Waters Reports Fourth Quarter 2012 Financial Results

  Waters Reports Fourth Quarter 2012 Financial Results

Business Wire

MILFORD, Mass. -- January 22, 2013

Waters Corporation (NYSE: WAT) reported fourth quarter 2012 sales of $522
million, slightly ahead of $521 million in the fourth quarter of 2011. In the
quarter, constant currency sales growth was approximately 1.5%. On a GAAP
basis, earnings per diluted share (E.P.S.) for the fourth quarter were $2.00
compared to $1.51 for the fourth quarter of 2011. On a non-GAAP basis,
including the adjustments in the attached reconciliation, E.P.S. grew 2% to
$1.59 from $1.56 in the fourth quarter of 2011.

For the full year, sales for the Company were $1.84 billion, compared to sales
of $1.85 billion in 2011, with foreign currency translation reducing sales
growth by about 2%. E.P.S. for 2012 were $5.19 compared to $4.69 in 2011. On a
non-GAAP basis, including adjustments in the attached reconciliation, E.P.S.
grew 2% to $4.93 from $4.81 in 2011.

Commenting on the Company’s 2012 performance, Douglas Berthiaume, Chairman,
President and Chief Executive Officer said, “Demand trends in the fourth
quarter were generally consistent with those observed throughout 2012. Our
recurring revenues and business in Asia contributed to overall constant
currency growth during a challenging period for the Company. For the full
year, the combination of a stable pricing environment and prudent cost control
allowed us to maintain our operating income level and grow our E.P.S.
principally by reducing our share count through share repurchases.”

As communicated in a prior press release, Waters Corporation will webcast its
fourth quarter 2012 financial results conference call this morning, January
22, 2013 at 8:30 a.m. eastern time. To listen to the call, connect to
www.waters.com, choose “Investor Relations” and click on the “Live Webcast”. A
replay will be available through January 29 at midnight eastern time,
similarly by webcast and also by phone at 402-220-9829.

                             CAUTIONARY STATEMENT

This release may contain “forward-looking” statements regarding future results
and events. 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”, “suggests”, “appears”, “estimates”, “projects”, and similar
expressions, whether in the negative or affirmative, 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 on demand among the Company’s various market sectors
from economic, sovereign and political uncertainties; increased regulatory
burdens as the Company’s business evolves, especially with respect to the U.S.
Food and Drug Administration and U.S. Environmental Protection Agency, among
others; shifts in taxable income in jurisdictions with different effective tax
rates; the outcome of tax examinations or changes in respective country
legislation affecting the Company’s effective tax rate; the ability to access
capital, maintain liquidity and service our debt in volatile market
conditions, particularly in the U.S., as a large portion of the Company’s cash
is held and operating cash flows are generated outside the U.S.; fluctuations
in expenditures by the Company’s customers, in particular large pharmaceutical
companies; introduction of competing products by other companies and loss of
market share; pressures on prices from competitors and/or customers;
regulatory, economic and competitive obstacles to new product introductions;
other changes in demand from the effect of mergers and acquisitions by the
Company’s customers; environmental and logistical obstacles affecting the
distribution of 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
potentially 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 December31, 2011 and Form 10-Q for the period ended September 29,
2012 as filed with the Securities and Exchange Commission, 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              Twelve Months Ended
                     December        December        December 31,      December 31,
                     31, 2012        31, 2011        2012              2011
                                                                       
Net sales            $ 521,766       $ 521,420       $ 1,843,641       $ 1,851,184
Cost of sales          208,363         204,243         737,614           730,493
                                                                       
Gross profit           313,403         317,177         1,106,027         1,120,691
                                                                       
Selling and
administrative         122,147         126,237         477,270           490,011
expenses
Research and
development            24,958          23,707          96,004            92,347
expenses
Purchased
intangibles            2,459           2,359           13,829            9,733
amortization
Litigation             4,434           -               7,434             -
provisions
                                                                       
Operating income       159,405         164,874         511,490           528,600
                                                                       
Interest               (6,373  )       (6,193  )       (23,865   )       (19,348   )
expense, net
                                                                       
Income from
operations             153,032         158,681         487,625           509,252
before income
taxes
                                                                       
Provision for
income tax             (22,912 )       21,534          26,182            76,284
(benefit)
expense
                                                                       
Net income           $ 175,944       $ 137,147       $ 461,443         $ 432,968
                                                                       
                                                                       
Net income per
basic common         $ 2.03          $ 1.54          $ 5.25            $ 4.77
share
                                                                       
Weighted-average
number of basic        86,712          89,324          87,841            90,833
common shares
                                                                       
                                                                       
Net income per
diluted common       $ 2.00          $ 1.51          $ 5.19            $ 4.69
share
                                                                       
Weighted-average
number of
diluted common         87,851          90,566          88,979            92,325
shares and
equivalents
                                                                                   

                     Waters Corporation and Subsidiaries
       Quarterly Reconciliation of GAAP to Adjusted Non-GAAP Financials
                    (in thousands, except per share data)

The 2012 and 2011 adjusted amounts presented below are used by the management
of the Company to measure operating performance with prior periods and
forecasts and are not in accordance with generally accepted accounting
principles (GAAP). The Company believes that the use of Non-GAAP measures,
such as Non-GAAP Earnings Per Share (E.P.S.) and Non-GAAP Operating Income,
help management and investors gain a better understanding of our core
operating results and future trends, and is consistent with how management
measures compensation and forecasts the Company’s performance.The
reconciliation identifies items management has excluded as non-operational
transactions.Management has excluded the following items:

  *Purchased Intangibles Amortization and Step-Up Expenses were excluded to
    allow for comparisons of operating results that are consistent over
    periods of time.
  *Restructuring Costs, Asset Impairments, Acquisition-Related Costs and
    Other One-Time Costs were excluded as the Company believes that costs to
    consolidate operations, reduce overhead and complete acquisitions are
    infrequent or unusual and are not indicative of normal operating costs.
  *Litigation Provisions and Non‐Income Tax Audit Settlement Provisions were
    excluded as these costs are isolated, unpredictable and not expected to
    recur regularly.
  *Net Operating Loss Tax Benefit was excluded as this was a one-time tax
    benefit recognized in 2012 as a result of a refinancing of inter-company
    debt that allowed the recognition of certain previously reserved deferred
    tax assets.
  *One‐Time Income Tax Benefits were excluded as these costs and benefits are
    typically the result of audit examination settlements or updates in
    management's assessment of ongoing examinations and are not indicative of
    the Company’s normal or future income tax expense.

                 (Unaudited)
                   Three Months Ended              Twelve Months Ended
                   December 31,   December 31,   December 31,    December 31,
                   2012             2011             2012              2011
                                                                  
GAAP Gross         $ 313,403        $ 317,177        $ 1,106,027       $ 1,120,691
Profit
Asset             -            -            1,903         -         
Impairments
Adjusted
Non-GAAP Gross   $ 313,403     $ 317,177     $ 1,107,930    $ 1,120,691 
Profit
                                                                       
                                                                       
GAAP Selling
and
Administrative
Expenses
(including
Purchased
Intangibles
Amortization       $ (129,040 )     $ (128,596 )     $ (498,533  )     $ (499,744  )
and Litigation
Provisions)
Purchased
Intangibles
Amortization &       2,592            2,813            14,420            10,583
Step-Up
Expenses
Restructuring
Costs, Asset
Impairments,         1,582            1,651            5,843             6,291
Acquisitions &
Other One-Time
Costs
Litigation           4,434            -                7,434             -
Provisions
Non-Income Tax
Audit             -            2,050        484           2,050     
Settlement
Provisions
Adjusted
Non-GAAP
Selling &        $ (120,432 )   $ (122,082 )   $ (470,352  )   $ (480,820  )
Administrative
Expenses
                                                                       
                                                                       
GAAP Operating     $ 159,405        $ 164,874        $ 511,490         $ 528,600
Income
Purchased
Intangibles
Amortization &       2,592            2,813            14,420            10,583
Step-Up
Expenses
Restructuring
Costs, Asset
Impairments,         1,582            1,651            7,746             6,291
Acquisitions &
Other One-Time
Costs
Litigation           4,434            -                7,434             -
Provisions
Non-Income Tax
Audit             -            2,050        484           2,050     
Settlement
Provisions
Adjusted
Non-GAAP         $ 168,013     $ 171,388     $ 541,574      $ 547,524   
Operating
Income
                                                                       
                                                                       
GAAP Provision
for Income Tax     $ 22,912         $ (21,534  )     $ (26,182   )     $ (76,284   )
Benefit
(Expense)
Purchased
Intangibles
Amortization &       (630     )       (910     )       (4,601    )       (3,409    )
Step-Up
Expenses
Restructuring
Costs, Asset
Impairments,         (567     )       (567     )       (2,864    )       (1,984    )
Acquisitions &
Other One-Time
Costs
Litigation           (1,663   )       -                (2,788    )       -
Provisions
Non-Income Tax
Audit                -                (759     )       (182      )       (759      )
Settlement
Provisions
Net Operating
Loss Tax             (36,250  )       -                (36,250   )       -
Benefit
One-Time
Income Tax        (6,035   )    -            (6,035    )    (1,617    )
Benefits
Adjusted
Non-GAAP
Provision for    $ (22,233  )   $ (23,770  )   $ (78,902   )   $ (84,053   )
Income Tax
Benefit
(Expense)
                                                                       
                                                                       
GAAP Net           $ 175,944        $ 137,147        $ 461,443         $ 432,968
Income
Purchased
Intangibles
Amortization &       1,962            1,903            9,819             7,174
Step-Up
Expenses
Restructuring
Costs, Asset
Impairments,         1,015            1,084            4,882             4,307
Acquisitions &
Other One-Time
Costs
Litigation           2,771            -                4,646             -
Provisions
Non-Income Tax
Audit                -                1,291            302               1,291
Settlement
Provisions
Net Operating
Loss Tax             (36,250  )       -                (36,250   )       -
Benefit
One-Time
Income Tax        (6,035   )    -            (6,035    )    (1,617    )
Benefits
Adjusted
Non-GAAP Net     $ 139,407     $ 141,425     $ 438,807      $ 444,123   
Income
                                                                       
                                                                       
GAAP E.P.S.        $ 2.00           $ 1.51           $ 5.19            $ 4.69
Purchased
Intangibles
Amortization &       0.02             0.02             0.11              0.08
Step-Up
Expenses
Restructuring
Costs, Asset
Impairments,         0.01             0.01             0.05              0.05
Acquisitions &
Other One-Time
Costs
Litigation           0.03             -                0.05              -
Provisions
Non-Income Tax
Audit                -                0.01             0.00              0.01
Settlement
Provisions
Net Operating
Loss Tax             (0.41    )       -                (0.41     )       -
Benefit
One-Time
Income Tax        (0.07    )    -            (0.07     )    (0.02     )
Benefits
Adjusted
Non-GAAP         $ 1.59        $ 1.56        $ 4.93         $ 4.81      
E.P.S.
                                                                                   

Waters Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands and unaudited)
                                                        
                                                             
                                                             
                                       December 31, 2012     December 31, 2011
                                                             
                                                             
Cash, cash equivalents and             1,539,025             1,281,351
short-term investments
Accounts receivable                    404,556               367,085
Inventories                            229,565               212,864
Other current assets                   84,580                80,804
Total current assets                   2,257,726             1,942,104
                                                             
Property, plant and equipment, net     273,279               237,095
Other assets                           637,145               544,035
Total assets                           3,168,150             2,723,234
                                                             
                                                             
Notes payable and debt                 132,781               290,832
Accounts payable and accrued           361,866               311,031
expenses
Total current liabilities              494,647               601,863
                                                             
Long-term debt                         1,045,000             700,000
Other long-term liabilities            161,146               194,793
Total liabilities                      1,700,793             1,496,656
                                                             
Total equity                           1,467,357             1,226,578
Total liabilities and equity           3,168,150             2,723,234
                                                             

Contact:

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