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Waters Corporation Third Quarter 2003 Sales Up 7%, Earnings Per Diluted Share in Line with Company's Expectations

MILFORD, Mass., Oct 22, 2003 (BUSINESS WIRE) -- Waters Corporation (NYSE:WAT) reported today third quarter 2003 sales of $230.4 million, an increase of 7 % over sales of $216.0 million in the third quarter of 2002. Sales for the quarter benefited from the positive effects of currency translation that contributed approximately 5% to the quarter's reported growth. Quarterly earnings per diluted share (E.P.S.) were $0.29, compared to $0.29 for the third quarter in 2002. On a pro-forma basis, excluding an in-process R&D charge, E.P.S. were $0.33 for the quarter, an increase of 14% over the last year's third quarter E.P.S. of $0.29. Free cash flow for the quarter was approximately $34 million.

Commenting on the quarter, Douglas Berthiaume, Chairman, President and Chief Executive Officer said, "Growth in our HPLC business, driven by improved pharmaceutical spending in the U.S., highlighted our third quarter performance. This business improvement was somewhat offset by continued weakness in the proteomics and drug discovery markets affecting our mass spectrometry products. However, late in the quarter, we began customer shipments of the Quattro Premier(TM) marking our re-entry into the domestic high-end tandem quadrupole market. We are confident that our new Quattro Premier(TM) will accelerate growth of our worldwide market share in this resilient and growing product market."

As communicated in a prior press release, Waters Corporation will webcast its third quarter 2003 financial results conference call this morning, October 22, 2003, 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 October 28, 2003, similarly by webcast, and also by phone at 402-220-5317.

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 $4.4 billion of the overall $20 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: 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 demands of the Company's healthcare and pharmaceutical company customers, changes in the healthcare market and the pharmaceutical industry, changes in distribution of the Company's products, the short-term effect on sales and expenses as a result of the formerly announced combination of the Waters and Micromass sales, service and distribution organizations, and foreign exchange fluctuations. 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, 2002, 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)

                                Three Months Ended  Nine Months Ended
                                    September 30      September 30
                                   2003     2002     2003     2002

Net sales                         230,381  216,045  683,132  633,578
Cost of sales                      95,045   89,832  284,744  265,066

  Gross profit                    135,336  126,213  398,388  368,512

Selling, general and
 administrative expenses           66,743   62,759  197,033  183,896
Research and development expenses  15,106   13,576   42,456   38,499
Purchased intangibles amortization  1,179      860    3,234    2,697
Litigation provisions (A)               -        -    1,500    2,800
Loss on disposal of business (B)        -        -    5,031        -
Restructuring and other
 unusual charges (C)                 (135)       -    1,079        -
Expensed in-process research
 and development (D)                5,160        -    5,160        -

  Operating income                 47,283   49,018  142,895  140,620

Other income, net                       -        -        -      116
Interest income, net                1,550    1,661    4,279    4,539
  Income from operations
   before income taxes             48,833   50,679  147,174  145,275

Provision for income taxes         12,419   11,656   34,685   33,301
  Income before cumulative
   effect of change in
    accounting principle           36,414   39,023  112,489  111,974

Cumulative effect of change
 in accounting principle (E)            -        -        -   (4,506)
  Net income                       36,414   39,023  112,489  107,468


Income per basic common share:
  Net income before cumulative
   effect of accounting
   principle change                  0.30     0.30     0.91     0.85
  Cumulative effect of change
   in accounting principle (E)          -        -        -    (0.03)
    Net income                       0.30     0.30     0.91     0.82


Income per diluted common share:
  Net income before cumulative
   effect of accounting
   principle change                  0.29     0.29     0.87     0.82
  Cumulative effect of change
   in accounting principle (E)          -        -        -    (0.03)
    Net income                       0.29     0.29     0.87     0.79


Weighted average number of
 basic common shares              122,240  130,788  124,000  131,090

Weighted average number of
 diluted common shares
 and equivalents                  126,709  135,483  128,568  136,511


(A) The results for the nine months ended September 30, 2003 include a
    $1.5 million provision for an environmental matter with the
    Commonwealth of Massachusetts.

(B) The results for the nine months ended September 30, 2003 include a
    loss on disposal of the inorganic mass spectrometry product line.

(C) The results for the three and nine months ended September 30, 2003
    include restructuring and other incremental costs and adjustments
    recorded in relation to the Company's reorganization of the HPLC
    and mass spectrometry businesses, and restructuring charges
    relating to the acquisition of the rheology business of Rheometric
    Scientific, Inc.

(D) The results for the three and nine months ended September 30, 2003
    include charges for expensed in-process research and development
    relating to the acquisition of Creon Lab Control, AG.

(E) Effect at January 1, 2002 of a change in accounting method for
    patent related costs.


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

                                         (Unaudited)     (Unaudited)
                                        Three Months     Nine Months
                                            Ended           Ended
                                         September 30    September 30
                                          2003  2002     2003    2002
Reconciliation of income per diluted
 share, in accordance with generally
 accepted accounting principles,
 with pro-forma results:

Income per diluted share before
 cumulative effect of change in
 accounting principle                      0.29  0.29     0.87   0.82

Adjustment for litigation provisions,
 net of tax                                   -     -    1,155  2,044
Income per diluted share effect               -     -     0.01   0.01

Adjustment for restructuring and other
 unusual charges, net of tax               (104)    -      831      -
Income per diluted share effect           (0.00)    -     0.01      -

Loss on disposal of business, net of tax      -     -    3,522      -
Income per diluted share effect               -     -     0.03      -

Other expense, write down of certain
 investments, net of tax                      -     -        -    (89)
Income per diluted share effect               -     -        -  (0.00)

Expensed in-process research and
 development                              5,160     -    5,160      0
Income per diluted share effect            0.04     -     0.04      -

Pro-forma income per diluted share:        0.33  0.29     0.96   0.83

The pro-forma 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
those items management has excluded as non-operational activities or
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)

                                          September 30,  December 31,
                                              2003          2002

Cash and cash equivalents                    288,120       263,312
Restricted cash                                    0        49,944
Accounts receivable                          195,711       196,273
Inventories                                  124,947       130,241
Other current assets                          16,251        13,341
   Total current assets                      625,029       653,111

Property, plant and equipment, net           106,780       100,329
Other assets                                 301,274       255,478
   Total assets                            1,033,083     1,008,918


Notes payable and debt                       181,110         2,665
Accounts payable and accrued expenses        257,694       313,758
   Total current liabilities                 438,804       316,423

Other long-term liabilities                   29,334        27,185
   Total liabilities                         468,138       343,608

Total equity                                 564,945       665,310
   Total liabilities and equity            1,033,083     1,008,918

SOURCE: Waters Corporation

Waters Corporation
Gene Cassis, 508-482-2349
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