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Waters Annual Report, Year Ended Dec 31, 2003

Filing Date
Filed March 12, 2004
Period End
December 31, 2003
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 12, 2004. Cited figures are marked; the original filing is the authoritative source.

Waters Corporation's 10-K for fiscal 2003 reports net sales of $958.2 milliona, up 8% from $890.0 million in 2002, with the company stating that excluding favorable currency effects, net sales were essentially flat.

Operating income rose to $219.2 millionb from $196.4 million, and net income was $170.9 million, or $1.34 per diluted share, versus $147.7 million, or $1.09 per diluted share, in 2002 (which included a $4.5 million cumulative effect charge). Growth was led by HPLC chemistry and service, thermal analysis (TAI) sales, which grew 20% excluding the acquired rheology business, while mass spectrometry (MS) sales declined approximately 18% excluding the sold inorganic product line, which the filing attributes partly to the Applera patent litigation. The balance sheet shifted meaningfully during 2003.

The company repurchased 11,939 thousand shares for $324.6 millionc, completing its $200 million program and making progress on a new $400 million authorization, which left net borrowings of $246.3 million at year-end compared with no debt in 2002. Cash and cash equivalents were $356.8 million. Operating cash flow was $157.0 million, and the company paid $53.7 million in April 2003 to Applera for patent damages and interest, plus $59.6 million across the Applera and DEP settlements during the year.

Litigation was a major focus. The company entered a settlement with Applera, MDS and Applied Biosystems/MDS Sciex on March 2, 2004, requiring an $18.1 milliond one-time payment (fully accrued at year-end) and royalty-paying cross-licenses.

Other matters remain pending, including a Hewlett-Packard patent dispute in which the company has recorded a provision, and an environmental settlement with Massachusetts that included a $5.9 million civil penalty. The company does not pay dividends and states that its existing cash and credit facilities are sufficient for at least the next twelve months.

02—Key points

Key Highlights

  1. Net sales of $958.2 million, up 8% from $890.0 million, with the filing noting that growth was essentially flat excluding favorable currency effects
  2. Operating income of $219.2 million versus $196.4 million in 2002; diluted EPS of $1.34 versus $1.09
  3. HPLC chemistry grew 11% and HPLC service grew 14%, while HPLC instrument sales declined 1%
  4. Mass spectrometry sales declined approximately 18% excluding the inorganic product line sold in March 2003
  5. Repurchased $324.6 million of common stock in 2003, completing the $200 million program and funding part of a $400 million authorization; net borrowings reached $246.3 million
  6. Settled Applera patent litigation in March 2004 with an $18.1 million payment and cross-licensing agreements
  7. Paid $53.7 million to Applera in April 2003 for damages and interest from the Quattro Ultima patent case

03—Questions

Frequently Asked Questions

  1. How did Waters perform financially in 2003?

    Net sales rose 8% to $958.2 million and net income rose to $170.9 million, or $1.34 per diluted share, from $147.7 million, or $1.09, in 2002. The filing states that excluding currency effects, sales were essentially flat.

  2. What drove growth and what held it back?

    Growth came from HPLC chemistry (up 11%), HPLC service (up 14%) and thermal analysis, which grew 20% before the rheology acquisition. Instrument sales in HPLC declined 1%, and mass spectrometry declined approximately 18%, which the company partly attributes to the Applera patent litigation and a loss of market share.

  3. How did the Applera litigation affect the company?

    The company paid $53.7 million in April 2003 for damages and interest, and accrued $19.9 million for remaining patent litigation expenses at year-end. On March 2, 2004, it entered a settlement agreement with Applera, MDS and Applied Biosystems/MDS Sciex that includes an $18.1 million one-time payment and royalty-paying cross-licenses.

  4. What did Waters do with its capital in 2003?

    The company repurchased 11,939 thousand shares for $324.6 million and acquired Creon, Rheometrics and the Korean distributor for about $35.2 million in cash. It ended the year with $356.8 million in cash and $246.3 million in net borrowings, and it does not pay dividends.

  5. What are the main risks identified in the filing?

    The filing cites intense competition, with approximately 53% of 2003 net sales coming from the pharmaceutical industry, and about 55% of sales coming from outside the United States, which exposes results to currency movements. It also notes reliance on single-source suppliers and outside manufacturers, a restructuring in January 2004 affecting about 80 employees, and ongoing patent litigation including a Hewlett-Packard dispute.

04—Continue

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