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Waters Corporation Fourth Quarter 2003 Earnings Rise with Improved Pharmaceutical Industry Demand and Favorable Currency Translation

MILFORD, Mass.--(BUSINESS WIRE)--Jan. 29, 2004--Waters Corporation (NYSE/WAT) reported today fourth quarter 2003 sales of $275.1 million, an increase of 7 % over reported sales of $256.4 million in the fourth quarter of 2002. Foreign currency translation benefited revenue growth by approximately 7%. Reported GAAP quarterly earnings per diluted share (E.P.S.) were $0.47, compared to $0.30 for the fourth quarter in 2002. On a pro-forma basis, E.P.S. were $0.48 compared to fourth quarter 2002 E.P.S. of $0.41. Free cash flow for the quarter was approximately $81 million.

Commenting on the quarter, Douglas Berthiaume, Chairman, President and Chief Executive Officer said, " Our HPLC products did very well in the fourth quarter growing 10% on a constant currency basis and responding to an improvement in pharmaceutical industry spending, particularly in the United States. Our TA Instruments division continued to show good results with sales growth in the double digits. Our mass spectrometry business remained weak with demand for proteomics-focused Q-Tof systems particularly soft compared to the prior year's result.

Looking ahead to the first quarter and full year 2004, we are encouraged by the trends that we see in customer demand and by our plans for exciting new HPLC and mass spectrometry product introductions during the first half of the year."

As communicated in a prior press release, Waters Corporation will webcast its fourth quarter 2003 financial results conference call this morning, January 29, 2004 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 4, 2004 similarly by webcast, and also by phone at 402-220-9680.

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 release contains "forward-looking" statements regarding future results and events, including statements regarding expected financial results, future growth and customer demand that involve a number of risks and uncertainties. For this purpose, any statements contained herein that are not statements of historical fact may be deemed forward looking statements. Without limiting the foregoing, the words, "believes", "anticipates", "plans", "expects", "intends", "appears", "estimates", "projects", and similar expressions are intended to identify forward looking statements. The Company's actual future results may differ significantly from the results discussed in the forward-looking statements within this release for a variety of reasons including and without limitation: 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 the Company's healthcare and pharmaceutical company customers, changes in the healthcare market and the pharmaceutical industry, changes in distribution of the Company's products, the short-term effect on sales and expenses as a result of the formerly announced combination of the Waters and Micromass sales, service and distribution organizations, and foreign exchange fluctuations. Such factors and others are discussed more fully in the section entitled "Risk Factors" of the Company's Form 10-K for the year ended December 31, 2002, as filed with the Securities and Exchange Commission, which "Risk Factors" discussion is incorporated by reference in this press release. The forward-looking statements included in this press release represent the Company's estimates as of the date of this press release and should not be relied upon as representing the Company's estimates or views as of any date subsequent to the date of this press release. The Company specifically disclaims any obligation to update these forward-looking statements in the future.

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

                                           December 31,   December 31,
                                                  2003           2002

Cash and cash equivalents                      356,781        263,312
Restricted cash                                      0         49,944
Accounts receivable                            213,894        201,309
Inventories                                    128,724        130,241
Other current assets                            14,898         13,341
   Total current assets                        714,297        658,147

Property, plant and equipment, net             108,162        100,329
Other assets                                   308,134        255,478
   Total assets                              1,130,593      1,013,954


Notes payable and debt                         120,921          7,701
Accounts payable and accrued expenses          247,797        313,758
   Total current liabilities                   368,718        321,459

Other long-term liabilities                    171,381         27,185
   Total liabilities                           540,099        348,644

Total equity                                   590,494        665,310
   Total liabilities and equity              1,130,593      1,013,954


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


                                   (Unaudited)
                               Three Months Ended       Year Ended
                                   December 31          December 31
                                 2003       2002      2003       2002

Net sales                     275,073    256,389   958,205    889,967
Cost of sales                 113,104    108,402   397,848    373,468

  Gross profit                161,969    147,987   560,357    516,499

Selling, general and
 administrative expenses       67,219     62,920   264,252    246,816
Research and development
 expenses                      16,786     13,424    59,242     51,923
Purchased intangibles
 amortization                   1,008        903     4,242      3,600
Litigation provisions(A)            -      5,100     1,500      7,900
Loss on disposal of business(B)     -          -     5,031          -
Impairment of long-lived
 asset(C)                           -      2,445         -      2,445
Restructuring and other
 unusual charges(D)              (161)     7,404       918      7,404
Expensed in-process research
 and development(E)               840          -     6,000          -

  Operating income             76,277     55,791   219,172    196,411

Other expense, net(F)            (250)    (6,113)     (250)    (5,997)
Interest income, net              485        458     4,764      4,997
  Income from operations
   before income taxes         76,512     50,136   223,686    195,411

Provision for income taxes     18,110      9,892    52,795     43,193
  Income before cumulative
   effect of change in
   accounting principle        58,402     40,244   170,891    152,218

Cumulative effect of change
 in accounting principle(G)         -          -         -     (4,506)
  Net income                   58,402     40,244   170,891    147,712


Income per basic common
 share:
  Net income before cumulative
   effect of accounting
   principle change              0.48       0.31      1.39       1.17
  Cumulative effect of
   change in accounting
   principle(G)                     -          -         -      (0.03)
    Net income                   0.48       0.31      1.39       1.13


Income per diluted common
 share:
  Net income before cumulative
   effect of accounting principle
   change                        0.47       0.30      1.34       1.12
  Cumulative effect of
   change in accounting
   principle(G)                     -          -         -      (0.03)
    Net income                   0.47       0.30      1.34       1.09


Weighted average number of
 basic common shares          120,961    128,752   123,189    130,489

Weighted average number of
 diluted common shares
 and equivalents              124,784    133,573   127,579    135,762


(A) The results for the year ended December 31, 2003 include a
$1.2 million provision for an environmental matter with the
Commonwealth of Massachusetts.

(B) The results for the year ended December 31, 2003 include a
loss on disposal of the inorganic mass spectrometry product line.

(C) Charges recorded for full write-down of a technology licensed
asset.

(D) The results for the three months and year ended December 31,
2003 include restructuring and other incremental costs and adjustments
recorded in relation to the Company's reorganization of the HPLC and
mass spectrometry businesses.

(E) The results for the year ended December 31, 2003 include
charges for expensed in-process research and development relating to
the acquisition of Creon Lab Control, AG.

(F) Includes write-down of certain non-affiliate investments.

(G) 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
                                 2003       2002      2003       2002

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

Income per diluted share
 before cumulative effect of
 change in accounting principle  0.47       0.30      1.34       1.12

Adjustment for litigation
 provisions, net of tax             -      3,315     1,155      5,359
Income per diluted share
 effect                             -       0.03      0.01       0.04

Adjustment for restructuring
 and other unusual charges,
 net of tax                      (124)     5,701       707      5,701
Income per diluted share
 effect                         (0.00)      0.04      0.01       0.04

Loss on disposal of business,
 net of tax                         -          -     3,522          -
Income per diluted share effect     -          -      0.03          -

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

Other expense, write down of
 certain investments, net of
 tax                              220      4,063         -      3,974
Income per diluted share effect  0.00       0.03         -       0.03

Expensed in-process research
 and development                  840          -     6,000          -
Income per diluted share effect  0.01          -      0.05          -

Pro-forma income per diluted
 share:                          0.48       0.41      1.44       1.24


The pro-forma 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
those items management has excluded as non- operational activities or
transactions. Management feels these transactions are not indicative
of understanding the ongoing operations of the business or its future
outlook.

CONTACT:
Waters Corporation
Gene Cassis
508-482-2349