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Waters Corporation's Reports 13% Second Quarter 2008 Sales Growth
MILFORD, Mass., Jul 22, 2008 (BUSINESS WIRE) -- Waters Corporation (NYSE:WAT) reported today second quarter 2008 sales of $399 million, an increase of 13% over sales of $353 million in the second quarter of 2007. Foreign currency translation contributed 6% to this reported sales growth rate. On a GAAP basis, earnings per diluted share (E.P.S.) for the first quarter were $0.82, compared to $0.59 for the second quarter in 2007. On a non-GAAP basis, excluding purchased intangibles amortization in both periods and a cumulative adjustment relating to capitalized software amortization and related tax expenses (as noted in the attached reconciliation), E.P.S. grew 27% to $0.76 in the second quarter of 2008 from $0.60 in the second quarter of 2007.

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 Corporation

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