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Waters Corporation. (2/17/06). "Press Release: Waters Corporation and Agilent Technologies Deutschland GmbH Resolve Outstanding HPLC Litigation". Milford, MA.

Region Region Europe
Organisations Organisation Waters Corporation (NYSE: WAT)
  Group Waters (Group)
  Organisation 2 Agilent Technologies Deutschland GmbH
Products Product HPLC (high performance liquid chromatography)
  Product 2 HPLC-Chip (Agilent)
     


Waters Corporation (NYSE:WAT) reported today it had entered into a settlement agreement with Agilent Technologies Deutschland GmbH resolving certain outstanding HPLC related litigation between them.

The settlement provides for the resolution of a finding of patent infringement by a court in the United Kingdom with respect to a portion of the pump technology used in Waters' Alliance HPLC instruments. In 2002, Waters discontinued the use of the patented technology and the settlement has no effect on the Company's ability to sell its Alliance HPLC instruments in the United Kingdom.

In connection with the settlement, Waters and its United Kingdom affiliate have been released from any claims of past infringement under the patent and Waters has agreed to make a one time payment to Agilent of 3.5 million British Pounds Sterling.

As a result of the settlement, Waters has revised its fourth quarter 2005 and full year 2005 results as previously reported in a press release on January 24, 2006, to include a pre-tax $3.1 million provision for damages and estimated remaining costs related to this matter. This has reduced GAAP earnings per diluted share for the fourth quarter of 2005 to $0.69 per diluted share from $0.71 per diluted share and to $1.74 per diluted share from $1.76 per diluted share for the full year 2005. Updated condensed financial statements are attached.

Similar patent infringement actions to the case noted above are currently pending in France and Germany. Waters believes, however, that any potential damages resulting from these ongoing disputes are unlikely to be materially different from amounts previously recorded.

Waters Corporation holds worldwide leading positions in three complementary analytical technologies - liquid chromatography, mass spectrometry and thermal analysis. These markets account for $4.5 - $5.0 billion of the overall $20 + billion analytical instrument market.

Certain statements contained herein are forward looking. Many factors could cause actual results to differ from these statements, in particular, uncertainties of litigation.

Waters Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data) (Unaudited)
(Unaudited) (Unaudited)
Three Months Ended Year Ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004

Net sales 332,270 324,154 1,158,236 1,104,536
Cost of sales 133,980 130,144 478,355 454,807
Gross profit 198,290 194,010 679,881 649,729

Selling and
administrative expenses 81,593 80,916 321,694 300,150
Research and development
expenses 16,691 16,475 66,905 65,241
Purchased intangibles
amortization 1,216 1,236 5,005 4,814
Litigation provisions
and settlement (A) 3,122 - 3,122 (9,277)
Impairment of long-lived
asset (B) - 3,997 - 3,997
Restructuring and other
unusual charges, net - - - (54)

Operating income 95,668 91,386 283,155 284,858

Other expense, net (C) (3,103) (1,014) (3,103) (1,014)
Interest (expense)
income, net (3,421) 156 (5,489) 1,827
Income from operations
before income taxes 89,144 90,528 274,563 285,671

Provision for income
taxes (D) 13,546 19,011 72,588 61,618

Net income 75,598 71,517 201,975 224,053

Net income per basic
common share $ 0.70 $ 0.59 $ 1.77 $ 1.87

Weighted average number
of basic common shares 108,364 120,266 114,023 119,640

Net income per diluted
common share $ 0.69 $ 0.58 $ 1.74 $ 1.82

Weighted average number
of diluted common
shares and equivalents 109,962 122,679 115,945 123,069

(A) The results for the three months and year ended December 31, 2005 include provisions of $3.1 million for ongoing patent litigation with Hewlett-Packard Company. The results for the year ended December 31, 2004 include provisions of $7.8 million for the same ongoing patent litigation with Hewlett-Packard Company as well as settlement income of $17.1 million related to patent litigation with Perkin-Elmer Corporation.

(B) The results for the three months and year ended December 31, 2004 include charges of $4.0 million recorded for a write-down of a technology licensed asset.

(C) The results for the three months and year ended December 31, 2005 include charges of $4.8 million recorded for a write-off of an equity investment and gain of $1.7 million related to the sale of an equity investment. The results for the three months and year ended December 31, 2004 include charges of $1.0 million recorded for full write-down of an investment in an unaffiliated company.
(D) The results for the year ended December 31, 2005 include a tax provision of approximately $24.0 million related to a qualified dividends distribution under the American Jobs Creation Act of 2004.

Waters Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)

(Unaudited) (Unaudited)
Three Months Ended Year Ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004

Reconciliation of income per diluted share, in accordance with generally accepted accounting principles, with adjusted results:

Income per diluted share $ 0.69 $ 0.58 $ 1.74 $ 1.82
---------- -------- ---------- ----------
Adjustment for litigation provisions
and settlement, net of
tax 2,569 - 2,569 (5,688)
Income per diluted share
effect 0.02 - 0.02 (0.05)
---------- -------- ---------- ----------

Adjustment for restructuring and other unusual charges, net of
tax - - (57)
Income per diluted share
effect - - - (0.00)
---------- -------- ---------- ----------
Adjustment for tax provision for qualified
dividends distribution - - 24,000 -
Income per diluted share
effect - - 0.21 -
---------- -------- ---------- ----------
Impairment of long-lived
asset, net of tax - 3,158 - 3,158
Income per diluted share
effect - 0.03 - 0.03
---------- -------- ---------- ----------
Other expense, write down and sale of certain investments,
net of tax 2,554 801 2,554 801
Income per diluted share
effect 0.02 0.01 0.02 0.01
---------- -------- ---------- ----------
Adjusted income per
diluted share: $ 0.73 $ 0.62 $ 1.99 $ 1.81
========== ======== ========== ==========

The adjusted income per diluted share presented above is used by the management of the Company to measure operating performance with prior periods and is not in accordance with generally accepted accounting principles (GAAP). The above reconciliation identifies items management has excluded as non-operational transactions. Management feels these transactions are not indicative of understanding the ongoing operations of the business or its future outlook.

   
Record changed: 2016-03-19

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