WAT has a late surge in sales, beats revised guidance by a couple of pennies.
>>MILFORD, Mass.--(BUSINESS WIRE)--Jan. 28, 2003--Waters Corporation reported today fourth quarter 2002 sales of $256 million and earnings per diluted share (E.P.S.) of $0.41, compared to $0.43 in 2001, both before unusual charges. Sales were down 1% compared with the prior year's quarterly results before currency effects and up 3% at actual exchange rates. Earnings per share including charges were $0.30 for the fourth quarter 2002, as compared to ($0.01) in 2001.
Fourth quarter unusual charges, as explained in the accompanying financial schedules, consisted of charges for the write down of non-affiliate investments reflected in other expense and an impairment of long-lived assets, restructuring and unusual charges related to the combination of the company's field organizations, and an estimated litigation provision for outstanding legal matters. The financial schedules also reflect a reclassification of service costs from selling, general and administrative expenses to cost of sales as explained in the financial schedules.
Douglas Berthiaume, Chairman and Chief Executive Officer, said, "Overall, 2002 was a challenging year for the company. The combined effects of a mass spectrometry patent dispute loss in the first quarter and slower demand, late in the year, from large pharmaceutical customers adversely affected our growth.
During the fourth quarter, despite slower high performance liquid chromatography (HPLC) sales to our large pharmaceutical customers, improved HPLC demand from other market segments in late December resulted in somewhat better performance than last expected. Results for the quarter therefore exceeded the revised guidance we had communicated in early December. Sales of mass spectrometry (MS) and thermal analysis instruments for the quarter were in line with our expectations.
In preparation for 2003, we have made significant progress on several key initiatives. New product development efforts in mass spectrometry are on track and a second quarter 2003 introduction of a new high performance triple quadrupole system is planned. Our combined field organization for HPLC and MS products is now in place and we recorded restructuring and other unusual charges of $7.4 million in the fourth quarter. The acquisition of the rheology products of Rheometric Scientific was completed in January and we have begun its integration into our thermal analysis product line. We continue to pursue new business acquisitions, and our $200 million share repurchase plan is on schedule; approximately $100 million of stock was purchased during the last half of 2002.
Significantly, our business continues to generate strong free cash flow with $50 million for the quarter alone and $192 million for the full year."
As communicated in a prior press release, Waters Corporation will webcast its fourth quarter 2002 financial results conference call this morning, January 28, 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 February 3, 2003, similarly by webcast, and also by phone at 402-220-2055.
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 press release presents earnings per share, excluding unusual charges, not derived in accordance with generally accepted accounting principles (GAAP). Such earnings per share should not be considered a substitute for earnings per share derived in accordance with GAAP, (and may also be prepared in a different manner from, or inconsistent with similar earnings per share presented by other companies.) Reconciliation of non-GAAP earnings per share to GAAP is presented in the attached pages.
This press release also contains certain statements that 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 demands of our healthcare and pharmaceutical company customers, changes in the healthcare market and the pharmaceutical industry, changes in distribution of the Company's products, 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 Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Year Ended
December 31 December 31
2002 2001 2002 2001
Net sales 256,389 248,679 889,967 859,208
Cost of sales (A) 108,402 102,601 373,468 361,931
Gross profit 147,987 146,078 516,499 497,277
Selling, general and
administrative expenses (A) 62,920 56,385 246,816 219,007
Research and development
expenses 13,424 12,029 51,923 46,602
Goodwill and purchased
technology amortization 903 1,867 3,600 7,141
Litigation provision (B) 5,100 75,000 7,900 75,000
Impairment of long-lived asset(C) 2,445 - 2,445 -
Restructuring and other unusual
charges (D) 7,404 - 7,404 -
Operating income 55,791 797 196,411 149,527
Other expense, net (E) (6,113) (7,066) (5,997) (7,066)
Interest income, net 458 1,117 4,997 4,965
Income (loss) from operations
before income taxes 50,136 (5,152) 195,411 147,426
Provision for income taxes 9,892 (3,736) 43,193 32,883
Income (loss) before
cumulative effect of change
in accounting principle 40,244 (1,416) 152,218 114,543
Cumulative effect of change in
accounting principle, net of
tax (F) - - (4,506) -
Net income (loss) 40,244 (1,416) 147,712 114,543
Income (loss) per basic common
share:
Net income (loss) before
cumulative effect of
accounting principle change 0.31 (0.01) 1.17 0.88
Cumulative effect of change in
accounting principle (F) - - (0.03) -
Net income (loss) 0.31 (0.01) 1.13 0.88
Income (loss) per diluted common
share:
Net income (loss) before
cumulative effect of
accounting principle change 0.30 (0.01) 1.12 0.83
Cumulative effect of change in
accounting principle (F) - - (0.03) -
Net income (loss) 0.30 (0.01) 1.09 0.83
Weighted average number of basic
common shares 128,752 130,815 130,489 130,559
Weighted average number of
diluted common shares and
equivalents 133,573 130,815 135,762 137,509
(A) Certain service costs previously classified in selling, general
and administrative expenses have been reclassified to cost of
sales in the following amounts: $15.7m and $13.3m for Q4 2002 and
2001, respectively, and $58.4m and $50.7m for the full year 2002
and 2001, respectively.
(B) Expenses recorded in relation to the Company's patent and
regulatory proceedings.
(C) Charge recorded for full write-down of a technology license asset.
(D) Both restructuring and other incremental costs incurred in
relation to the Company's reorganization of the HPLC and Mass
Spectrometry business.
(E) Includes write-down of certain non-affiliate investments.
(F) 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)
Three Months Ended Year Ended
December 31 December 31
2002 2001 2002 2001
Reconciliation of income per diluted share, in accordance with
generally accepted accounting principles, with income before unusual
charges:
Income per diluted share before
cumulative effect of change in
accounting principle 0.30 (0.01) 1.12 0.83
Adjustment for litigation
provision, net of tax 3,315 54,500 5,359 54,500
Income per diluted share effect 0.03 0.40 0.04 0.40
Adjustment for restructuring and
other unusual charges, net of tax 5,701 - 5,701 -
Income per diluted share effect 0.04 - 0.04 -
Adjustment for impairment of long-
lived asset, net of tax 1,589 - 1,589 -
Income per diluted share effect 0.01 - 0.01 -
Adjustment for other expense,
write down of certain
investments, net of tax 3,974 5,370 3,974 5,370
Income per diluted share effect 0.03 0.04 0.03 0.04
Income per diluted share before
unusual charges 0.41 0.43 1.24 1.27
The income per diluted share before unusual charges presented above is
used by the management of the Company to measure performance with
prior periods and is not in accordance with generally accepted
accounting principles (GAAP). The above reconciliation identifies
those activities and transactions management has excluded. Management
feels these activities or transactions may not be indicative of
understanding the performance of the business or its future outlook.
Waters Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
December 31, December 31,
2002 2001
Cash and cash equivalents 263,312 226,798
Restricted cash 49,944 -
Accounts receivable 198,302 182,164
Inventories 111,557 102,718
Other current assets 13,341 11,064
Total current assets 636,456 522,744
Property, plant and equipment, net 119,013 114,207
Other assets 255,478 249,960
Total assets 1,010,947 886,911
Notes payable 2,665 1,140
Accounts payable and accrued expenses 317,550 279,866
Total current liabilities 320,215 281,006
Other liabilities 25,422 24,160
Total liabilities 345,637 305,166
Total equity 665,310 581,745
Total liabilities and equity 1,010,947 886,911<<
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Cheers, Tuck |
