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Waters Corporation and Agilent Technologies Deutschland GmbH Resolve Outstanding HPLC Litigation

MILFORD, Mass.--(BUSINESS WIRE)--Feb. 17, 2006--Waters Corporation (NYSE:WAT) reported today it had entered into a settlement agreement with Agilent Technologies Deutschland GmbH resolving certain outstanding HPLC related litigation between them.

The settlement provides for the resolution of a finding of patent infringement by a court in the United Kingdom with respect to a portion of the pump technology used in Waters' Alliance HPLC instruments. In 2002, Waters discontinued the use of the patented technology and the settlement has no effect on the Company's ability to sell its Alliance HPLC instruments in the United Kingdom.

In connection with the settlement, Waters and its United Kingdom affiliate have been released from any claims of past infringement under the patent and Waters has agreed to make a one time payment to Agilent of 3.5 million British Pounds Sterling.

As a result of the settlement, Waters has revised its fourth quarter 2005 and full year 2005 results as previously reported in a press release on January 24, 2006, to include a pre-tax $3.1 million provision for damages and estimated remaining costs related to this matter. This has reduced GAAP earnings per diluted share for the fourth quarter of 2005 to $0.69 per diluted share from $0.71 per diluted share and to $1.74 per diluted share from $1.76 per diluted share for the full year 2005. Updated condensed financial statements are attached.

Similar patent infringement actions to the case noted above are currently pending in France and Germany. Waters believes, however, that any potential damages resulting from these ongoing disputes are unlikely to be materially different from amounts previously recorded.

Waters Corporation holds worldwide leading positions in three complementary analytical technologies - liquid chromatography, mass spectrometry and thermal analysis. These markets account for $4.5 - $5.0 billion of the overall $20 + billion analytical instrument market.

Certain statements contained herein are forward looking. Many factors could cause actual results to differ from these statements, in particular, uncertainties of litigation.

                 Waters Corporation and Subsidiaries
                Consolidated Statements of Operations
                (In thousands, except per share data)
                             (Unaudited)


                             (Unaudited)           (Unaudited)
                          Three Months Ended         Year Ended
                           December   December   December    December
                              31,        31,        31,         31,
                             2005       2004       2005        2004

Net sales                   332,270   324,154   1,158,236   1,104,536
Cost of sales               133,980   130,144     478,355     454,807

  Gross profit              198,290   194,010     679,881     649,729

Selling and
 administrative expenses     81,593    80,916     321,694     300,150
Research and development
 expenses                    16,691    16,475      66,905      65,241
Purchased intangibles
 amortization                 1,216     1,236       5,005       4,814
Litigation provisions
 and settlement (A)           3,122         -       3,122      (9,277)
Impairment of long-lived
 asset (B)                        -     3,997           -       3,997
Restructuring and other
 unusual charges, net             -         -           -         (54)

  Operating income           95,668    91,386     283,155     284,858

Other expense, net (C)       (3,103)   (1,014)     (3,103)     (1,014)
Interest (expense)
 income, net                 (3,421)      156      (5,489)      1,827
  Income from operations
   before income taxes       89,144    90,528     274,563     285,671

Provision for income
 taxes (D)                   13,546    19,011      72,588      61,618

  Net income                 75,598    71,517     201,975     224,053

Net income per basic
 common share            $     0.70  $   0.59  $     1.77  $     1.87

Weighted average number
 of basic common shares     108,364   120,266     114,023     119,640


Net income per diluted
 common share            $     0.69  $   0.58  $     1.74  $     1.82

Weighted average number
 of diluted common
 shares and equivalents     109,962   122,679     115,945     123,069

(A) The results for the three months and year ended December 31, 2005
    include provisions of $3.1 million for ongoing patent litigation
    with Hewlett-Packard Company. The results for the year ended
    December 31, 2004 include provisions of $7.8 million for the same
    ongoing patent litigation with Hewlett-Packard Company as well as
    settlement income of $17.1 million related to patent litigation
    with Perkin-Elmer Corporation.

(B) The results for the three months and year ended December 31, 2004
    include charges of $4.0 million recorded for a write-down of a
    technology licensed asset.

(C) The results for the three months and year ended December 31, 2005
    include charges of $4.8 million recorded for a write-off of an
    equity investment and gain of $1.7 million related to the sale of
    an equity investment. The results for the three months and year
    ended December 31, 2004 include charges of $1.0 million recorded
    for full write-down of an investment in an unaffiliated company.

(D) The results for the year ended December 31, 2005 include a tax
    provision of approximately $24.0 million related to a qualified
    dividends distribution under the American Jobs Creation Act of
    2004.


                Waters Corporation and Subsidiaries
               Consolidated Statements of Operations
               (In thousands, except per share data)


                             (Unaudited)           (Unaudited)
                          Three Months Ended         Year Ended
                           December   December   December    December
                              31,        31,        31,         31,
                             2005       2004       2005        2004

Reconciliation of income
 per diluted share, in
 accordance with
 generally accepted
 accounting principles,
 with adjusted results:


Income per diluted share $     0.69  $   0.58  $     1.74  $     1.82
                          ----------  --------  ----------  ----------

Adjustment for
 litigation provisions
 and settlement, net of
 tax                          2,569         -       2,569      (5,688)
Income per diluted share
 effect                        0.02         -        0.02       (0.05)
                          ----------  --------  ----------  ----------

Adjustment for
 restructuring and other
 unusual charges, net of
 tax                              -         -                    (57)
Income per diluted share
 effect                           -         -           -       (0.00)
                          ----------  --------  ----------  ----------

Adjustment for tax
 provision for qualified
 dividends distribution           -         -      24,000           -
Income per diluted share
 effect                           -         -        0.21           -
                          ----------  --------  ----------  ----------

Impairment of long-lived
 asset, net of tax                -     3,158           -       3,158
Income per diluted share
 effect                           -      0.03           -        0.03
                          ----------  --------  ----------  ----------

Other expense, write
 down and sale of
 certain investments,
 net of tax                   2,554       801       2,554         801
Income per diluted share
 effect                        0.02      0.01        0.02        0.01
                          ----------  --------  ----------  ----------

Adjusted income per
 diluted share:          $     0.73  $   0.62  $     1.99  $     1.81
                          ==========  ========  ==========  ==========

The adjusted income per diluted share presented above is used by the
management of the Company to measure operating performance with prior
periods and is not in accordance with generally accepted accounting
principles (GAAP). The above reconciliation identifies items
management has excluded as non-operational transactions. Management
feels these transactions are not indicative of understanding the
ongoing operations of the business or its future outlook.


                 Waters Corporation and Subsidiaries
                Condensed Consolidated Balance Sheets
                     (In thousands and unaudited)



                                                  December   December
                                                  31, 2005   31, 2004


Cash and cash equivalents                          493,588    539,077
Accounts receivable                                256,809    271,731
Inventories                                        131,554    139,900
Other current assets                                31,550     23,176
   Total current assets                            913,501    973,884

Property, plant and equipment, net                 141,030    135,908
Other assets                                       387,874    350,634
   Total assets                                  1,442,405  1,460,426


Notes payable and debt                             326,286    206,663
Accounts payable and accrued expenses              278,544    286,327
   Total current liabilities                       604,830    492,990

Long-term debt                                     500,000    250,000
Other long-term liabilities                         41,408     38,750
   Total liabilities                             1,146,238    781,740

Total equity                                       296,167    678,686
   Total liabilities and equity                  1,442,405  1,460,426

CONTACT: Waters Corporation
Gene Cassis, 508-482-2349
Vice President of Investor Relations

SOURCE: Waters Corporation