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Waters Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed March 21, 2003
Period End
December 31, 2002
Security
WAT
In the record · 2016–202610-K1210-Q338-K109

WAT filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 109 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Jul ’17Jul ’17
  2. Material agreement8-K · Sep ’19Sep ’19
  3. Leadership change8-K · Oct ’21Oct ’21
  4. Material agreement8-K · Jul ’25Jul ’25

01—Abstract

Summary

Summary of the 10-K filed March 21, 2003. Cited figures are marked; the original filing is the authoritative source.

Waters Corporation's 10-K for fiscal 2002 reports net sales of $889,967 thousanda ($890.0 million), up 4% from $859.2 million in 2001, or 2% excluding favorable currency effects.

Reported operating income was $196.4 millionb, compared with $149.5 million in 2001, which was depressed by a $75.0 million patent litigation charge. Net income was $147.7 million, or $1.09 per diluted share, after a $4.5 million cumulative effect of an accounting change for patent-related costs. Net cash provided by operating activities was $219.6 million, and cash and cash equivalents stood at $263.3 million at December 31, 2002.

The largest investor concern is the Applera patent litigation. A jury found the Quattro Ultima mass spectrometer infringed a U.S. patent, and in March 2003 the appeals court affirmed the judgment, including damages and interest of approximately $54.0 millionc, which the company expects to pay in the second quarter of 2003 using restricted cash of $49.9 million. The U.S. product is subject to an injunction, and similar claims have been asserted in other countries.

Other open matters include the Hewlett-Packard and Perkin-Elmer patent cases, the Cohesive Technologies suits, and a $5.1 milliond environmental litigation provision for the Taunton, Massachusetts facility. Management says the company remained essentially debt-free, had a $250.0 million unsecured credit line, and had $100.7 million of treasury share repurchases remaining under its program. The filing describes Waters as the world's largest manufacturer and distributor of HPLC instruments, columns and consumables, and related service, with mass spectrometry and thermal analysis businesses added through Micromass and TA Instruments.

Around 57% of 2002 net sales were to the pharmaceutical industry, and about 62% came from outside the United States. Service revenue rose to $192.7 million from $162.6 million, and U.S. sales declined 5% because of the litigation.

02—Key points

Key Highlights

  1. Net sales rose 4% to $889,967 thousand in 2002, or 2% excluding currency effects; U.S. sales were down 5% due to the Applera patent litigation.
  2. Operating income was $196.4 million, up from $149.5 million, mainly because 2001 included a $75.0 million patent litigation charge.
  3. Net income was $147.7 million, or $1.09 per diluted share, versus $114.5 million, or $0.83 per diluted share, in 2001.
  4. The Applera patent judgment was affirmed on appeal in March 2003, with damages and interest of approximately $54.0 million expected to be paid in the second quarter of 2003; restricted cash of $49.9 million was set aside for it.
  5. Cash and cash equivalents were $263.3 million at December 31, 2002, and net cash from operating activities was $219.6 million.
  6. The company repurchased treasury shares for $99.3 million in 2002, with $100.7 million remaining under its repurchase program, and had a $250.0 million unsecured credit facility with no borrowings outstanding.
  7. Roughly 62% of 2002 net sales came from outside the United States, and about 57% came from the pharmaceutical industry.

03—Questions

Frequently Asked Questions

  1. How much is the Applera patent litigation expected to cost Waters, and when?

    The filing states that the appeals court affirmed the judgment in March 2003, including damages and interest of approximately $54.0 million. The company expects to pay this in the second quarter of 2003, and it had placed $49.9 million in restricted cash as credit support for a standby letter of credit.

  2. Why did operating income increase in 2002?

    Operating income rose to $196.4 million from $149.5 million, primarily because litigation provisions fell from $75.0 million in 2001 to $7.9 million in 2002, sales increased, and goodwill amortization ended. These gains were partly offset by $7.4 million of restructuring charges, a $2.4 million impairment charge, and higher operating expenses.

  3. Is Waters carrying debt, and how much liquidity does it have?

    The filing says the company remained essentially debt-free, with no borrowings outstanding under its $250.0 million unsecured credit agreement at December 31, 2002, and $248.0 million available after letters of credit. Cash and cash equivalents were $263.3 million.

  4. What other legal and environmental matters are disclosed?

    The filing discloses patent suits with Hewlett-Packard, Perkin-Elmer, Cohesive Technologies, Viscotek, Varian and the University of Manitoba. It also discloses a Massachusetts Department of Environmental Protection matter at the Taunton facility, for which a $5.1 million provision was recorded and settlement in the form of a fine and capital improvements is expected in the second quarter of 2003.

  5. What does the company's business mix look like?

    Instruments and data products represent about two-thirds of total revenue, with consumables and service making up the rest. Service revenue was $192.7 million in 2002, up from $162.6 million in 2001. The company operates in HPLC, mass spectrometry and thermal analysis, and these segments are aggregated into one reporting segment.

04—Continue

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