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Waters Corporation Reports 9% Sales Growth and Strong Earnings for Second Quarter 2005

MILFORD, Mass.--(BUSINESS WIRE)--July 26, 2005--Waters Corporation (NYSE:WAT) reported today second quarter 2005 sales of $284.6 million, an increase of 9% over sales of $260.5 million in the second quarter of 2004 with a foreign currency translation benefit accounting for approximately 1% of that growth. Quarterly earnings per diluted share (E.P.S.) were $0.46, compared to $0.49 for the second quarter in 2004. On a non-GAAP basis, excluding the benefit of a patent litigation settlement in the second quarter of 2004, adjusted E.P.S. grew 15% to $0.46 in the second quarter of 2005 from $0.40 in the second quarter of 2004.

Through the first six months of 2005 reported sales for the Company were $552.9 million, a 7% increase over 2004 first half-year sales of $515.6 million with a foreign currency benefit accounting for approximately 1% of that growth. E.P.S. through the first six months of 2005 were $0.84 compared to $0.81 for the comparable period in 2004. On a non-GAAP basis and including the adjustments in the attached reconciliation, E.P.S. grew 9% in the first six months of 2005 from $0.77 in 2004 to $0.84 in 2005.

Commenting on the quarter, Douglas Berthiaume, Chairman, President and Chief Executive Officer said, "Our business in Europe and overall sales to pharmaceutical accounts improved during the second quarter. Shipments of ACQUITY UPLC(TM) and QTof Premier(TM) continued to gain traction with strong sequential growth compared to the first quarter 2005 sales. We are optimistic that this positive sales momentum will continue into the second half of the year. We also believe that despite a less favorable foreign currency environment, the strength of our product portfolio in combination with improving market demand will allow us to deliver profitable sales growth in 2005."

As communicated in a prior press release, Waters Corporation will webcast its second quarter 2005 financial results conference call this morning, July 26, 2005 at 8:30 a.m. eastern time. To listen to the call, connect to , choose Investor Relations and click on the Live Webcast. A replay of the call will be available through August 2, 2005, similarly by webcast and also by phone at 402-220-9682.

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.


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 our customers, in particular large pharmaceutical companies, introduction of competing products, such as improved research-grade mass spectrometers, by other companies, 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, and foreign exchange rate fluctuations potentially adversely 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 Form 10-K for the year ended December 31, 2004, 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   Six Months Ended
                                  July 2,  July 3,    July 2,  July 3,
                                    2005     2004       2005     2004

Net sales                        284,630  260,488    552,935  515,574
Cost of sales                    117,066  106,180    228,867  213,654

  Gross profit                   167,564  154,308    324,068  301,920

Selling and administrative
 expenses                         82,861   75,840    163,456  147,267
Research and development
 expenses                         16,485   15,694     33,232   31,765
Purchased intangibles
 amortization                      1,266      996      2,548    2,350
Litigation settlement and
 provisions (A)                        -  (17,124)         -   (9,277)
Restructuring and other
 unusual charges, net                  -        -          -      104

  Operating income                66,952   78,902    124,832  129,711

Interest (expense) income, net      (463)     995        (99)   1,226
  Income from operations
   before income taxes            66,489   79,897    124,733  130,937

Provision for income taxes        12,424   20,146     24,073   30,341

  Net income                      54,065   59,751    100,660  100,596

Net income per basic common
 share                             $0.47    $0.50      $0.86    $0.84

Weighted average number of
 basic common shares             116,092  118,691    117,405  119,439

Net income per diluted common
 share                             $0.46    $0.49      $0.84    $0.81

Weighted average number of
 diluted common shares
  and equivalents                117,722  122,820    119,456  123,434

    (A) The results for the six months ended July 3, 2004 include a
        charge of $7.8 million for ongoing patent litigation with
        Hewlett-Packard Company. The results for the three months and
        six months ended July 3, 2004 include settlement income of
        $17.1 million related to patent litigation with Perkin-Elmer

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

                                     (Unaudited)          (Unaudited)
                                 Three Months Ended   Six Months Ended
                                   July 2,  July 3,    July 2, July 3,
                                     2005     2004       2005    2004

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

Income per diluted share            $0.46    $0.49      $0.84   $0.81
                               ----------- -------- ---------- -------

Adjustment for litigation
 settlement and provisions, net
 of tax                                    (10,788)            (5,688)
Income per diluted share effect         -    (0.09)         -   (0.05)
                               ----------- -------- ---------- -------

Adjusted income per diluted
 share:                             $0.46    $0.40      $0.84   $0.77
                               =========== ======== ========== =======

    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)

                                                July 2,   December 31,
                                                  2005           2004

Cash and cash equivalents                       615,234        539,077
Accounts receivable                             228,245        271,731
Inventories                                     140,481        139,900
Other current assets                             25,903         23,176
   Total current assets                       1,009,863        973,884

Property, plant and equipment, net              139,243        135,908
Other assets                                    343,288        350,634
   Total assets                               1,492,394      1,460,426

Notes payable and debt                          407,439        206,663
Accounts payable and accrued expenses           275,142        286,327
   Total current liabilities                    682,581        492,990

Long-term debt                                  250,000        250,000
Other long-term liabilities                      40,612         38,750
   Total liabilities                            973,193        781,740

Total equity                                    519,201        678,686
   Total liabilities and equity               1,492,394      1,460,426
CONTACT: Waters Corporation
Gene Cassis, 508-482-2349
Vice President of Investor Relations

SOURCE: Waters Corporation