Service cost........................ 62 27 495 379 Interest cost....................... 597 524 451 448 Plan participants' contributions.... 242 321 64 75 Actuarial loss (gain)............... 205 552 (414) 515 Benefits paid....................... (677) (1,006) (368) (428) Settlement.......................... -- (400) -- -- ------ ------- -------- -------- Benefit obligation at end of year... $8,271 $ 7,842 $ 7,801 $ 7,573 ====== ======= ======== ======== Change in plan assets: Fair value of plan assets at beginning of year.................. $9,235 $ 8,794 $ -- $ -- Actual return on plan assets........ 824 1,311 -- -- Company contributions............... -- 2,255 303 353 Plan participant contribution....... 242 321 64 75 Benefits paid....................... (677) (1,006) (368) (428) Settlement.......................... -- (2,440) -- -- ------ ------- -------- -------- Fair value of plan assets at end of year............................... $9,625 $ 9,235 $ -- $ -- ====== ======= ======== ======== Funded status......................... $1,354 $ 1,394 $ (7,801) $ (7,573) Unrecognized net loss (gain).......... 2,108 2,235 (3,224) (2,939) Unrecognized prior service cost....... 78 89 -- -- Unrecognized net transition obligation........................... (231) (311) -- -- ------ ------- -------- -------- Prepaid (accrued) benefit cost........ $3,309 $ 3,407 $(11,026) $(10,512) ====== ======= ======== ========
Pension Benefits Other Benefits ---------------- ---------------- 1999 1998 1997 1999 1998 1997 ---- ---- ---- ---- ---- ---- Weighted average assumptions as of December 31: Discount rate........................ 8.0% 6.5% 7.0% 8.0% 6.5% 7.0% Expected return on plan assets....... 8.0% 8.0% 8.0% N/A N/A N/A Rate of compensation increase........ 5.0% 5.0% 5.0% N/A N/A N/A
F-21 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) For measurement purposes, a 5 percent annual rate of increase in the per capita cost of covered health care benefits was assumed for 2000. The rate was assumed to remain at this level.
Pension Benefits Other Benefits ------------------- ------------------- 1999 1998 1997 1999 1998 1997 ----- ----- ----- ----- ----- ----- Components of net periodic benefit cost: Service cost.................. $ 62 $ 27 $ 270 $ 495 $ 379 $ 317 Interest cost................. 597 524 523 451 449 418 Expected return on plan assets....................... (714) (690) (589) -- -- -- Amortization of unrecognized gain......................... (80) (82) (84) (129) (133) (166) Amortization of prior service cost......................... 11 11 11 -- -- -- Recognized actuarial loss..... 222 121 187 -- -- -- ----- ----- ----- ----- ----- ----- Net periodic benefit cost..... $ 98 $ (89) $ 318 $ 817 $ 695 $ 569 ===== ===== ===== ===== ===== =====
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in the assumed health care cost trend rates would have the following effects.
1% Point 1% Point Increase Decrease -------- -------- Effect on total of services and interest cost components............................................. $ 189 $ (148) Effect on postretirement benefit obligations............ 1,192 (964)
NOTE O--Gain on Sale of Equity Securities The $9,500 of proceeds on sale of securities in 1999 reflects the sale by the Company of 100 shares of Series A Preferred Stock of Waters Corporation which the Company received in connection with the divestiture of its Waters Chromatography Division in 1994. The gain on sale of equity securities in 1998 primarily reflects the sale of all of the Company's shares of Perkin-Elmer stock for approximately $32,500 in cash. The Company also sold all of its common shares of Glyko Biomedical Ltd. in 1998 and recognized a gain of $3,100. NOTE P--Business Segment Information The Company has two reportable business segments--Biopharmaceutical & Research and Microelectronics. In the Biopharmaceutical & Research segment the Company develops, manufactures and sells consumable products and capital equipment to pharmaceutical companies, biotechnology companies, food and beverage companies, university and government laboratories and research institutes. In this segment the Company also provides process design, engineering and repair services to its customers. The Company's product offerings to the Biopharmaceutical & Research segment include membranes, membrane based filter and separation devices, test kits, laboratory water purification systems, resin and membrane based cartridge filters, laboratory test equipment and manufacturing process equipment. These products are used in laboratory and research applications for detecting and identifying molecules, compounds or micro-organisms in a fluid sample. Filters, separation devices and process equipment sold to customers in the Biopharmaceutical & Research segment are used in the manufacture of pharmaceutical products, diagnostic devices and beverages to isolate and purify specific components or to remove contaminants in a fluid stream. The products are sold worldwide principally through a direct sales force. Distributors are used in selected regions and for specific product lines. F-22 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data) In the Microelectronics segment the Company develops, manufactures and sells consumables and capital equipment to semiconductor fabrication companies as well as OEM suppliers to those companies. The Company also provides capital equipment warranty and repair services to customers in this segment. Microelectronics products include membrane and metal based filters, housings, precision liquid dispense filtration pumps, resin based gas purifiers and mass flow and pressure controllers. The products are used by customers in manufacturing operations to remove contaminants in process fluid streams and process gas applications to purify process gases, to measure and control flow rates in process gas streams and to control and monitor pressure and vacuum levels in process chambers. Microelectronics products are sold worldwide through a direct sales force and through distributors in selected regions. The operating segment results for Biopharmaceutical & Research, Microelectronics and Corporate included below are presented in "local currencies". For comparability of financial results, the foreign currency balances, in all periods presented, are translated at Millipore's 1999 budgeted exchange rates which differ from actual rates of exchange. This provides a clearer presentation of underlying trends in the Company's business, before the impact of foreign currency translation. The foreign exchange impact is shown separately and reconciles the local currency reporting to the consolidated results at the actual rates of exchange. Operating Segments:
Consolidated Net Sales ---------------------------- 1999 1998 1997 -------- -------- -------- Biopharmaceutical & Research................... $570,184 $527,298 $491,846 Microelectronics............................... 206,700 189,187 264,000 Foreign exchange............................... (5,696) (17,178) 3,073 -------- -------- -------- Total net sales.............................. $771,188 $699,307 $758,919 ======== ======== ========
Consolidated Operating Income (Loss) ----------------------------- 1999 1998 1997 -------- -------- --------- Biopharmaceutical & Research.................. $126,128 $109,157 $ 99,496 Microelectronics.............................. 19,059 (13,073) 38,994 Corporate..................................... (36,827) (31,114) (29,802) Restructuring and unusual items............... 5,200 (60,582) (119,091) Foreign exchange.............................. (4,079) (5,054) 11,510 -------- -------- --------- Total operating income (loss)............... $109,481 $ (666) $ 1,107 ======== ======== =========
Depreciation and Amortization Expense, Included in Operating Income (Loss) ---------------------------------------- 1999 1998 1997 ------------ ------------ ------------ Biopharmaceutical & Research...... $ 19,839 $ 18,926 $ 17,935 Microelectronics.................. 12,042 12,169 10,103 Corporate......................... 13,348 13,370 11,189 Foreign exchange.................. (938) (56) 1,434 ------------ ------------ ------------ Total depreciation and amortization................... $ 44,291 $ 44,409 $ 40,661 ============ ============ ============
F-23 MILLIPORE CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued) (In thousands except share and per share data)
Segment Assets-- Inventory only ------------------ 1999 1998 -------- -------- Biopharmaceutical & Research............................. $ 73,772 $ 77,204 Microelectronics......................................... 34,092 28,214 Corporate................................................ (1,414) (1,083) Foreign exchange......................................... (1,410) 2,906 -------- -------- Total segment assets................................... $105,040 $107,241 ======== ========
Geographical Segments: The Company attributes net sales and long-lived assets to different geographic areas on the basis of the location of the customer. The Company has three geographic regions. The United States represents greater than 90% of the Americas region. Net sales and long-lived asset information by geographic area in U.S. dollars as of December 31, 1999, 1998 and 1997 and for each of the three years ended December 31, 1999 is presented as follows:
Net Sales -------------------------- 1999 1998 1997 -------- -------- -------- Americas.......................................... $319,951 $292,173 $321,634 Europe............................................ 233,564 237,786 222,452 Japan and Asia.................................... 217,673 169,348 214,833 -------- -------- -------- Total........................................... $771,188 $699,307 $758,919 ======== ======== ========
Long-Lived Assets ----------------- 1999 1998 -------- -------- Americas................................................... $235,439 $250,900 Europe..................................................... 50,645 58,179 Japan and Asia............................................. 37,880 36,947 -------- -------- Total.................................................... $323,964 $346,026 ======== ========
F-24 REPORT OF INDEPENDENT ACCOUNTANTS To the Shareholders and Directors of Millipore Corporation: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, shareholders' equity, and of cash flows, present fairly, in all material respects, the financial position of Millipore Corporation and its subsidiaries at December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts January 19, 2000 F-25 MILLIPORE CORPORATION Quarterly Results (Unaudited) The Company's unaudited quarterly results are summarized below.
First Second Third Fourth Quarter Quarter Quarter Quarter Year -------- -------- -------- -------- -------- (In thousands, except per share data) 1999 Net sales................... $180,403 $187,466 $188,635 $214,684 $771,188 Cost of sales............... 84,895 86,080 86,920 100,274 358,169 -------- -------- -------- -------- -------- Gross profit.............. 95,508 101,386 101,715 114,410 413,019 Selling, general and administrative expenses.... 61,833 62,883 64,387 67,495 256,598 Research and development expenses................... 12,345 13,362 13,305 13,128 52,140 Restructuring items......... -- -- (5,200) -- (5,200) -------- -------- -------- -------- -------- Operating income.......... 21,330 25,141 29,223 33,787 109,481 Interest income............. 699 691 671 964 3,025 Interest expense............ (7,779) (7,333) (7,482) (7,561) (30,155) -------- -------- -------- -------- -------- Income before income taxes.................... 14,250 18,499 22,412 27,190 82,351 Provision for income taxes.. 2,993 3,885 5,435 5,710 18,023 -------- -------- -------- -------- -------- Net income.............. $ 11,257 $ 14,614 $ 16,977 $ 21,480 $ 64,328 ======== ======== ======== ======== ======== Net income per share: Basic..................... $ 0.26 $ 0.33 $ 0.38 $0.48 $ 1.44 Diluted................... $ 0.25 $ 0.32 $ 0.37 $ 0.47 $ 1.42 Weighted average shares outstanding Basic..................... 44,078 44,791 44,994 45,096 44,731 Diluted................... 44,477 45,308 45,681 45,632 45,274 1998 Net sales................... $185,662 $175,172 $159,181 $179,292 $699,307 Cost of sales............... 86,429 85,507 101,493 91,038 364,467 -------- -------- -------- -------- -------- Gross profit.............. 99,233 89,665 57,688 88,254 334,840 Selling, general and administrative expenses.... 61,687 60,809 56,588 57,437 236,521 Research and development expenses................... 13,135 13,910 13,301 13,232 53,578 Restructuring items......... -- -- 33,641 -- 33,641 Litigation settlement....... 11,766 -- -- -- 11,766 -------- -------- -------- -------- -------- Operating income (loss)... 12,645 14,946 (45,842) 17,585 (666) Gain on sale of equity securities................. 35,594 -- -- -- 35,594 Interest income............. 614 761 877 838 3,090 Interest expense............ (7,073) (7,058) (7,098) (8,245) (29,474) -------- -------- -------- -------- -------- Income (loss) before income taxes............. 41,780 8,649 (52,063) 10,178 8,544 Provision (benefit) for income taxes............... 10,370 1,816 (15,643) 2,137 (1,320) -------- -------- -------- -------- -------- Net income (loss)....... $ 31,410 $ 6,833 $(36,420) $ 8,041 $ 9,864 ======== ======== ======== ======== ======== Net income (loss) per share: Basic..................... $ 0.72 $ 0.16 $ (0.83) $ 0.18 $ 0.22 Diluted................... $ 0.71 $ 0.15 $ (0.83) $ 0.18 $ 0.22 Weighted average shares outstanding Basic..................... 43,727 43,819 43,891 44,005 43,864 Diluted................... 44,307 44,327 43,891 44,294 44,289
F-26 INDEX TO EXHIBITS
Exhibit No. Description Page ------- ------------------------------------------------------------ ---- 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 the 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, ABN 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 Standard Executive Termination Agreement, as amended........ 4 10.8 Millipore Corporation 1999 Stock Incentive Plan............. 20 10.9 Millipore Corporation 1995 Employee Stock Purchase Plan, as 30 amended..................................................... 10.10 Millipore Corporation 1995 Management Incentive Plan........ ** 10.11 Millipore Corporation 1995 Combined Stock Option Plan, as ** amended..................................................... 10.12 Second Amendment, effective as of September 30, 1998, to ** Revolving Credit Agreement, dated as of January 22, 1997, among Millipore Corporation and The First National Bank of Boston, ABN AMRO Bank N.V. and certain other lending institutions................................................ 10.13 Note Purchase and Exchange Agreement, as amended through ** November 2, 1998, between Millipore Corporation and Metropolitan Life Insurance Company......................... 10.14 Form of letter agreement with directors relating to the ** deferral of directors fees and conversion into phantom stock units....................................................... 10.15 Millipore Corporation 1989 Stock Option Plan for Non- ** Employee Directors.......................................... 10.16 Commercial Lease Agreement between EBP 3, Ltd. and Millipore ** Corporation with respect to Premises located in Allen, Texas....................................................... 10.17 ISDA Master Agreement, dated January 27, 1994, as amended, ** with Morgan Guaranty Trust Company of New York.............. 10.18 Millipore Corporation 1999 Stock Option Plan for Non- 37 Employee Directors.......................................... 10.19 Employment and Relocation Agreement, dated November 10, 45 1999, between Millipore Corporation and Michael P. Carroll.. 11 Computation of Per Share Earnings........................... *+ 21 Subsidiaries of Millipore Corporation....................... 52 23 Consent of PricewaterhouseCoopers LLP....................... 54 24 Power of Attorney........................................... 56 27 Financial Data Schedule..................................... 59++++
- -------- *+ Incorporated by reference to Note D to Financial Statements on page F-12 ++++ EDGAR Filing only EX-10.7 2 STANDARD EXECUTIVE TERMINATION AGREEMENT EXHIBIT 10.7 EXECUTIVE TERMINATION AGREEMENT Agreement between MILLIPORE CORPORATION, a Massachusetts corporation with offices at 80 Ashby Road, Bedford, Massachusetts 01730 ("Millipore" or the "Company") and _________________ (the "Executive") dated ________________________. W I T N E S S E T H RECITALS -------- A. The Executive is an officer and key member of Millipore's management. B. Millipore believes that it is in its best interests, as well as those of its stockholders, to assure the continuity of management in general and the Executive in particular, for a fixed period of time in the event of actual or threatened change of control of the Company and whether or not such change of control is thought by Millipore's Board of Directors to be in the best interest of its stockholders. C. This Agreement is not intended to alter materially the compensation, benefits or terms of employment that the Executive could reasonably expect in the absence of a change in control of Millipore, but is intended to encourage and reward his compliance with the wishes of the Millipore Board of Directors whatever they may be in the event that a change of control occurs or is threatened. D. This Agreement supersedes and replaces the previous Executive Termination Agreement between the Executive and Millipore. AGREEMENT --------- 1. Definitions ----------- 1.01 The term "Change of "Control" shall mean a change in control as the result of any tender offer, market purchase program, proxy solicitation, merger, consolidation, sale of assets or otherwise of a nature that would be required to be reported in response to Item 5(f) of Schedule 14A of Regulation 14a promulgated under the Securities Exchange Act of 1934 as in effect on the date of this Agreement; provided that without limitation, such a Change in Control shall be deemed to have occurred if and when (a) any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or becomes a beneficial owner, directly or indirectly, of securities of Millipore representing 20% or more of the combined voting power of Millipore's then outstanding securities or (b) during any period of 24 consecutive months, commencing before or after the date of the Agreement, individuals who at the beginning of such 24 month period were directors of Millipore cease for any reason to constitute at least a majority of the Board of Directors of Millipore. 1.02 The term "Impending Change of Control" refers to any event or circumstances which gives rise to a threat or a likelihood of Change of Control, whether or not supported or approved by Millipore's management or directors. 2 A determination made by Millipore's Board of Directors that an event constituting an Impending Change of Control has occurred shall be binding and conclusive if such determination is made by the Board in good faith. 1.03 The term "Period of Employment" shall mean the period which begins when an Impending Change of Control occurs and which shall continue until the close of business on the 180th day subsequent to any Change of Control. 1.04 The term "Involuntary Termination" shall mean the following (a) Any Discharge of Executive by Millipore or by any corporation succeeding to the business and assets of Millipore (a "Successor") if effected during the Period of Employment or after the Period of Employment but within two years after any Change of Control; (b) Any resignation by Executive if such resignation shall have been requested by Millipore or by a Successor if made within the period described in Clause (a); (c) Any resignation by Executive if such resignation shall follow any reduction in the compensation, perquisites, fringe benefits, incentive programs and the like applicable to Executive as compared to those in effect at the beginning of the Period of Employment, or any material decrease in the responsibilities, scope, or authority associated with Executive's employment by Millipore, if the foregoing events shall not have been approved in advance by Executive and if the resignation shall be tendered within the period referred to in Clause (a), provided, however, -------- ------- 3 that changes in fringe benefit programs and perquisites shall not be regarded as reductions if Millipore's Board of Directors determines in good faith that benefits and perquisites of equivalent value are substituted, and reductions in payout or other benefits in incentive programs shall not be regarded as reductions if Millipore's Board of Directors determines in good faith that the differences are attributable to changing base levels and changing performance criteria and goals; (d) Any voluntary termination by Executive if, by notice given within the Period of Employment, the Executive elects to treat a Change of Control as an Involuntary Termination. 2. Employment; Period of Employment -------------------------------- 2.01 If an Impending Change of Control should occur while Executive is employed by Millipore, Executive agrees to remain in the employ of Millipore for at least the Period of Employment in the position and with the duties and responsibilities he then currently carries, with such changes therein as may from time to time be made by the Millipore Board of Directors, and upon the other terms and conditions hereinafter stated. 2.02 Executive agrees that during the Period of Employment, and prior to any Change in Control, he will exercise his best efforts to bring about whatever result the Board of Directors determines to be in the best interests of Millipore and its stockholders relative to any Impending Change in Control, i.e., to help in the resistance to any such Change in Control if the Board determines that to be in the best interests of the Company and its stockholders, and to bring 4 about such Change of Control if the Board determines that to be the preferable alternative. The Executive agrees to use his best efforts at and after the occurrence of a Change of Control to effect an orderly and beneficial transfer of control to the party or parties comprising the new control group. 2.03 Nothing in this Agreement shall be deemed to prevent the Executive from remaining in the employ of Millipore or any Successor beyond the Period of Employment either on the terms and conditions set forth herein or on others that may be mutually agreed upon. 3. Compensation and Benefit Plans ------------------------------ 3.01 For all services rendered by the Executive in any capacity during the Period of Employment, including, without limitation, services as an executive officer, director or member of any committee of Millipore or of any subsidiary, division or affiliate thereof, the Executive shall be paid as base compensation the salary he is receiving at the beginning of the Period of Employment, payable not less often than monthly. 3.02 The executive shall continue to be a participant in Millipore's Management Incentive Plan, its Long Term Restricted Stock (Incentive) Plan, and its Stock Option Plan as in effect at the beginning of the Period of Employment, and any and all other incentive plans in which key employees of the Company participate that are in effect. 3.03 The Executive, his dependents and beneficiaries shall be entitled to all payments and benefits and service credit for benefits during the Period of Employment to which officers of Millipore, their dependents and 5 beneficiaries are entitled as of the beginning of the Period of Employment under the terms of the then effective employee plans and practices of Millipore. 3.04 For the two year period commencing immediately after the Period of Employment, the Executive and his family shall be entitled to and receive all medical, dental and life insurance benefits to which they had been entitled as of the beginning of the Period of Employment. 4. Effect of Involuntary Termination of Employment on the Pension and ------------------------------------------------------------------ Retirement Program - ------------------ 4.01 The term "Millipore's Pension and Retirement Program" shall mean the Participation and the Retirement Plan of Millipore, its supplemental unfunded pension plan, if any, and any other supplemental, early retirement and similar plan or plans of Millipore and its subsidiaries providing for pension or retirement benefits that may be applicable to the Executive at the beginning of the Period of Employment. 4.02 In the event of Involuntary Termination of Executive, Executive shall be entitled to payment by Millipore which will supplement benefits under Millipore's Pension and Retirement Program. The provisions of this Section 4 shall not affect in any way the terms of Millipore's Pension and Retirement Program or the rights of Executive thereunder. Separate and apart from Millipore's Pension and Retirement Program, however, Millipore agrees to pay to Executive, in the event of Involuntary Termination, the difference between the benefits payable to Executive under Millipore's Pension and Retirement 6 Program and the amounts that would be payable thereunder if Millipore's Pension and Retirement Program were adjusted as follows: (a) "Compensation" as defined in the Pension and Retirement Program shall be the highest Annual Compensation paid to the Executive within the three years prior to Involuntary Termination; (b) the Executive shall be credited for the purpose of determining "years of service" (up the maximum of 30 years) with 2.5 times the actual number of years served, with a minimum of ten years of such credited service for purposes of determining both vesting and benefit amounts; (c) The Executive shall be entitled to receive his actuarially determined benefit at any time he elects subsequent to Involuntary Termination without regard to his age at the time of such election. 5. Involuntary Termination Payment ------------------------------- 5.01 In the event of Involuntary Termination of Executive's employment, Millipore shall provide the Executive with a lump sum severance payment (the "Termination Payment") in an amount equal to two years compensation at the highest annual rate of target total cash compensation to the Executive during the three years prior to Involuntary Termination. 5.02 To assure Executive's receipt of the Termination Payment as against a possibly hostile successor control group, Millipore shall pay Executive an amount equal to the Termination Payment just prior to a Change in Control. At the time of the receipt of such payment, Executive shall issue his six month non-interest bearing note to the Company in an amount equal to such payment. 7 Such note shall be deemed canceled if an event constituting an "Involuntary Termination" should occur within the Period of Employment. 5.03 If no event constituting an Involuntary Termination shall have occurred with the Period of Employment, then executive's note referred to in Section 5.02 will become immediately due and payable as of the day following the Period of Employment. 5.04 Executive's entitlement to receive the Termination Payment called for by this Section 5 shall be conditioned upon his having complied to the best of his abilities with the commitments contained in Sections 2.01 and 2.02. In the event of an Involuntary Termination described in Clauses (a), (b) or (c) of Section 1.04, he shall be deemed to have so complied if he shall have complied to the best of his abilities with the requirements of those sections until the time of his discharge or resignation pursuant to such clauses; in the event of an Involuntary Termination described in Clause (d) of Section 1.04, he shall be deemed to have complied only if his employment continues through the Period of Employment and if his compliance shall have continued throughout the Period of Employment. 6. Purchase by Millipore of Executive's Shares ------------------------------------------- 6.01 Executive is hereby granted the right and option to sell to Millipore all shares of common stock of Millipore owned by him at the time of, or acquired by him within 90 days after, the closing of any transaction constituting a Change of Control. The purchase price to be paid by Millipore to Executive for such shares shall be the highest price paid within 90 days prior to the date of 8 exercise by Executive of his right under this Section 6 by the party taking control. Executive's right to exercise this right and option shall be subject to his being in the employ of Millipore at the date of commencement of the tender offer or exchange offer giving rise to the Change of Control. 6.02 The right and option granted to the Executive under this Section 6 shall begin at the date of closing of the event constituting a Change of Control and shall continue for a period of 90 days thereafter. 6.03 In the event of an Impending Change of Control Executive will become immediately entitled to exercise any and all stock options previously granted to him by Millipore and any and all restricted stock shall become free of any restrictions notwithstanding any provision to the contrary in the option agreement, the restricted stock agreement or any plans under which they were granted. 7. Confidential Information ------------------------ 7.01 The Executive agrees not to disclose, either while in Millipore's employ or at any time thereafter, to any person not employed by Millipore, or not engaged to render services to Millipore, any confidential information obtained by him while in the employ of Millipore, including without limitation, any of Millipore's inventions, processes, methods of distribution or customers or trade secrets, provided, however, that this provision shall not preclude the Executive from use or disclosure of information known generally to the public or for information not considered confidential by persons engaged in the business conducted by Millipore or from disclosure required by law or Court order. 9 7.02 The Executive also agrees that upon leaving Millipore's employ he will not take with him, without the prior written consent of an officer authorized to act in the matter by Millipore's Board of Directors any drawing, blueprint, specification or other document of Millipore, its subsidiaries, affiliates and divisions, which is of a confidential nature relating to Millipore, its subsidiaries, affiliates, and divisions, or without limitation, relating to its or their methods of distribution, or any description of any formulae or secret processes. 8. Limitation ---------- 8.01 Notwithstanding any other provision of this Agreement, and except as provided in Section 8.02 below, the payments or benefits to which Executive will be entitled under this Agreement will be reduced to the extent necessary so that Executive will not be liable for the federal excise tax levied on certain "excess parachute payments" under section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"). 8.02 The limitation of Section 8.01 will not apply if - (a) the difference between (i) the present value of all payments to which Executive is entitled under this Agreement determined without regard to Section 8.01 less (ii) the present value of all federal, state and other income and excise taxes for which Executive is liable as a result of such payment; exceeds (b) the difference between (i) the present value of all payments to which executive is entitled under this Agreement calculated as if the limitation of 10 Section 8.01 applies, less (ii) the present value of all federal, state, and other income and excise taxes for which executive is liable as a result of such reduced payments. Present values will be determined using the interest rate specified in Section 280G of the Code and will be the present values as of the date on which an event of Impending Change of Control occurs. 8.03 (a) Whether payments to the Executive are to be reduced pursuant to Section 8.01, and the extent to which they are to be so reduced, will be ------------ determined by the Executive. Executive may, at the expense of Millipore, hire an accounting firm, law firm or employment consulting firm selected by Executive to assist him in such determination. (b) If a reduction is made pursuant to Section 8.01, Executive will have the right to determine which payments and benefits will be reduced. 8.04 Notwithstanding anything to the contrary in this Agreement, and at the Executive's option, in lieu of the reduction contemplated by Section 8.01, the Executive may elect to receive an additional payment from Millipore of an amount that is equal to the product of (1) the excise tax payable by the Executive pursuant to Section 280G of the Code on payments made to him under this Agreement, excluding payments to be made to him pursuant to this Section 8.04 and (2) a fraction the numerator of which is the total target cash compensation payable to the Executive under this Agreement and the denominator of which is the value of the total payments and benefits payable to the Executive under this Agreement, excluding payments to be made to him 11 pursuant to this Section 8.04. Millipore will gross up the payment required under the preceding sentence so as to offset any excise tax payable on it. 9. Notices ------- All notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be sufficiently given when mailed in the continental United States by registered or certified mail or personally delivered to the party entitled thereto at the address stated below or to such changed address as the addressee may have given by a similar notice: To Millipore: Attention: Clerk Millipore Corporation 80 Ashby Road Bedford, MA 01730 To the Executive: c/o Millipore Corporation, with an additional copy to the Executive's home address 10. No Mitigation and No Offset --------------------------- 10.01 The amounts payable to Executive hereunder shall be absolutely owing, and not subject to reduction or mitigation as a result of employment by Executive elsewhere after his employment with Millipore is terminated. 10.02 There shall be no right of set-off or counterclaim in respect of any claim, debt or obligation against any payments to the Executive, his dependents, beneficiaries or estate, provided for in this Agreement. 11. General Provisions ------------------ 11.01 Should the Executive's employment be terminated either on a voluntary or involuntary basis other than as provided for in this Agreement, 12 then any and all termination payments and other provisions associated with any such severance of employment shall be determined in accordance with Millipore's policies and procedures then in effect and not in accordance with this Agreement. Except as specifically provided for herein, nothing shall be deemed to give the Executive the right to continue in the employ of Millipore. 11.02 Millipore and the Executive recognize that each party will have no adequate remedy at law for breach by the other of any of the agreements contained herein and, in the event of any such breach, Millipore (with respect to Sections 3, 4, 5 and 6) and the Executive (with respect to Section 7) hereby agree and consent that the other shall be entitled to a decree of specific performance, or other appropriate remedy to enforce performance of such agreements. 11.03 No right or interest to or in any payments shall be assignable by the Executive; provided, however, that this provision shall not preclude him from designating one or more beneficiaries to receive any amount that may be payable after his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. 11.04 No right, benefit or interest hereunder shall be subject to anticipation, alienation, sale, assignment, encumbrance, charge, pledge, hypothecation, or set-off in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process, or assignment by operation of 13 law. Any attempt, voluntary or involuntary, to effect any action specified in the immediately preceding sentence shall, to the full extent permitted by law, be null, void and of no effect. 11.05 The titles to sections in this Agreement are intended solely for the convenience and no provision of this Agreement is to be construed by reference to the title of any section. 11.06 This Agreement shall be binding upon and shall inure to the benefit of the Executive, his heirs and legal representatives, and Millipore and its successors. 12. Amendment or Modification; Waiver --------------------------------- No provision of this Agreement may be amended, modified or waived unless such amendment, modification or waiver shall be authorized by the Board of Directors of Millipore or any authorized committee of the Board of Directors and shall be agreed to in writing, signed by the Executive and by an officer of Millipore thereunto duly authorized. Except as otherwise specifically provided in this Agreement, no waiver by either party hereto of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a subsequent breach of such condition or provision or a waiver of a similar or dissimilar provision or condition at the same time or at any prior or subsequent time. 14 13. Governing Law ------------- The validity, interpretation, construction performance and enforcement of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts without giving effect to the principles of conflict of laws thereof. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. MILLIPORE CORPORATION By ______________________ __________________________ Executive 15 EX-10.8 3 1999 STOCK INCENTIVE PLAN EXHIBIT 10.8 MILLIPORE CORPORATION 1999 STOCK INCENTIVE PLAN 1. PURPOSE The purpose of this 1999 Stock Incentive Plan (the "Plan") is to advance the interests of Millipore Corporation (the "Company") and its subsidiaries by enhancing the ability of the Company to (i) attract and retain employees and other persons or entities who are in a position to make significant contributions to the success of the Company and its subsidiaries; (ii) reward such persons or entities for such contributions; and (iii) encourage such persons or entities to take into account the long-term interest of the Company through ownership of shares ("Shares") of the Company's common stock ("Stock"). The Plan is intended to accomplish these goals by enabling the Company to grant awards ("Awards") in the form of Options and Restricted Stock, all as more fully described below. 2. ADMINISTRATION The Plan will be administered by the Management Development and Compensation Committee (the "Committee") of the Board of Directors of the Company (the "Board"). The Plan and its administration will comply with Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any successor rule and will comply with the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee will determine the recipients of Awards, the times at which Awards will be made and the size and type or types of Awards to be made to each recipient and will set forth in such Awards the terms, conditions and limitations applicable to it. Awards may be made singly, in combination or in tandem. The Committee will have full and exclusive power to interpret the Plan, to adopt rules, regulations and guidelines relating to the Plan, to grant waivers of Plan restrictions and to make all of the determinations necessary for its administration. Such determinations and actions of the Committee, and all other determinations and actions of the Committee made or taken under authority granted by any provision of the Plan, will be conclusive and binding on all parties. Nothing in this paragraph shall be construed as limiting the power of the Committee or the Board to make adjustments under Section 12 or to amend or terminate the Plan under Section 16. 3. EFFECTIVE DATE AND TERM OF PLAN The Plan will become effective on the date on which it is approved by the stockholders of the Company. Grants of Awards under the Plan may be made prior to that date, subject to such approval of the Plan. The Plan will terminate ten years after the effective date of the Plan, subject to earlier termination of the Plan by the Board pursuant to Section 16. No Award may be granted under the Plan after the termination date of the Plan, but Awards previously granted may extend beyond that date. 4. SHARES SUBJECT TO THE PLAN Subject to adjustment as provided in Section 11 below, (i) the maximum aggregate number of Shares of Stock that may be delivered for all purposes under the Plan shall be 4,000,000 and (ii) the maximum number of Options and Restricted Stock awarded to any Participant (as defined in Section 5 below) in any calendar year under the Plan shall be (x) 250,000 in the case of all Participants other than the Chief Executive Officer and/or President of the Company and (y) 500,000 in the case of the Chief Executive Officer and/or President of the Company. The maximum aggregate number of Shares of Stock which may be issued under the Plan pursuant to the exercise of ISOs (as defined in Section 7 below) shall be 1,000,000. The maximum aggregate number of Shares of Stock which may be issued under the Plan as Restricted Stock shall be 250,000. If any Award requiring exercise by the Participant for delivery of Stock is canceled or terminates without having been exercised in full, the number of Shares of Stock as to which such Award was not exercised will be available for future grants of stock. Shares of Stock tendered by a Participant or withheld by the Company to pay the exercise price of an Option or to satisfy the tax withholding obligations of the exercise or vesting of an Award shall be available again for Awards under the Plan, but only to Participants who are not subject to Section 16 of the Exchange Act. Shares of Restricted Stock forfeited to the Company in accordance with the Plan and the terms of the particular Award shall be available again for Awards under the Plan. Stock delivered under the Plan may be either authorized but unissued Stock or previously issued Stock acquired by the Company and held in treasury. No fractional Shares of Stock will be delivered under the Plan and the Committee shall determine the manner in which fractional share value will be treated. 5. ELIGIBILITY AND PARTICIPATION Those eligible to receive Awards under the Plan ("Participants") will be persons in the employ of the Company or any of its subsidiaries ("Employees") and other persons or entities who, in the opinion of the Committee, are in a position to make a 2 significant contribution to the success of the Company or its subsidiaries, except that non-Employee directors of the Company or a subsidiary of the Company are not eligible to participate in this Plan. A "subsidiary" for purposes of the Plan will be a corporation in which the Company owns, directly or indirectly, stock possessing 50% or more of the total combined voting power of all classes of stock. 6. DELEGATION OF AUTHORITY The Committee may delegate to senior officers of the Company who are also directors of the Company (including, without limitation, the Chief Executive Officer and/or President) its duties under the Plan subject to such conditions and limitations as the Committee may prescribe, except that only the Committee may designate and make grants to Participants (i) who are subject to Section 16 of the Exchange Act or any successor statute, including, without limitation, decisions on timing, amount and pricing of Awards, or (ii) whose compensation is covered by Section 162(m) of the Code. 7. OPTIONS a. Nature of Options. An Option is an Award entitling the Participant to purchase a specified number of Shares at a specified exercise price. Both "incentive stock options," as defined in Section 422 of the Code (referred to herein as an "ISO") and non-incentive stock options may be granted under the Plan. ISOs may be awarded only to Employees. b. Exercise Price. The exercise price of each Option shall be determined by the Committee, but in the case of an ISO shall not be less than 100% (110% in the case of an ISO granted to a ten-percent shareholder) of the Fair Market Value of a Share at the time the ISO is granted; nor shall the exercise price of any other Option be less than 100% of the Fair Market Value of a Share at the time the Option is granted; provided, that, in no case shall the exercise price of an Option be less, in the case of an original issue of authorized Stock, than the par value of a Share. For purposes of this Plan, "Fair Market Value" shall mean, except as provided below, the closing price of a Share as reported on the New York Stock Exchange on the day prior to the date of the grant (based on The Wall Street Journal report of composite transactions) or, if the New York Stock Exchange is closed on the day prior to the date of grant, the next preceding day on which it is open or, if the Shares are no longer listed on such Exchange, such term shall have the same meaning as it does in the case of ISOs. In the case of ISOs, the term "Fair Market Value" shall have the same meaning as it does in the provisions of the Code and the regulations thereunder applicable to ISOs. For purposes of this Plan, "ten-percent shareholder" shall mean any Employee who at the time of grant owns directly, or is deemed to own by reason of the attribution rules set forth in Section 424(d) of the Code, Stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of any of its subsidiaries. 3 c. Duration of Options. In no case shall an Option be exercisable more than ten years (five years, in the case of an ISO granted to a "ten-percent shareholder" as defined in (b) above) from the date the Option was granted. d. Exercise of Options and Conditions. Options granted under any single Award will become exercisable at such time or times, and on and subject to such conditions, as the Committee may specify. The Committee may at any time and from time to time accelerate the time at which all or any part of the Option may be exercised. e. Payment for and Delivery of Stock. Full payment for Shares purchased will be made at the time of the exercise of the Option, in whole or in part. Payment of the purchase price will be made in cash or in such other form as the Committee may approve, including, without limitation, delivery of Shares of Stock. 8. RESTRICTED STOCK A Restricted Stock Award entitles the recipient to acquire Shares, subject to certain restrictions or conditions, for no cash consideration, if permitted by applicable law, or for such other consideration as determined by the Committee. The Award may be subject to such restrictions, conditions, and forfeiture provisions as the Committee may determine, including, but not limited to, restrictions on transfer; continuous service with the Company; achievement of business objectives, and individual, unit and Company performance. Subject to such restrictions, conditions and forfeiture provisions as may be established by the Committee, any Participant receiving an Award will have all the rights of a stockholder of the Company with respect to Shares of Restricted Stock, including the right to vote the Shares and the right to receive any dividends thereon. In the event of a Participant's death, any Restricted Stock previously awarded to him shall become free of restrictions, unless at the time of its initial grant the Committee has provided otherwise. 9. TRANSFERS AND TERMINATIONS a. No Award (other than an Award in the form of an outright transfer of Stock) may be assigned, pledged or transferred other than by will or by the laws of descent and distribution and during a Participant's lifetime will be exercisable only by the Participant or, in the event of a Participant's incapacity, his or her guardian or legal representative, except that with the approval of the Board of Directors (and upon such terms and conditions imposed by the Board) Participants may gift Options to immediate family members or family trusts. b. If and when an employee Participant shall cease to be an employee of the Company (or a subsidiary) any Award granted to him under this Plan shall, except as otherwise provided in this Section 9(b), terminate. During the 90 day period following the Participant's termination of employment, for reasons other than "cause", the Participant shall have the right to exercise any Options previously granted, vested and 4 exercisable on the Participant's employment termination date. In the event an employee is terminated for "cause", any Option granted to him under this Plan shall terminate immediately. The Committee may provide for an optionee a special exercise period which will apply if his employment terminates due to retirement at normal retirement age (as defined in the Company's Retirement Plan) or he terminates his employment earlier with the consent of the Company (the "Special Exercise Period"). The Special Exercise Period will begin on the date of termination of employment and end on the date specified by the Committee, but in no event later than the earlier of the expiration date of the option or the fifth anniversary of the date of termination of employment. During such period the option will be exercisable to the extent it would have been exercisable had the Participant remained in the employ of the Company. With respect to non-incentive stock options granted under the Plan to employees, the Special Exercise Period shall apply without further consent of the Committee if a Participant's employment with the Company terminates after such Participant has attained age 62 and completed ten (10) years of Service (as defined in the Company's Retirement Plan) with the Company. Any question whether or when a Participant has retired or terminated his employment with the consent of the Company shall be determined by the Committee, and its determination shall be final. If a Participant dies while employed by the Company (or a subsidiary) or during a Special Exercise Period provided under this Section 9(b), his Option may be exercised in accordance with Section 10. Notwithstanding any other provision contained in this Plan, the Company shall have the right, but shall not be required, to repurchase from any employee who terminates his employment without the consent and approval of the Company, within six months of the exercise of any Option, the shares of the Company's Common Stock so purchased by said employee at their original (or exercise) price. c. In the event a Participant's employment with the Company terminates after such Participant has attained the age of 62 and completed ten (10) years of Service (as defined in the Company's Retirement Plan) with the Company, any Restricted Stock previously granted to him under the Plan shall become free of any and all restrictions. d. No award, nor anything contained in the Plan shall confer upon any participant any right to continue in the Company's employ or limit in any way the Company's right to terminate his employment at anytime. In no event shall the loss of profit or potential profit in any award constitute an element of damages in the event of termination of the employment relationship of the participant, even if the termination is in violation of an obligation of the Company or any of its subsidiaries. 5 10. DEATH OF PARTICIPANT a. Should a participant die while in the employ of the Company (or a subsidiary), or within a Special Exercise Period provided to him under Section 9, any Option held by him at death may be exercised by his estate, or by the person or persons designated in his last will and testament, as follows: In the case of death during employment, each Option will be exercisable until the earlier of the first anniversary of his death and the original expiration date of the Option to the extent the Option was exercisable by the participant at the time of death. In the case of death during a Special Exercise Period, each Option will be exercisable during the remainder of such period to the extent it would have been exercisable had the employee lived. 11. ADJUSTMENTS a. In the event of a stock dividend, stock split or combination of Shares, recapitalization or other change in the Company's capitalization, or other distribution to common stockholders other than normal cash dividends, after the effective date of the Plan, the Committee will make any appropriate adjustments to the maximum number of Shares that may be delivered under the Plan and to any Participant under Section 4 above. b. In any event referred to in paragraph (a), the Committee will also make any appropriate adjustments to the number and kind of Shares of Stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change. The Committee may also make such adjustments to take into account material changes in law or in accounting practices or principles, mergers, consolidations, acquisitions, dispositions or similar corporate transactions, or any other event, if it is determined by the Committee that adjustments are appropriate to avoid distortion in the operation of the Plan. c. In the event that any option granted under the Millipore Corporation 1995 Combined Stock Option Plan, as Amended, or any restricted stock awarded under the 1995 Long Term Restricted Stock (Incentive) Plan for Senior Management shall expire or terminate or be forfeited under said Plans, then, in that event, any such option or restricted stock shall be added to the number of Shares of Stock that may delivered for all purposes under this Plan. 12. RIGHTS AS A STOCKHOLDER Except as specifically provided by the Plan, the receipt of an Award will not give a Participant rights as a stockholder; the Participant will obtain such rights, subject to any limitations imposed by the Plan or the instrument evidencing the Award, upon actual receipt of Shares. 6 13. CONDITIONS ON DELIVERY OF STOCK The Company will not be obligated to deliver any Shares pursuant to the Plan or to remove any restrictions or legends from Shares previously delivered under the Plan until, (a) in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, (b) if the outstanding Shares are at the time listed on any stock exchange, the Shares to be delivered have been listed or authorized to be listed on such exchange upon official notice of notice of issuance, and (c) all other legal matters in connection with the issuance and delivery of such Shares have been approved by the Company's counsel. If the sale of Shares has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations and agreements as counsel for the Company may consider appropriate to avoid violation of such Act and may require that the certificates evidencing such Shares bear an appropriate legend restricting transfer. If an Award is exercised by the Participant's legal representative, the Company will be under no obligation to deliver Shares pursuant to such exercise until the Company is satisfied as to the authority of such representative. 14. TAX WITHHOLDING The Company will have the right to deduct from any cash payment under the Plan taxes that are required to be withheld and further to condition the obligation to deliver or vest Shares under this Plan upon the Participant's paying the Company such amount as it may request to satisfy any liability for applicable withholding taxes. The Committee may in its discretion permit Participants to satisfy all or part of their withholding liability by delivery of Shares with a Fair Market Value equal to such liability or by having the Company withhold from Stock delivered upon exercise of an Award, Shares whose Fair Market Value is equal to such liability. 7 15. MERGERS; ETC. In the event of any merger or consolidation involving the Company, any sale of substantially all of the Company's assets or any other transaction or series of related transactions as a result of which a single person or several persons acting in concert own a majority of the Company's then outstanding Stock (such merger, consolidation, sale or other transaction being hereinafter referred to as a "Transaction"), all outstanding Options shall, if the Committee, so votes by a majority of the members of the Committee who are Continuing Directors (as defined below), become immediately exercisable and each outstanding share of Restricted Stock shall immediately become free of all restrictions and conditions. In that event, upon consummation of the Transaction, all outstanding Options shall terminate and cease to be exercisable. In lieu of the foregoing, if there is an acquiring or surviving corporation or equity, the Committee may, by vote of a majority of the members of the Committee who are Continuing Directors, arrange to have such acquiring or surviving corporation or entity or an Affiliate (as defined below) thereof grant to Participants holding outstanding Awards replacement Awards which, in the case of ISOs, satisfy, in the determination of the Committee, the requirements of Section 424(a) of the Code. The term "Continuing Director" shall mean any director of the Company who (i) is not an Acquiring Person or an Affiliate of an Acquiring Person and (ii) either was (A) a member of the Board of Directors of the Company on the date hereof or (B) nominated for his or her initial term of office by a majority of the Continuing Directors in office at the time of such nomination. The term "Acquiring Person" shall mean, with respect to any Transaction, each Person who is a party to or a participant in such Transaction or who, as a result of such Transaction, would (together with other Persons acting in concert) own a majority of the Company's outstanding Common Stock; provided, however, that none of the Company, any wholly-owned subsidiary of the Company, any employee benefit plan of the Company or any trustee in respect thereof acting in such capacity shall, for purposes of this Section, be deemed an "Acquiring Person". The term "Affiliate", with respect to any Person, shall mean any other Person who is, or would be deemed to be, an "affiliate" or an "associate" of such Person within the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended. The term "Person" shall mean a corporation, association, partnership, joint venture, trust, organization, business, individual or government or any governmental agency or political subdivision thereof. 8 16. AMENDMENTS AND TERMINATION The Committee will have the authority to make such amendments to any terms and conditions applicable to outstanding Awards as are consistent with this Plan provided that, except for adjustments under Section 11 hereof, no such action will modify such Award in a manner adverse to the Participant without the Participant's consent except as such modification is provided for or contemplated in the terms of the Award. The Board may amend, suspend or terminate the Plan except that no such action may be taken, without shareholder approval, which would effectuate any change for which shareholder approval is required pursuant to Section 16 of the Exchange Act. 17. PRIOR PLANS This Plan is intended to replace the Millipore Corporation 1995 Combined Stock Option Plan, as amended and the 1995 Long Term Restricted Stock (Incentive) Plan for Senior Management (collectively the "Prior Plans"), which Prior Plans shall automatically be terminated and replaced and superseded by this Plan on the date on which this Plan becomes effective, except that any option or restricted stock granted under the Prior Plans shall remain in effect pursuant to their terms. 18. MISCELLANEOUS This Plan shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. 9 EX-10.9 4 1995 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED EXHIBIT 10.9 MILLIPORE CORPORATION --------------------- 1995 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED --------------------------------------------- The purpose of the Millipore Corporation 1995 Employee Stock Purchase Plan (the "Plan") is to provide employees of Millipore Corporation (the "Corporation") and its subsidiary corporations a continuing opportunity to purchase the Corporation's Common Stock (the "Common Stock") through annual offerings. 1,300,000 authorized but unissued or treasury shares of Common Stock in the aggregate may be reserved for this purpose by the Board of Directors of the Corporation. It is intended that this Plan shall constitute an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code of 1986 (the "Code"). The provisions of the Plan shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. 1. ADMINISTRATION. The Plan shall be administered by a committee -------------- appointed by the Board of Directors of the Corporation (the "Committee"). The Committee shall consist of no fewer than three members, some or all of whom may but need not be members of the Board of Directors. The Board of Directors may from time to time remove members from, or add members to, the Committee. Vacancies of the Committee, however caused, shall be filled by the Board of Directors. The Committee shall select one of its members as Chairman, and shall hold meetings at such times and places as it may determine. Actions pursuant to the affirmative vote of a majority of the members of the Committee present at any meeting or pursuant to the written consent of a majority of the members of the Committee shall be valid action of the Committee. The interpretation and construction by the Committee of any provision of the Plan or of any purchase right granted under it shall be final unless otherwise determined by the Board of Directors. No member of the Board of Directors or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any purchase right granted under it. 2. DEFINITIONS. In addition to the definitions provided elsewhere in ----------- this Plan, the following terms shall have the meanings set forth below: "Date of Offering" shall be the first day of June in each year. "Parent corporation" and "subsidiary corporation" shall have the meanings set forth in Section 424(e) and (f) of the Code. "Compensation" means an employee's regular earnings, including payments for overtime, shift premium, commissions and bonuses; provided, however, it shall not include payments made pursuant to the Corporation's Management Incentive Plan. "Working Day" means a day other than a Saturday, Sunday or scheduled holiday. 3. ELIGIBILITY. All regular employees of the Corporation (and those ----------- employees of its subsidiaries who may participate on such terms and conditions, not inconsistent with this Plan, as provided for by the Committee) shall be granted purchase rights under the Plan to purchase Common Stock. Subject to the terms and conditions of this Plan, each eligible employee shall be granted a purchase right effective on the next succeeding Date of Offering. In no event may an employee be granted a purchase right if such employee, immediately after the purchase right is granted, owns stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Corporation or of its parent corporation or subsidiary corporation. For purposes of determining stock ownership under this paragraph, Section 424(d) of the Code shall apply and stock which the employee may purchase under the outstanding purchase rights shall be treated as stock owned by the employee. For purposes of this Section 3, the term "employee" shall not include an employee whose customary employment is not more than five (5) months in any calendar year. 4. OFFERINGS. The Corporation will make one annual offering to --------- employees to purchase stock under the Plan. The terms and conditions for the offering shall specify the amount of stock that may be purchased thereunder and shall include an Offering Period of 12 months duration commencing with the Date of Offering. 5. ACCRUAL LIMITATION. No offering shall be effective to grant to ------------------ any employee a purchase right which permits his rights to purchase stock under all "employee stock purchase plans" of the parent or any subsidiary corporation to accrue at a rate which exceeds $25,000 of fair market value of such stock (determined at the time such purchase right is granted) for each calendar year in which such purchase right is outstanding at any time. For purposes of this paragraph: (A) the right to purchase stock under a purchase right accrues when the purchase right (or any portion thereof) is granted during the calendar year; 2 (B) a right to purchase stock which has accrued under one purchase right granted pursuant to the Plan may not be carried over to any other purchase right. 6. STOCK. The stock subject to the purchase rights shall be shares ----- of the Corporation's authorized but unissued or treasury shares. The aggregate number of shares which may be issued under all purchase rights granted under this Plan shall not exceed 1,300,000 shares of Common Stock. 7. TERMS AND CONDITIONS OF PURCHASE RIGHTS. Purchase rights granted --------------------------------------- pursuant to the Plan shall be in such form as the Committee may from time to time recommend and the Board of Directors shall from time to time approve, provided that all employees granted purchase rights shall have the same rights and privileges (except as otherwise provided by this Plan) and provided further that such purchase rights shall comply with and be subject to the following terms and conditions: (a) Number of Shares. Each purchase right granted thereunder shall ---------------- provide that the grantee may purchase shares of Common Stock, as specified in each offering, provided, however, no purchase right may permit the purchase of stock in excess of the amounts set forth in Section 5. In addition, no employee may purchase stock in an amount which is greater than 10% of his Compensation. (b) Price. Each purchase right shall state that the price per share ----- shall be an amount equal to the lower of: (a) 85% of the fair market value of each share of Common Stock on the Date of Offering (the "Offering Price"); or (b) 85% of the fair market value of each share at the time of exercise (the "Alternative Offering Price"). 8. PARTICIPATION. An eligible employee may participate in this Plan ------------- by making an election (prior to the Date of Offering). The election will authorize regular payroll deductions from the employee's compensation during the Offering Period. 9. DEDUCTIONS. The Corporation will maintain payroll deduction ---------- accounts for all participating employees. With respect to any offering made under this Plan, an employee may authorize a minimum payroll deduction of 1% up to a maximum of 10% of his Compensation during the Offering Period. 3 10. DEDUCTION CHANGES. An employee may at any time increase or ----------------- decrease his or her payroll deduction. The change may not become effective sooner than the next pay period. 11. WITHDRAWAL. An employee may for any reason withdraw from ---------- continued participation in an offering, in which event any monies previously deducted and not used to purchase Common Stock under this Plan shall be returned to him or her. 12. PURCHASE OF SHARES. As of the last day of August, November, ------------------ February and May during any offering, the account of each participating employee shall be totaled and the Alternative Offering Price determined. When a participating employee shall have sufficient funds in his account to purchase one or more full shares at the lower of either the Offering Price or the Alternative Offering Price as of that date, the employee shall be deemed to have exercised his purchase rights to purchase such share or shares at such lower price; his account shall be charged for the amount of the purchase; and shares shall be credited to the employee's account at Salomon Smith Barney (or such other broker as may be designated by the Corporation) within a reasonable period following August 31, November 30, February 28/29 and May 31 of each Offering Period year, for such number of shares as his or her payroll deductions have purchased during the quarter ending on such dates. Subsequent shares covered by the employee's purchase right will be purchased in the same manner, whenever sufficient funds have again accrued in the employee's account. Payroll deductions may be made under each offering to the extent authorized by the employee, subject to the maximum and minimum limitations imposed for such offering. A separate employee account will be maintained with respect to each offering. If an employee does not accumulate sufficient funds in his or her account to purchase a share by the end of the Offering Period, he/she will thereupon be deemed to have withdrawn from the offering to the extent of the unfunded shares and the balance of the amount in the account will be refunded, unless the employee continues in the Plan during the next Offering Period. 13. REGISTRATION OF CERTIFICATES. Certificates will be ---------------------------- registered only in the name of the employee, unless the employee completes and forwards a Transaction Order Form to Salomon Smith Barney (or such other broker designated by the Corporation) instructing that the certificate(s) be issued in the employee's name jointly with a member of his or her family, with right of survivorship. An employee who is a resident of a jurisdiction which does not recognize such a joint tenancy may have certificates registered in his or her name as tenant in common with a member of his or her family, without right of survivorship. 4 14. RIGHTS AS A STOCKHOLDER. None of the rights or privileges of ----------------------- a stockholder of the Corporation shall exist with respect to shares purchased under the Plan unless and until certificates representing such full shares have been issued. 15. TERMINATION OF EMPLOYMENT EXCEPT BY DEATH. In the event that ----------------------------------------- an employee is terminated by the Corporation or by any of its subsidiaries for any reason other than death, such former employee shall be deemed to have withdrawn from the Plan and any monies in his account will be returned to him. 16. DEATH OF GRANTEE AND TRANSFER OF PURCHASE RIGHT. If an ----------------------------------------------- employee shall die while in the employ of the Corporation or any of its subsidiaries and shall not have fully exercised a purchase right, the purchase right will be exercised in accordance with this Plan. 17. PURCHASE RIGHTS NOT TRANSFERABLE. Purchase rights under this -------------------------------- Plan are not transferable by a participating employee other than by will or the laws of descent and distribution, and are exercisable during the employee's lifetime only by the employee. 18. APPLICATION OF FUNDS. All funds received or held by the -------------------- Corporation under this Plan may be used for any corporate purpose. 19. ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK. In the ---------------------------------------------------- event of subdivision of outstanding shares of Common Stock, or the payment of a stock dividend with respect to the Common Stock of 10% or more, the number of shares reserved or authorized to be reserved under this Plan, including shares covered by outstanding grants to participating employees, shall be increased proportionately, and the Offering Price for each participant at such time reduced proportionately, and such other adjustment shall be made as may be deemed equitable by the Committee or by the Board of Directors. In the event of any other change affecting the Common Stock such adjustment shall be made as may be deemed equitable by the Board of Directors to give proper effect to such event. 20. AMENDMENT OF THE PLAN. The Board of Directors may at any --------------------- time, or from time to time, amend this Plan in any respect, except that no amendment shall be made without the approval of the stockholders of the Corporation (i) increasing or decreasing the number of shares to be reserved under this Plan or (ii) decreasing the purchase price per share. 5 21. TERMINATION OF THE PLAN. The Plan and all rights of employees ----------------------- under any offering hereunder shall terminate: (a) on the day that participating employees exercise purchase rights to purchase a number of shares equal to or greater than the number of shares remaining available for purchase. If the number of shares so purchasable is greater than the shares remaining available, the available shares shall be allocated by the Committee among such participating employees in such manner as it deems fair; or (b) at any time, at the discretion of the Board of Directors. No offering hereunder shall be made which shall extend an Offering Period beyond May 31, 2005. Upon termination of this Plan, all amounts in the accounts of participating employees shall be promptly refunded. 22. GOVERNMENTAL REGULATIONS. The Corporation's obligation to sell ------------------------ and deliver Common Stock under this Plan is subject to the approval of any governmental authority required in connection with the authorization, issuance or sale of such stock. 23. INDEMNIFICATION OF COMMITTEE. In addition to such other rights ---------------------------- of indemnification as they may have as Directors or as members of the Committee, the members of the Committee shall be indemnified by Millipore Corporation against the reasonable expenses, including attorneys' fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any purchase right granted thereunder, and against all amounts paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit, or proceeding that such Committee member is liable for gross negligence or willful misconduct in the performance of his duties; provided that within 60 days after institution of any such action, suit or proceeding a Committee member shall in writing offer the Company the opportunity, at its own expense, to handle and defend the same. 24. APPROVAL OF STOCKHOLDERS. This amended Plan shall be effective ------------------------ on the date of approval by the stockholders of the Corporation and shall supersede and replace the previous version of the Plan. 6 EX-10.18 5 1999 STOCK INCENTIVE PLAN RE: NON-EMPLOYEE DIR. EXHIBIT 10.18 MILLIPORE CORPORATION 1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS 1. PURPOSE ------- The purpose of the 1999 Stock Option Plan for Non-Employee Directors (the "Plan") is to advance the interests of Millipore Corporation (the "Company") by enhancing the ability of the Company to attract and retain non- employee directors who are in a position to make significant contributions to the success of the Company and to reward directors for such contributions through ownership of shares of the Company's common stock (the "Stock"). 2. ADMINISTRATION -------------- The Plan shall be administered by the Governance and Public Policy Committee of the Board of Directors (the "Board") of the Company (the "Committee"). The Committee shall have authority, not inconsistent with the express provisions of the Plan, (a) to grant options in accordance with the Plan to such directors as are eligible to receive options; (b) to prescribe the form or forms of instruments evidencing options and any other instruments required under the Plan and to change such forms from time to time; (c) to adopt, amend and rescind rules and regulations for the administration of the Plan; and (d) to interpret the Plan and to decide any questions and settle all controversies and disputes that may arise in connection with the Plan. Such determinations of the Committee shall be conclusive and shall bind all parties. Subject to Section 8, the Committee shall also have the authority, both generally and in particular instances, to waive compliance by a director with any obligation to be performed by him or her under an option and to waive any condition or provision of an option. A majority of the members of the Committee shall constitute a quorum, and all determinations of the Committee shall be made by a majority of its members. Any determination of the Committee under the Plan may be made without notice or meeting of the Committee by a writing signed by a majority of its members. All members of the Committee shall be "disinterested persons" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934. 3. EFFECTIVE DATE AND TERM OF PLAN ------------------------------- The Plan shall become effective on the date on which the Plan is approved by the shareholders of the Company; provided, however, that any options granted prior to approval shall be subject to the Plan as approved by the shareholders of the Company. No option shall be granted under the Plan after the completion of ten years from the effective date (the "Termination Date"), but options previously granted may extend beyond that date. 4. SHARES SUBJECT TO THE PLAN -------------------------- (a) Number of Shares. Subject to adjustment as provided in Section ---------------- 4(c), the aggregate number of shares of Stock that may be delivered upon the exercise of options granted under the Plan shall be 250,000. If any option granted under the Plan terminates without having been exercised in full, the number of shares of Stock as to which such option was not exercised shall be available for future grants within the limits set forth in this Section 4(a). (b) Shares to be Delivered. Shares delivered under the Plan shall be ---------------------- authorized but unissued Stock or, if the Board so decides in its sole discretion, previously issued Stock acquired by the Company and held in treasury. No fractional shares of Stock shall be delivered under the Plan. (c) Changes in Stock. In the event of a stock dividend, stock split ---------------- or combination of shares, recapitalization or other change in the Company's capital stock, the number and kind of shares of stock or securities of the Company subject to options then outstanding or subsequently granted under the Plan, the maximum number of shares or securities that may be delivered under the Plan, the exercise price, and other relevant provisions shall be appropriately adjusted by the Committee, whose determination shall be binding on all persons. The Committee may also adjust the number of shares subject to outstanding options, the exercise price of outstanding options and the terms of outstanding options, to take into consideration material changes in accounting practices or principles, consolidations or mergers (except those described in Section 6(i), acquisitions or dispositions of stock or property or any other event if it is determined by the Committee that such adjustment is appropriate to avoid distortion in the operation of the Plan. 2 5. ELIGIBILITY FOR OPTIONS ----------------------- Directors eligible to receive options under the Plan ("Eligible Directors") shall be any director who (i) is not an employee of the Company, and (ii) is not a holder of more than 5% of the outstanding shares of the Stock or a person who is in control of such holder. 6. TERMS AND CONDITIONS OF OPTIONS ------------------------------- (a) Number of Options. Each newly elected Eligible Director shall be ----------------- awarded options covering 4,000 shares of Stock on the date of his or her first election. Following the initial grants, each Eligible Director shall be awarded options covering 2,000 shares of Stock at the first Directors' Meeting following the Annual Meeting of Shareholders, following his or her initial grant and each anniversary thereof, provided such individual is then an Eligible Director. (b) Exercise Price. The exercise price of each option shall be 100% -------------- of the fair market value per share of the Stock at the time the option is granted but not less, in the case of an original issue of authorized stock, then par value per share. The "fair market value" shall be defined as the closing price for Millipore stock on the New York Stock Exchange on the composite tape on the last business day prior to the date on which the option was granted, or if no sale of the stock shall have been made on the New York Stock Exchange on that day, on the next preceding day on which there was a sale of such stock. (c) Duration of Options. The latest date on which an option may be ------------------- exercised (the "Final Exercise Date") shall be the date which is ten years from the date the option was granted. (d) Exercise of Options. ------------------- (1) Each option shall first become exercisable upon the completion of one year from the date of grant, at which time the option shall be exercisable to the extent of 25% of the shares covered thereby. It shall become exercisable as to an additional 25% of the shares covered thereby on subsequent anniversaries of the date of grant, so that it shall be exercisable in full after the fourth anniversary. 3 (2) Any exercise of an option shall be in writing, signed by the proper person and delivered or mailed to the Company, accompanied by (a) the option certificate and any other documents required by the Committee and (b) payment in full for the number of shares for which the option is exercised. (3) If an option is exercised by the executor or administrator of a deceased director, or by the person or persons to whom the option has been transferred by the director's will or the applicable laws of descent and distribution, the Company shall be under no obligation to deliver stock pursuant to such exercise until the Company is satisfied as to the authority of the person or persons exercising the option. The Company may, either in the instrument evidencing the option or in a written instrument delivered at any time subsequent to the granting of the option provide for an optionee a special exercise period which will apply if an Eligible Director's services as a director terminate due to retirement at age 70 or such other age as the Board of Directors may determine from time to time, or he or she ceases to perform services as a director earlier with the consent of the Company ("Special Exercise Period"). The Special Exercise Period will begin on his or her termination and will end on the earlier of up to the fifth anniversary of his or her termination or the earlier expiration date of the option. During such period the option will be exercisable to the extent it would have been exercisable had the Eligible Director continued to perform services as a director for the Company. Any question whether or not an Eligible Director has retired or ceased to perform services as a director shall be determined by the Committee, and its determination shall be final. With respect to stock options granted on or after December 1, 1997, each optionee shall be provided the Special Exercise Period without further consent of the Company if an optionee's services as a director terminate due to retirement at age 70 or such other age as the Board of Directors may determine from time to time. (4) If an Eligible Director dies while performing services for the Company or during a special exercise period provided under this section, his or her option may be exercised in accordance with Section 6(g) below. Notwithstanding the provisions of the preceding paragraph the Company shall have the right, but shall not be required to repurchase from any Eligible Director who ceases to render services as a director 4 without the consent and approval of the Company, within six (6) months of the exercise of any options, the shares of the Company's Common Stock so purchased by such Eligible Director at their original purchase (or exercise) price. (e) Payment for and Delivery of Stock. Stock purchased under the Plan --------------------------------- shall be paid for as follows: (i) in cash or by certified check, bank draft or money order payable to the order of the Company, (ii) through the delivery of shares of Stock having a fair market value on the last business day preceding the date of exercise equal to the purchase price or (iii) by a combination of cash and Stock as provided in clauses (i) and (ii) above. An option holder shall not have the rights of a shareholder with regard to awards under the Plan except as to Stock actually received by him under the Plan. The Company shall not be obligated to deliver any shares of Stock (a) until, in the opinion of the Company's counsel, all applicable federal and state laws and regulations have been complied with, and (b) if the outstanding Stock is at the time listed on any stock exchange, until the shares to be delivered have been listed or authorized to be listed on such exchange upon official notice of issuance, and (c) until all other legal matters in connection with the issuance and delivery of such shares have been approved by the Company's counsel. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the option, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act and may require that the certificates evidencing such Stock bear an appropriate legend restricting transfer. (f) Nontransferability of Options. No option may be transferred other ----------------------------- than by will or by the laws of descent and distribution, and during a director's lifetime an option may be exercised only by him or her. (g) Death. Should an Eligible Director die while a director of the ----- Company, or within a special exercise period provided to him or her under Section 6(d)(3), any option held by him or her at death may be exercised by his or her estate, or by the person or persons designated in his or her last will and testament, as follows: In the case of death while an Eligible Director, each option will be exercisable until the earlier of the first anniversary of his or death and the original expiration date of the option to the extent the option was exercisable by the optionee at the time of death. In the case of death during a special exercise period, each option will be exercisable during the remainder of such period to the extent it would have been exercisable had the director lived. 5 (h) Other Termination of Status of Director. If a director's service --------------------------------------- with the Company terminates for any reason other than as provided in paragraphs 6(d)(3) and 6(g) above, all options held by the director shall terminate immediately. (i) Mergers, etc. In the event of a consolidation or merger in which ------------ the Company is not the surviving Corporation or which results in the acquisition of substantially all the Company's outstanding Stock by a single person or entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all the Company's assets, all outstanding options shall thereupon terminate, provided that at least 20 days prior to the effective date of any such merger, consolidation or sale of assets, the Board shall either (i) make exercisable, immediately prior to consummation of such merger, consolidation or sale of assets, that portion of all outstanding options determined by multiplying the total number of shares covered by each option by a fraction (not greater than one) (A) the numerator of which is the number of full months elapsed after the date of grant and prior to such event, and (B) the denominator of which is the number of months between the date of grant and the date on which the option would have first become exercisable in full, and rounding the resulting number of shares to the nearest whole number, or (ii) if there is a surviving or acquiring corporation, arrange, subject to consummation of the merger, consolidation or sale of assets, to have that corporation or an affiliate of that corporation grant replacement options. 7. ASSOCIATION RIGHTS. ------------------- Neither the adoption of the Plan nor the grant of options shall confer upon any Eligible Director the right to continued association with the Company or affect in any way the right of the Company to terminate its association with a director. Except as specifically provided by the Committee in any particular case, the loss of existing or potential profit in options granted under this Plan shall not constitute an element of damages in the event of termination of any agreement or arrangement with an option holder even if the termination is in violation of an obligation of the Company to such person under that agreement or arrangement. 8. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION. ---------------------------------------------------------------- Neither adoption of the Plan nor the grant of options to a director shall affect the Company's right to grant to such director options that are not 6 subject to the Plan, to issue to such directors Stock as a bonus or otherwise, or to adopt other plans or arrangements under which stock may be issued to directors. The Committee may at any time discontinue granting options under the Plan. The Committee may at any time or times amend the Plan for the purpose of satisfying any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law, or may at any time terminate the Plan as to any further grants of options, provided that (except to the extent expressly required or permitted hereinabove), no such amendment shall, without the approval of the shareholders of the Company, (a) increase the maximum number of shares available under the Plan, (b) increase the number of options granted to Eligible Directors, (c) amend the definition of Eligible Director so as to enlarge the group of directors eligible to receive options under the Plan, (d) reduce the price at which options may be granted, (e) change or extend the times at which options may be granted, or (f) amend the provisions of this Section 8, and no such amendment shall adversely affect the rights of any director (without his or consent) under any option previously granted. 7 EX-10.19 6 EMPLOYMENT AND RELOCATION AGREEMENT EXHIBIT 10.19 November 10, 1999 Michael P. Carroll Dear Mike: I am pleased to confirm with you the position of Corporate Vice President, Vice President and General Manager of the Gas Process Division located in Allen, Texas, effective on the date described below, and reporting to Jean-Marc Pandraud. Your contributions to Millipore in Hong Kong have been significant, and I am confident that your efforts in this assignment will result in even greater success for you and Millipore in the future. Listed below are the specific details relating to this assignment. TRANSFER DATE Your new assignment in Allen officially begins on September 1, 1999 ("effective date") and extends for a period of three years thereafter. This period may be extended by mutual agreement. Within two months of your effective date, Jean- Marc will draft a written set of performance standards and goals for your position. At least once a year for the duration of your assignment, Jean-Marc and I will conduct an in-depth review of your performance, development and career plan. SALARY AND BENEFITS You will be paid in U.S. dollars at the base salary rate of $21,666.66 per month which is equal to $260,000.00 annually. Since this position is a key senior management position at Millipore you will be eligible to participate in the Management Incentive Plan (MIP) for the 1999 plan year, in accordance with the terms of that plan. Your target incentive is 50% of your base annual salary, for the 1999 plan year and the calculation of your 1999 bonus will be at 70% for the Millipore Asia goals and 30% for the MicroElectronics goals. This 50% target incentive will continue throughout this assignment. Your compensation will be reviewed annually each January. You will continue to be a Corporate Officer for the Company throughout your assignment and thus will continue to be eligible for restricted stock, and the supplemental retirement program as well as eligible for consideration under Millipore's Stock Option Plan. In addition, you will continue to be covered under the Executive Termination Agreement. For a period not to exceed six months from your effective date, Millipore will maintain your Hong Kong housing, automobile, goods and services allowances and your Foreign Service Incentive from your previous assignment. You will maintain all standard medical and other benefits offered by Millipore in the United States, in accordance with the terms of those plans. You will be responsible for making any employee contributions to those benefits, which require an employee contribution, i.e., medical, dental, optional death & dismemberment, etc. Your vacation eligibility will be based on your total years of service with Millipore (according to U.S. vacation policy in effect on September 1, 1999) plus one additional week. Once you arrive at the maximum number of weeks (i.e., 5 weeks), no additional weeks will be added. RELOCATION Millipore will reimburse you for relocation travel expenses to the U.S. (business class) for you and your spouse, as well as the shipment of personal goods, from Hong Kong to the U.S. Additional details are described below, in the Movement of Household Goods section of this letter. The selection of the mode of goods transportation, the moving company carrier and the insurance coverage will be at the sole discretion of Millipore. Millipore currently uses Weichert Relocation Services to manage movement of household goods. This relocation must be initiated within one year of the transfer date. HOUSE HUNTING TRIP To facilitate the purchase of a home in the new location, Millipore will reimburse you for expenses incurred for 2 house-hunting trips of 3-5 days each. Reimbursable expenses consist of lodging and meals, plus business class air travel for your spouse. MOVEMENT OF HOUSEHOLD GOODS Millipore has contracted with a moving company and will pay the cost of the following items directly: . Packing and unpacking furniture and household goods. . Transportation of furniture and household goods from Hong Kong to Texas and from Massachusetts to Texas, including two automobiles located in Massachusetts. . Comprehensive insurance for furniture and household goods during the move, excluding antiques and artwork. Additional insurance can be purchased if the standard is determined insufficient for specific items. . Storage, in Massachusetts, for any household goods not needed in Texas. Millipore will not pay the cost of moving unusual or sizable recreational items or other items requiring special handling, i.e., boats, livestock, pianos, machine tools, building materials, etc. However, Millipore will pay the cost of transporting your dog from Hong Kong to the U.S. 2 Housing/Temporary Living - U.S. - ------------------------------- If temporary living arrangements are required until you obtain permanent housing in Allen, Texas, you can utilize the two-bedroom apartment currently leased by Millipore for up to six months from your effective date. If they do not allow pets, we will help you find another apartment that will allow pets for up to the remainder of the six months time period. PURCHASE OF HOME AT NEW LOCATION Millipore will reimburse the following actual and reasonable costs related to the purchase of a home at the new location: . Abstract/Title Search . Assumption fee . Attorney fees . Appraisal fees . Credit report . Escrow fee . One home inspection . Recording fees . Settlement/Closing fee . State/City/County Stamps on deed/note/mortgage . Title insurance . One home pest inspection (not to exceed $300) . One Toxic Substance (e.g. Radon) inspection (not to exceed $300) . Real Estate broker's commission Millipore will not reimburse for the following expenses: --- . Real Estate and Personal Property Tax pro-rated payments . Hazard, fire, flood and any other type of homeowner's insurance . Mortgage insurance (PMI) . Any mortgage insurance application fees . Pro-rated waste collection fee . Improvement assessments by State/City/County taxing agencies . Prepaid or pro-rated interest on mortgage . Pro-rated rent . Pro-rated water, electric, gas billings . Home or component warranties of any type In addition, Millipore will provide you with a loan of up to $450,000 to enable you to purchase your primary residence in Texas. This loan would be secured by the real estate on your residence in Massachusetts and such other assets as may be deemed necessary to secure the amount outstanding and will be subject to a Promissory Note, to include provisions that the loan will be interest free for the three-year period following the effective date, and thereafter will bear interest at the prime rate then prevailing. The loan will become due upon the first to occur of (a) the sale of your property in Texas, (b) 39 months after the effective date, or 3 (c) the termination of your employment. You have also agreed that, in addition to repayment of the loan, you will pay to Millipore any appreciation in the market value of your Texas property using the date of purchase and the date of sale as the measuring points. When you sell your Texas property, we will cover the real estate broker's fee for the property. If you decide not to purchase a home in Allen but instead will rent a property, Millipore will give you a housing allowance, after you move from the Millipore apartment, not to exceed $615. monthly for the remainder of your three year assignment. If you decide on the monthly housing allowance, no future assistance will be provided on the purchase of a home. If it will be necessary to pay for the services of a rental agent to find a rental in Allen, the Company will pay the necessary, reasonable and customary finder's fees for the area, but not for a security deposit. IMMIGRATION AND VISA SERVICES If you wish to move your one household helper from Hong Kong to Texas, Millipore will provide you with visa advice from our paralegal staff. However, any costs for visas and visa applications will be charged to you directly. FINAL MOVE TRAVEL TO NEW LOCATION The following travel expenses will be reimbursed for moving your family to the new location: . Food and lodging in transit. . Transportation consisting of air, train, or bus fares not to exceed one- way business class fares on available regularly scheduled airlines, or car mileage for the distance moved at Millipore's standard business rate for your spouse. . Car rental payments for a period not to exceed 30 days. . Travel for your household helper from Hong Kong to the US will be covered. MISCELLANEOUS ALLOWANCE You will be eligible for $10,000.00 USD to assist you in the purchase of miscellaneous appliances and necessary incidentals in the U.S. This allowance is payable within 30 days of commencing the move to your Allen residence. FINANCIAL PLANNING Continuation of financial planning services with the Colony Group, or such other service provider as may be selected by Millipore. TAX EQUALIZATION For the first year of your assignment, Millipore will use the services of its designated outside tax counsel, to develop a hypothetical tax projection on your income. The intent of this approach is to equalize your tax liability on any 4 Millipore-sourced income, so that you neither gain nor lose based on the tax implications of this transfer. It is necessary for you to provide personal tax information to our designated tax counsel before this calculation can be prepared. You should be aware that you will be liable for all taxes associated with any transfer bonus, cash profit sharing payouts, stock option transactions or any non-company sourced income you receive during this assignment. After the preparation of your annual tax return has been completed, the Company's outside tax counsel will compare the hypothetical and actual taxes paid by you (less any tax refunds received by you) to your hypothetical tax obligation under the agreement. Any variance between the net payments will be refunded to you by the Company (or conversely; paid by you to the Company). It remains your responsibility to comply with both the United States and Hong Kong tax requirements. Therefore the Company requires that you fully disclose income, as required, to all taxing authorities including the country of assignment, and that you maintain adequate records to facilitate the timely preparation and filing of all applicable tax returns. Actual foreign taxes on your worldwide income will be advanced to you prior to you filing your foreign tax returns or making foreign estimated tax payments. Additional taxes, or penalties and/or interest resulting from your failure to comply in a timely manner with the tax return filing process will be your responsibility. By signing this agreement you are authorizing the Company's designated outside tax counsel to release any pertinent tax information to Millipore during the course of this assignment. Millipore's current outside tax counsel is Tobias, Fleishman and Shapiro. TAX PREPARATION In order to qualify for tax equalization and to assist you in the preparation of your Hong Kong and U.S. tax returns, you are required to utilize the services of the Company's designated outside tax counsel. The Company will pay customary and reasonable costs for preparation of your tax returns for the second year or portion thereof, that you are on this assignment. It is important that you contact our tax counsel to discuss any relevant tax implications of this new assignment before you leave Hong Kong permanently. TAX GROSS UP Millipore will provide tax gross up for relocation expenses that are not exempt from income taxes and are not deductible. This will include any imputed income from the interest free loan. 5 RELOCATION PAYBACK If you decide to voluntarily terminate from Millipore during the first 24 months of your assignment, you will be required to reimburse Millipore for relocation costs, leases, taxes, and other costs that were incurred by Millipore to transfer you to the United States, according to the following schedule: 100% reimbursement to Millipore if termination of employment occurs within one year after assignment begins 50% reimbursement to Millipore if termination of employment occurs within two years after assignment begins I am very excited about your move to the U.S. and look forward to your continued success in your new geographic location. Please return the attached copy of this letter countersigned in acceptance of this agreement. Sincerely, Agreed and Accepted, /s/ Jean-Marc Pandraud /s/ Michael P. Carroll - ---------------------- ---------------------- Jean Marc Pandraud Michael P. Carroll Vice President/General Manager Date: 11/17/99 MicroElectronics Business Segment -------- /s/ Douglas B. Jacoby - --------------------- Douglas B. Jacoby Corporate Vice President 6 EX-21 7 SUBSIDIARIES OF MILLIPORE CORPORATION EXHIBIT 21 SUBSIDIARIES OF MILLIPORE CORPORATION Pursuant to Item 601, Paragraph 21, clause (ii) of Regulation S-K, the following list excludes subsidiaries who conduct no business operations or which have no significant assets.
COMPANY NAME JURISDICTION OF ORGANIZATION - ------------ ---------------------------- Millipore Asia Ltd. Delaware Millipore Korea Ltd. Korea Millipore Singapore, Pte. Ltd. Singapore Millipore Cidra, Inc. Delaware Millipore Intertech, (V.I.), Inc. U.S. Virgin Is. Millipore (Canada) Ltd. Canada Millipore S.A. de C.V. Mexico Millipore GesmbH Austria Millipore Kft Hungary Millipore S.R.O. Czech Republic Millipore Investment Holdings Ltd. Delaware Millipore International Holding Company B.V. Netherlands BCL Acquisition Corp. Delaware BioProcessing Limited Corporation United Kingdom Millipore Japan Company L.L.C. Delaware Nihon Millipore Limited Japan Millipore S.A./N.V. Belgium Millipore (U.K.) Ltd. United Kingdom Millipore S.A. France Millipore Ireland B.V. Netherlands Millipore Dublin International Finance Company Ireland Millipore GmbH West Germany Millipore S.p.A. Italy Millipore A.B. Sweden Millipore AS Norway Millipore A.G. Switzerland Millipore A/S Denmark Millipore Australia Pty. Ltd. Australia Millipore Iberica S.A. Spain Millipore I.E.C., Ltda. Brazil Millipore OY Finland Millipore B.V. The Netherlands Millipore China Ltd. Hong Kong Millipore Pacific Limited Delaware Millipore (Suzhou) Filter Company Limited Peoples Republic of China Millicorp, Inc. Delaware Minerva Insurance Co. Ltd. Bermuda Vermeer Ireland
EX-23 8 CONSENT OF PRICEWATERHOUSECOOPERS LLP EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File Nos. 2-91432, 2-72124, 2-85698, 2-97280, 33-37319, 33-37323, 33-59005, 33-10801, 33-11790, 333-79227, 333-90127, and 333-30918), on Form S-3 (File Nos. 2-84252, 33-9706, 33-22196, 33-47213, and 333-23025), on Form S-3/A (File No. 333-80781) and on Form S-4 (File No. 33-58117) of Millipore Corporation of our report dated January 19, 2000 relating to the financial statements, which appears in this Form 10-K. /s/ PricewaterhouseCoopers Boston, Massachusetts March 10 , 2000 EX-24 9 POWER OF ATTORNEY EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned Directors and Officers of Millipore Corporation (the "Corporation"), do hereby constitute and appoint C. William Zadel, Kathleen Allen and Jeffrey Rudin and each of them individually, their true and lawful attorneys and agents to execute on behalf of the Corporation the Form 10-K Annual Report of the Corporation for the fiscal year ended December 31, 1999, and all such amendments or additional instruments related thereto which such attorneys and agents may deem to be necessary and desirable to enable the Corporation to comply with the requirements of the Securities Exchange Act of 1934, as amended, and any regulations, orders, or other requirements of the United States Securities and Exchange Commission thereunder in connection with the preparation and filing of said documents, including specifically, but without limitation of the foregoing, power and authority to sign the names of each of such Directors and Officers on his behalf, as such Director or Officer, as indicated below to the said Form 10-K Annual Report or documents filed or to be filed as a part of or in connection with such Form 10-K Annual Report; and each of the undersigned hereby ratifies and confirms all that said attorneys and agents shall do or cause to be done by virtue thereof.
SIGNATURE TITLE DATE - --------- ----- ---- /s/ C. William Zadel Chairman, President February 17, 2000 - -------------------- Chief Executive Officer C. William Zadel and Director /s/ Robert C. Bishop Director February 17, 2000 - -------------------- Robert C. Bishop _____________________ Director February , 2000 Samuel C. Butler /s/ Robert E. Caldwell Director February 17, 2000 - ---------------------- Robert E. Caldwell
SIGNATURE TITLE DATE - --------- ----- ---- /s/ Elaine L. Chao Director February 17, 2000 - ------------------ Elaine L. Chao /s/ Maureen A. Hendricks Director February 17, 2000 - ------------------------ Maureen A. Hendricks /s/ Mark Hoffman Director February 17, 2000 - ---------------- Mark Hoffman /s/ Richard J. Lane Director February 17, 2000 - ------------------- Richard J. Lane /s/ Thomas O. Pyle Director February 17, 2000 - ------------------ Thomas O. Pyle /s/ John F. Reno Director February 17, 2000 - ---------------- John F. Reno
2 EX-27 10 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS DEC-31-1999 DEC-31-1999 51,060 0 200,074 4,323 105,040 358,947 433,391 206,914 792,733 269,783 0 0 0 56,988 119,863 792,733 771,188 771,188 358,169 358,169 303,538 0 30,155 82,351 18,023 64,328 0 0 0 64,328 1.44 1.42
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