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Waters Corporation Reports Second Quarter 2002 Results

Waters Corporation Second Quarter 2002 Sales Up 3% Before Currency Effects, Earnings Per Diluted Share Down 3%. Year to Date Earnings Per Diluted Share Restated to Reflect a $0.03 Charge for a Change in Accounting Principle

MILFORD, Mass., Jul 23, 2002 (BUSINESS WIRE) --Waters Corporation (NYSE:WAT) reported today that second quarter 2002 sales increased by 3% over prior year levels before favorable currency effects. After currency effects, reported sales growth was up 5% over the prior year. Earnings per diluted share (E.P.S.) were $0.28 for the quarter. Year to date earnings per diluted share were adjusted to reflect the after-tax impact of a change in accounting principle resulting from a revised policy to immediately expense all patent related defense costs.

Douglas A. Berthiaume, Chairman and Chief Executive Officer, said, "Sales for the second quarter met our latest projection and earnings per share were within our expectation range. Free cash flow remained strong during the quarter as we generated $40 million of cash flow for the quarter and $79 million of cash flow though mid-year. We continue our efforts to reintroduce certain mass spectrometry products in the United States impacted by the recent unfavorable patent litigation ruling and are now shipping our Q-Tof Ultima(TM) and Q-Tof Maldi(TM) products as planned.

As announced earlier this month, we have undertaken a reorganization of our field sales, service and distribution groups within our HPLC and Mass Spectrometry product lines to take full advantage of market synergies. This will create a customer centric organization that will more effectively leverage our resources and support sales growth over the next several years. We remain optimistic about our future business prospects and continued success of our reorganization and new product introduction programs."

As communicated in a prior press release, Waters Corporation will webcast its second quarter 2002 financial results conference call this morning, July 23, 2002, 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 July 29, 2002 similarly by webcast, and also by phone at 402-220-0283.

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 $4.2 billion of the overall $19 billion analytical instrument market.

CAUTIONARY STATEMENT

Certain statements contained herein are forward looking. Many factors could cause actual results to differ from these statements, including 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 healthcare market and the pharmaceutical industry, changes in distribution of the Company's products, and foreign exchange fluctuations. Such factors are discussed in detail in the Company's filings with the Securities and Exchange Commission.

                  Waters Corporation and Subsidiaries
                 Consolidated Statements of Operations
                 (In thousands, except per share data)
                              (Unaudited)
                             Three Months Ended    Six Months Ended
                                  June 30               June 30
                               2002      2001       2002       2001
Net sales                    217,192    206,803    417,533    407,835
Cost of sales                 75,980     75,545    147,412    148,843
  Gross profit               141,212    131,258    270,121    258,992
Selling, general
 and administrative
 expenses                     80,041     67,169    148,959    133,076
Research and
 development expenses         12,643     11,741     24,923     22,779
Patent litigation
 provision                         -          -      2,800          -
Goodwill and purchased
 technology amortization         922      1,771      1,837      3,519
  Operating income            47,606     50,577     91,602     99,618
Other income, net                116          -        116          -
Interest income, net           1,500      1,151      2,878      2,637
  Income from operations
   before income taxes        49,222     51,728     94,596    102,255
Provision for income
 taxes                        11,321     12,415     21,645     24,542
  Income before
   cumulative effect of
   change in accounting
   principle                  37,901     39,313     72,951     77,713
Cumulative effect of
 change in accounting
 principle (A)                     -          -     (4,506)         -
  Net income                  37,901     39,313     68,445     77,713
Income per basic common
 share:
  Net income before
   cumulative effect of
   accounting principle
   change                       0.29       0.30       0.56       0.60
  Cumulative effect of
   change in accounting
   principle (A)                   -          -      (0.03)         -
    Net income                  0.29       0.30       0.52       0.60
Income per diluted
 common share:
  Net income before
   cumulative effect
   of accounting
   principle change             0.28       0.29       0.53       0.56
  Cumulative effect of
   change in accounting
   principle (A)                   -          -      (0.03)         -
    Net income                  0.28       0.29       0.50       0.56
Weighted average number
 of basic common shares      131,510    130,564    131,264    130,363
Weighted average number
 of diluted common shares
 and equivalents             136,778    137,564    137,004    137,785
(A) Effect at January 1, 2002 of a change in accounting method for
patent related costs.
                  Waters Corporation and Subsidiaries
                 Condensed Consolidated Balance Sheets
                            (In thousands)
                                       June 30, 2002    Dec. 31, 2001
                                        (Unaudited)
Cash and cash equivalents                306,408           226,798
Accounts receivable                      179,990           182,164
Inventories                              119,341           102,718
Other current assets                      15,047            11,064
   Total current assets                  620,786           522,744
Property, plant and equipment, net       116,452           114,207
Other assets                             260,990           249,960
   Total assets                          998,228           886,911
Notes payable                                910             1,140
Accounts payable and accrued expenses    291,163           279,866
   Total current liabilities             292,073           281,006
Other liabilities                         26,750            24,160
   Total liabilities                     318,823           305,166
Total equity                             679,405           581,745
   Total liabilities and equity          998,228           886,911

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