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Waters Corporation Third Quarter 1998 Sales Up 45%
MILFORD, Mass.--(BUSINESS WIRE)--Oct. 26, 1998--Waters Corporation (NYSE:WAT - news) reported today that third quarter 1998 sales increased by 45% over prior year levels. Sales grew by 46% excluding the unfavorable impact of foreign currency exchange rate comparisons. Earnings per diluted share (E.P.S.) were $0.67 for the quarter, representing a 60% increase over prior year E.P.S. of $0.42 excluding nonrecurring charges.

Douglas A. Berthiaume, Chairman and Chief Executive Officer, said: ``The Company's performance was exceptional across all aspects of our business. Third quarter worldwide sales of core high performance liquid chromatography (HPLC) and thermal analysis products grew by 13% excluding currency effects. Sales of benchtop HPLC-mass spectrometry systems were especially strong. Our new mass spectrometry business, added in September 1997 with the acquisition of Micromass, performed well and added 33% points of sales growth for the quarter. Micromass has sustained high growth since the acquisition and in the third quarter continued to grow faster than our core business. The Company's growth continues to reflect broad-based customer demand across all major geographies.

Waters continued its record of steady productivity improvement with operating margins at 22% of sales for the quarter. And, the Company continued to benefit from its cash generation capabilities, producing $29.3 million of free cash flow for the quarter. Strong sales performance, coupled with benefits from productivity improvements and healthy cash flow, drove earnings per diluted share growth of 60% for the quarter excluding prior year nonrecurring charges.``

Waters Corporation holds worldwide leading positions in three complementary analytical technologies -- HPLC, thermal analysis and mass spectrometry --which account for $3 billion in annual revenues of the $14 billion analytical instrument industry total.

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 interest rate and foreign exchange fluctuations. Such factors are discussed in detail in the Company's filings with the Securities and Exchange Commission.

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

                                   Three Months        Nine Months
                                Ended September 30  Ended September 30
                                  1998     1997      1998      1997

Net sales                        151,793  105,044   439,829   313,715
Cost of sales                     57,832   38,598   165,600   115,066
Revaluation of acquired
 inventory(A)                          0        0    16,500         0
  Gross profit                    93,961   66,446   257,729   198,649

Selling, general and
 administrative expenses          49,276   39,008   151,216   116,993
Research and development
 expenses                          8,512    6,259    25,130    17,851
Expensed in-process
 research and
 development(A)                        0   55,000         0    55,000
Goodwill and purchased
 technology amortization           2,537    1,444     7,043     4,216
  Operating income (loss)         33,636  (35,265)   74,340     4,589

Interest expense, net              4,416    2,334    14,367     8,317
 Income (loss) from
  operations before
  income taxes                    29,220  (37,599)   59,973    (3,728)

Provision for income taxes         7,264    3,480    17,660    10,254
  Net income (loss)               21,956  (41,079)   42,313   (13,982)

Less: preferred stock
 dividend and accretion              241      237       720       705
  Net income (loss) available
   to common stockholders         21,715  (41,316)   41,593   (14,687)

Net income (loss) per basic
 common share                       0.72    (1.42)     1.39     (0.51)

Net income (loss) per
 diluted common share               0.67    (1.42)     1.29     (0.51)

Weighted average number of
 basic common shares              30,014   29,074    29,859    28,986

Weighted avg. number of
 diluted common shares
 and equivalents                  32,411   29,074    32,206    28,986


(A)  Nonrecurring 1998 and 1997 charges, no associated tax effects




                  Waters Corporation and Subsidiaries
                 Condensed Consolidated Balance Sheets

                                         September 30,  December 31,
                                             1998          1997
                                          (Unaudited)

Cash and cash equivalents                     3,558         3,113
Accounts receivable                         119,784       111,022
Inventories                                  82,904        87,375
Other current assets                         17,683        11,614
   Total current assets                     223,929       213,124

Property, plant and equipment, net           88,579        88,668
Other assets                                241,754       250,267
   Total assets                             554,262       552,059

Notes payable                                 7,106         7,394
Accounts payable and accrued expenses       170,821       163,262
   Total current liabilities                177,927       170,656

Loans payable                               252,205       305,340
Redeemable preferred stock                    8,816         8,096
Other liabilities                             7,378         5,670
   Total liabilities                        446,326       489,762

 Total equity                               107,936        62,297
   Total liabilities and equity             554,262       552,059


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