Through the first six months of 2008, sales for the Company were $770 million, a 13% increase over sales in the first six months of 2007 of $683 million. Foreign currency translation contributed 6% to this reported sales growth rate. E.P.S. for the first six months of 2008 were $1.49 compared to $1.13 for the comparable period in 2007. On a non-GAAP basis and including the adjustments on the attached reconciliation, E.P.S. grew 25% in the first six months of 2008 to $1.45 from $1.16 in 2007.
Commenting on the quarter, Douglas Berthiaume, Chairman, President and Chief Executive Officer said, "Though the first half of 2008 presented Waters with a challenging economic environment, solid sales of our technologically advanced systems solutions, as well as our recurring revenues, resulted in strong earnings growth and superior cash generation."
As communicated in a prior press release, Waters Corporation will webcast its second quarter 2008 financial results conference call this morning, July 22, 2008 at 8:30 a.m. eastern time. To listen to the call, connect to www.waters.com, choose "Investor" and click on the Live Webcast. A replay of the call will be available through July 29, 2008, similarly by webcast and also by phone at 402-998-1458.
About Waters Corporation:
Waters Corporation creates business advantage for laboratory-dependent organizations by delivering practical and sustainable innovation to enable significant advancements in such areas as healthcare delivery, environmental management, food safety, and water quality worldwide.
Pioneering a connected portfolio of separations science, laboratory information management, mass spectrometry and thermal analysis, Waters technology breakthroughs and laboratory solutions provide an enduring platform for customer success.
With revenue of $1.47 billion in 2007 and 5,000 employees, Waters is driving scientific discovery and operational excellence for customers worldwide. CAUTIONARY STATEMENT
This release may contain "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 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, the impact of changes in accounting principles or tax rates, the ability to successfully integrate acquired businesses, 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, risks associated with lawsuits and other legal actions particularly involving claims for infringement of patents and other intellectual property rights, 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, 2007 and quarterly report on Form 10-Q for the period ended March 29, 2008 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 June 28, 2008 June 30, 2007 June 28, 2008 June 30, 2007 Net sales 398,771 352,630 770,483 683,407 Cost of sales (1) 175,232 152,219 330,683 295,451 Gross profit 223,539 200,411 439,800 387,956 Selling and administrative expenses 111,935 102,223 217,772 196,130 Research and development expenses 22,228 19,115 42,014 37,837 Purchased intangibles amortization 2,352 2,133 4,624 4,258 Operating income 87,024 76,940 175,390 149,731 Interest expense, net (4,855) (6,396) (9,099) (13,231) Income from operations before income taxes 82,169 70,544 166,291 136,500 Provision for income taxes (1) (979) 10,635 14,668 20,654 Net income 83,148 59,909 151,623 115,846 Net income per basic common share $0.83 $0.60 $1.52 $1.15 Weighted- average number of basic common shares 99,586 100,327 99,981 100,880 Net income per diluted common share $0.82 $0.59 $1.49 $1.13 Weighted- average number of diluted common shares and equivalents 101,035 102,130 101,531 102,702 (1) During the second quarter of 2008, the Company identified errors originating in periods prior to the quarter ended June 28, 2008. The errors primarily relate to (i) an overstatement of the Company's income tax expense of $16.3 million as a result of errors in recording its income tax provision in prior periods and (ii) an understatement of amortization expense of $8.7 million for certain capitalized software. The Company incorrectly calculated its provision for income taxes by tax-effecting a deferred tax liability utilizing a U.S. tax rate of 35% instead of an Irish tax rate of 10%. In addition, the Company incorrectly accounted for Irish-based capitalized software and the related amortization expense as a U.S. Dollar-denominated asset instead of Euro-denominated asset resulting in an understatement of amortization expense and cumulative translation adjustment. The Company identified and corrected the errors in the second quarter of 2008, which had the effect of increasing cost of sales by $8.7 million; reducing gross profit and income from operations before income tax by $8.7 million; reducing the provision for income taxes by $16.3 million and increasing net income by $7.6 million. The Company does not believe that the prior period errors, individually or in the aggregate, are material to any previously issued annual or quarterly financial statements. In addition, the Company does not believe that the adjustments described above to correct the cumulative effect of the errors in the second quarter of 2008 are material to either the second quarter of 2008 or to the estimate of the full year results for 2008. As a result, the Company has not restated its previously issued annual financial statements or interim financial data. (Unaudited) (Unaudited) Three Months Ended Six Months Ended June 28, 2008 June 30, 2007 June 28, 2008 June 30, 2007 Reconciliation of net income per diluted share, in accordance with generally accepted accounting principles, with adjusted results: Net income per diluted share $0.82 $0.59 $1.49 $1.13 ------------- ------------- ------------- ------------- Adjustment for purchased intangibles amortization, net of tax 1,675 1,648 3,278 3,286 Net income per diluted share effect 0.02 0.02 0.03 0.03 ------------- ------------- ------------- ------------- Adjustment for out-of-period errors as described above, net of tax (7,612) - (7,612) - Net income per diluted share effect (0.08) - (0.07) - ------------- ------------- ------------- ------------- Adjusted net income per diluted share $0.76 $0.60 $1.45 $1.16 ============= ============= ============= ============= The adjusted net 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. Management has excluded the purchased intangibles amortization and the adjustment for out-of-period errors and the related tax effects from its non-GAAP adjusted amounts since management believes that these items 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) June 28, 2008 December 31, 2007 Cash, cash equivalents and short-term investments 830,681 693,014 Accounts receivable 304,790 317,792 Inventories 206,873 175,888 Other current assets 47,957 50,368 Total current assets 1,390,301 1,237,062 Property, plant and equipment, net 165,929 160,856 Other assets 508,128 483,137 Total assets 2,064,358 1,881,055 Notes payable and debt 334,020 384,176 Accounts payable and accrued expenses 286,849 274,258 Total current liabilities 620,869 658,434 Long-term debt 650,000 500,000 Other long-term liabilities 142,872 136,545 Total liabilities 1,413,741 1,294,979 Total equity 650,617 586,076 Total liabilities and equity 2,064,358 1,881,055
SOURCE: Waters CorporationWaters Corporation
Gene Cassis, 508-482-2349
Vice President of Investor Relations