01—Abstract
Summary
Summary of the 10-K filed March 27, 2001. Cited figures are marked; the original filing is the authoritative source.
Waters Corporation's annual report on Form 10-K for the fiscal year ended December 31, 2000 shows net sales of $795.1 milliona, up 13% from $704.4 million in 1999, or 17% excluding currency effects.
Operating income rose to $210.8 millionb, a 19% increase, and income before the cumulative effect of an accounting change was $156.1 million, up 28%. Diluted EPS before the cumulative effect was $1.14, compared with $.92 in 1999. Net income after a $10.8 million charge for the cumulative effect of the change in revenue recognition (SAB 101) was $145.3 million, or $1.06 per diluted share.
The company describes itself as the world's largest manufacturer and distributor of HPLC instruments, columns and consumables, with growing mass spectrometry (Micromass) and thermal analysis (TA Instruments) businesses. Approximately 57% of 2000 net sales came from outside the United States, and about 64% came from the pharmaceutical industry. Net cash from operating activities was $175.6 million, and cash and cash equivalents rose to $75.5 millionc from $3.8 million.
Bank debt was fully repaid, and the company had no borrowings outstanding under its $450 milliond credit agreement at year end. The filing also covers risks that investors should weigh: competition from larger instrument makers, concentration of sales in the pharmaceutical sector, currency exposure, and several patent infringement suits, none of which management considers material. The company has not paid dividends and does not plan to.
02—Key points
Key Highlights
- Net sales of $795.1 million in 2000, up 13% from $704.4 million in 1999; sales grew 17% excluding currency effects.
- Operating income of $210.8 million, up 19% from $176.5 million; operating margin reported as 26.5% in the adjusted results table.
- Diluted EPS of $1.14 before the $10.8 million cumulative effect of the SAB 101 revenue recognition change, up 24% from $.92; reported diluted EPS after the charge was $1.06.
- Cash and cash equivalents of $75.5 million at year end, versus $3.8 million in 1999, and no outstanding borrowings under the $450 million Bank Credit Agreement.
- Net cash provided by operating activities of $175.6 million in 2000, compared with $150.2 million in 1999.
- Approximately 57% of 2000 net sales were generated outside the United States, and about 64% were to the pharmaceutical industry.
- Research and development spending rose to $42.5 million from $36.1 million, and time-of-flight mass spectrometry sales grew in excess of 50%.
03—Questions
Frequently Asked Questions
How did Waters perform financially in 2000?
Net sales rose 13% to $795.1 million and operating income rose 19% to $210.8 million. Income before the cumulative effect of an accounting change was $156.1 million, up 28%. After a $10.8 million non-cash charge for the change in revenue recognition, net income was $145.3 million.
What caused the cumulative effect charge?
Effective January 1, 2000, Waters changed its revenue recognition for certain products requiring installation under SAB 101. Revenue related to installation is now deferred until installation is complete. The cumulative effect on prior years was a charge of $10.8 million, net of a $3.8 million income tax benefit.
How exposed is Waters to foreign currency and customer concentration?
About 57% of 2000 net sales were outside the United States and are primarily denominated in foreign currencies, so a strong U.S. dollar could materially reduce results. Approximately 64% of net sales went to the pharmaceutical industry, which the filing says may be subject to unfavorable market conditions and consolidation. No single customer accounted for more than 2% of sales.
Does Waters pay dividends, and what is its balance sheet position?
Waters has not declared or paid dividends in the past two years and does not plan to in the foreseeable future. At December 31, 2000, cash and cash equivalents were $75.5 million, total assets were $692.3 million, and stockholders' equity was $451.8 million. The company had no outstanding borrowings under its Bank Credit Agreement, which had $442.8 million available after letters of credit.
What legal matters does the filing disclose?
Waters is involved in several patent infringement actions, including disputes with Perkin-Elmer, Hewlett-Packard (Agilent), Cohesive Technologies, Viscotek and PE/MDS/Perkin-Elmer Sciex. Management says it has meritorious arguments and believes that no outcome of these proceedings will be material to the company.
04—Continue