As nineteen hundred ninety-nine began, we anticipated an improvement in Millipore’s business. We expected market conditions to improve with the financial crisis in Asia tempering, and the downturn in the microelectronics industry bottoming and growth starting again. We expected our Biopharmaceutical & Research business to continue its robust growth in revenue and profitability. Also, we expected our restructuring efforts in the second half of 1998 to yield results with improved profitability, especially in microelectronics. These events proved to be true, and Millipore’s results exceeded our expectations for the year. In total, revenues were $771 million, an increase of 10 percent versus 1998. Growth in local currency was 8 percent, which reflects primarily the strengthening of the Japanese yen versus the U.S. dollar, tempered by the weakening of the newly established Euro. Earnings for the year were $1.35 per diluted share compared with $.60 per diluted share in 1998, when unusual items in both years were excluded. The microelectronics industry started its recovery in 1999, with the first half improving slowly and the second half growing at increasing rates. Millipore’s Microelectronics segment followed this trend with sequentially improved revenue and profitability growth as the year unfolded. Revenue for the year in this segment grew 15 percent versus 1998 in dollars and 9 percent in local currency, with fourth quarter revenues in local currency 67 percent higher than the same period in the prior year. The Microelectronics segment in 1999 generated $32 million of incremental operating income on a revenue increase of $18 million. This profitability leverage is evidence of the success of our 1998 restructuring program and improved capacity utilization. Millipore’s Biopharmaceutical & Research segment was favorably impacted by the scientific community’s expansion of life science research activities in both the public and private sectors, as well as the continuing rapid growth of biotech pharmaceuticals. Biotechnology is the fastest growing area in the pharmaceutical industry, and Millipore has a clear leadership position in the purification of new biopharmaceuticals. Revenues for Millipore’s Biopharmaceutical & Research segment grew 9 percent in 1999 versus 1998 in actual rates of exchange and 8 percent in local currency. Operating income for the year grew 16 percent versus 1998 in local currency, again highlighting the profitability leverage Millipore gains with revenue volume growth. We made a strategic technology addition to our Biopharmaceutical & Research business in 1999. We acquired Bioprocessing Corporation Ltd., a United Kingdom based company, which develops, manufactures and markets chromatography media for the purification of proteins. The technology fits well with our long term strategy in protein purification, and it complements our existing membrane and chromatographic products. It gives us a strong competitive advantage in the purification of monoclonal antibodies, a very promising area of new drug therapy. As we enter 2000 and the 21st Century, the outlook is much brighter than the recent past. We visit our strategic approach to the future every year; and, with the exception of a few updates, our strategies of the recent past continue to be sound. In summary: > We will focus on our core technologies of filtration and purification as well as complementary technologies that — when combined with our core technologies — create value-added systems for our customers. > We will focus on key customer segments that exhibit attractive growth characteristics and require filtration and purification technology to ensure success. These segments include research, biopharmaceuticals and microelectronics. > We will focus on customers’ needs and applying our technologies to meet those needs, working directly with customers worldwide. The markets upon which we focus, biopharmaceuticals, research, and microelectronics, are all experiencing strong growth trends that should last for the next several years. The biopharmaceutical market has a strong driver with the expansion of biotech pharmaceuticals. There are over 350 new biopharmaceutical drugs in clinical trials, and 1999 saw a record number of new biotech drug approvals. Since the manufacturing processes for biotech drugs are seven to ten times more filtration and purification intensive compared to classical pharmaceuticals, this trend is very favorable for Millipore. Research trends are also very positive. Life science research is rapidly expanding in the areas of genomics, proteomics, cell biology, and drug discovery and screening. Over the last few years, both governmental and industrial research and development organizations have intensified their life science research activities to unlock basic life science knowledge, such as the human genome project. Additionally, governments, academia, and pharmaceutical companies around the world have increased the resources expended in life science. Millipore products are essential for this work for sample preparation; for water purification; for purifying and analyzing cells, viruses, proteins, DNA, RNA; for basic drug discovery and high throughput drug screening. Life science research is a great opportunity for Millipore. continue |