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Waters Corporation Reports On the Impact of Recent Litigation On 2001 Results and 2002 Outlook

MILFORD, Mass., Mar 25, 2002 (BUSINESS WIRE) -- Waters Corporation (NYSE:WAT) revised its 2001 results and updated its earnings outlook for 2002 first quarter and full year as a result of an unfavorable ruling in the patent litigation involving certain mass spectrometry products sold in the United States.

The judgement is specific to the Company's Quattro Ultima(TM) product offerings. However, because the high-end Q-TOF family of products uses similar technology, the Company has decided to hold shipment of these products as well in the United States. Affected products are the Quattro Ultima(TM), Q-TOF API(TM), Q-TOF Maldi(TM) and Q-TOF Global(TM). All other mass spectrometry products including the Q-TOF Micro(TM) and Quattro Micro(TM) are not affected.

Even though the Company plans to aggressively appeal this verdict, it has revised its 2001 results, previously reported in a January 2002 press release, to include a $75 million pre-tax provision for estimated costs related to this matter. This has reduced earnings per share for the year from $1.23 per diluted share to $.83 per diluted share. Adjusted financial statements are attached.

In light of the current litigation status facing the Company, it has reforecasted its view of 2002 and the Company now estimates that sales growth in Q1 and full year to be 5% and 9% respectively before currency impacts and 2% and 7% respectively at actual rates. Earnings per diluted share are now estimated to be between $.27 to $.29 for Q1 and $1.37 to $1.45 for the full year.

Douglas A. Berthiaume, Chairman and Chief Executive Officer, said, "The result of the recent litigation involving several of our mass spectrometry offerings has been a significant disappointment. We still believe that we have a strong defense and we will pursue the appeals process while we proceed with our efforts to introduce new products in the second half of this year that incorporate pre-existing technology."

The Company will webcast its conference call to discuss this update this morning at 9:00 a.m. eastern time. To listen to the call, connect to and access the investor relations section. A replay will be available through March 28, 2002 similarly by webcast and also by phone at 402-998-1463.


Most statements contained herein are forward looking. All such statements reflect only current expectations and actual results may differ materially. The Company does not obligate or commit itself, by providing the guidance above, to update predictions. Many factors could cause results to differ from these statements, including actual results for the balance of the quarter, loss of market share through competition, introduction of competing products by other companies, changes in the healthcare market and the pharmaceutical industry, changes in distribution of the Company's products and foreign exchange fluctuations. Many of these factors are discussed in detail in the Company's Securities and Exchange Commission filings.

                  Waters Corporation and Subsidiaries
                 Consolidated Statements of Operations
                 (In thousands, except per share data)
                          Three Months Ended         Year Ended
                              December 31            December 31
                            2001        2000       2001        2000
Net sales                 248,679     225,508    859,208     795,071
Cost of sales              89,269      79,854    311,232     288,264
  Gross profit            159,410     145,654    547,976     506,807
Selling, general
 and administrative
 expenses                  69,717      65,223    269,706     246,390
Research and
 development expenses      12,029      11,200     46,602      42,513
Patent litigation
 provision                 75,000        --       75,000        --
Goodwill and purchased
 technology amortization    1,867       1,751      7,141       7,077
  Operating income            797      67,480    149,527     210,827
Other expense (A)          (7,066)       --       (7,066)       --
Interest income, net        1,117         857      4,965         135
  Income (loss) before
   income taxes            (5,152)     68,337    147,426     210,962
Provision for income taxes (3,736)     17,768     32,883      54,849
  Income (loss) before
   cumulative effect
   of change in
   accounting principle    (1,416)     50,569    114,543     156,113
Cumulative effect of
 change in accounting
 principle (B)               --          --         --       (10,771)
  Net income (loss)        (1,416)     50,569    114,543     145,342
Income (loss) per
 basic common share:
  Net income (loss)
   before cumulative
   effect of accounting
   principle change         (0.01)       0.39       0.88        1.22
  Cumulative effect of
   change in accounting
   principle (B)             --          --         --         (0.08)
    Net income (loss)       (0.01)       0.39       0.88        1.14
Income (loss) per
 diluted common share:
  Net income (loss)
   before cumulative
   effect of accounting
   principle change         (0.01)       0.37       0.83        1.14
  Cumulative effect of
   change in accounting
   principle (B)             --          --         --         (0.08)
    Net income (loss)       (0.01)       0.37       0.83        1.06
Weighted average number
 of basic common shares   130,815     129,347    130,559     127,568
Weighted average number
 of diluted common shares
  and equivalents         130,815     137,795    137,509     136,743
(A) Impairment charge for certain equity investments
(B) Effect at January 1, 2000 of adopting Securities and Exchange
Commission Staff Accounting Bulletin #101, recorded in first quarter
                  Waters Corporation and Subsidiaries
                 Condensed Consolidated Balance Sheets
                            (In Thousands)
                                      December 31,   December 31,
                                          2001           2000
Cash and cash equivalents               226,798         75,509
Accounts receivable                     182,164        167,713
Inventories                             102,718         87,275
Other current assets                     11,064         13,299
   Total current assets                 522,744        343,796
Property, plant and equipment, net      114,207        102,608
Other assets                            249,960        245,941
   Total assets                         886,911        692,345
Notes payable                             1,140          4,879
Accounts payable and accrued expenses   279,866        212,902
   Total current liabilities            281,006        217,781
Other liabilities                        24,160         22,783
   Total liabilities                    305,166        240,564
Total equity                            581,745        451,781
   Total liabilities and equity         886,911        692,345

CONTACT: Waters Corporation Brian Mazar, 508-482-2193