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Waters Corporation Fourth Quarter 2005 Earnings Rise on Sales of New Products and Continued Expansion of Asian Businesses

MILFORD, Mass.--(BUSINESS WIRE)--Jan. 24, 2006--Waters Corporation (NYSE/WAT) reported today fourth quarter 2005 sales of $332 million, an increase of 3% over sales of $324 million in the fourth quarter of 2004. Eliminating the effects of foreign currency translation, sales for the quarter grew 7%. On a GAAP basis, earnings per diluted share (E.P.S.) for the fourth quarter were $0.71, compared to $0.58 for the fourth quarter in 2004. On a non-GAAP basis, including the adjustments noted in the attached reconciliation, E.P.S. grew 18% to $0.73 in the fourth quarter of 2005 from $0.62 in the fourth quarter of 2004.

For the full year, sales grew 5% to $1,158 million in 2005 from $1,105 million in 2004. Foreign exchange translation had no material impact on the annual growth rate. On a GAAP basis, E.P.S. declined to $1.76 in 2005 from $1.82 in 2004. On a non-GAAP basis, including the adjustments noted in the attached reconciliation, E.P.S. grew 10% to $1.99 in 2005 from $1.81 in 2004.

Commenting on the quarter, Douglas Berthiaume, Chairman, President and Chief Executive Officer said, "Our 7% organic sales growth and stronger E.P.S. growth in the fourth quarter exceeded our expectations. Strong growth in our chromatography business led by ACQUITY UPLC(TM) system shipments and strength in our Asian businesses were key factors in delivering these encouraging results."

As communicated in a prior press release, Waters Corporation will webcast its fourth quarter 2005 financial results conference call this morning, January 24, 2006 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 through January 31, 2006, similarly by webcast and also by phone at 402-220-9707.

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.

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, fluctuations in capital expenditures by the Company's customers, in particular large pharmaceutical companies, regulatory and/or administrative obstacles to the timely completion of purchase order documentation, introduction of competing products by other companies, such as improved research-grade mass spectrometers, and/or higher speed and/or more sensitive liquid chromatographs, pressures on prices from competitors and/or customers, regulatory obstacles to new product introductions, lack of acceptance of new products, other changes in the demands of the Company's healthcare and pharmaceutical company customers, changes in distribution of the Company's products, changes in the healthcare market and the pharmaceutical industry, loss of market share through competition, potential product liability or other claims against the Company as a result of the use of its products, risks associated with lawsuits and other legal actions particularly involving claims for infringement of patents and other intellectual property rights, the short-term impact to 2006 operating results from cost savings initiatives the Company may implement, the effect in 2006 of implementing the new Statement of Financial Accounting Standard 123(R), Share-Based Payments adversely impacting the Company's fiscal year 2006 operating results, and foreign exchange rate fluctuations affecting translation of the Company's future non-U.S. operating results. Such factors and others are discussed more fully in the section entitled "Risk Factors" of the Company's annual report on Form 10-K for the year ended December 31, 2004, as filed with the Securities and Exchange Commission (the "SEC"), which "Risk Factors" discussion is incorporated by reference in this release. The forward-looking statements included in this release represent the Company's estimates or views as of the date of this release report and should not be relied upon as representing the Company's estimates or views as of any date subsequent to the date of this release. The Company specifically disclaims any obligation to update these forward-looking statements in the future.

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


                           (Unaudited)              (Unaudited)
                        Three Months Ended          Year Ended
                   December 31, December 31, December 31, December 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 settlement
 and provisions (A)          -            -            -       (9,277)
Impairment of long-
 lived asset (B)             -        3,997            -        3,997
Restructuring and
 other unusual
 charges, net                -            -            -          (54)

  Operating income      98,790       91,386      286,277      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         92,266       90,528      277,685      285,671

Provision for income
 taxes (D)              14,099       19,011       73,141       61,618

  Net income            78,167       71,517      204,544      224,053

Net income per basic
 common share            $0.72        $0.59        $1.79        $1.87

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


Net income per
 diluted common share    $0.71        $0.58        $1.76        $1.82

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


(A) The results for the year ended December 31, 2004 include
    provisions of $7.8 million for ongoing patent litigation with
    Hewlett-Packard Company and 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
                             Dec. 31,   Dec. 31,   Dec. 31,   Dec. 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   $    0.71  $    0.58  $    1.76  $    1.82
                           ---------- ---------- ---------- ----------

Adjustment for litigation
settlement and provisions,
net of tax                         -          -          -     (5,688)
Income per diluted share
 effect                            -          -          -      (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 31,    December 31,
                                               2005            2004


Cash and cash equivalents                     493,588        539,077
Accounts receivable                           256,809        271,731
Inventories                                   131,554        139,900
Other current assets                           30,321         23,176
   Total current assets                       912,272        973,884

Property, plant and equipment, net            141,030        135,908
Other assets                                  387,874        350,634
   Total assets                             1,441,176      1,460,426


Notes payable and debt                        326,286        206,663
Accounts payable and accrued expenses         274,746        286,327
   Total current liabilities                  601,032        492,990

Long-term debt                                500,000        250,000
Other long-term liabilities                    41,408         38,750
   Total liabilities                        1,142,440        781,740

Total equity                                  298,736        678,686
   Total liabilities and equity             1,441,176      1,460,426

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

SOURCE: Waters Corporation