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Waters Annual Report, Year Ended Dec 31, 2004

Filing Date
Filed March 15, 2005
Period End
December 31, 2004
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 15, 2005. Cited figures are marked; the original filing is the authoritative source.

Waters Corporation, an analytical instrument manufacturer, reported net sales of $1,104.5 milliona for 2004, up 15% from $958.2 million in 2003 (11% excluding currency effects).

Operating income rose to $284.9 millionb from $219.2 million, and net income reached $224.1 million, or $1.82 per diluted share, compared with $170.9 million and $1.34 in 2003. Growth was led by the Waters Division's liquid chromatography (LC) products, which grew approximately 9% excluding currency effects, with LC service sales up 13% and mass spectrometry (MS) sales up approximately 6%. The March 2004 launch of the ACQUITY UPLC system, which began shipping in the third quarter of 2004, was cited as a contributor to instrument sales growth.

Cash flow and capital allocation were central to the year. Operating cash flow increased to $259.4 millionc from $157.0 million, and cash and cash equivalents ended the year at $539.1 million. The company repurchased 5.5 million shares for $231.3 million in 2004 and authorized a new $500.0 million buyback in October 2004.

In December 2004, it replaced its credit facility with a $700.0 milliond committed Credit Agreement, and total borrowings at year-end were $456.7 million. The company paid no dividends in the past three fiscal years and does not plan to pay any in the foreseeable future. Key risks disclosed include ongoing patent litigation with Hewlett-Packard, for which the company recorded a $7.8 million provision in 2004, and the Alliance pump case in Germany, France and England.

Other risks include currency exposure, since about 64% of 2004 net sales were outside the United States, and a concentration of about 53% of net sales in the pharmaceutical and biotechnology industries. The company also disclosed that it may need to repatriate foreign earnings under the American Jobs Creation Act, which could increase its tax provision by between $20.0 million and $45.0 million.

02—Key points

Key Highlights

  1. Net sales rose 15% to $1,104.5 million in 2004, with currency translation contributing about 4 points of the growth.
  2. Operating income increased 30% to $284.9 million, including a $17.1 million Perkin-Elmer litigation judgment benefit that was partly offset by a $7.8 million Hewlett-Packard litigation provision and a $4.0 million technology license impairment.
  3. Diluted EPS was $1.82 in 2004, up from $1.34 in 2003, and net income was $224.1 million.
  4. Operating cash flow rose to $259.4 million from $157.0 million, and cash and cash equivalents reached $539.1 million at year-end.
  5. Share repurchases totaled $231.3 million in 2004, and a new $500.0 million buyback program was authorized in October 2004 with $443.7 million remaining at year-end.
  6. The new $700.0 million Credit Agreement, entered into in December 2004, replaced the prior facility and carries lower borrowing costs; total borrowings were $456.7 million at year-end.
  7. Roughly 64% of 2004 net sales came from outside the United States, and about 53% came from the pharmaceutical and biotechnology industries, which the filing identifies as sources of risk.

03—Questions

Frequently Asked Questions

  1. How did Waters perform in 2004 compared with 2003?

    Net sales grew 15% to $1,104.5 million from $958.2 million, or 11% excluding currency effects. Net income increased to $224.1 million from $170.9 million, and diluted EPS rose to $1.82 from $1.34.

  2. What drove growth in the Waters Division?

    LC sales grew approximately 9% excluding currency effects, helped by the ACQUITY UPLC system and LC service sales growth of 13%. MS sales grew approximately 6%, aided by early shipments of the Q-Tof Premier, and Laboratory Informatics added approximately 2% to sales growth.

  3. How is the company returning capital to shareholders?

    Waters repurchased $231.3 million of stock in 2004 and authorized up to $500.0 million in buybacks over two years in October 2004. It has not paid dividends in its past three fiscal years and does not plan to pay dividends in the foreseeable future.

  4. What are the main litigation and tax risks?

    The Hewlett-Packard patent litigation is ongoing, and the company recorded a $7.8 million provision in 2004. Separately, the company could face an additional tax provision of between $20.0 million and $45.0 million if it repatriates up to $500.0 million of foreign earnings under the American Jobs Creation Act.

04—Continue

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