UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

Form 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) January 26, 2016

 

 

Waters Corporation

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

(State or Other Jurisdiction

of Incorporation)

 

01-14010   13-3668640

(Commission

File Number)

  

(IRS Employer

Identification No.)

 

34 Maple Street, Milford, Massachusetts   01757
(Address of Principal Executive Offices)   (Zip Code)

(508) 478-2000

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 2.02 Results of Operations and Financial Condition

On January 26, 2016, Waters Corporation announced its results of operations for the quarter and year ended December 31, 2015. A copy of the related press release is attached hereto as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference in its entirety.

Item 9.01 Financial Statements and Exhibits

Exhibit 99.1 Waters Corporation press release dated January 26, 2016 for the quarter and year ended December 31, 2015.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  WATERS CORPORATION
Dated: January 26, 2016     By:  

/s/ Eugene G. Cassis

    Name:   Eugene G. Cassis
    Title:   Corporate Vice President and Chief Financial Officer


Exhibit 99.1

For Immediate Release

Contact: John Lynch, Vice President, Treasurer and Investor Relations, 508-482-2314

Waters Reports Fourth Quarter and Full Year 2015 Financial Results

Strong Fourth Quarter Caps Milestone Year

Milford, Massachusetts, January 26, 2016 - Waters Corporation (NYSE: WAT) reported fourth quarter 2015 sales of $587 million, a slight increase versus sales of $584 million in the fourth quarter of 2014. Foreign currency translation reduced sales growth by approximately 5%. On a GAAP basis, earnings per diluted share (EPS) for the fourth quarter were $1.83 compared to $1.80 for the fourth quarter of 2014. On a non-GAAP basis, including the adjustments in the attached reconciliation, EPS declined 2% to $1.96 from $1.99 in the fourth quarter 2014. A description and reconciliation of GAAP to non-GAAP EPS is attached and can be found on the Company’s website at http://www.waters.com under the caption “Investors”.

For the full year, sales for the Company were $2.04 billion, an increase of 3% in comparison to sales of $1.99 billion in 2014, with foreign currency translation reducing sales growth by about 6%. On a GAAP basis, EPS for 2015 was $5.65 compared to $5.07 in 2014. On a non-GAAP basis, including adjustments in the attached reconciliation, EPS grew 7% to $5.89 from $5.48 in 2014.

Commenting on the Company’s performance, Christopher J. O’Connell, President and Chief Executive Officer said, “2015 was a true milestone year for Waters, highlighted by impressive and balanced growth across key products and markets, the significant impact of meaningful new innovations, and a smooth CEO transition. Heading into 2016, we are operating from a strong foundation.”

As communicated in a prior press release, Waters Corporation will webcast its fourth quarter 2015 financial results conference call this morning, January 26, 2016 at 8:30 a.m. eastern time. To listen to the call, connect to www.waters.com, choose “Investor Relations” and click on the “Live Webcast”. A replay will be available through February 2, 2016 at midnight eastern time, similarly by webcast and also by phone at 402-220-4152.

About Waters Corporation

Waters Corporation (NYSE: WAT) develops and manufactures advanced analytical science technologies for laboratory-dependent organizations. For more than 50 years, the company has pioneered a connected portfolio of separations science, laboratory information management, mass spectrometry and thermal analysis systems.

CAUTIONARY STATEMENT

This release may contain “forward-looking” statements regarding future results and events. For this purpose, any statements that are not statements of historical fact may be deemed forward-looking statements. Without limiting the foregoing, the words, “feels”, “believes”, “anticipates”, “plans”, “expects”, “intends”, “suggests”, “appears”, “estimates”, “projects”, and similar expressions, whether in the negative or affirmative, are intended to identify forward-looking statements. The Company’s actual future results may differ significantly from the results discussed in the forward-looking statements within this release for a variety of reasons, including and without limitation, foreign exchange rate fluctuations potentially affecting translation of the Company’s future non-U.S. operating results; the impact on demand among the Company’s various market sectors from economic, sovereign and political uncertainties; fluctuations in expenditures by the Company’s customers, in particular large pharmaceutical companies; introduction of competing products by other companies and loss of market share; pressures on prices from competitors and/or customers; regulatory, economic and competitive obstacles to new product introductions; other changes in demand from the effect of mergers and acquisitions by the Company’s customers; uncertainties relating to organizational/leadership changes; increased regulatory burdens as the Company’s business evolves, especially with respect to the U.S. Food and Drug Administration and U.S. Environmental Protection Agency, among others; shifts in taxable income in jurisdictions with different effective tax rates; the outcome of tax examinations or changes in respective country legislation affecting the Company’s effective tax rate; the ability to access capital, maintain liquidity and service our debt in volatile market conditions, particularly in the U.S., as a large portion of the Company’s cash is held and operating cash flows are generated outside the U.S.; environmental and logistical obstacles affecting the distribution of products and risks associated with lawsuits and other legal actions, particularly involving claims for infringement of patents and other intellectual property rights. Such factors and others are discussed more fully in the sections entitled “Forward-Looking Statements” and “Risk Factors” of the Company’s annual report on Form 10-K for the year ended December 31, 2014 and Form 10-Q for the period ended October 3, 2015 as filed with the Securities and Exchange Commission, which “Forward-Looking Statements” and “Risk Factors” discussions are incorporated by reference in this release. The forward-looking statements included in this release represent the Company’s estimates or views as of the date of this release report and should not be relied upon as representing the Company’s estimates or views as of any date subsequent to the date of this release.

Waters Corporation and Subsidiaries

Condensed Unclassified Consolidated Balance Sheets

(In thousands and unaudited)

 

     December 31, 2015      December 31, 2014  

Cash, cash equivalents and investments

      2,399,263         2,055,388   

Accounts receivable

      468,315         433,616   

Inventories

      263,415         246,430   

Property, plant and equipment, net

      333,355         321,583   

Intangible assets, net

      218,022         232,371   

Goodwill

      356,864         354,838   

Other assets

      221,919         233,708   

Total assets

      4,261,153         3,877,934   

Notes payable and debt

      1,668,336         1,465,243   

Other liabilities

      534,987         518,025   

Total liabilities

      2,203,323         1,983,268   

Total equity

      2,058,851         1,894,666   

Total liabilities and equity

      4,261,153         3,877,934   

Waters Corporation and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

 

     Three Months Ended     Twelve Months Ended  
     December 31, 2015     December 31, 2014     December 31, 2015     December 31, 2014  

Net sales

    $ 586,610      $ 583,870      $ 2,042,332      $ 1,989,344   

Cost of sales

      237,915        233,119        842,672        824,913   

Gross profit

      348,695        350,751        1,199,660        1,164,431   

Selling and administrative expenses

      128,681        131,916        495,747        512,707   

Research and development expenses

      28,336        28,724        118,545        107,726   

Acquired in-process research and development

      3,855        15,456        3,855        15,456   

Purchased intangibles amortization

      2,576        2,616        10,123        10,634   

Litigation provisions

      3,939        —          3,939        —     

Operating income

      181,308        172,039        567,451        517,908   

Interest expense, net

      (6,070 )      (7,566 )      (25,532 )      (27,168 ) 

Income from operations before income taxes

      175,238        164,473        541,919        490,740   

Provision for income tax expense

      24,184        13,181        72,866        59,120   

Net income

    $ 151,054      $ 151,292      $ 469,053      $ 431,620   

Net income per basic common share

    $ 1.85      $ 1.82      $ 5.70      $ 5.12   

Weighted-average number of basic common shares

      81,650        83,217        82,336        84,358   

Net income per diluted common share

    $ 1.83      $ 1.80      $ 5.65      $ 5.07   

Weighted-average number of diluted common shares and equivalents

      82,382        84,015        83,087        85,151   

Waters Corporation and Subsidiaries

Quarterly Reconciliation of GAAP to Adjusted Non-GAAP Financials

(in thousands, except per share data)

The 2015 and 2014 adjusted amounts presented below are used by the management of the Company to measure operating performance against prior periods and forecasts and are not in accordance with generally accepted accounting principles (GAAP). These Non-GAAP amounts should be considered supplemental to, and not a substitute for, financial performance in accordance with GAAP. The Company believes that the use of Non-GAAP measures, such as Adjusted Non-GAAP Earnings Per Share (EPS) and Adjusted Non-GAAP Operating Income, helps management and investors gain a better understanding of the Company’s core operating results, and is consistent with how management measures performance for purposes of executive compensation and forecasts the Company’s performance. The reconciliation identifies items management has excluded as non-operational items. Management has excluded the following items:

 

  •   Purchased Intangibles Amortization was excluded to allow for comparisons of operating results that are consistent over periods of time.

 

  •   Restructuring Costs, Asset Impairments, Acquisition-Related Costs and Other One-Time Costs were excluded as the Company believes that costs to consolidate operations, reduce overhead and complete acquisitions are infrequent or unusual and are not indicative of normal operating costs.

 

  •   Acquired In-Process Research and Development was excluded as the Company believes that the costs to license certain intellectual property are infrequent and are not indicative of normal operating costs. In 2015 and 2014, the Company entered into licensing arrangements for mass spectrometry technologies, primarily related to new medically-focused applications.

 

  •   Litigation Provisions were excluded as these costs are isolated, unpredictable and not expected to recur regularly.

 

  •   Infrequent Income Tax Items were excluded as these costs and benefits are typically the result of audit examination settlements, updates in management’s assessment of ongoing examinations or other unusual tax items and are not indicative of the Company’s normal or future income tax expense.

 

    (Unaudited)  
    Three Months Ended     Twelve Months Ended  
    December 31, 2015     December 31, 2014     December 31, 2015     December 31, 2014  

GAAP Selling and Administrative Expenses (including Purchased Intangibles

   $ (135,196 )    $ (134,532 )    $ (509,809 )    $ (523,341 ) 

Amortization & Litigation Provisions)

        

Purchased Intangibles Amortization

     2,576        2,616        10,123        10,634   

Restructuring Costs, Asset Impairments, Acquisition-Related Costs & Other One-Time Costs

     2,435        3,140        7,455        17,697   

Litigation Provisions

     3,939        —          3,939        —     
 

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP Selling & Administrative Expenses

   $ (126,246 )    $ (128,776 )   $ (488,292 )    $ (495,010 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

GAAP Research & Development Expenses (including Acquired In-Process Research and Development)

   $ (32,191 )    $ (44,180 )    $ (122,400 )    $ (123,182 ) 

Acquired In-Process Research and Development

     3,855        15,456        3,855        15,456   
 

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP Research & Development Expenses

   $ (28,336 )    $ (28,724 )   $ (118,545 )    $ (107,726 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

GAAP Operating Income

   $ 181,308      $ 172,039      $ 567,451      $ 517,908   

Acquired In-Process Research and Development

     3,855        15,456        3,855        15,456   

Purchased Intangibles Amortization

     2,576        2,616        10,123        10,634   

Restructuring Costs, Asset Impairments, Acquisition-Related Costs & Other One-Time Costs

     2,435        3,140        7,455        17,697   

Litigation Provisions

     3,939        —          3,939        —     
 

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP Operating Income

   $ 194,113      $ 193,251     $ 592,823      $ 561,695   
 

 

 

    

 

 

    

 

 

    

 

 

  

GAAP Provision for Income Tax Expense

   $ (24,184 )    $ (13,181 )    $ (72,866 )    $ (59,120 ) 

Acquired In-Process Research and Development

     (786 )      (3,323 )      (786 )      (3,323 ) 

Purchased Intangibles Amortization

     (729 )      (718 )      (2,888 )      (3,024 ) 

Restructuring Costs, Asset Impairments, Acquisition-Related Costs & Other One-Time Costs

     (606 )      (925 )      (2,377 )      (4,979 ) 

Litigation Provisions

     (1,478 )      —          (1,478 )      —     

Infrequent Income Tax Items

     959        (357 )      2,326        2,383   
 

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP Provision for Income Tax Expense

   $ (26,824 )    $ (18,504 )   $ (78,069 )    $ (68,063 ) 
 

 

 

    

 

 

    

 

 

    

 

 

  

GAAP Net Income

   $ 151,054      $ 151,292      $ 469,053      $ 431,620   

Acquired In-Process Research and Development

     3,069        12,133        3,069        12,133   

Purchased Intangibles Amortization

     1,847        1,898        7,235        7,610   

Restructuring Costs, Asset Impairments, Acquisition-Related Costs & Other One-Time Costs

     1,829        2,215        5,078        12,718   

Litigation Provisions

     2,461        —          2,461        —     

Infrequent Income Tax Items

     959        (357 )      2,326        2,383   
 

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP Net Income

   $ 161,219      $ 167,181     $ 489,222      $ 466,464   
 

 

 

    

 

 

    

 

 

    

 

 

  

GAAP EPS

   $ 1.83      $ 1.80      $ 5.65      $ 5.07   

Acquired In-Process Research and Development

     0.04        0.14        0.04        0.14   

Purchased Intangibles Amortization

     0.02        0.02        0.09        0.09   

Restructuring Costs, Asset Impairments, Acquisition-Related Costs & Other One-Time Costs

     0.02        0.03        0.06        0.15   

Litigation Provisions

     0.03        —          0.03        —     

Infrequent Income Tax Items

     0.01        —          0.03        0.03   
 

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted Non-GAAP EPS

   $ 1.96      $ 1.99     $ 5.89      $ 5.48   
 

 

 

    

 

 

    

 

 

    

 

 

  
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