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Waters Corporation Reports 15% Third Quarter Sales Growth with Stronger European Performance and ACQUITY UPLC Shipments

MILFORD, Mass.--(BUSINESS WIRE)--Oct. 26, 2004--Waters Corporation (NYSE:WAT) reported today third quarter 2004 sales of $264.8 million, an increase of 15% over the $230.4 million in sales reported for the third quarter of 2003. This quarterly growth is comprised of 11% growth prior to currency effects and a 4% benefit from foreign exchange. Earnings per diluted share (E.P.S.) for the third quarter 2004 were $0.42 compared to $0.29 for the comparable period in 2003. E.P.S. for the third quarter of 2004 benefited from an improved and sustainable 1% decrease in the Company's full year effective tax rate favorably impacting E.P.S. by approximately $ 0.01 this quarter. On a pro-forma basis, excluding a charge for expensed in-process research and development incurred in the third quarter of 2003 associated with an acquisition, E.P.S. grew 27% from $0.33 to an as reported $0.42 for the third quarter of 2004.

Commenting on the quarter, Douglas Berthiaume, Chairman, President and Chief Executive Officer said, "Our third quarter results reflect continued strong demand from major pharmaceutical and industrial customers in the United States and Asia for all our major product lines and an improvement in business conditions in Europe. Overall, shipments were within our range of expectations and benefited from ACQUITY UPLC(TM) related system sales in the third quarter. Customer excitement and demand for ACQUITY continues to build and installations have proceeded smoothly."

As communicated in a prior press release, Waters Corporation will webcast its third quarter 2004 financial results conference call this morning, October 26, 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 November 2, 2004, similarly by webcast, and also by phone at 402-530-7928.

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 $4.5 - $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 discussed in this release for a variety of reasons, including, without limitation, shipments of new product introductions expected in the upcoming quarters such as ACQUITY UPLC and tandem quadrupole systems, 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, 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, 2003, 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
                 Consolidated Statements of Operations
                 (In thousands, except per share data)

                                 (Unaudited)           (Unaudited)
                              Three Months Ended    Nine Months Ended
                              Oct. 2,   Sept. 27,   Oct. 2,  Sept. 27,
                               2004       2003       2004      2003

Net sales                      264,808   230,381    780,382   683,132
Cost of sales                  111,009    95,045    324,663   284,744

  Gross profit                 153,799   135,336    455,719   398,388

Selling and administrative
 expenses                       71,967    66,743    219,234   197,033
Research and development
 expenses                       17,001    15,106     48,766    42,456
Purchased intangibles
 amortization                    1,228     1,179      3,578     3,234
Litigation settlement and
 provisions (A)                      -         -     (9,277)    1,500
Loss on sale of business (B)         -         -          -     5,031
Restructuring and other
 unusual charges, net (C)         (158)     (135)       (54)    1,079
Expensed in-process research
 and development (D)                 -     5,160          -     5,160

  Operating income              63,761    47,283    193,472   142,895

Interest income, net               445     1,550      1,671     4,279
  Income from operations
   before income taxes          64,206    48,833    195,143   147,174

Provision for income taxes      12,266    12,419     42,607    34,685

  Net income                    51,940    36,414    152,536   112,489


Net income per basic common
 share                           $0.43     $0.30      $1.28     $0.91

Weighted average number of
 basic common shares           119,519   122,240    119,452   124,000


Net income per diluted
 common share                    $0.42     $0.29      $1.24     $0.87

Weighted average number of
 diluted common shares
  and equivalents              122,597   126,709    123,168   128,568


(A) The results for the nine months ended October 2, 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. The
    results for the nine months ended September 27, 2003 include a
    $1.2 million provision for an environmental matter with the
    Commonwealth of Massachusetts.

(B) The results for the nine months ended September 27, 2003 include a
    loss on sale of the inorganic mass spectrometry product line.

(C) The results for the three and nine months ended October 2, 2004
    and September 27, 2003 include restructuring and other incremental
    costs and adjustments recorded in relation to the Company's
    reorganization of the HPLC and mass spectrometry businesses.

(D) The results for the three and nine months ended September 27, 2003
    include charges for expensed in-process research and development
    relating to the acquisition of Creon Lab Control AG.



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

                              (Unaudited)            (Unaudited)
                           Three Months Ended     Nine Months Ended
                           Oct. 2,    Sept. 27,   Oct. 2,   Sept. 27,
                             2004       2003       2004        2003

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


Income per diluted share      $0.42      $0.29      $1.24       $0.87
                         ----------- ---------- ---------- -----------

Adjustment for
 litigation settlement
 and provisions, net of
 tax                              -          -     (5,688)      1,155
Income per diluted share
 effect                           -          -      (0.05)       0.01
                         ----------- ---------- ---------- -----------

Adjustment for
 restructuring and other
 unusual charges, net of
 tax                           (125)      (104)       (57)        831
Income per diluted share
 effect                       (0.00)     (0.00)     (0.00)       0.01
                         ----------- ---------- ---------- -----------

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

Expensed in-process
 research and
 development                      -      5,160          -       5,160
Income per diluted share
 effect                           -       0.04          -        0.04
                         ----------- ---------- ---------- -----------

Adjusted income per
 diluted share:               $0.42      $0.33      $1.19       $0.96
                         =========== ========== ========== ===========


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
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.



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

                                        October 2,       December 31,
                                            2004              2003


Cash and cash equivalents                    471,171          356,781
Accounts receivable                          228,322          214,260
Inventories                                  140,961          128,810
Other current assets                          16,955           15,548
   Total current assets                      857,409          715,399

Property, plant and equipment, net           129,111          108,162
Other assets                                 346,950          307,300
   Total assets                            1,333,470        1,130,861


Notes payable and debt                       282,697          121,309
Accounts payable and accrued expenses        253,691          257,212
   Total current liabilities                 536,388          378,521

Other long-term liabilities                  150,813          161,863
   Total liabilities                         687,201          540,384

Total equity                                 646,269          590,477
   Total liabilities and equity            1,333,470        1,130,861

CONTACT:
Waters Corporation
Gene Cassis
508-482-2349