QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
☒ | Accelerated filer | ☐ | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||
Emerging growth company |
Page |
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PART I |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
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3 |
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4 |
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5 |
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6 |
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7 |
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8 |
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9 |
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10 |
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Item 2. |
28 |
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Item 3. |
39 |
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Item 4. |
39 |
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PART II |
OTHER INFORMATION |
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Item 1. |
40 |
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Item 1A. |
40 |
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Item 2. |
40 |
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Item 6. |
41 |
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42 |
October 1, 2022 |
December 31, 2021 |
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(In thousands, except per share data) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Investments |
||||||||
Accounts receivable, net |
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Inventories |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Intangible assets, net |
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Goodwill |
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Operating lease assets |
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Other assets |
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Total assets |
$ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Notes payable and debt |
$ | $ | ||||||
Accounts payable |
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Accrued employee compensation |
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Deferred revenue and customer advances |
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Current operating lease liabilities |
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Accrued income taxes |
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Accrued warranty |
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Other current liabilities |
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Total current liabilities |
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Long-term liabilities: |
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Long-term debt |
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Long-term portion of retirement benefits |
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Long-term income tax liabilities |
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Long-term operating lease liabilities |
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Other long-term liabilities |
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Total long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Notes 6, 7, 8 and 12) |
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Stockholders’ equity: |
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Preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid-in capital |
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Retained earnings |
||||||||
Treasury stock, at cost, |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ | $ | ||||||
Three Months Ended |
||||||||
October 1, 2022 |
October 2, 2021 |
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(In thousands, except per share data) |
||||||||
Revenues: |
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Product sales |
$ | $ | ||||||
Service sales |
||||||||
Total net sales |
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Costs and operating expenses: |
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Cost of product sales |
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Cost of service sales |
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Selling and administrative expenses |
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Research and development expenses |
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Purchased intangibles amortization |
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Total costs and operating expenses |
||||||||
Operating income |
||||||||
Other income (expense), net |
( |
) | ||||||
Interest expense |
( |
) | ( |
) | ||||
Interest income |
||||||||
Income before income taxes |
||||||||
Provision for income taxes |
||||||||
Net income |
$ | $ | ||||||
Net income per basic common share |
$ | $ | ||||||
Weighted-average number of basic common shares |
||||||||
Net income per diluted common share |
$ | $ | ||||||
Weighted-average number of diluted common shares and equivalents |
Nine Months Ended |
||||||||
October 1, 2022 |
October 2, 2021 |
|||||||
(In thousands, except per share data) |
||||||||
Revenues: |
||||||||
Product sales |
$ | $ | ||||||
Service sales |
||||||||
Total net sales |
||||||||
Costs and operating expenses: |
||||||||
Cost of product sales |
||||||||
Cost of service sales |
||||||||
Selling and administrative expenses |
||||||||
Research and development expenses |
||||||||
Purchased intangibles amortization |
||||||||
Acquired in-process research and development |
||||||||
Total costs and operating expenses |
||||||||
Operating income |
||||||||
Other income, net |
||||||||
Interest expense |
( |
) | ( |
) | ||||
Interest income |
||||||||
Income before income taxes |
||||||||
Provision for income taxes |
||||||||
Net income |
$ | $ | ||||||
Net income per basic common share |
$ | $ | ||||||
Weighted-average number of basic common shares |
||||||||
Net income per diluted common share |
$ | $ | ||||||
Weighted-average number of diluted common shares and equivalents |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
October 1, 2022 |
October 2, 2021 |
October 1, 2022 |
October 2, 2021 |
|||||||||||||
(In thousands) |
(In thousands) |
|||||||||||||||
Net income |
$ | $ | $ | $ | ||||||||||||
Other comprehensive (loss) income: |
||||||||||||||||
Foreign currency translation |
( |
) | ( |
) | ( |
) | ||||||||||
Unrealized gains on investments before income taxes |
||||||||||||||||
Income tax expense |
— | ( |
) | — | ||||||||||||
|
|
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|
|
|
|
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Unrealized gains on investments, net of tax |
||||||||||||||||
Retirement liability adjustment before reclassifications |
( |
) | ||||||||||||||
Amounts reclassified to other income, net |
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Retirement liability adjustment before income taxes |
||||||||||||||||
Income tax expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Retirement liability adjustment, net of tax |
||||||||||||||||
Other comprehensive (loss) income |
( |
) | ( |
) | ( |
) | ||||||||||
|
|
|
|
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|
|||||||||
Comprehensive income |
$ |
$ |
$ |
$ |
||||||||||||
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|
|
|
|
|
|
|
Nine Months Ended |
||||||||
October 1, 2022 |
October 2, 2021 |
|||||||
(In thousands) |
||||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | $ | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Stock-based compensation |
||||||||
Deferred income taxes |
( |
) | ||||||
Depreciation |
||||||||
Amortization of intangibles |
||||||||
Acquired in-process research and development and other non-cash items |
||||||||
Change in operating assets and liabilities: |
||||||||
(Increase) decrease in accounts receivable |
( |
) | ||||||
Increase in inventories |
( |
) | ( |
) | ||||
Increase in other current assets |
( |
) | ( |
) | ||||
Increase in other assets |
( |
) | ( |
) | ||||
Decrease in accounts payable and other current liabilities |
( |
) | ( |
) | ||||
Increase in deferred revenue and customer advances |
||||||||
Decrease in other liabilities |
( |
) | ( |
) | ||||
|
|
|
|
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Net cash provided by operating activities |
||||||||
Cash flows from investing activities: |
||||||||
Additions to property, plant, equipment and software capitalization |
( |
) | ( |
) | ||||
Proceeds from (investments in) equity investments, net |
( |
) | ||||||
Payments for intellectual property licenses |
( |
) | ( |
) | ||||
Purchases of investments |
( |
) | ( |
) | ||||
Maturities and sales of investments |
||||||||
|
|
|
|
|||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
Cash flows from financing activities: |
||||||||
Proceeds from debt issuances |
||||||||
Payments on debt |
( |
) | ( |
) | ||||
Payments of debt issuance costs |
( |
) | ||||||
Proceeds from stock plans |
||||||||
Purchases of treasury shares |
( |
) |
( |
) | ||||
Proceeds from derivative contracts |
||||||||
|
|
|
|
|||||
Net cash used in financing activities |
( |
) | ( |
) | ||||
Effect of exchange rate changes on cash and cash equivalents |
( |
) |
( |
) | ||||
|
|
|
|
|||||
(Decrease) increase in cash and cash equivalents |
( |
) | ||||||
Cash and cash equivalents at beginning of period |
||||||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | $ | ||||||
|
|
|
|
Number of Common Shares |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Total Stockholders’ Equity |
||||||||||||||||||||||
Balance July 3, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
Other comprehensive loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Issuance of common stock for employees: |
||||||||||||||||||||||||||||
Employee Stock Purchase Plan |
— | — | — | — | ||||||||||||||||||||||||
Stock options exercised |
— | — | — | |||||||||||||||||||||||||
Treasury stock |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Stock-based compensation |
— | — | — | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance October 2, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Number of Common Shares |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Total Stockholders’ Equity |
||||||||||||||||||||||
Balance July 2, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
Other comprehensive loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Issuance of common stock for employees: |
||||||||||||||||||||||||||||
Employee Stock Purchase Plan |
— | — | — | — | ||||||||||||||||||||||||
Stock options exercised |
— | — | — | — | ||||||||||||||||||||||||
Treasury stock |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Stock-based compensation |
— | — | — | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance October 1, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Common Shares |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Total Stockholders’ Equity |
||||||||||||||||||||||
Balance December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
Other comprehensive income |
— | — | — | — | — | |||||||||||||||||||||||
Issuance of common stock for employees: |
||||||||||||||||||||||||||||
Employee Stock Purchase Plan |
— | — | — | — | ||||||||||||||||||||||||
Stock options exercised |
— | — | — | |||||||||||||||||||||||||
Treasury stock |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Stock-based compensation |
— | — | — | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance October 2, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Number of Common Shares |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Total Stockholders’ Equity |
||||||||||||||||||||||
Balance December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
Other comprehensive loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
Issuance of common stock for employees: |
||||||||||||||||||||||||||||
Employee Stock Purchase Plan |
— | — | — | — | ||||||||||||||||||||||||
Stock options exercised |
— | — | — | |||||||||||||||||||||||||
Treasury stock |
— | — | — | — | ( |
) | — | ( |
) | |||||||||||||||||||
Stock-based compensation |
— | — | — | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance October 1, 2022 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at Beginning of Period |
Additions |
Deductions |
Balance at End of Period |
|||||||||||||
Allowance for Credit Losses |
||||||||||||||||
October 1, 2022 |
$ | $ | $ | ( |
) | $ | ||||||||||
October 2, 2021 |
$ | $ | $ | ( |
) | $ |
Total at October 1, 2022 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Assets: |
||||||||||||||||
Time deposits |
— | — | ||||||||||||||
Waters 401(k) Restoration Plan assets |
— | — | ||||||||||||||
Foreign currency exchange contracts |
— | — | ||||||||||||||
Interest rate cross-currency swap agreements |
— | — | ||||||||||||||
Total |
$ | $ | $ | $ | — | |||||||||||
Liabilities: |
||||||||||||||||
Contingent consideration |
$ | $ | — | $ | — | $ | ||||||||||
Foreign currency exchange contracts |
— | — | ||||||||||||||
Total |
$ | $ | — | $ | $ | |||||||||||
Total at December 31, 2021 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
|||||||||||||
Assets: |
||||||||||||||||
U.S. Treasury securities |
$ | $ | — | $ | $ | — | ||||||||||
Corporate debt securities |
— | — | ||||||||||||||
Time deposits |
— | — | ||||||||||||||
Waters 401(k) Restoration Plan assets |
— | — | ||||||||||||||
Foreign currency exchange contracts |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | $ | $ | — | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities: |
||||||||||||||||
Contingent consideration |
$ | $ | — | $ | — | $ | ||||||||||
Foreign currency exchange contracts |
— | — | ||||||||||||||
Interest rate cross-currency swap agreements |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | — | $ | $ | |||||||||||
|
|
|
|
|
|
|
|
October 1, 2022 |
December 31, 2021 |
|||||||||||||||
Notional Value |
Fair Value |
Notional Value |
Fair Value |
|||||||||||||
Foreign currency exchange contracts: |
||||||||||||||||
Other current assets |
$ | $ | $ | $ | ||||||||||||
Other current liabilities |
$ | $ | $ | $ | ||||||||||||
Interest rate cross-currency swap agreements: |
||||||||||||||||
Other assets |
$ | $ | $ | — | $ | — | ||||||||||
Other liabilities |
— | — | ||||||||||||||
Accumulated other comprehensive income (loss) |
$ | $ | ( |
) |
Financial Statement Classification |
Three Months Ended |
Nine Months Ended |
||||||||||||||||
October 1, 2022 |
October 2, 2021 |
October 1, 2022 |
October 2, 2021 |
|||||||||||||||
Foreign currency exchange contracts: |
||||||||||||||||||
Realized (losses) gains on closed contracts |
Cost of sales | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | |||||||
Unrealized gains (losses) on open contracts |
Cost of sales |
( |
) | ( |
) | ( |
) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Cumulative net pre-tax losses |
Cost of sales | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||
|
|
|
|
|
|
|
|
|||||||||||
Interest rate cross-currency swap agreements: |
||||||||||||||||||
Interest earned |
Interest income |
$ | $ | $ | $ | |||||||||||||
Unrealized gains on open contracts |
Other comprehensive income |
$ | $ | $ | $ |
Balance at Beginning of Period |
Accruals for Warranties |
Settlements Made |
Balance at End of Period |
|||||||||||||
Accrued warranty liability: |
||||||||||||||||
October 1, 2022 |
$ | $ | $ | ( |
) | $ | ||||||||||
October 2, 2021 |
$ | $ | $ | ( |
) | $ |
October 1, 2022 |
October 2, 2021 |
|||||||
Balance at the beginning of the period |
$ | $ | ||||||
Recognition of revenue included in balance at beginning of the period |
( |
) | ( |
) | ||||
Revenue deferred during the period, net of revenue recognized |
||||||||
|
|
|
|
|||||
Balance at the end of the period |
$ | $ | ||||||
|
|
|
|
October 1, 2022 |
||||
Deferred revenue and customer advances expected to be recognized in: |
||||
|
$ | |||
13 - |
||||
|
||||
|
|
|||
Total |
$ | |||
|
|
October 1, 2022 |
||||||||||||||||
Amortized Cost |
Unrealized Gain |
Unrealized Loss |
Fair Value |
|||||||||||||
Time deposits |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | — | $ | — | $ | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Amounts included in: |
||||||||||||||||
Investments |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | — | $ | — | $ | ||||||||||
|
|
|
|
|
|
|
|
December 31, 2021 |
||||||||||||||||
Amortized Cost |
Unrealized Gain |
Unrealized Loss |
Fair Value |
|||||||||||||
U.S. Treasury securities |
$ | $ | — | $ | ( |
) | $ | |||||||||
Corporate debt securities |
— | ( |
) | |||||||||||||
Time deposits |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | — | $ | ( |
) | $ | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Amounts included in: |
||||||||||||||||
Cash equivalents |
$ | $ | — | $ | — | $ | ||||||||||
Investments |
— | ( |
) | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | $ | — | $ | ( |
) | $ | |||||||||
|
|
|
|
|
|
|
|
October 1, 2022 |
December 31, 2021 |
|||||||
Due in one year or less |
$ | $ | ||||||
Due after one year through three years |
— | |||||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
October 1, 2022 |
December 31, 2021 |
|||||||
Raw materials |
$ | $ | ||||||
Work in progress |
||||||||
Finished goods |
||||||||
|
|
|
|
|||||
Total inventories |
$ | $ | ||||||
|
|
|
|
October 1, 2022 |
December 31, 2021 |
|||||||||||||||||||||||
Gross Carrying Amount |
Accumulated Amortization |
Weighted- Average Amortization Period |
Gross Carrying Amount |
Accumulated Amortization |
Weighted- Average Amortization Period |
|||||||||||||||||||
Capitalized software |
$ | $ | $ | $ | ||||||||||||||||||||
Purchased intangibles |
||||||||||||||||||||||||
Trademarks |
— | — | — | — | ||||||||||||||||||||
Licenses |
||||||||||||||||||||||||
Patents and other intangibles |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||||||||||
|
|
|
|
|
|
|
|
October 1, 2022 |
December 31, 2021 |
|||||||
Senior unsecured notes - Series I - |
$ | $ | — | |||||
Total notes payable and debt, current |
— | |||||||
Senior unsecured notes - Series G - |
||||||||
Senior unsecured notes - Series H - floating rate*, due June 2024 |
||||||||
Senior unsecured notes - Series I - |
— | |||||||
Senior unsecured notes - Series K - |
||||||||
Senior unsecured notes - Series L - |
||||||||
Senior unsecured notes - Series M - |
||||||||
Senior unsecured notes - Series N - |
||||||||
Senior unsecured notes - Series O - |
||||||||
Credit agreement |
||||||||
Unamortized debt issuance costs |
( |
) | ( |
) | ||||
Total long-term debt |
||||||||
Total debt |
$ | $ | ||||||
* | Series H senior unsecured notes bear interest at a 3-month LIBOR for that floating rate interest period plus |
Three Months Ended |
Nine Months Ended |
|||||||||||||||
October 1, 2022 |
October 2, 2021 |
October 1, 2022 |
October 2, 2021 |
|||||||||||||
Cost of sales |
$ | $ | $ | $ | ||||||||||||
Selling and administrative expenses |
||||||||||||||||
Research and development expenses |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total stock-based compensation |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Nine Months Ended |
||||||||
Options Issued and Significant Assumptions Used to Estimate Option Fair Values |
October 1, 2022 |
October 2, 2021 |
||||||
Options issued in thousands |
||||||||
Risk-free interest rate |
% | % | ||||||
Expected life in years |
||||||||
Expected volatility |
% | % | ||||||
Expected dividends |
— |
Nine Months Ended |
||||||||
Weighted-Average Exercise Price and Fair Value of Options on the Date of Grant |
October 1, 2022 |
October 2, 2021 |
||||||
Exercise price |
$ | $ | ||||||
Fair value |
$ | $ |
Number of Shares |
Exercise Price per Share |
Weighted-Average Exercise Price per Share |
||||||||||
Outstanding at December 31, 2021 |
$ | $ | ||||||||||
Granted |
$ | $ | ||||||||||
Exercised |
( |
) | $ | $ | ||||||||
Canceled |
( |
) | $ | $ | ||||||||
|
|
|||||||||||
Outstanding at October 1, 2022 |
$ | $ | ||||||||||
|
|
Shares |
Weighted-Average Grant Date Fair Value per Share |
|||||||
Unvested at December 31, 2021 |
$ | |||||||
Granted |
$ | |||||||
Vested |
( |
) | $ | |||||
Forfeited |
( |
) | $ | |||||
|
|
|||||||
Unvested at October 1, 2022 |
$ | |||||||
|
|
Nine Months Ended |
||||||||
Performance Stock Units Issued and Significant Assumptions Used to Estimate Fair Values |
October 1, 2022 |
October 2, 2021 |
||||||
Performance stock units issued (in thousands) |
||||||||
Risk-free interest rate |
% | % | ||||||
Expected life in years |
||||||||
Expected volatility |
% | % | ||||||
Average volatility of peer companies |
% | % | ||||||
Correlation coefficient |
% | % | ||||||
Expected dividends |
— |
Shares |
Weighted-Average Fair Value per Share |
|||||||
Unvested at December 31, 2021 |
$ | |||||||
Granted |
$ | |||||||
Vested |
( |
) | $ | |||||
Forfeited |
$ | |||||||
|
|
|||||||
Unvested at October 1, 2022 |
$ | |||||||
|
|
Three Months Ended October 1, 2022 |
||||||||||||
Net Income (Numerator) |
Weighted- Average Shares (Denominator) |
Per Share Amount |
||||||||||
Net income per basic common share |
$ | $ | ||||||||||
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net income per diluted common share |
$ | $ | ||||||||||
|
|
|
|
|
|
Three Months Ended October 2, 2021 |
||||||||||||
Net Income (Numerator) |
Weighted- Average Shares (Denominator) |
Per Share Amount |
||||||||||
Net income per basic common share |
$ | $ | ||||||||||
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities |
— | ( |
) | |||||||||
|
|
|
|
|
|
|||||||
Net income per diluted common share |
$ | $ | ||||||||||
|
|
|
|
|
|
Nine Months Ended October 1, 2022 |
||||||||||||
Net Income (Numerator) |
Weighted- Average Shares (Denominator) |
Per Share Amount |
||||||||||
Net income per basic common share |
$ | $ | ||||||||||
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Net income per diluted common share |
$ | $ | ||||||||||
|
|
|
|
|
|
Nine Months Ended October 2, 2021 |
||||||||||||
Net Income (Numerator) |
Weighted- Average Shares (Denominator) |
Per Share Amount |
||||||||||
Net income per basic common share |
$ | $ | ||||||||||
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities |
— | ( |
) | |||||||||
|
|
|
|
|
|
|||||||
Net income per diluted common share |
$ | $ | ||||||||||
|
|
|
|
|
|
Currency Translation |
Unrealized Gain (Loss) on Retirement Plans |
Unrealized Gain (Loss) on Investments |
Accumulated Other Comprehensive Loss |
|||||||||||||
Balance at December 31, 2021 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Other comprehensive (loss) income, net of tax |
( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Balance at October 1, 2022 |
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||
|
|
|
|
|
|
|
|
Three Months Ended |
||||||||||||||||
October 1, 2022 |
October 2, 2021 |
|||||||||||||||
U.S. Retiree Healthcare Plan |
Non-U.S. Pension Plans |
U.S. Retiree Healthcare Plan |
Non-U.S. Pension Plans |
|||||||||||||
Service cost |
$ | $ | $ | $ | ||||||||||||
Interest cost |
||||||||||||||||
Expected return on plan assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Settlement loss |
— | — | ||||||||||||||
Net amortization: |
||||||||||||||||
Prior service (credit) cost |
( |
) | ( |
) | ( |
) | ||||||||||
Net actuarial loss |
— | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net periodic pension cost |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Nine Months Ended |
||||||||||||||||
October 1, 2022 |
October 2, 2021 |
|||||||||||||||
U.S. Retiree Healthcare Plan |
Non-U.S. Pension Plans |
U.S. Retiree Healthcare Plan |
Non-U.S. Pension Plans |
|||||||||||||
Service cost |
$ | $ | $ | $ | ||||||||||||
Interest cost |
||||||||||||||||
Expected return on plan assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Settlement loss |
— | — | ||||||||||||||
Net amortization: |
||||||||||||||||
Prior service credit |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net actuarial loss |
— | |||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net periodic pension cost |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
October 1, 2022 |
October 2, 2021 |
October 1, 2022 |
October 2, 2021 |
|||||||||||||
Product net sales: |
||||||||||||||||
Waters instrument systems |
$ | $ | $ | $ | ||||||||||||
Chemistry consumables |
||||||||||||||||
TA instrument systems |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total product sales |
||||||||||||||||
Service net sales: |
||||||||||||||||
Waters service |
||||||||||||||||
TA service |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total service sales |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total net sales |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
October 1, 2022 |
October 2, 2021 |
October 1, 2022 |
October 2, 2021 |
|||||||||||||
Net Sales: |
||||||||||||||||
Asia: |
||||||||||||||||
China |
$ | $ | $ | $ | ||||||||||||
Japan |
||||||||||||||||
Asia Other |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Asia |
||||||||||||||||
Americas: |
||||||||||||||||
United States |
||||||||||||||||
Americas Other |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Americas |
||||||||||||||||
Europe |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total net sales |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
October 1, 2022 |
October 2, 2021 |
October 1, 2022 |
October 2, 2021 |
|||||||||||||
Pharmaceutical |
$ | $ | $ | $ | ||||||||||||
Industrial |
||||||||||||||||
Academic and government |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total net sales |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
October 1, 2022 |
October 2, 2021 |
October 1, 2022 |
October 2, 2021 |
|||||||||||||
Net sales recognized at a point in time: |
||||||||||||||||
Instrument systems |
$ | $ | $ | $ | ||||||||||||
Chemistry consumables |
||||||||||||||||
Service sales recognized at a point in time (time & materials) |
||||||||||||||||
Total net sales recognized at a point in time |
||||||||||||||||
Net sales recognized over time: |
||||||||||||||||
Service and software maintenance sales recognized over time (contracts) |
||||||||||||||||
Total net sales |
$ | $ | $ | $ | ||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||||||
October 1, 2022 |
October 2, 2021 |
% change |
October 1, 2022 |
October 2, 2021 |
% change |
|||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Product sales |
$ | 464,923 | $ | 419,133 | 11 |
% |
$ | 1,385,393 | $ | 1,242,110 | 12 |
% | ||||||||||||
Service sales |
243,632 | 240,100 | 1 |
% |
728,053 | 707,315 | 3 |
% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total net sales |
708,555 | 659,233 | 7 |
% |
2,113,446 | 1,949,425 | 8 |
% | ||||||||||||||||
Costs and operating expenses: |
||||||||||||||||||||||||
Cost of sales |
307,101 | 271,128 | 13 |
% |
899,992 | 805,529 | 12 |
% | ||||||||||||||||
Selling and administrative expenses |
164,417 | 152,545 | 8 |
% |
483,769 | 453,954 | 7 |
% | ||||||||||||||||
Research and development expenses |
43,435 | 41,986 | 3 |
% |
127,913 | 125,027 | 2 |
% | ||||||||||||||||
Purchased intangibles amortization |
1,592 | 1,759 | (9 |
%) |
4,863 | 5,408 | (10 |
%) | ||||||||||||||||
Acquired in-process research and development |
— | — | — | 9,797 | — | * | * | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating income |
192,010 | 191,815 | — |
587,112 | 559,507 | 5 |
% | |||||||||||||||||
Operating income as a % of sales |
27.1 |
% |
29.1 |
% |
27.8 |
% |
28.7 |
% |
||||||||||||||||
Other income, net |
895 | (607 | ) | (247 |
%) |
2,600 | 18,073 | (86 |
%) | |||||||||||||||
Interest expense, net |
(9,524 | ) | (8,533 | ) | 12 |
% |
(27,362 | ) | (23,707 | ) | 15 |
% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Income before income taxes |
183,381 | 182,675 | — |
562,350 | 553,873 | 2 |
% | |||||||||||||||||
Provision for income taxes |
27,383 | 21,490 | 27 |
% |
81,657 | 77,269 | 6 |
% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income |
$ | 155,998 | $ | 161,185 | (3 |
%) |
$ | 480,693 | $ | 476,604 | 1 |
% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income per diluted common share |
$ | 2.60 | $ | 2.60 | — |
$ | 7.94 | $ | 7.66 | 4 |
% |
** | Percentage not meaningful |
Three Months Ended |
Nine Months Ended |
|||||||||||||||||||||||
October 1, 2022 |
October 2, 2021 |
% change |
October 1, 2022 |
October 2, 2021 |
% change |
|||||||||||||||||||
Net Sales: |
||||||||||||||||||||||||
Asia: |
||||||||||||||||||||||||
China |
$ | 140,080 | $ | 115,886 | 21 |
% |
$ | 399,852 | $ | 346,030 | 16 |
% | ||||||||||||
Japan |
37,095 | 44,293 | (16 |
%) |
123,222 | 139,702 | (12 |
%) | ||||||||||||||||
Asia Other |
102,759 | 94,423 | 9 |
% |
289,204 | 268,359 | 8 |
% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Asia |
279,934 | 254,602 | 10 |
% |
812,278 | 754,091 | 8 |
% | ||||||||||||||||
Americas: |
||||||||||||||||||||||||
United States |
216,380 | 194,776 | 11 |
% |
638,908 | 544,124 | 17 |
% | ||||||||||||||||
Americas Other |
40,029 | 36,225 | 11 |
% |
123,609 | 109,128 | 13 |
% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Americas |
256,409 | 231,001 | 11 |
% |
762,517 | 653,252 | 17 |
% | ||||||||||||||||
Europe |
172,212 | 173,630 | (1 |
%) |
538,651 | 542,082 | (1 |
%) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total net sales |
$ | 708,555 | $ | 659,233 | 7 |
% |
$ | 2,113,446 | $ | 1,949,425 | 8 |
% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
October 1, 2022 |
October 2, 2021 |
October 1, 2022 |
October 2, 2021 |
|||||||||||||
Pharmaceutical |
$ | 405,959 | $ | 398,338 | $ | 1,258,902 | $ | 1,175,191 | ||||||||
Industrial |
223,968 | 196,032 | 641,882 | 581,884 | ||||||||||||
Academic and government |
78,628 | 64,863 | 212,662 | 192,350 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total net sales |
$ | 708,555 | $ | 659,233 | $ | 2,113,446 | $ | 1,949,425 | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended |
||||||||||||||||||||
October 1, 2022 |
% of Total |
October 2, 2021 |
% of Total |
% change |
||||||||||||||||
Waters instrument systems |
$ | 274,869 | 44 |
% |
$ | 240,475 | 41 |
% |
14 |
% | ||||||||||
Chemistry consumables |
128,096 | 21 |
% |
123,045 | 21 |
% |
4 |
% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Waters product sales |
402,965 | 65 |
% |
363,520 | 62 |
% |
11 |
% | ||||||||||||
Waters service |
220,436 | 35 |
% |
218,291 | 38 |
% |
1 |
% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Waters net sales |
$ | 623,401 | 100 |
% |
$ | 581,811 | 100 |
% |
7 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
||||||||||||||||||||
October 1, 2022 |
% of Total |
October 2, 2021 |
% of Total |
% change |
||||||||||||||||
Waters instrument systems |
$ | 825,677 | 44 |
% |
$ | 717,910 | 41 |
% |
15 |
% | ||||||||||
Chemistry consumables |
385,661 | 21 |
% |
368,478 | 22 |
% |
5 |
% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Waters product sales |
1,211,338 | 65 |
% |
1,086,388 | 63 |
% |
12 |
% | ||||||||||||
Waters service |
660,371 | 35 |
% |
644,625 | 37 |
% |
2 |
% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total Waters net sales |
$ | 1,871,709 | 100 |
% |
$ | 1,731,013 | 100 |
% |
8 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
||||||||||||||||||||
October 1, 2022 |
% of Total |
October 2, 2021 |
% of Total |
% change |
||||||||||||||||
TA instrument systems |
$ | 61,958 | 73 |
% |
$ | 55,613 | 72 |
% |
11 |
% | ||||||||||
TA service |
23,196 | 27 |
% |
21,809 | 28 |
% |
6 |
% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total TA net sales |
$ | 85,154 | 100 |
% |
$ | 77,422 | 100 |
% |
10 |
% | ||||||||||
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
||||||||||||||||||||
October 1, 2022 |
% of Total |
October 2, 2021 |
% of Total |
% change |
||||||||||||||||
TA instrument systems |
$ | 174,055 | 72 |
% |
$ | 155,722 | 71 |
% |
12 |
% | ||||||||||
TA service |
67,682 | 28 |
% |
62,690 | 29 |
% |
8 |
% | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total TA net sales |
$ | 241,737 | 100 |
% |
$ | 218,412 | 100 |
% |
11 |
% | ||||||||||
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
||||||||
October 1, 2022 |
October 2, 2021 |
|||||||
Net income |
$ | 480,693 | $ | 476,604 | ||||
Depreciation and amortization |
99,105 | 97,926 | ||||||
Stock-based compensation |
30,929 | 21,949 | ||||||
Deferred income taxes |
(20,836 | ) | 9,219 | |||||
Acquired in-process research and development and other non-cash items |
10,003 | — | ||||||
Change in accounts receivable |
(39,098 | ) | 23,472 | |||||
Change in inventories |
(113,211 | ) | (93,878 | ) | ||||
Change in accounts payable and other current liabilities |
(4,952 | ) | (4,768 | ) | ||||
Change in deferred revenue and customer advances |
47,060 | 71,889 | ||||||
Other changes |
(76,741 | ) | (73,077 | ) | ||||
|
|
|
|
|||||
Net cash provided by operating activities |
412,952 | 529,336 | ||||||
Net cash used in investing activities |
(45,783 | ) | (248,428 | ) | ||||
Net cash used in financing activities |
(398,187 | ) | (183,907 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents |
(26,579 | ) | (8,994 | ) | ||||
|
|
|
|
|||||
(Decrease) increase in cash and cash equivalents |
$ | (57,597 | ) | $ | 88,007 | |||
|
|
|
|
• | The changes in accounts receivable were primarily attributable to timing of payments made by customers and timing of sales. Days sales outstanding increased to 77 days at October 1, 2022 as compared to 74 days at October 2, 2021. This increase is days sales outstanding is primarily due to delays in the timing of shipments to our customers from a supply chain issue caused by the COVID-19 pandemic lockdowns in China that occurred late in the second quarter of 2022. |
• | The increase in inventory can be primarily attributed to higher material costs as well as an increase in safety stock levels to help mitigate any future supply chain issues. |
• | The changes in accounts payable and other current liabilities were a result of the timing of payments to vendors, as well as the annual payment of management incentive compensation. |
• | Net cash provided from deferred revenue and customer advances results from annual increases in new service contracts as a higher installed base of customers renew annual service contracts. |
• | Other changes were attributable to variation in the timing of various provisions, expenditures, prepaid income taxes and accruals in other current assets, other assets and other liabilities. |
• | Risks related to the effects of the COVID-19 pandemic on our business, including: portions of our global workforce being unable to work fully and/or effectively due to working remotely, illness, quarantines, government actions, facility closures or other reasons related to the COVID-19 pandemic, increased risks of cyber attacks resulting from our temporary remote working model, disruptions in our manufacturing capabilities or to our supply chain and distribution network, including the impact from the lockdown in China, volatility and uncertainty in global capital markets limiting our ability to access capital, customers being unable to make timely payment for purchases, volatility in demand for our products and current global economic, sovereign and political conditions and uncertainties regarding the effect of the COVID-19 pandemic. |
• | Foreign currency exchange rate fluctuations that could adversely affect translation of the Company’s future sales, financial operating results and the condition of its non-U.S. operations, especially when a currency weakens against the U.S. dollar. |
• | Current global economic, sovereign and political conditions and uncertainties; new or proposed tariffs or trade regulations or changes in the interpretation or enforcement of existing regulations; the United Kingdom’s exit from the European Union as well as the Chinese government’s ongoing tightening of restrictions on procurement by government-funded customers; the Company’s ability to access capital and maintain liquidity in volatile market conditions; rising interest rates; changes in timing and demand for the Company’s products among the Company’s customers and various market sectors or geographies, particularly if they should reduce capital expenditures or are unable to obtain funding, as in the cases of governmental, academic and research institutions; the effect of mergers and acquisitions on customer demand for the Company’s products; and the Company’s ability to sustain and enhance its services. |
• | Negative industry trends; changes in the competitive landscape as a result of changes in ownership, mergers and continued consolidation among the Company’s competitors; introduction of competing products by other companies and loss of market share; pressures on prices from customers or resulting from competition; regulatory, economic and competitive obstacles to new product introductions; lack of acceptance of new products; expansion of our business in developing markets; spending by certain end-markets; ability to obtain alternative sources for components and modules; and the possibility that future sales of new products related to acquisitions, which trigger contingent purchase payments, may exceed the Company’s expectations. |
• | Increased regulatory burdens as the Company’s business evolves, especially with respect to the United States Food and Drug Administration and the United States Environmental Protection Agency, among others, as well as regulatory, environmental and logistical obstacles affecting the distribution of the Company’s products, completion of purchase order documentation by our customers and ability of customers to obtain letters of credit or other financing alternatives. |
• | Risks associated with lawsuits, particularly involving claims for infringement of patents and other intellectual property rights. |
• | The impact and costs incurred from changes in accounting principles and practices; the impact and costs of changes in statutory or contractual tax rates in jurisdictions in which the Company operates, specifically as it relates to the 2017 Tax Act in the U.S.; shifts in taxable income among jurisdictions with different effective tax rates; and the outcome of and costs associated with ongoing and future tax audit examinations or changes in respective country legislation affecting the Company’s effective rates. |
• | The impact and costs of war, in particular as a result of the ongoing conflict between Russia and Ukraine, and the possibility of further escalation resulting in a new geopolitical and regulatory instability. |
Period |
Total Number of Shares Purchased (1) |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Programs |
Maximum Dollar Value of Shares that May Yet Be Purchased Under the Programs (2) |
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July 3, 2022 to July 30, 2022 |
129 | $ | 340.09 | 129 | $ | 528,840 | ||||||||||
July 31, 2022 to August 27, 2022 |
157 | $ | 335.11 | 157 | $ | 476,337 | ||||||||||
August 28, 2022 to October 1, 2022 |
199 | $ | 295.79 | 197 | $ | 418,055 | ||||||||||
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Total |
485 | $ | 320.30 | 483 | $ | 418,055 | ||||||||||
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(1) | The Company repurchased approximately two thousand shares of common stock at a cost of less than $1 million related to the vesting of restricted stock during the three months ended October 1, 2022. |
(2) | In January 2019, the Company’s Board of Directors authorized the Company to repurchase up to $4 billion of its outstanding common stock in open market or private transactions over a two-year period. This program replaced the remaining amounts available under the pre-existing authorization. In December 2020, the Company’s Board of Directors authorized the extension of the share repurchase program through January 21, 2023. The size and timing of these purchases, if any, will depend on our stock price and market and business conditions, as well as other factors. |
Exhibit Number |
Description of Document | |
31.1 | Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*) | |
32.2 | Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*) | |
101 | The following materials from Waters Corporation’s Quarterly Report on Form 10-Q for the quarter ended October 1, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets (unaudited), (ii) the Consolidated Statements of Operations (unaudited), (iii) the Consolidated Statements of Comprehensive Income (unaudited), (iv) the Consolidated Statements of Cash Flows (unaudited) and (vi) Condensed Notes to Consolidated Financial Statements (unaudited). | |
104 | Cover Page Interactive Date File (formatted in iXBRL and contained in Exhibit 101). |
(*) | This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any filing, except to the extent the Company specifically incorporates it by reference. |
W ATERS CORPORATION |
/s/ Amol Chaubal |
Amol Chaubal |
Senior Vice President and Chief Financial Officer |
(Principal Financial Officer) |
(Principal Accounting Officer) |