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Waters Corporation Fourth Quarter 2002 Sales Down 1% Before Currency Effects, Earnings Per Diluted Share Down 5% Before 2002 and 2001 Unusual Charges

MILFORD, Mass.--(BUSINESS WIRE)--Jan. 28, 2003--Waters Corporation reported today fourth quarter 2002 sales of $256 million and earnings per diluted share (E.P.S.) of $0.41, compared to $0.43 in 2001, both before unusual charges. Sales were down 1% compared with the prior year's quarterly results before currency effects and up 3% at actual exchange rates. Earnings per share including charges were $0.30 for the fourth quarter 2002, as compared to ($0.01) in 2001.

Fourth quarter unusual charges, as explained in the accompanying financial schedules, consisted of charges for the write down of non-affiliate investments reflected in other expense and an impairment of long-lived assets, restructuring and unusual charges related to the combination of the company's field organizations, and an estimated litigation provision for outstanding legal matters. The financial schedules also reflect a reclassification of service costs from selling, general and administrative expenses to cost of sales as explained in the financial schedules.

Douglas Berthiaume, Chairman and Chief Executive Officer, said, "Overall, 2002 was a challenging year for the company. The combined effects of a mass spectrometry patent dispute loss in the first quarter and slower demand, late in the year, from large pharmaceutical customers adversely affected our growth.

During the fourth quarter, despite slower high performance liquid chromatography (HPLC) sales to our large pharmaceutical customers, improved HPLC demand from other market segments in late December resulted in somewhat better performance than last expected. Results for the quarter therefore exceeded the revised guidance we had communicated in early December. Sales of mass spectrometry (MS) and thermal analysis instruments for the quarter were in line with our expectations.

In preparation for 2003, we have made significant progress on several key initiatives. New product development efforts in mass spectrometry are on track and a second quarter 2003 introduction of a new high performance triple quadrupole system is planned. Our combined field organization for HPLC and MS products is now in place and we recorded restructuring and other unusual charges of $7.4 million in the fourth quarter. The acquisition of the rheology products of Rheometric Scientific was completed in January and we have begun its integration into our thermal analysis product line. We continue to pursue new business acquisitions, and our $200 million share repurchase plan is on schedule; approximately $100 million of stock was purchased during the last half of 2002.

Significantly, our business continues to generate strong free cash flow with $50 million for the quarter alone and $192 million for the full year."

As communicated in a prior press release, Waters Corporation will webcast its fourth quarter 2002 financial results conference call this morning, January 28, 2003, at 8:30 a.m. eastern time. To listen to the call, connect to www.waters.info, choose Investor Relations and click on the Live Webcast. A replay of the call will be available from today through February 3, 2003, similarly by webcast, and also by phone at 402-220-2055.

Waters Corporation holds worldwide leading positions in three complementary analytical technologies - high performance liquid chromatography (HPLC), mass spectrometry (MS) and thermal analysis (TA). These markets account for $4.4 billion of the overall $20 billion analytical instrument market.

CAUTIONARY STATEMENT

This press release presents earnings per share, excluding unusual charges, not derived in accordance with generally accepted accounting principles (GAAP). Such earnings per share should not be considered a substitute for earnings per share derived in accordance with GAAP, (and may also be prepared in a different manner from, or inconsistent with similar earnings per share presented by other companies.) Reconciliation of non-GAAP earnings per share to GAAP is presented in the attached pages.

This press release also contains certain statements that 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 demands of our healthcare and pharmaceutical company customers, changes in the healthcare market and the pharmaceutical industry, changes in distribution of the Company's products, 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)

                                    (Unaudited)
                                Three Months Ended     Year Ended
                                    December 31        December 31
                                  2002       2001     2002     2001

Net sales                       256,389    248,679  889,967  859,208
Cost of sales (A)               108,402    102,601  373,468  361,931

  Gross profit                  147,987    146,078  516,499  497,277

Selling, general and
 administrative expenses (A)     62,920     56,385  246,816  219,007
Research and development
 expenses                        13,424     12,029   51,923   46,602
Goodwill and purchased
 technology amortization            903      1,867    3,600    7,141
Litigation provision (B)          5,100     75,000    7,900   75,000
Impairment of long-lived asset(C) 2,445          -    2,445        -
Restructuring and other unusual
 charges (D)                      7,404          -    7,404        -

  Operating income               55,791        797  196,411  149,527

Other expense, net (E)           (6,113)    (7,066)  (5,997)  (7,066)
Interest income, net                458      1,117    4,997    4,965
  Income (loss) from operations
   before income taxes           50,136     (5,152) 195,411  147,426

Provision for income taxes        9,892     (3,736)  43,193   32,883

  Income (loss) before
   cumulative effect of change
   in accounting principle       40,244     (1,416) 152,218  114,543

Cumulative effect of change in
 accounting principle, net of
 tax (F)                              -          -   (4,506)       -
  Net income (loss)              40,244     (1,416) 147,712  114,543

Income (loss) per basic common
 share:
  Net income (loss) before
   cumulative effect of
   accounting principle change     0.31      (0.01)    1.17     0.88
  Cumulative effect of change in
   accounting principle (F)           -          -    (0.03)       -
    Net income (loss)              0.31      (0.01)    1.13     0.88

Income (loss) per diluted common
 share:
  Net income (loss) before
   cumulative effect of
   accounting principle change     0.30      (0.01)    1.12     0.83
  Cumulative effect of change in
   accounting principle (F)           -          -    (0.03)       -
    Net income (loss)              0.30      (0.01)    1.09     0.83

Weighted average number of basic
 common shares                  128,752    130,815  130,489  130,559

Weighted average number of
 diluted common shares  and
 equivalents                    133,573    130,815  135,762  137,509

(A) Certain service costs previously classified in selling, general
    and administrative expenses have been reclassified to cost of
    sales in the following amounts: $15.7m and $13.3m for Q4 2002 and
    2001, respectively, and $58.4m and $50.7m for the full year 2002
    and 2001, respectively.
(B) Expenses recorded in relation to the Company's patent and
    regulatory proceedings.
(C) Charge recorded for full write-down of a technology license asset.
(D) Both restructuring and other incremental costs incurred in
    relation to the Company's reorganization of the HPLC and Mass
    Spectrometry business.
(E) Includes write-down of certain non-affiliate investments.
(F) Effect at January 1, 2002 of a change in accounting method for
    patent related costs.


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

                                       (Unaudited)
                                    Three Months Ended   Year Ended
                                       December 31       December 31
                                      2002     2001     2002     2001

Reconciliation of income per diluted share, in accordance with
generally accepted accounting principles, with income before unusual
charges:

Income per diluted share before
 cumulative effect of change in
 accounting principle                 0.30    (0.01)    1.12     0.83

Adjustment for litigation
 provision, net of tax               3,315   54,500    5,359   54,500
Income per diluted share effect       0.03     0.40     0.04     0.40

Adjustment for restructuring and
 other unusual charges, net of tax   5,701        -    5,701        -
Income per diluted share effect       0.04        -     0.04        -

Adjustment for impairment of long-
 lived asset, net of tax             1,589        -    1,589        -
Income per diluted share effect       0.01        -     0.01        -

Adjustment for other expense,
 write down of certain
 investments, net of tax             3,974    5,370    3,974    5,370
Income per diluted share effect       0.03     0.04     0.03     0.04

Income per diluted share before
 unusual charges                      0.41     0.43     1.24     1.27

The income per diluted share before unusual charges presented above is
used by the management of the Company to measure performance with
prior periods and is not in accordance with generally accepted
accounting principles (GAAP). The above reconciliation identifies
those activities and transactions management has excluded. Management
feels these activities or transactions may not be indicative of
understanding the performance of the business or its future outlook.


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

                                            December 31,  December 31,
                                                2002          2001


Cash and cash equivalents                      263,312       226,798
Restricted cash                                 49,944             -
Accounts receivable                            198,302       182,164
Inventories                                    111,557       102,718
Other current assets                            13,341        11,064
   Total current assets                        636,456       522,744

Property, plant and equipment, net             119,013       114,207
Other assets                                   255,478       249,960
   Total assets                              1,010,947       886,911


Notes payable                                    2,665         1,140
Accounts payable and accrued expenses          317,550       279,866
   Total current liabilities                   320,215       281,006

Other liabilities                               25,422        24,160
   Total liabilities                           345,637       305,166

Total equity                                   665,310       581,745
   Total liabilities and equity              1,010,947       886,911

CONTACT:
Waters Corporation
Gene Cassis
508-482-2349