News Releases

<< Back
Waters Corporation Reports Second Quarter Sales Growth of 6%

MILFORD, Mass., Jul 25, 2006 (BUSINESS WIRE) -- Waters Corporation (NYSE/WAT) reported today second quarter 2006 sales of $302 million, an increase of 6% over sales of $285 million in the second quarter of 2005. In the quarter, the effects of foreign currency translation did not positively or negatively affect this sales growth rate. On a GAAP basis, earnings per diluted share (E.P.S.) for the second quarter were $0.46, compared to $0.46 for the second quarter in 2005. On a non-GAAP basis, including the adjustments noted in the attached reconciliation, E.P.S. grew 15% to $0.53 in the second quarter of 2006 from $0.46 in the second quarter of 2005.

Through the first six months of 2006, sales for the Company were $592 million, a 7% increase over sales in the first six months of 2005 of $553 million. Without the effects of foreign currency translation, the Company's organic sales growth rate was 9% as currency translation reduced its reported sales growth rate by approximately 2%. E.P.S. through the first six months of 2006 were $0.87 compared to $0.84 for the comparable period in 2005. On a non-GAAP basis and including adjustments on the attached reconciliation, E.P.S. grew 21% in the first six months of 2006 to $1.03 in 2006 from $0.85 in 2005.

Commenting on the quarter, Douglas Berthiaume, Chairman, President and Chief Executive Officer said, "Our results in the second quarter indicate a continuation of the trends we experienced earlier this year, including: continued expansion of businesses in China and India, strong industrial spending and growing demand for ACQUITY UPLC(TM) technology. In the quarter, we also introduced exciting new mass spectrometry instruments that we will begin shipping in the second half of 2006. We were very encouraged by the excitement that these new systems generated at the ASMS conference in late May and feel that the powerful combination of ACQUITY UPLC and new Waters mass spectrometry technologies will help to further stimulate demand as we look to the remainder of 2006 and beyond."

As communicated in a prior press release, Waters Corporation will webcast its second quarter 2006 financial results conference call this morning, July 25, 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 August 1, 2006, similarly by webcast and also by phone at 203-369-0188.

Waters Corporation holds worldwide leading positions in three complementary analytical technologies - liquid chromatography, mass spectrometry and thermal analysis. These markets account for approximately $5.0 billion of the overall $20 - $25 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 implemented in February 2006, 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, 2005 and quarterly report on Form 10-Q for the period ended April 1, 2006, 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.


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

                               (Unaudited)            (Unaudited)
                           Three Months Ended     Six Months Ended
                            July 1,    July 2,    July 1,     July 2,
                             2006       2005        2006       2005

Net sales                   301,899    284,630     592,117    552,935
Cost of sales (1)           126,004    117,066     246,632    228,867

  Gross profit              175,895    167,564     345,485    324,068

Selling and
 administrative
 expenses (1)                88,968     82,861     174,506    163,456
Research and development
 expenses (1)                19,655     16,485      38,698     33,232
Purchased intangibles
 amortization                 1,383      1,266       2,577      2,548
Restructuring and other
 unusual charges (2)          2,974          -       7,326          -

  Operating income           62,915     66,952     122,378    124,832

Interest expense, net        (6,272)      (463)    (12,408)       (99)
  Income from operations
   before income taxes       56,643     66,489     109,970    124,733

Provision for income
 taxes                        8,863     12,424      18,035     24,073

  Net income                 47,780     54,065      91,935    100,660

Net income per basic
 common share             $    0.46  $    0.47   $    0.89  $    0.86

Weighted average number
 of basic common shares     103,010    116,092     103,795    117,405


Net income per diluted
 common share             $    0.46  $    0.46   $    0.87  $    0.84

Weighted average number
 of diluted common shares
  and equivalents           104,337    117,722     105,192    119,456


(1) Effective January 1, 2006, Waters Corporation adopted FAS 123(R),
    "Share-Based Payment". Accordingly, for the three months and six
    months ended July 1, 2006, stock-based compensation was accounted
    for under FAS 123 (R), while for the three months and six months
    ended July 2, 2005, stock-based compensation was accounted for
    under APB No. 25, Accounting for Stock Issued to Employees." The
    amounts in the consolidated statements of operations above include
    stock-based compensation as follows:

                                 (Unaudited)            (Unaudited)
                            Three Months Ended       Six Months Ended
                             July 1,    July 2,    July 1,     July 2,
                               2006       2005        2006       2005
Cost of sales                 1,101          -       2,252          -
Selling and
 administrative expenses      4,813        579       9,796        668
Research and development
 expenses                     1,188          -       2,568          -
   Total stock-based
    compensation              7,102        579      14,616        668


(2) The results for the three months and six months ended July 1, 2006
    include restructuring and other incremental costs in relation to a
    cost reduction plan implemented in February 2006.

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

                                (Unaudited)          (Unaudited)
                           Three Months Ended     Six Months Ended
                             July 1,    July 2,    July 1,     July 2,
                               2006       2005        2006       2005

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


Income per diluted share  $    0.46  $    0.46   $    0.87  $    0.84
                          ---------- ----------  ---------- ----------

Adjustment for stock-
 based compensation, net
 of tax                       5,111        467      10,724        538
Income per diluted share
 effect                        0.05       0.00        0.10       0.00
                          ---------- ----------  ---------- ----------

Adjustment for
 restructuring and other
 unusual charges, net of
 tax                          2,477          -       6,037          -
Income per diluted share
 effect                        0.02          -        0.06          -
                          ---------- ----------  ---------- ----------

Adjusted income per
 diluted share:           $    0.53  $    0.46   $    1.03  $    0.85
                          ========== ==========  ========== ==========


    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. As a result of the adoption of FAS 123(R),
    management has excluded the stock-based compensation cost from its
    non-GAAP adjusted amounts to enable management and investors to
    perform a meaningful comparison of the Company's operating results
    to the prior period. In the prior period, the Company's
    consolidated statements of operations were not required to include
    the expense associated with stock-based compensation and now the
    Company must include the expense in the consolidated statements of
    operations. Management has excluded the restructuring charges from
    its non-GAAP adjusted amounts since management believes that these
    charges are not directly related to ongoing operations thereby
    providing investors with information that helps to compare ongoing
    operating performance.


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



                                                July 1,   December 31,
                                                 2006         2005


Cash and cash equivalents                       489,556       493,588
Accounts receivable                             238,352       256,809
Inventories                                     161,843       131,554
Other current assets                             35,020        31,041
   Total current assets                         924,771       912,992

Property, plant and equipment, net              144,102       141,030
Other assets                                    400,677       374,909
   Total assets                               1,469,550     1,428,931


Notes payable and debt                          362,345       326,286
Accounts payable and accrued expenses           311,305       277,605
   Total current liabilities                    673,650       603,891

Long-term debt                                  500,000       500,000
Other long-term liabilities                      45,332        41,408
   Total liabilities                          1,218,982     1,145,299

Total equity                                    250,568       283,632
   Total liabilities and equity               1,469,550     1,428,931

SOURCE: Waters Corporation

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