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Waters Corporation Fourth Quarter 1998 Sales Increase 18% and Earnings Per Diluted Share Increase 46%, Excluding Nonrecurring Prior Year Charge
MILFORD, Mass.--(BUSINESS WIRE)--Jan. 25, 1999--Waters Corporation (NYSE: WAT) reported today that fourth quarter 1998 sales increased by 18% over prior year levels. Earnings per diluted share (E.P.S.) were $0.98 for the quarter and represented a 46% increase over prior year E.P.S. of $0.67 excluding a nonrecurring acquisition related charge in that year.

Diluted E.P.S. for the full year were $2.78 and represented a 43% increase over prior year diluted E.P.S. excluding nonrecurring charges in both years. Full year diluted E.P.S. after nonrecurring charges were $2.27 in 1998 and a loss of $(0.32) in 1997.

Douglas A. Berthiaume, Chairman and Chief Executive Officer, said: ``As has been true for the entire year, the Company's performance continues to be strong across all aspects of its business. Fourth quarter worldwide sales of our high performance liquid chromatography (HPLC), mass spectrometry (MS) and thermal analysis products grew by 16% excluding currency effects. Sales to pharmaceutical customers led this growth. And sales of our benchtop HPLC-mass spectrometry systems were particularly robust. As Micromass Limited, the mass spectrometry business which we acquired in September 1997, begins its second year of operation as part of Waters, the marriage of MS and HPLC product offerings continues to drive increasing customer demand.

Fourth quarter customer demand growth was fairly broadbased across all geographies with the exception of the (non-Japan) Pacific Rim. This broad geographic strength, particularly in the U.S. and Europe, more than offset weaker performance in the Pacific Rim.

Finally, Waters continued its record of steady productivity improvement with operating margins for the quarter at a record 25.4%. Productivity improvement and strong sales performance drove earnings growth of 46% for the quarter, as well as $38.7 million of free cash flow.``

Waters Corporation holds worldwide leading positions in three complementary analytical technologies-- HPLC, thermal analysis and mass spectrometry --which account for $3 billion in annual revenues of the $14 billion analytical instrument industry total.

Cautionary Statement

Certain statements contained herein are forward looking. Many factors could cause actual results to differ from these statements, including loss of market share through competition, introduction of competing products by other companies, pressures on prices from competitors and/or customers, regulatory obstacles to new product introductions, lack of acceptance of new products, changes in the healthcare market and the pharmaceutical industry, changes in distribution of the Company's products, and interest rate and foreign exchange fluctuations. Such factors are discussed in detail in the Company's filings with the Securities and Exchange Commission.


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

                                     Three Months
                                Ended December 31                Year
                                      (Unaudited)   Ended December 31
                                   1998      1997      1998      1997

Net sales                       178,984   151,755   618,813   465,470
Cost of sales                    66,897    58,209   232,497   173,275
Revaluation of acquired
 inventory (A)                        0    16,500    16,500    16,500
   Gross profit                 112,087    77,046   369,816   275,695

Selling, general and
 administrative expenses         54,995    50,297   206,211   167,290
Research and development
 expenses                         9,303     7,899    34,433    25,750
Expensed in-process research
 and development (A)                  0         0         0    55,000
Goodwill and purchased
 technology amortization          2,304     2,252     9,347     6,468
  Operating income               45,485    16,598   119,825    21,187

Interest expense, net             3,911     5,403    18,278    13,720
   Income from operations
    before income taxes          41,574    11,195   101,547     7,467

Provision for income taxes        9,488     5,501    27,148    15,755
   Net income (loss)             32,086     5,694    74,399    (8,288)

Less: preferred stock
 dividend and accretion             243       237       963       942
   Net income (loss) available
    to common stockholders       31,843     5,457    73,436    (9,230)

Net income (loss)
 per basic common share            1.06      0.18      2.45     (0.32)

Net income (loss)
 per diluted common share          0.98      0.17      2.27     (0.32)

Weighted average basic
 common shares                   30,165    29,551    29,930    29,127

Weighted average diluted
 common shares and equivalents   32,614    32,936    32,321    29,127

(A)  Nonrecurring 1998 and 1997 charges, no tax effects

                  Waters Corporation and Subsidiaries
                 Condensed Consolidated Balance Sheets

                              December 31, 1998
                                    (Unaudited)  December 31, 1997

Cash and cash equivalents                 5,497              3,113
Accounts receivable                     136,806            111,022
Inventories                              80,281             87,375
Other current assets                     15,300             11,614
   Total current assets                 237,884            213,124

Property, plant and equipment, net       89,029             88,668
Other assets                            240,423            250,267
   Total assets                         567,336            552,059

Notes payable                             4,259              7,394
Accounts payable and accrued expenses   166,552            163,262
   Total current liabilities            170,811            170,656

Loans payable                           218,250            305,340
Redeemable preferred stock                9,059              8,096
Other liabilities                        14,700              5,670
   Total liabilities                    412,820            489,762

 Total equity                           154,516             62,297
   Total liabilities and equity         567,336            552,059

     Waters Corporation
     Brian Mazar, 508-482-2193