Back to GetFilings.com
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2000
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 01-14010
----------------
WATERS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3668640
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
34 Maple Street
Milford, Massachusetts 01757
(Address, including zip code, of principal executive offices)
Registrant's telephone number, including area code: (508) 478-2000
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $.01 per share
New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [_]
State the aggregate market value of the registrant's common stock held by
non-affiliates of the registrant as of March 19, 2001: $6,195,863,995.
Indicate the number of shares outstanding of the registrant's common stock
as of March 19, 2001: 130,439,242
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2000 Annual Report to Stockholders are incorporated by
reference in Parts I and II.
Portions of the proxy statement for the 2001 Annual Meeting of Stockholders
are incorporated by reference in Part III.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
WATERS CORPORATION AND SUBSIDIARIES
ANNUAL REPORT ON FORM 10K
INDEX
Index
No. Page
----- ----
PART I
1. Business......................................................... 1
2. Properties....................................................... 6
3. Legal Proceedings................................................ 7
4. Submission of Matters to a Vote of Security Holders.............. 7
Executive Officers............................................... 8
PART II
Market for Registrant's Common Equity and Related Stockholder
5. Matters.......................................................... 9
6. Selected Financial Data.......................................... 9
Management's Discussion and Analysis of Financial Condition and
7. Results of Operations............................................ 10
7a. Quantitative and Qualitative Disclosures About Market Risk....... 10
8. Financial Statements and Supplementary Data...................... 10
Changes In and Disagreements With Accountants on Accounting and
9. Financial Disclosure............................................. 10
PART III
10. Directors and Executive Officers of the Registrant............... 11
11. Executive Compensation........................................... 11
12. Security Ownership of Certain Beneficial Owners and Management... 11
13. Certain Relationships and Related Transactions................... 11
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.. 11
Signatures....................................................... 14
PART I
ITEM 1: BUSINESS
General
Waters Corporation ("Waters" or the "Company") is a holding company which
owns only and all of the outstanding common stock of Waters Technologies
Corporation, the operating subsidiary. Waters Corporation was established to
acquire ("Acquisition") the predecessor Waters Chromatography Division
("Predecessor") of Millipore Corporation ("Millipore") on August 18, 1994.
Waters Corporation became a publicly traded company with its initial public
offering ("IPO") in November 1995. The Company has made two significant
acquisitions since its inception: Micromass Limited ("Micromass") in September
1997 and TA Instruments, Inc. ("TAI") in May 1996.
Business Segments
The Company operates in the analytical instrument industry, with
manufacturing and distribution expertise in three complementary technologies:
high performance liquid chromatography ("HPLC") instruments, chromatography
columns and other consumables, and related service; mass spectrometry
instruments that can be integrated and used along with other analytical
instruments, especially HPLC; and thermal analysis and rheology instruments.
The Company also operates in several geographic segments. See Footnote 15 to
the Financial Statements for detailed results by geographic segment and
products and service revenue found in the 2000 Annual Report, which is
incorporated herein by reference.
Business
Waters, an analytical instrument manufacturer, is the world's largest
manufacturer and distributor of HPLC instruments, chromatography columns and
other consumables, and related service. The Company has the largest HPLC market
share in the United States, Europe and non-Japan Asia and has a leading
position in Japan. HPLC, the largest product segment of the analytical
instrument market, is utilized in a broad range of industries to detect,
identify, monitor and measure the chemical, physical and biological composition
of materials, and to purify a full range of compounds. Through Micromass,
Waters is a market leader in the development, manufacture, and distribution of
mass spectrometry instruments, which are complementary products that can be
integrated and used along with other analytical instruments, especially HPLC.
Through TAI, Waters is also the world's leader in thermal analysis, a prevalent
and complementary technique used in the analysis of polymers.
Developed in the 1950's, HPLC today is the standard technique used to
identify and analyze the constituent components of a variety of chemicals and
materials. HPLC's unique performance capabilities enable it to separate and
identify 80% of all known chemicals and materials. As a result, HPLC is used to
analyze substances in a wide variety of industries for research and development
purposes, quality control and process engineering applications. Within the
pharmaceutical and life science industries, its most significant end-use
market, HPLC is used extensively to identify new drugs, to develop
manufacturing methods, and to assure the potency and purity of new
pharmaceuticals. HPLC is used to identify food content for nutritional labeling
in the food and beverages industry and to test water and air purity within the
environmental testing industry. HPLC is also used in a variety of applications
in other industries, such as chemical and consumer products, as well as by
universities and government agencies. In many instances, Food and Drug
Administration ("FDA") and Environmental Protection Agency ("EPA") regulations,
and those of their international counterparts, mandate testing that requires
HPLC instrumentation.
Waters manufactures over 100 HPLC instrument types. A complete HPLC system
consists of five basic components: the solvent delivery system, the sample
injector, the separation column, the detector and the data acquisition unit.
The solvent delivery system pumps the solvent through the HPLC system, while
the sample injector injects the sample into the solvent flow. The separation
column then separates the sample into its
1
components for analysis by the detector, which measures the presence and amount
of the constituents. The data acquisition unit then records and stores the
information from the detector. Consumable products primarily are columns packed
with separation media used in the HPLC testing process and are replaced at
regular intervals. The separation column contains one of several types of
packing, typically stationary phase packing made from silica. As the sample
flows through the column, it is separated into its constituent components.
The acquisition of Micromass expanded the Company's product offerings in
mass spectrometry instruments. Micromass is a world leader in the development,
manufacture, sale and support of organic, inorganic, stable isotope and
inductively-coupled plasma ("ICP") mass spectrometers typically combined with
HPLC, chemical electrophoresis, chemical electrophoresis chromatography, gas
chromatography or elemental analysis systems. Mass spectrometry is a powerful
analytical technique that is used to identify unknown compounds, to quantify
known materials, and to elucidate the structural and chemical properties of
molecules by measuring the masses of individual molecules that have been
converted into ions. These products supply a diverse market with a strong
emphasis on the life science, pharmaceutical, biomedical, clinical,
environmental and geochemistry markets worldwide. With the acquisition of
Micromass, Waters became one of the leading worldwide manufacturers of HPLC-MS
systems; "hyphenated" analytical systems that bring together HPLC and mass
spectrometry detection. Design innovations in HPLC-MS interfacing technology
have drastically improved the operating efficiencies of these systems, greatly
simplifying their operation, driving down their overall cost and making them
much more affordable for the average analytical laboratory. These laboratories
previously relied on expert mass spectrometrists to provide them the
information they now get in minutes. The largest market for HPLC-MS is the
pharmaceutical market where new drug development technologies are placing
greater demands on laboratories to screen and analyze new drug compounds.
The acquisition of TAI expanded the Company's product offerings to include
thermal analysis and rheology products. TAI develops, manufactures, sells and
services thermal analysis and rheology instruments which are used for the
physical characterization of polymers and related materials. Thermal analysis
measures the physical characteristics of materials as a function of
temperature. Changes in temperature affect several characteristics of materials
such as their physical state, weight, dimension and mechanical and electrical
properties, which may be measured by one or more thermal analysis techniques.
Consequently, thermal analysis techniques are widely used in the development,
production and characterization of materials in various industries such as
plastics, chemicals, automobiles, pharmaceuticals and electronics. Rheology
instruments complement thermal analyzers in characterizing materials. Rheology
characterizes the flow properties of materials and measures their viscosity,
elasticity and deformation under different types of loading. The information
obtained provides insight with regard to a material's behavior during
manufacture, transport, usage and storage.
Instruments and data products comprise about two thirds of the Company's
total revenue. Consumable products and service comprise the remaining one
third.
Customers
Waters has a broad and diversified customer base that includes
pharmaceutical accounts, other industrial accounts, universities and government
agencies. The pharmaceutical segment represents the Company's largest sector
and includes multinational pharmaceutical companies, generic drug manufacturers
and biotechnology companies. The Company's other industrial customers include
chemical manufacturers, polymer manufacturers, food and beverage companies and
environmental testing laboratories. The Company also sells to various
universities and government agencies worldwide and Waters' technical support
staff work closely with these customers in developing and implementing
applications that meet their full range of analytical requirements.
The Company does not rely on any one customer or group of customers for a
material portion of its sales. During fiscal 2000, no customer accounted for
more than 2% of the Company's net sales.
2
Research and Development
Waters maintains an active research and development program focused on the
development and commercialization of products which both complement and updates
the existing product offering. The Company's research and development
expenditures for 2000, 1999 and 1998, were $42.5 million, $36.1 million and
$34.4 million, respectively. Nearly all of the current HPLC products of the
Company have been developed at the main research and development center in
Milford, Massachusetts, with input and feedback from Waters' extensive field
organization. The majority of the mass spectrometry products have been
developed at facilities in England and nearly all of the current thermal
analysis products have been developed at the Company's research and development
center in New Castle, Delaware. There are approximately 400 employees involved
in the Company's research and development efforts.
Sales and Service
Waters has the largest sales and service team focused exclusively on HPLC in
the industry. Across all technologies, using respective specialized sales and
service forces, the Company serves its customer base with approximately 1,100
field representatives in 86 sales offices throughout the world. The sales
representatives have direct responsibility for account relationships, while
service representatives work in the field to install instruments and minimize
instrument downtime for customers. Technical support representatives work
directly with customers, helping them to develop applications and procedures.
Waters provides customers with comprehensive product literature and also makes
consumable products available through a dedicated catalog.
Manufacturing
Waters provides high quality HPLC products by controlling each stage of
production of its instruments and columns. The Company assembles most of its
instruments at its facility in Milford, Massachusetts, where it performs
machining, wiring, assembly and testing. The Milford facility employs
manufacturing techniques that meet the strict ISO 9002 quality manufacturing
standards and FDA mandated Good Manufacturing Practices. The Company outsources
manufacturing of certain electronic components such as computers, monitors and
circuit boards to outside vendors that can meet the Company's quality
requirements.
The Company manufactures its HPLC columns at its facilities in Taunton,
Massachusetts and Wexford, Ireland, where it processes, sizes and treats silica
and polymer media that are packed into columns, solid phase extraction
cartridges and bulk shipping containers. The Wexford facility also manufactures
and distributes certain data and software components for the Company's HPLC and
mass spectrometry product lines. These facilities meet the same ISO and FDA
standards met by the Milford, Massachusetts facility and are approved by the
FDA to produce Class 1 medical devices.
The Company manufactures its mass spectrometry products at its facilities in
Manchester, England and Cheshire, England. Thermal analysis products are
manufactured at the Company's New Castle, Delaware facility and rheology
products are manufactured at the Company's Leatherhead, England facility.
Competition
The analytical instrument and systems market is highly competitive. The
Company encounters competition from several worldwide instrument manufacturers
in both domestic and foreign markets. Waters competes in its markets primarily
on the basis of instrument performance, reliability and service and, to a
lesser extent, price. Some competitors have instrument businesses that are much
larger than the Company's business, but are typically less focused on Waters'
chosen markets. Certain competitors have greater financial and other resources
than the Company.
The market for consumable HPLC products, including separation columns, is
also highly competitive but is more fragmented than the analytical instruments
market. Waters encounters competition in the columns market from chemical
companies that produce column chemicals and small specialized companies that
pack
3
and distribute columns. The Company believes that it is one of the few
suppliers that process silica, packs columns, and distributes its own product.
Waters competes in this market on the basis of reproducibility, reputation and
performance, and, to a lesser extent, price.
Patents, Trademarks and Licenses
Waters owns a number of United States and foreign patents and has patent
applications pending in the United States and abroad. Certain technology and
software is licensed from third parties. Waters also owns a number of
trademarks. While the patents, licenses and trademarks are viewed as valuable
assets, the Company's patent position is not of material importance to its
operations.
Employees
Waters employs approximately 3,200 employees, 54% of whom are located in the
United States. Labor relations are considered to be excellent, and Waters'
employees are not represented by any union.
Environmental Matters
The Company is subject to federal, state and local laws, regulations and
ordinances that (i) govern activities or operations that may have adverse
environmental effects, such as discharges to air and water, as well as handling
and disposal practices for solid and hazardous wastes, and (ii) impose
liability for the costs of cleaning up, and certain damages resulting from
sites of past spills, disposals or other releases of hazardous substances. The
Company believes that it currently conducts its operations, and in the past has
operated its business, in substantial compliance with applicable environmental
laws. From time to time, operations of the Company have resulted or may result
in noncompliance with or liability for cleanup pursuant to environmental laws.
The Company does not currently anticipate any material adverse effect on its
operations, financial condition or competitive position as a result of its
efforts to comply with environmental laws.
With respect to the Predecessor operations of the Company's HPLC business,
Millipore has been notified that the United States Environmental Protection
Agency has determined that a release or a threat of a release of hazardous
substances as defined by CERCLA has occurred at certain sites to which chemical
wastes generated by its manufacturing operations have been sent. In each
instance, Millipore was only one of a large number of corporations and entities
which received such notification, and anticipates that any ultimate liability
for remedial costs will be shared by others. In any instances involving
chemical wastes generated by the Predecessor, Millipore has entered into
partial settlements, paid its proportionate financial obligation and received
partial releases.
In connection with the Acquisition, Millipore agreed to retain environmental
liabilities resulting from pre-acquisition operations of the Company's
facilities. Notwithstanding this contractual agreement, under CERCLA and
similar environmental laws, the Company may remain primarily liable to certain
persons for environmental cleanup costs.
Risk Factors
Forward-Looking Statements
Certain of the statements in this Form 10-K and the documents incorporated
in this Form (including portions of our Annual Report) are forward-looking
statements, including statements regarding, among other items, (i) the impact
of the Company's new products, (ii) the Company's growth strategies, including
its intention to make acquisitions and introduce new products, (iii)
anticipated trends in the Company's business and (iv) the Company's ability to
continue to control costs and maintain quality. You can identify these forward-
looking statements by our use of the words "believes", "anticipates", "plans",
"expects", "may", "will", "would", "intends", "estimates" and similar
expressions, whether in the negative or affirmative. These statements are
subject to various risks and uncertainties, many of which are outside the
control of the
4
Company, including (i) changes in the HPLC, mass spectrometry and thermal
analysis portions of the analytical instrument marketplace as a result of
economic or regulatory influences, (ii) general changes in the economy or
marketplace including currency fluctuations, in particular with regard to the
Eurocurrency, (iii) changes in the competitive marketplace, including new
products and pricing changes by the Company's competitors and (iv) the ability
of the Company to generate increased sales and profitability from new product
introductions, as well as additional risk factors set forth below. Actual
results or events could differ materially from the plans, intentions and
expectations disclosed in the forward-looking statements we make, whether
because of these factors or for other reasons. We do not assume any obligations
to update any forward-looking statement we make.
Competition and the Analytical Instrument Market
The analytical instrument market; in particular, the portion related to the
Company's HPLC, mass spectrometry and thermal analysis product lines; is highly
competitive, and the Company encounters competition from several international
instrument manufacturers and other companies in both domestic and foreign
markets. Certain competitors are divisions of significantly larger companies
which have greater financial and other resources than the Company. There can be
no assurances that the Company's competitors will not introduce more effective
and less costly products than those of the Company, or that the Company will be
able to increase its sales and profitability from new product introductions.
Additionally, the market may, from time to time, experience low sales growth.
Approximately 64% of the Company's net sales in 2000 were to the worldwide
pharmaceutical industry, which may be periodically subject to unfavorable
market conditions and consolidations. Unfavorable industry conditions could
have a material adverse effect on the Company's results of operations.
Risk of Disruption
The Company manufactures HPLC instruments at its facility in Milford,
Massachusetts, separation columns at its facilities in Taunton, Massachusetts
and Wexford, Ireland, mass spectrometry products at its facilities in
Manchester, England and Cheshire, England, thermal analysis products at its
facility in New Castle, Delaware and rheology products at its facility in
Leatherhead, England. Any prolonged disruption to the operations at these
facilities, whether due to labor difficulties, destruction of or damage to
either facility or other reasons, could have a material adverse effect on the
Company's results of operations and financial condition.
Foreign Operations and Exchange Rates
Approximately 57% of Waters' 2000 net sales were outside of the United
States and were primarily denominated in foreign currencies. As a result, a
significant portion of the Company's sales and operations are subject to
certain risks, including adverse developments in the foreign political and
economic environment, tariffs and other trade barriers, difficulties in
staffing and managing foreign operations and potentially adverse tax
consequences.
Additionally, the U.S. dollar value of the Company's net sales varies with
currency exchange rate fluctuations. Significant increases in the value of the
U.S. dollar relative to certain foreign currencies could have a material
adverse effect on Waters' result of operations.
Reliance on Key Management
The operation of the Company requires managerial and operational expertise.
None of the key management employees has an employment contract with the
Company, and there can be no assurance that such individuals will remain with
the Company. If, for any reason, such key personnel do not continue to be
active in management, the Company's operations could be adversely affected.
5
Euro Currency Conversion
Several countries of the European Union will adopt the euro as their legal
currency effective July 1, 2002. A transition period has been established from
January 1, 1999 to July 1, 2002 during which companies conducting business in
these countries may use the euro or their local currency. The Company has
considered the potential impact of the euro conversion on pricing competition,
information technology systems, currency risk and risk management. Currently,
the Company does not expect that the euro conversion will result in any
material increase in costs to the Company or have a material adverse effect on
its business or financial condition.
ITEM 2: PROPERTIES
Waters operates 17 United States facilities and 71 international facilities.
The Company believes its facilities are suitable and adequate for its current
production level and for reasonable growth over the next few years. The
Company's primary facilities are summarized in the table below.
Primary Facility Locations
Square Feet
Location Function (1) Owned/Leased (000's)
-------- ------------- ------------ -----------
Franklin, MA.......................... D Leased 30
Milford, MA........................... M, R, S, A Owned 465
Taunton, MA........................... M Owned 32
Etten-Leur, Netherlands............... S, D, A Leased 37
St. Quentin, France................... S, A Leased 30
Singapore............................. S, A Leased 6
Tokyo, Japan.......................... R, S, A Leased 28
Wexford, Ireland...................... M, R, S Leased 28
New Castle, DE........................ M, R, S, D, A Leased 71
Leatherhead, England.................. M, R, S, D Leased 10
Beverly, MA........................... S, D, A Leased 66
Cheshire, England..................... M, R, S Leased 28
Manchester, England................... M, R, S, D, A Leased 54(2)
- --------
(1) M = Manufacturing; R = Research; S = Sales; D = Distribution; A =
Administration
(2) Excludes 35 thousand square feet of additional space for research, sales
and administration purposes presently under construction and scheduled for
occupancy in the spring of 2001.
Waters operates and maintains 12 field offices in the United States and 64
field offices abroad in addition to sales offices in the primary facilities
listed above. The Company's field office locations are listed below.
Field Office Locations (3)
United States International
------------------- --------------------------------------------------------
Tustin, CA Australia India Sweden
Wood Dale, IL Austria Italy Switzerland
Fairfax, VA Belgium Japan Taiwan
Cary, NC Brazil Korea United Kingdom
Morristown, NJ Canada Mexico
Houston, TX Czech Republic Netherlands
Dublin, CA Denmark Norway
Ann Arbor, MI Finland People's Republic of China
Capitola, CA France Poland
Rolling Meadows, IL Germany Puerto Rico
Spring, TX Hong Kong Russia
Hungary Spain
- --------
(3) Waters operates more than one office within certain states and foreign
countries.
6
ITEM 3: LEGAL PROCEEDINGS
From time to time, the Company and its subsidiaries are involved in various
litigation matters arising in the ordinary course of its business. The Company
does not believe that the matters in which it or its subsidiaries are currently
involved, either individually or in the aggregate, are material to the Company
or its subsidiaries.
The Company, through its subsidiary TAI, asserted a claim against The
Perkin-Elmer Corporation ("PE") alleging patent infringement of three patents
owned by TAI ("the TAI patents"). PE counterclaimed for infringement of a
patent owned by PE ("the PE patent"). The U.S. District Court for the District
of Delaware granted judgment as a matter of law in favor of TAI and enjoined PE
from infringing the TAI patents. PE appealed the District Court judgment in
favor of TAI to the federal appellate court. The District Court's judgment,
with respect to PE's infringement of the TAI patents, was affirmed. The
District Court's judgment with respect to TAI's non-infringement of the PE
patent was reversed and remanded to the District Court for further proceedings.
PE appealed the appellate court decision, that PE failed to preserve certain
arguments on appeal, to the U.S. Supreme Court and that appeal was denied. The
Company believes it has meritorious arguments and should prevail, although the
outcome is not certain. The Company believes that any outcome will not be
material to the Company.
The Company has filed suit in the U.S. against Hewlett-Packard Company and
Hewlett-Packard GmbH ("HP"), seeking a declaration that certain products sold
under the mark Alliance do not constitute an infringement of one or more
patents owned by HP or its foreign subsidiaries ("the HP patents"). The action
in the U.S. was dismissed for lack of controversy. Actions seeking revocation
or nullification of foreign HP patents have been filed by the Company in
Germany, France and England. A German patent tribunal found the HP German
patent to be valid. The Company is appealing the German decision. In Germany,
France and England, HP and its successor, Agilent Technologies Deutschland
GmbH, have brought an action alleging certain features of the Alliance pump may
infringe the HP patent. The Company believes it has meritorious arguments and
should prevail, although the outcome is not certain. The Company believes that
any outcome of the proceedings will not be material to the Company.
Cohesive Technologies, Inc. ("Cohesive") has filed infringement actions
against the Company alleging that several products in a large product line
infringe one or more Cohesive patents. The Company has denied infringement. The
Company believes it has meritorious arguments and should prevail, although the
outcome is not certain. The Company believes that any outcome of the
proceedings will not be material to the Company.
Viscotek Corporation ("Viscotek") has filed a civil action against the
Company alleging one option offered by the Company with a high temperature gel
permeation chromatography instrument is an infringement of two of its patents.
These patents are owned by E. I. Du Pont de Nemours and Company ("Du Pont") and
claimed to be exclusively licensed to Viscotek. Du Pont is not a party to the
suit. The Company has answered the complaint and believes it does not infringe
the patents. The Company believes it has meritorious arguments and should
prevail, although the outcome is not certain. The Company believes that any
outcome of the proceedings will not be material to the Company.
PE Corporation, MDS Inc. and Perkin-Elmer Sciex Instruments have filed a
civil action against Micromass UK Limited and Micromass, Inc., wholly owned
subsidiaries of the Company, alleging one or more mass spectroscopy instrument
products infringes upon a patent. The Company believes that it does not
infringe the patent. The Company believes it has meritorious arguments and
should prevail, although the outcome is not certain. The Company believes that
any outcome of the proceedings will not be material to the Company.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
7
EXECUTIVE OFFICERS
Douglas A. Berthiaume, 52, has served as Chairman of the Board of Directors
of the Company since February 1996 and has served as President, Chief Executive
Officer and a Director of the Company since August 1994. From 1990 to 1994, Mr.
Berthiaume served as President of the Waters Chromatography Division of
Millipore. Mr. Berthiaume is a Director of Genzyme Corporation.
Arthur G. Caputo, 49, has been Senior Vice President, Worldwide Sales and
Marketing of the Company since August 1994. He joined the Predecessor in
October 1977 and has held a number of positions in sales within the Predecessor
and Millipore. Prior to his current position, he was Senior Vice President and
General Manager of Millipore's North American Business Operations responsible
for establishing the Millipore North American Sales Subsidiary and also served
as the General Manager of Waters' North American field sales, support and
marketing functions.
Thomas W. Feller, 60, has been Senior Vice President, E-Business Initiative
of the Company since January 2000. Prior to his current position, he was Senior
Vice President, Operations of the Company from August 1994 to December 1999. He
joined Millipore in 1977 and moved to the Predecessor as Vice President of
Operations in 1980. Mr. Feller returned to Millipore Operations in 1985 before
becoming Senior Vice President of Manufacturing Operations for the Predecessor
in January 1991. Prior to joining Millipore, Mr. Feller held various production
and manufacturing positions at Johnson and Johnson, Jensen Speaker and Baxter
Travenol. Mr. Feller is scheduled to retire in fiscal 2001.
John R. Nelson, 57, has been Senior Vice President, Research, Development
and Engineering of the Company since August 1994. He joined the Predecessor in
August 1976 and has held a variety of positions in marketing as well as
research and development, including Vice President Waters Research Development
and Engineering, Senior Vice President Worldwide Marketing Operations and
Senior Vice President of Product Development. Mr. Nelson is also responsible
for the Company's Micromass Limited and TA Instruments, Inc. operations.
Philip S. Taymor, 45, has been Senior Vice President, Finance and
Administration, Chief Financial Officer, Treasurer and Assistant Secretary of
the Company since August 1994. He joined Millipore in May 1981 and held several
positions in the Millipore organization, including Corporate Controller,
Director of Finance of Millipore's Membrane Division and Manager of Corporate
Accounting. Mr. Taymor joined the Predecessor in early 1992. His current
responsibilities include business and financial planning, accounting and
financial reporting, treasury operations, legal, tax and information systems.
Mr. Taymor joined Millipore from Grant Thornton & Company, Certified Public
Accountants.
Brian K. Mazar, 43, Senior Vice President, Human Resources and Investor
Relations, has directed Human Resources and Investor Relations since August
1994. He joined the Predecessor in 1991 as Director of Human Resources with
responsibility for worldwide human resources functions. From 1986 to 1991, Mr.
Mazar was Director of Human Resources of GeneTrak Systems. Prior thereto, Mr.
Mazar worked at Exxon Corporation and Corning Inc.
Devette W. Russo, 48, Senior Vice President, Chromatography Consumables
Division, has directed the Chromatography Consumables Division since 1990. She
joined the Predecessor in 1975 as a Marketing Communications Account Manager,
and has held a variety of positions within the Predecessor and Millipore in
marketing before assuming her current responsibilities as Senior Vice
President, Chromatography Consumables Division. Prior positions include
Director of Corporate Communications for Millipore and Vice President of
Marketing for the Chemistry Division. Ms. Russo held various marketing and
application support roles before joining the Millipore organization.
John A. Ornell, 43, has been Vice President, Operations of the Company since
January 2000. He joined Waters in 1990 and most recently was Vice President of
Manufacturing and Engineering. During his years at
8
Waters, he has had responsibility for Operations Finance and Distribution and
had a senior role in the successful implementation of the Company's worldwide
business systems.
PART II
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is registered under the Securities Exchange Act
of 1934 and is listed on the New York Stock Exchange under the symbol WAT. As
of March 19, 2001, the Company had approximately 259 common stockholders of
record. The Company has not declared or paid any dividends on its Common Stock
in the past two years and does not plan to pay dividends in the foreseeable
future.
On February 29, 2000, the Board of Directors approved an amendment to the
Company's Certificate of Incorporation to increase authorized common stock from
one hundred million to two hundred million shares, contingent upon shareholder
approval at the Company's Annual Meeting. On May 4, 2000, shareholders approved
the amendment.
On July 13, 2000, the Board of Directors approved a two-for-one common stock
split, in the form of a 100% stock dividend. Shareholders of record on August
4, 2000 received the stock dividend on or about August 25, 2000.
The quarterly range of high and low sales prices for the Common Stock as
reported by the New York Stock Exchange (adjusted to reflect the two-for-one
stock split discussed above) is as follows:
Price
Range
-------------
For the quarter ended High Low
--------------------- ---- ---
March 31, 1999........................................... 27 1/16 18 1/8
June 30, 1999............................................ 28 1/4 23 1/4
September 30, 1999....................................... 33 13/16 24 3/8
December 31, 1999........................................ 33 1/16 18 1/2
March 31, 2000........................................... 53 3/8 22
June 30, 2000............................................ 64 3/4 38 23/32
September 30, 2000....................................... 90 3/8 59 5/16
December 31, 2000........................................ 88 1/2 62 11/16
ITEM 6: SELECTED FINANCIAL DATA
Reference is made to information contained in the section entitled "Selected
Financial Data" on page 44 of the 2000 Annual Report, which information is
incorporated herein by reference.
9
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Reference is made to the information on pages 19 to 23 of the 2000 Annual
Report, which information is incorporated herein by reference.
ITEM 7a: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Reference is made to the information on page 22 of the 2000 Annual Report,
which information is incorporated herein by reference.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the Company's consolidated financial statements and
notes thereto on pages 25 to 45 of the 2000 Annual Report together with the
"Report of Independent Accountants" dated January 23, 2001 on page 24 and
including "Quarterly Results" on pages 42 and 43, which information is
incorporated herein by reference.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
10
PART III
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
a. Information concerning the Registrant's directors is set forth in the
Proxy Statement under the headings "Election of Directors" and "Directors
Meetings and Compensation." Such information is incorporated herein by
reference.
b. Information required by Item 405 of Regulation S-K is set forth in the
Proxy Statement under the heading "Section 16(A) Beneficial Ownership Reporting
Compliance." Such information is incorporated herein by reference.
ITEM 11: EXECUTIVE COMPENSATION
Information concerning compensation of the Registrant's executive officers
is set forth in the Proxy Statement under the heading "Management
Compensation." Such information is incorporated herein by reference.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners and
management is set forth in the Proxy Statement under the heading "Security
Ownership of Certain Beneficial Owners." Such information is incorporated
herein by reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is set
forth in the Proxy Statement under the heading "Certain Relationships and
Related Transactions." Such information is incorporated herein by reference.
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
(1) Financial Statements: Reference is made to the Company's
consolidated financial statements and notes thereto on pages 25 to 45
of the 2000 Annual Report, which information is incorporated herein by
reference.
(2) Financial Statement Schedules:
11
WATERS CORPORATION AND SUBSIDIARIES
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 2000, 1999 and 1998
Balance at
Beginning Balance at
of Period Additions Deductions End of Period
---------- --------- ---------- -------------
Allowance for Doubtful
Accounts and Sales Returns:
2000...................... $3,741 $1,263 $(2,189) $2,815
1999...................... $2,966 $1,197 $(422) $3,741
1998...................... $2,785 $ 617 $(436) $2,966
(3) Exhibits:
Exhibit
Number Description of Document
------- -----------------------
2.1 Agreement for the Sale and Purchase of Micromass Limited dated as
of September 12, 1997, between Micromass Limited, Schroder UK
Buy-Out Fund III Trust I and Others, Waters Corporation and
Waters Technologies Corporation. Incorporated by reference to the
Registrant's Report on Form 8-K, filed on October 8, 1997 and
amended on December 5, 1997.
3.1 Second Amended and Restated Certificate of Incorporation of Waters
Corporation. (1)
3.11 Certificate of Amendment of Second Amended and Restated
Certificate of Incorporation of Waters Corporation, as amended
May 12, 1999. (3)
3.12 Certificate of Amendment of Second Amended and Restated
Certificate of Incorporation of Waters Corporation, as amended
July 27, 2000. (6)
3.2 Amended and Restated Bylaws of Waters Corporation, as amended to
date. (1)
10.1 Amended and Restated Credit Agreement, dated as of June 16, 1997
among Waters Corporation, Waters Technologies Corporation,
Bankers Trust Company and other Lenders party thereto. (5)
10.2 First Amendment to Amended and Restated Credit Agreement dated as
of September 4, 1997. (5)
10.21 Second Amendment to Amended and Restated Credit Agreement, dated
as of February 7, 2000. (5)
10.22 Third Amendment to Amended and Restated Credit Agreement dated as
of September 14, 2000. (7)
10.23 Fourth Amendment to Amended and Restated Credit Agreement, dated
as of March 15, 2001.
10.3 Waters Corporation Second Amended and Restated 1996 Long-Term
Performance Incentive Plan. (5)
10.4 Waters Corporation 1996 Employee Stock Purchase Plan. Incorporated
by reference to Exhibit B of the 1996 Proxy Statement.
10.41 December 1999 Amendment to the Waters Corporation 1996 Employee
Stock Purchase Plan. (4)
10.42 March 2000 Amendment to the Waters Corporation 1996 Employee Stock
Purchase Plan. (4)
10.43 June 1999 Amendment to the Waters Corporation 1996 Employee Stock
Purchase Plan.
10.44 July 2000 Amendment to the Waters Corporation 1996 Employee Stock
Purchase Plan.
12
Exhibit
Number Description of Document
------- -----------------------
10.5 Waters Corporation 1996 Non-Employee Director Deferred
Compensation Plan. Incorporated by reference to Exhibit C of the
1996 Proxy Statement.
10.51 First Amendment to the Waters Corporation 1996 Non-Employee
Director Deferred Compensation Plan. (5)
10.6 Waters Corporation Amended and Restated 1996 Non-Employee Director
Stock Option Plan. (5)
10.7 Agreement and Plan of Merger among Waters Corporation, TA Merger
Sub, Inc. and TA Instruments, Inc. dated as of March 28, 1996.
Incorporated by reference to the Registrant's Report on Form 8-K
dated March 29, 1996.
10.8 Offer to Purchase and Consent Solicitation Statement, dated March
7, 1996, of Waters Technologies Corporation. Incorporated by
reference to the Registrant's Report on Form 8-K dated March 11,
1996.
10.9 WCD Investors, Inc. Amended and Restated 1994 Stock Option Plan
(including Form of Amended and Restated Stock Option Agreement).
(2)
10.91 Amendment to the WCD Investors, Inc. Amended and Restated 1994
Stock Option Plan. (5)
10.10 Waters Corporation Retirement Plan. (2)
10.11 Registration Rights Agreement made as of August 18, 1994, by and
among WCD Investors, Inc., AEA Investors, Inc., certain
investment funds controlled by Bain Capital, Inc. and other
stockholders of Waters Corporation. (2)
10.12 Form of Indemnification Agreement, dated as of August 18, 1994,
between WCD Investors, Inc. and its directors and executive
officers. (2)
10.13 Form of Management Subscription Agreement, dated as of August 18,
1994, between WCD Investors, Inc. and certain members of
management. (2)
10.14 1999 Management Incentive Plan. (3)
13.1 2000 Annual Report to Stockholders.
21.1 Subsidiaries of Waters Corporation. (1)
23.1 Consent of PricewaterhouseCoopers LLP
- --------
(1) Incorporated by reference to the Registrant's Report on Form 10-K dated
March 29, 1996.
(2) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 333-3810).
(3) Incorporated by reference to the Registrant's Report on Form 10-Q dated
August 11, 1999.
(4) Incorporated by reference to the Registrant's Report on Form 10-K dated
March 30, 2000.
(5) Incorporated by reference to the Registrant's Report on Form 10-Q dated May
8, 2000.
(6) Incorporated by reference to the Registrant's Report on Form 10-Q dated
August 8, 2000.
(7) Incorporated by reference to the Registrant's Report on Form 10-Q dated
November 14, 2000.
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the three-month period ended
December 31, 2000, except those for informational purposes only.
(c) See (3) above.
(d) Not Applicable.
13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Waters Corporation
/s/ Philip S. Taymor
By: _________________________________
Philip S. Taymor
Senior Vice President, Finance
and Administration and Chief
Financial Officer
Date: March 27, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities indicated on March 27, 2001.
Signature Title
--------- -----
/s/ Douglas A. Berthiaume Chairman of the Board of
______________________________________ Directors, Chief
Douglas A. Berthiaume Executive Officer and
President (principal
executive officer)
/s/ Philip S. Taymor Senior Vice President,
______________________________________ Finance and
Philip S. Taymor Administration and Chief
Financial Officer
(principal financial
officer and principal
accounting officer)
/s/ Joshua Bekenstein Director
______________________________________
Joshua Bekenstein
/s/ Dr. Michael J. Berendt Director
______________________________________
Dr. Michael J. Berendt
/s/ Philip Caldwell Director
______________________________________
Philip Caldwell
/s/ Edward Conard Director
______________________________________
Edward Conard
/s/ Dr. Laurie H. Glimcher Director
______________________________________
Dr. Laurie H. Glimcher
/s/ William J. Miller Director
______________________________________
William J. Miller
/s/ Thomas P. Salice Director
______________________________________
Thomas P. Salice
14