☑
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
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OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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13-3668640
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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WAT
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New York Stock Exchange, Inc.
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Securities registered pursuant to Section 12(g) of the Act:
|
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None
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Large accelerated filer
☑
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Accelerated filer
☐
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Non-accelerated
filer
☐
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Smaller reporting company
☐
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Emerging growth company
☐
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Item
No.
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Page
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PART I
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1.
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1
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1A.
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12
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1B.
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19
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2.
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19
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3.
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20
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4.
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20
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20
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PART II
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5.
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22
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6.
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25
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7.
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26
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7A.
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43
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8.
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46
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9.
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96
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9A.
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96
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9B.
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96
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PART III
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10.
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97
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11.
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97
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12.
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97
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13.
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98
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14.
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98
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PART IV
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15.
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99
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16.
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103
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104
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• |
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.
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• | Current global economic, sovereign and political conditions and uncertainties, particularly regarding the effect of new or proposed tariff or trade 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; changes in timing and demand for the Company’s products among the Company’s customers and various market sectors, particularly if they should reduce capital expenditures or are unable to obtain funding, as in the cases of academic, governmental 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 service. |
• |
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.
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• | Increased regulatory burdens as the Company’s business evolves, especially with respect to the FDA and EPA, among others, as well as regulatory, environmental and logistical obstacles affecting the distribution of the Company’s products, including the impact, if any, of the coronavirus in China or elsewhere; completion of purchase order documentation by our customers; and the customers’ ability 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. |
Item
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1B:
Unresolved Staff Comments
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Location
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Function (1)
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Owned/Leased
|
|
||||
Golden, CO
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M, R, S, D, A
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Leased
|
||||||
New Castle, DE
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M, R, S, D, A
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Owned
|
||||||
Franklin, MA
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D
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Leased
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||||||
Milford, MA
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M, R, S, A
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Owned
|
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Taunton, MA
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M, R
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Owned
|
||||||
Cambridge, MA
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R, S
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Leased
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||||||
Wakefield, MA
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M, R, S, D, A
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Leased
|
||||||
Eden Prairie, MN
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M, R, S, D, A
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Leased
|
||||||
Nixa, MO
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M, S, D, A
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Leased
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||||||
Sharpsburg, PA
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M, R, S, D, A
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Leased
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||||||
Lindon, UT
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M, R, S, D, A
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Leased
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||||||
Newcastle, England
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R, S, D, A
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Leased
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||||||
Solihull, England
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M,A
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Owned
|
||||||
Wilmslow, England
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M, R, S, D, A
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Owned
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St. Quentin, France
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S, A
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Leased
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||||||
Bochum, Germany
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R, S, A
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Leased
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||||||
Huellhorst, Germany
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M, R, S, D, A
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Owned
|
||||||
Budapest, Hungary
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R
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Leased
|
||||||
Wexford, Ireland
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M, R, D, A
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Owned
|
||||||
Etten-Leur, Netherlands
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S, D, A
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Owned
|
||||||
Brasov, Romania
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R, A
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Leased
|
||||||
Singapore
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R, S, D, A
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Leased
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(1) | M = Manufacturing; R = Research; S = Sales and Service; D = Distribution; A = Administration |
United States
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International
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|||||
Costa Mesa, CA
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Australia
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India
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Portugal
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Pleasanton, CA
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Austria
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Ireland
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Poland
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Wood Dale, IL
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Belgium
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Israel
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Puerto Rico
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Carmel, IN
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Brazil
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Italy
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Spain
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Columbia, MD
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Canada
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Japan
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Sweden
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Beverly, MA
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Czech Republic
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Korea
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Switzerland
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Durham, NC
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Denmark
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Malaysia
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Taiwan
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Morrisville, NC
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Finland
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Mexico
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United Kingdom
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Parsippany, NJ
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France
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Netherlands
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Plymouth Meeting, PA
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Germany
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Norway
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Bellaire, TX
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Hungary
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People’s Republic of China
|
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(2) | The Company operates more than one field office within certain states and foreign countries. |
Item 5:
|
Market for Registrant’s Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|||||||||||||
WATERS CORPORATION
|
$ |
100.00
|
$ |
119.39
|
$ |
119.22
|
$ |
171.39
|
$ |
167.36
|
$ |
207.28
|
|||||||||||||
NYSE MARKET INDEX
|
$ |
100.00
|
$ |
95.91
|
$ |
107.36
|
$ |
127.46
|
$ |
116.06
|
$ |
145.66
|
|||||||||||||
SIC CODE INDEX
|
$ |
100.00
|
$ |
111.14
|
$ |
102.42
|
$ |
156.71
|
$ |
165.13
|
$ |
205.80
|
|||||||||||||
S&P 500 INDEX
|
$ |
100.00
|
$ |
101.38
|
$ |
113.51
|
$ |
138.29
|
$ |
132.23
|
$ |
173.86
|
Period
|
Total
Number of Shares Purchased (1) |
|
Average
Price Paid per Share |
|
Total Number of
Shares Purchased as Part of Publicly Announced Programs (2) |
|
Maximum Dollar
Value of Shares that May Yet Be Purchased Under the Programs (2) |
|
||||||||
September 29, 2019 to October 26, 2019
|
646
|
$ |
217.06
|
646
|
$ |
2,112,901
|
||||||||||
October 27, 2019 to November 23, 2019
|
797
|
$ |
214.93
|
797
|
$ |
1,941,602
|
||||||||||
November 24, 2019 to December 31, 2019
|
1,092
|
$ |
228.96
|
1,092
|
$ |
1,691,643
|
||||||||||
Total
|
2,535
|
$ |
221.52
|
2,535
|
$ |
1,691,643
|
||||||||||
(1) | The Company’s repurchase activity related to the vesting of restricted stock units during the three months ended December 31, 2019 was insignificant. |
(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 new program replaced the remaining amounts available under the
pre-existing
authorization.
|
Item 6:
|
Selected Financial Data
|
In thousands, except per share
and employees data |
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||
STATEMENT OF OPERATIONS DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net sales
|
$ |
2,406,596
|
$ |
2,419,929
|
$ |
2,309,078
|
$ |
2,167,423
|
$ |
2,042,332
|
||||||||||
Income from operations before income taxes
|
$ |
678,239
|
$ |
682,146
|
$ |
641,097
|
$ |
600,114
|
$ |
541,918
|
||||||||||
Net income*
|
$ |
592,198
|
$ |
593,794
|
$ |
20,311
|
$ |
521,503
|
$ |
469,275
|
||||||||||
Net income per basic common share*
|
$ |
8.76
|
$ |
7.71
|
$ |
0.25
|
$ |
6.46
|
$ |
5.70
|
||||||||||
Weighted-average number of basic common shares
|
67,627
|
76,992
|
79,793
|
80,786
|
82,336
|
|||||||||||||||
Net income per diluted common share*
|
$ |
8.69
|
$ |
7.65
|
$ |
0.25
|
$ |
6.41
|
$ |
5.65
|
||||||||||
Weighted-average number of diluted common shares and equivalents
|
68,166
|
77,618
|
80,604
|
81,417
|
83,087
|
|||||||||||||||
BALANCE SHEET AND OTHER DATA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash, cash equivalents and investments
|
$ |
337,144
|
$ |
1,735,224
|
$ |
3,393,701
|
$ |
2,813,032
|
$ |
2,399,263
|
||||||||||
Working capital, including current maturities of debt**
|
$ |
721,157
|
$ |
2,214,232
|
$ |
3,663,977
|
$ |
3,115,124
|
$ |
2,649,457
|
||||||||||
Total assets**
|
$ |
2,557,055
|
$ |
3,727,426
|
$ |
5,324,354
|
$ |
4,662,059
|
$ |
4,268,677
|
||||||||||
Long-term debt
|
$ |
1,580,797
|
$ |
1,148,172
|
$ |
1,897,501
|
$ |
1,701,966
|
$ |
1,493,027
|
||||||||||
Stockholders’ (deficit) equity***
|
$ |
(216,281
|
) | $ |
1,567,258
|
$ |
2,233,788
|
$ |
2,301,949
|
$ |
2,058,851
|
|||||||||
Employees
|
7,467
|
7,246
|
7,020
|
6,899
|
6,594
|
* | The provision for income taxes for 2017 includes a $550 million estimate for the impact of the enactment of the 2017 Tax Act, which was signed into law on December 22, 2017. The $550 million income tax provision reduced net income per share by $6.82. The $550 million income tax provision primarily consists of an estimated transition tax, as well as estimated income tax provisions for state and withholding taxes and a provision associated with the remeasurement of the Company’s deferred tax assets and liabilities from 35% to the new U.S. corporate income tax rate of 21%. |
** |
In January 2019, the company adopted new accounting guidance related to the accounting for leases. The new guidance requires lessees to present the assets and liabilities that arise from leases on their balance sheets. The standard required using a modified retrospective transition approach to be applied to leases existing as of, or entered into after, January 1, 2019. As a result, the Company recorded a $93 million
right-of-use
asset as of December 31, 2019. The adoption of this standard did not have a material impact on the Company’s results of operations, cash flows and stockholder’s (deficit) equity.
|
*** | In 2018, the Company adopted new accounting guidance which eliminates the deferral of tax effects on intra-entity transfers other than inventory and requires an entity to recognize the income tax consequences when the transfer occurs. The Company adopted this standard as of January 1, 2018 with a $4 million charge to beginning retained earnings in the consolidated balance sheet. |
Item 7:
|
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
|
|
Year Ended December 31,
|
% change
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs.
2018 |
|
2018 vs.
2017 |
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Product sales
|
$ |
1,567,189
|
$ |
1,604,993
|
$ |
1,552,349
|
|
(2
|
%)
|
|
3
|
%
|
||||||||
Service sales
|
839,407
|
814,936
|
756,729
|
|
3
|
%
|
|
8
|
%
|
|||||||||||
Total net sales
|
2,406,596
|
2,419,929
|
2,309,078
|
|
(1
|
%)
|
|
5
|
%
|
|||||||||||
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cost of sales
|
1,010,700
|
992,564
|
947,067
|
|
2
|
%
|
|
5
|
%
|
|||||||||||
Selling and administrative expenses
|
534,791
|
536,902
|
544,363
|
|
—
|
|
|
(1
|
%)
|
|||||||||||
Research and development expenses
|
142,955
|
143,403
|
132,593
|
|
—
|
|
|
8
|
%
|
|||||||||||
Purchased intangibles amortization
|
9,693
|
7,712
|
6,743
|
|
26
|
%
|
|
14
|
%
|
|||||||||||
Litigation (settlement) provision
|
—
|
(426
|
) |
11,114
|
|
100
|
%
|
|
(104
|
%)
|
||||||||||
Acquired
in-process
research and development
|
—
|
—
|
5,000
|
|
—
|
|
|
(100
|
%)
|
|||||||||||
Operating income
|
708,457
|
739,774
|
662,198
|
|
(4
|
%)
|
|
12
|
%
|
|||||||||||
Operating income as a % of sales
|
|
29.4
|
%
|
|
30.6
|
%
|
|
28.7
|
%
|
|
|
|
|
|
|
|||||
Other expense
|
(3,586
|
) |
(47,794
|
) |
(340
|
) |
|
|
**
|
|
|
**
|
||||||||
Interest expense, net
|
(26,632
|
) |
(9,834
|
) |
(20,761
|
) |
|
171
|
%
|
|
(53
|
%)
|
||||||||
Income before income taxes
|
678,239
|
682,146
|
641,097
|
|
(1
|
%)
|
|
6
|
%
|
|||||||||||
Provision for income taxes
|
86,041
|
88,352
|
620,786
|
|
(3
|
%)
|
|
(86
|
%)
|
|||||||||||
Net income
|
$ |
592,198
|
$ |
593,794
|
$ |
20,311
|
|
—
|
|
|
|
**
|
||||||||
Net income per diluted common share
|
$ |
8.69
|
$ |
7.65
|
$ |
0.25
|
|
14
|
%
|
|
|
**
|
|
Year Ended December 31,
|
% change
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs.
2018 |
|
2018 vs.
2017 |
|
||||||||||
Net Sales:
|
|
|
|
|
|
|||||||||||||||
Asia:
|
|
|
|
|
|
|
|
|
|
|||||||||||
China
|
$ |
439,557
|
$ |
443,321
|
$ |
387,059
|
|
(1
|
%)
|
|
15
|
%
|
||||||||
Japan
|
180,707
|
173,357
|
167,258
|
|
4
|
%
|
|
4
|
%
|
|||||||||||
Asia Other
|
318,848
|
305,613
|
308,300
|
|
4
|
%
|
|
(1
|
%)
|
|||||||||||
Total Asia
|
939,112
|
922,291
|
862,617
|
|
2
|
%
|
|
7
|
%
|
|||||||||||
Americas:
|
|
|
|
|
|
|
|
|
|
|||||||||||
United States
|
692,277
|
683,596
|
669,274
|
|
1
|
%
|
|
2
|
%
|
|||||||||||
Americas Other
|
137,964
|
151,581
|
140,715
|
|
(9
|
%)
|
|
8
|
%
|
|||||||||||
Total Americas
|
830,241
|
835,177
|
809,989
|
|
(1
|
%)
|
|
3
|
%
|
|||||||||||
Europe
|
637,243
|
662,461
|
636,472
|
|
(4
|
%)
|
|
4
|
%
|
|||||||||||
Total net sales
|
$ |
2,406,596
|
$ |
2,419,929
|
$ |
2,309,078
|
|
(1
|
%)
|
|
5
|
%
|
||||||||
|
Year Ended December 31,
|
% change
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2019 vs.
2018 |
|
2018 vs.
2017 |
|
||||||||||
Pharmaceutical
|
$ |
1,365,275
|
$ |
1,365,731
|
$ |
1,294,668
|
|
—
|
|
|
5
|
%
|
||||||||
Industrial
|
719,377
|
737,144
|
721,088
|
|
(2
|
%)
|
|
2
|
%
|
|||||||||||
Academic and governmental
|
321,944
|
317,054
|
293,322
|
|
2
|
%
|
|
8
|
%
|
|||||||||||
Total net sales
|
$ |
2,406,596
|
$ |
2,419,929
|
$ |
2,309,078
|
|
(1
|
%)
|
|
5
|
%
|
||||||||
|
Year Ended December 31,
|
% change
|
||||||||||||||||||||||||||||||
|
2019
|
|
% of
Total |
|
2018
|
|
% of
Total |
|
2017
|
|
% of
Total |
|
2019 vs.
2018 |
|
2018 vs.
2017 |
|
||||||||||||||||
Waters instrument systems
|
$ |
963,871
|
|
45
|
%
|
$ |
1,000,625
|
|
47
|
%
|
$ |
988,750
|
|
48
|
%
|
|
(4
|
%)
|
|
1
|
%
|
|||||||||||
Chemistry consumables
|
412,018
|
|
19
|
%
|
400,287
|
|
18
|
%
|
372,157
|
|
18
|
%
|
|
3
|
%
|
|
8
|
%
|
||||||||||||||
Total Waters product sales
|
1,375,889
|
|
64
|
%
|
1,400,912
|
|
65
|
%
|
1,360,907
|
|
66
|
%
|
|
(2
|
%)
|
|
3
|
%
|
||||||||||||||
Waters service
|
761,594
|
|
36
|
%
|
738,433
|
|
35
|
%
|
686,656
|
|
34
|
%
|
|
3
|
%
|
|
8
|
%
|
||||||||||||||
Total Waters net sales
|
$ |
2,137,483
|
|
100
|
%
|
$ |
2,139,345
|
|
100
|
%
|
$ |
2,047,563
|
|
100
|
%
|
|
—
|
|
|
4
|
%
|
|||||||||||
|
Year Ended December 31,
|
% change
|
||||||||||||||||||||||||||||||
|
2019
|
|
% of
Total |
|
2018
|
|
% of
Total |
|
2017
|
|
% of
Total |
|
2019 vs.
2018 |
|
2018 vs.
2017 |
|
||||||||||||||||
TA instrument systems
|
$ |
191,300
|
|
71
|
%
|
$ |
204,081
|
|
73
|
%
|
$ |
191,442
|
|
73
|
%
|
|
(6
|
%)
|
|
7
|
%
|
|||||||||||
TA service
|
77,813
|
|
29
|
%
|
76,503
|
|
27
|
%
|
70,073
|
|
27
|
%
|
|
2
|
%
|
|
9
|
%
|
||||||||||||||
Total TA net sales
|
$ |
269,113
|
|
100
|
%
|
$ |
280,584
|
|
100
|
%
|
$ |
261,515
|
|
100
|
%
|
|
(4
|
%)
|
|
7
|
%
|
|||||||||||
|
Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Net income
|
$ |
592,198
|
$ |
593,794
|
$ |
20,311
|
||||||
Depreciation and amortization
|
105,296
|
108,408
|
106,002
|
|||||||||
Stock-based compensation
|
38,577
|
37,541
|
39,436
|
|||||||||
Deferred income taxes
|
9,620
|
2,405
|
45,510
|
|||||||||
In-process
research and development and other
non-cash
charges
|
—
|
—
|
5,000
|
|||||||||
Change in accounts receivable
|
(22,195
|
) |
(47,921
|
) |
(24,013
|
) | ||||||
Change in inventories
|
(31,854
|
) |
(25,396
|
) |
731
|
|||||||
Change in accounts payable and other current liabilities
|
9,784
|
(81,663
|
) |
3,175
|
||||||||
Change in deferred revenue and customer advances
|
12,189
|
2,721
|
10,386
|
|||||||||
Effect of the 2017 Tax Cuts and Jobs Act
|
(3,229
|
) |
(6,059
|
) |
530,383
|
|||||||
Other changes
|
(67,299
|
) |
20,616
|
(39,281
|
) | |||||||
Net cash provided by operating activities
|
643,087
|
604,446
|
697,640
|
|||||||||
Net cash provided by (used in) investing activities
|
768,802
|
1,683,302
|
(535,752
|
) | ||||||||
Net cash used in financing activities
|
(1,872,678
|
) |
(2,119,522
|
) |
(63,869
|
) | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
224
|
(14,265
|
) |
38,669
|
||||||||
(Decrease) increase in cash and cash equivalents
|
$ |
(460,565
|
) | $ |
153,961
|
$ |
136,688
|
|||||
• | The changes in accounts receivable were primarily attributable to timing of payments made by customers and timing of sales. Days sales outstanding was 77 days at December 31, 2019, 74 days at December 31, 2018 and 71 days at 2017. |
• | The changes in inventory were primarily attributable to new product launches and the increase in safety stock in advance of Brexit. |
• | The changes in accounts payable and other current liabilities were the result of timing of payments to vendors. In addition, the change in 2019 as compared to 2018 includes $29 million and $103 million, respectively, of income tax payments made in the U.S. relating to the Company’s estimated 2017 tax reform liability and 2018 estimated income tax payments and a $15 million litigation settlement payment. |
• | 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, other liabilities, and income tax expenses related to the 2017 Tax Act. In addition, in 2018, the Company made $11 million of contributions to certain defined benefit pension plans. |
|
|
Payments Due by Year (1)
|
|
|||||||||||||||||||||||||||||
|
|
Total
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|
2025
|
|
|
After 2025
|
|
||||||||
Notes payable and debt
|
|
$
|
100,366
|
|
|
$
|
100,366
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest on senior unsecured notes
|
|
|
214,160
|
|
|
|
33,962
|
|
|
|
30,273
|
|
|
|
28,160
|
|
|
|
27,182
|
|
|
|
24,654
|
|
|
|
22,714
|
|
|
|
47,215
|
|
Long-term debt (2)
|
|
|
1,585,000
|
|
|
|
—
|
|
|
|
150,000
|
|
|
|
625,000
|
|
|
|
50,000
|
|
|
|
100,000
|
|
|
|
—
|
|
|
|
660,000
|
|
2017 Tax Act liability
|
|
|
403,768
|
|
|
|
38,454
|
|
|
|
38,454
|
|
|
|
38,454
|
|
|
|
72,101
|
|
|
|
96,135
|
|
|
|
120,170
|
|
|
|
—
|
|
Operating leases
|
|
|
103,359
|
|
|
|
29,489
|
|
|
|
21,774
|
|
|
|
16,743
|
|
|
|
9,175
|
|
|
|
6,867
|
|
|
|
5,550
|
|
|
|
13,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,406,653
|
|
|
$
|
202,271
|
|
|
$
|
240,501
|
|
|
$
|
708,357
|
|
|
$
|
158,458
|
|
|
$
|
227,656
|
|
|
$
|
148,434
|
|
|
$
|
720,976
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Does not include normal purchases made in the ordinary course of business and uncertain tax positions discussed below.
|
(2)
|
The interest rates applicable to the 2017 Credit Agreement are, at the Company’s option, equal to either the alternate base rate (which is a rate per annum equal to the greatest of (a) the prime rate in effect on such day, (b) the Federal Reserve Bank of New York Rate on such day plus 1/2 of 1% per annum and (c) the adjusted LIBO rate on such day (or if such day is not a business day, the immediately preceding business day) for a deposit in U.S. dollars with a maturity of one month plus 1% per annum) or the applicable 1, 2, 3 or 6 month adjusted LIBO rate or EURIBO rate for Euro-denominated loans, in each case, plus an interest rate margin based upon the Company’s leverage ratio, which can range between 0 and 12.5 basis points for alternate base rate loans and between 80 and 112.5 basis points for LIBO rate or EURIBO rate loans. The facility fee on the 2017 Credit Agreement ranges between 7.5 and 25 basis points per annum, based on the leverage ratio, of the amount of the revolving facility commitments and the outstanding term loan. The 2017 Credit Agreement requires that the Company comply with an interest coverage ratio test of not less than 3.50:1 as of the end of any fiscal quarter for any period of four consecutive fiscal quarters and a leverage ratio test of not more than 3.50:1 as of the end of any fiscal quarter. In addition, the 2017 Credit Agreement includes negative covenants, affirmative covenants, representations and warranties and events of default that are customary for investment grade credit facilities. As of December 31, 2019, the Company was in compliance with all such covenants.
|
|
|
Amount of Commitments Expiration Per Period
|
|
|||||||||||||||||||||||||||||
|
|
Total
|
|
|
2020
|
|
|
2021
|
|
|
2022
|
|
|
2023
|
|
|
2024
|
|
|
2025
|
|
|
After 2025
|
|
||||||||
Letters of credit
|
|
$
|
1,797
|
|
|
$
|
1,797
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
•
|
significant underperformance relative to historical or projected future operating results, particularly as it pertains to capitalized software and patent costs;
|
|
•
|
significant negative industry or economic trends, competitive products and technologies; and
|
|
•
|
significant changes or developments in strategic technological collaborations or legal matters which affect the Company’s capitalized patents, purchased technology, trademarks and intellectual properties, such as licenses.
|
|
•
|
significant decline in the Company’s projected revenue, earnings or cash flows;
|
|
•
|
significant adverse change in legal factors or business climate;
|
|
•
|
significant decline in the Company’s stock price or the stock price of comparable companies;
|
|
•
|
adverse action or assessment by a regulator; and
|
|
•
|
unanticipated competition.
|
|
Unrecognized
Compensation Costs |
|
Weighted-Average
Life in Years |
|
||||
Stock options
|
$ |
32
|
3.2
|
|||||
Restricted stock units
|
36
|
3.3
|
||||||
Performance stock units
|
10
|
1.9
|
||||||
Restricted stock
|
—
|
—
|
||||||
Total
|
$ |
78
|
3.1
|
|||||
Item 7A:
|
Quantitative and Qualitative Disclosures About Market Risk
|
|
December 31, 2019
|
December 31, 2018
|
||||||||||||||
|
Notional Value
|
|
Fair Value
|
|
Notional Value
|
|
Fair Value
|
|
||||||||
Foreign currency exchange contracts:
|
|
|
|
|
||||||||||||
Other current assets
|
$ |
119,576
|
$ |
16
|
$ |
112,212
|
$ |
503
|
||||||||
Other current liabilities
|
$ |
29,495
|
$ |
1,028
|
$ |
40,175
|
$ |
224
|
||||||||
Interest rate cross-currency swap agreements:
|
|
|
|
|
||||||||||||
Other assets
|
$ |
560,000
|
$ |
4,485
|
$ |
300,000
|
$ |
1,093
|
||||||||
Accumulated other comprehensive income
|
|
$ |
(4,485
|
) |
|
$ |
(1,093
|
) |
|
Financial
Statement
Classification
|
|
|
|
|
|
|
|
||||||||
|
Year Ended December 31,
|
|||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||||||
Foreign currency exchange contracts:
|
|
|
|
|||||||||||||
Realized (losses) gains on closed contracts
|
Cost of sales
|
$ |
(3,552
|
) | $ |
(6,684
|
) | $ |
3,894
|
|||||||
Unrealized (losses) gains on open contracts
|
Cost of sales
|
(1,292
|
) |
(105
|
) |
1,054
|
||||||||||
Cumulative net
pre-tax
(losses) gains
|
Cost of sales
|
$ |
(4,844
|
) | $ |
(6,789
|
) | $ |
4,948
|
|||||||
Interest rate cross-currency swap agreements:
|
|
|
|
|||||||||||||
Interest earned
|
Interest income
|
$ |
11,709
|
$ |
2,713
|
$ |
—
|
|||||||||
Unrealized gains on open contracts
|
Stockholders’ (deficit) equity
|
$ |
4,485
|
$ |
1,093
|
$ |
—
|
Item
|
/s/ PricewaterhouseCoopers LLP
|
Boston, Massachusetts
|
February 25, 2020
|
|
Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
|
(In thousands, except per share data)
|
|||||||||||
Revenues:
|
|
|||||||||||
Product sales
|
$ |
1,567,189
|
$ |
1,604,993
|
$ |
1,552,349
|
||||||
Service sales
|
839,407
|
814,936
|
756,729
|
|||||||||
Total net sales
|
2,406,596
|
2,419,929
|
2,309,078
|
|||||||||
Costs and operating expenses:
|
|
|
|
|||||||||
Cost of product sales
|
642,706
|
656,275
|
623,214
|
|||||||||
Cost of service sales
|
367,994
|
336,289
|
323,853
|
|||||||||
Selling and administrative expenses
|
534,791
|
536,902
|
544,363
|
|||||||||
Research and development expenses
|
142,955
|
143,403
|
132,593
|
|||||||||
Purchased intangibles amortization
|
9,693
|
7,712
|
6,743
|
|||||||||
Litigation provision (settlement) (Note 11)
|
—
|
(426
|
) |
11,114
|
||||||||
Acquired
in-process
research and development (Note 2)
|
—
|
—
|
5,000
|
|||||||||
Total costs and operating expenses
|
1,698,139
|
1,680,155
|
1,646,880
|
|||||||||
Operating income
|
708,457
|
739,774
|
662,198
|
|||||||||
Other expense
|
(3,586
|
) |
(47,794
|
) |
(340
|
) | ||||||
Interest expense
|
(48,690
|
) |
(48,641
|
) |
(56,839
|
) | ||||||
Interest income
|
22,058
|
38,807
|
36,078
|
|||||||||
Income before income taxes
|
678,239
|
682,146
|
641,097
|
|||||||||
Provision for income taxes
|
86,041
|
88,352
|
620,786
|
|||||||||
Net income
|
$ |
592,198
|
$ |
593,794
|
$ |
20,311
|
||||||
Net income per basic common share
|
$ |
8.76
|
$ |
7.71
|
$ |
0.25
|
||||||
Weighted-average number of basic common shares
|
67,627
|
76,992
|
79,793
|
|||||||||
Net income per diluted common share
|
$ |
8.69
|
$ |
7.65
|
$ |
0.25
|
||||||
Weighted-average number of diluted common shares and equivalents
|
68,166
|
77,618
|
80,604
|
|
Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
|
(In thousands)
|
|||||||||||
Net income
|
$ |
592,198
|
$ |
593,794
|
$ |
20,311
|
||||||
Other comprehensive (loss) income:
|
|
|
|
|||||||||
Foreign currency translation
|
1,631
|
(36,279
|
) |
101,148
|
||||||||
Unrealized gains (losses) on investments before income taxes
|
3,046
|
698
|
(1,794
|
) | ||||||||
Income tax (expense) benefit
|
(641
|
) |
443
|
68
|
||||||||
Unrealized gains (losses) on investments, net of tax
|
2,405
|
1,141
|
(1,726
|
) | ||||||||
Retirement liability adjustment before reclassifications
|
(9,360
|
) |
(6,722
|
) |
7,832
|
|||||||
Amounts reclassified to other expense
|
1,979
|
48,792
|
3,948
|
|||||||||
Retirement liability adjustment before income taxes
|
(7,381
|
) |
42,070
|
11,780
|
||||||||
Income tax benefit (expense)
|
1,845
|
(14,836
|
) |
(4,989
|
) | |||||||
Retirement liability adjustment, net of tax
|
(5,536
|
) |
27,234
|
6,791
|
||||||||
Other comprehensive (loss) income
|
(1,500
|
) |
(7,904
|
) |
106,213
|
|||||||
Comprehensive income
|
$ |
590,698
|
$ |
585,890
|
$ |
126,524
|
||||||
|
Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
|
(In thousands)
|
|||||||||||
Cash flows from operating activities:
|
|
|
|
|||||||||
Net income
|
$ |
592,198
|
$ |
593,794
|
$ |
20,311
|
||||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|||||||||
Stock-based compensation
|
38,577
|
37,541
|
39,436
|
|||||||||
Deferred income taxes
|
9,620
|
2,405
|
45,510
|
|||||||||
Depreciation
|
53,839
|
57,952
|
61,450
|
|||||||||
Amortization of intangibles
|
51,457
|
50,456
|
44,552
|
|||||||||
In-process
research and development and other
non-cash
charges
|
—
|
—
|
5,000
|
|||||||||
Change in operating assets and liabilities, net of acquisitions:
|
|
|
|
|||||||||
Increase in accounts receivable
|
(22,195
|
) |
(47,921
|
) |
(24,013
|
) | ||||||
(
Increase
) decrease
in inventories
|
(31,854
|
) |
(25,396
|
) |
731
|
|||||||
Increase in other current assets
|
(10,918
|
) |
(12,446
|
) |
(16,323
|
) | ||||||
(Increase) decrease in other assets
|
(16,470
|
) |
6,047
|
(24,098
|
) | |||||||
Increase (decrease)
in accounts payable and other current liabilities
|
9,784
|
(81,663
|
) |
3,175
|
||||||||
I
ncrease in deferred revenue and customer advances
|
12,189
|
2,721
|
10,386
|
|||||||||
Effect of the 2017 Tax Cuts
and
Jobs Act
|
(3,229
|
) |
(6,059
|
) |
530,383
|
|||||||
(Decrease)
ncrease in other liabilities
i
|
(39,911
|
) |
27,015
|
1,140
|
||||||||
Net cash provided by operating activities
|
643,087
|
604,446
|
697,640
|
|||||||||
Cash flows from investing activities:
|
|
|
|
|||||||||
Additions to property, plant, equipment and software capitalization
|
(163,823
|
) |
(96,079
|
) |
(85,473
|
) | ||||||
Asset and business acquisitions, net of cash acquired
|
—
|
(31,486
|
) |
—
|
||||||||
Investment in unaffiliated company
|
(8,843
|
) |
(7,615
|
) |
(7,000
|
)
|
||||||
Paym
ents for intellectual p
roperty licen
ses
|
—
|
—
|
(5,000
|
) | ||||||||
P
of investments
urc
hases
|
(36,951
|
) |
(1,006,080
|
) |
(2,960,379
|
) | ||||||
Maturities and sales
of
inves
tments
|
978,419
|
2,824,562
|
2,522,100
|
|||||||||
Net cash provided by (used in) investing activities
|
768,802
|
1,683,302
|
(535,752
|
) | ||||||||
Cash flows from financing activities:
|
|
|
|
|||||||||
Proceeds from debt issuances
|
925,670
|
274
|
1,480,190
|
|||||||||
Payments on debt
|
(390,482
|
) |
(850,435
|
) |
(1,310,214
|
) | ||||||
Payments of debt issuance costs
|
(2,932
|
) |
—
|
(2,984
|
) | |||||||
Proceeds from stock plans
|
53,715
|
52,429
|
97,789
|
|||||||||
Purchases of treasury shares
|
(2,469,258
|
) |
(1,315,106
|
) |
(332,544
|
) | ||||||
Proceeds from (payments for) derivative contracts
|
10,609
|
(6,684
|
) |
3,894
|
||||||||
Net cash used in financing activities
|
(1,872,678
|
) |
(2,119,522
|
) |
(63,869
|
) | ||||||
Effect of exchange rate changes on cash and cash equivalents
|
224
|
(14,265
|
) |
38,669
|
||||||||
(Decrease) increase in cash and cash equivalents
|
(460,565
|
) |
153,961
|
136,688
|
||||||||
Cash and cash equivalents at beginning of period
|
796,280
|
642,319
|
505,631
|
|||||||||
Cash and cash equivalents at end of period
|
$ |
335,715
|
$ |
796,280
|
$ |
642,319
|
||||||
Supplemental cash flow information:
|
|
|
|
|||||||||
Income taxes paid
|
$ |
87,998
|
$ |
159,397
|
$ |
70,583
|
||||||
Interest paid
|
$ |
42,843
|
$ |
50,798
|
$ |
56,503
|
|
Number of
Common Shares |
|
Common
Stock |
|
Additional
Paid-In
Capital |
|
Retained
Earnings |
|
Treasury
Stock |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Total
Stockholders’ Equity
(
Def
i
cit
)
|
|
||||||||||||||
|
(In thousands)
|
|||||||||||||||||||||||||||
Balance December 31, 2016
|
|
|
158,634
|
|
|
$
|
1,586
|
|
|
$
|
1,607,241
|
|
|
$
|
5,385,069
|
|
|
$
|
(4,475,667
|
)
|
|
$
|
(216,280
|
)
|
|
$
|
2,301,949
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,311
|
|
|
|
—
|
|
|
|
—
|
|
|
|
20,311
|
|
Other comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
106,213
|
|
|
|
106,213
|
|
Issuance of common stock for employees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan
|
|
|
50
|
|
|
|
1
|
|
|
|
6,874
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,875
|
|
Stock options exercised
|
|
|
972
|
|
|
|
10
|
|
|
|
90,904
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
90,914
|
|
Treasury stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(332,544
|
)
|
|
|
—
|
|
|
|
(332,544
|
)
|
Stock-based compensation
|
|
|
189
|
|
|
|
1
|
|
|
|
40,069
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
40,070
|
|
Balance December 31, 2017
|
|
|
159,845
|
|
|
$
|
1,598
|
|
|
$
|
1,745,088
|
|
|
$
|
5,405,380
|
|
|
$
|
(4,808,211
|
)
|
|
$
|
(110,067
|
)
|
|
$
|
2,233,788
|
|
Adoption of new accounting pronouncement
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,969
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(3,969
|
)
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
593,794
|
|
|
|
—
|
|
|
|
—
|
|
|
|
593,794
|
|
Other comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7,904
|
)
|
|
|
(7,904
|
)
|
Issuance of common stock for employees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan
|
|
|
45
|
|
|
|
—
|
|
|
|
7,874
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,874
|
|
Stock options exercised
|
|
|
438
|
|
|
|
5
|
|
|
|
44,550
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
44,555
|
|
Treasury stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,338,111
|
)
|
|
|
—
|
|
|
|
(1,338,111
|
)
|
Stock-based compensation
|
|
|
144
|
|
|
|
2
|
|
|
|
37,229
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37,231
|
|
Balance December 31, 2018
|
|
|
160,472
|
|
|
$
|
1,605
|
|
|
$
|
1,834,741
|
|
|
$
|
5,995,205
|
|
|
$
|
(6,146,322
|
)
|
|
$
|
(117,971
|
)
|
|
$
|
1,567,258
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
592,198
|
|
|
|
—
|
|
|
|
—
|
|
|
|
592,198
|
|
Other comprehensive
loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,500
|
)
|
|
|
(1,500
|
)
|
Issuance of common stock for employees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee Stock Purchase Plan
|
|
|
43
|
|
|
|
—
|
|
|
|
7,996
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,996
|
|
Stock options exercised
|
|
|
406
|
|
|
|
4
|
|
|
|
45,715
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
45,719
|
|
Treasury stock
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(2,466,254
|
)
|
|
|
—
|
|
|
|
(2,466,254
|
)
|
Stock-based compensation
|
|
|
109
|
|
|
|
1
|
|
|
|
38,301
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
38,302
|
|
Balance December 31, 2019
|
|
|
161,030
|
|
|
$
|
1,610
|
|
|
$
|
1,926,753
|
|
|
$
|
6,587,403
|
|
|
$
|
(8,612,576
|
)
|
|
$
|
(119,471
|
)
|
|
$
|
(216,281
|
)
|
|
Balance at
Beginning of Period |
|
Additions
|
|
Deduction
|
|
Balance at
End of Period |
|
||||||||
Allowance for Doubtful Accounts
|
|
|
|
|
||||||||||||
December 31, 2019
|
$ |
7,663
|
$
|
4,701
|
$ |
(2,804
|
) | $ |
9,560
|
|||||||
December 31, 2018
|
$ |
6,109
|
$ |
6,333
|
$ |
(4,779
|
) | $ |
7,663
|
|||||||
December 31, 2017
|
$ |
5,141
|
$ |
3,752
|
$ |
(2,784
|
) | $ |
6,109
|
|
Total at
December 31, 2019 |
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
||||||||
Assets:
|
|
|
|
|
||||||||||||
Time deposits
|
$
|
1,642
|
$
|
—
|
$
|
1,642
|
$
|
—
|
||||||||
Waters 401(k) Restoration Plan assets
|
30,158
|
30,158
|
—
|
—
|
||||||||||||
Foreign currency exchange contracts
|
16
|
—
|
16
|
—
|
||||||||||||
Interest rate cross-currency swap agreements
|
4,485
|
—
|
4,485
|
—
|
||||||||||||
Total
|
$ |
36,301
|
$ |
30,158
|
$ |
6,143
|
$ |
—
|
||||||||
Liabilities:
|
|
|
|
|
||||||||||||
Contingent consideration
|
$ |
2,557
|
$ |
—
|
$ |
—
|
$ |
2,557
|
||||||||
Foreign currency exchange contracts
|
1,028
|
—
|
1,028
|
—
|
||||||||||||
Total
|
$ |
3,585
|
$ |
—
|
$ |
1,028
|
$ |
2,557
|
||||||||
|
Total at
December 31, 2018 |
|
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
|
$ |
164,315
|
$ |
—
|
$ |
164,315
|
$ |
—
|
||||||||
Foreign government securities
|
3,463
|
—
|
3,463
|
—
|
||||||||||||
Corporate debt securities
|
723,059
|
—
|
723,059
|
—
|
||||||||||||
Time deposits
|
108,638
|
—
|
108,638
|
—
|
||||||||||||
Waters 401(k) Restoration Plan assets
|
33,104
|
33,104
|
—
|
—
|
||||||||||||
Foreign currency exchange contracts
|
503
|
—
|
503
|
—
|
||||||||||||
Interest rate cross-currency swap agreements
|
1,093
|
|
1,093
|
|
||||||||||||
Total
|
$ |
1,034,175
|
$ |
33,104
|
$ |
1,001,071
|
$ |
—
|
||||||||
Liabilities:
|
|
|
|
|
||||||||||||
Contingent consideration
|
$ |
2,476
|
$ |
—
|
$ |
—
|
$ |
2,476
|
||||||||
Foreign currency exchange contracts
|
224
|
—
|
224
|
—
|
||||||||||||
Total
|
$ |
2,700
|
$ |
—
|
$ |
224
|
$ |
2,476
|
||||||||
|
December 31, 2019
|
December 31, 2018
|
||||||||||||||
|
Notional Value
|
|
Fair Value
|
|
Notional Value
|
|
Fair Value
|
|
||||||||
Foreign currency exchange contracts:
|
|
|
|
|
||||||||||||
Other current assets
|
$ |
119,576
|
$ |
16
|
$ |
112,212
|
$ |
503
|
||||||||
Other current liabilities
|
$ |
29,495
|
$ |
1,028
|
$ |
40,175
|
$ |
224
|
||||||||
Interest rate cross-currency swap agreements:
|
|
|
|
|
||||||||||||
Other assets
|
$ |
560,000
|
$ |
4,485
|
$ |
300,000
|
$ |
1,093
|
||||||||
Accumulated other comprehensive income
|
|
$ |
(4,485
|
) |
|
$ |
(1,093
|
) |
|
Financial
Statement
Classification
|
|
|
|
|
|
|
|
||||||||
|
Year Ended December 31,
|
|||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||||||
Foreign currency exchange contracts:
|
|
|
|
|
||||||||||||
Realized (losses) gains on closed contracts
|
Cost of sales
|
$ |
(3,552
|
) | $ |
(6,684
|
) | $ |
3,894
|
|||||||
Unrealized (losses) gains on open contracts
|
Cost of sales
|
(1,292
|
) |
(105
|
) |
1,054
|
||||||||||
Cumulative net
pre-tax
(losses) gains
|
Cost of sales
|
$ |
(4,844
|
) | $ |
(6,789
|
) | $ |
4,948
|
|||||||
Interest rate cross-currency swap agreements:
|
|
|
|
|||||||||||||
Interest earned
|
Interest income
|
$ |
11,709
|
$ |
2,713
|
$ |
—
|
|||||||||
Unrealized gains on open contracts
|
Stockholders’
(
def
i
cit
equity
|
$ |
4,485
|
$ |
1,093
|
$ |
—
|
|
Balance at
Beginning of Period |
|
Accruals for
Warranties |
|
Settlements
Made |
|
Balance at
End of Period |
|
||||||||
Accrued warranty liability:
|
|
|
|
|
||||||||||||
December 31, 2019
|
$ |
12,300
|
$ |
7,540
|
$ |
(7,876
|
) | $ |
11,964
|
|||||||
December 31, 2018
|
$ |
13,026
|
$ |
5,033
|
$ |
(5,759
|
) | $ |
12,300
|
|||||||
December 31, 2017
|
$ |
13,391
|
$ |
8,746
|
$ |
(9,111
|
) | $ |
13,026
|
|
December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Balance at the beginning of the period
|
$ |
204,257
|
$ |
192,589
|
$ |
173,780
|
||||||
Recognition of revenue included in balance at beginning of the period
|
(176,981
|
) |
(159,258
|
) |
(143,589
|
) | ||||||
Revenue deferred during the period, net of revenue recognized
|
186,419
|
170,926
|
162,398
|
|||||||||
Balance at the end of the period
|
$ |
213,695
|
$ |
204,257
|
$ |
192,589
|
||||||
|
December 31, 2019
|
|
||
Deferred revenue and customer advances expected to be recognized in:
|
|
|||
One year or less
|
$ |
176,360
|
||
13-24
months
|
21,029
|
|||
25 months and beyond
|
16,306
|
|||
Total
|
$ |
213,695
|
||
|
December 31, 2019
|
|||||||||||||||
|
|
Amortized
Cost
|
|
|
Unrealized
Gain
|
|
|
Unrealized
Loss
|
|
|
Fair
Value
|
|
||||
Time deposits
|
$
|
1,642
|
$
|
—
|
$
|
—
|
$
|
1,642
|
||||||||
Total
|
$ |
1,642
|
$ |
—
|
$ |
—
|
$ |
1,642
|
||||||||
Amounts included in:
|
|
|
|
|
||||||||||||
Cash equivalents
|
$ |
213
|
$ |
—
|
$ |
—
|
$ |
213
|
||||||||
Investments
|
1,429
|
—
|
—
|
1,429
|
||||||||||||
Total
|
$ |
1,642
|
$ |
—
|
$ |
—
|
$ |
1,642
|
||||||||
|
December 31, 2018
|
|||||||||||||||
|
Amortized
Cost |
|
Unrealized
Gain |
|
Unrealized
Loss |
|
Fair
Value
|
|
||||||||
U.S. Treasury securities
|
$ |
164,619
|
$ |
16
|
$ |
(320
|
) | $ |
164,315
|
|||||||
Foreign government securities
|
3,486
|
1
|
(24
|
) |
3,463
|
|||||||||||
Corporate debt securities
|
725,778
|
41
|
(2,760
|
) |
723,059
|
|||||||||||
Time deposits
|
108,638
|
—
|
—
|
108,638
|
||||||||||||
Total
|
$ |
1,002,521
|
$ |
58
|
$ |
(3,104
|
) | $ |
999,475
|
|||||||
Amounts included in:
|
|
|
|
|
||||||||||||
Cash equivalents
|
$ |
60,532
|
$ |
—
|
$ |
(1
|
) | $ |
60,531
|
|||||||
Investments
|
941,989
|
58
|
(3,103
|
) |
938,944
|
|||||||||||
Total
|
$ |
1,002,521
|
$ |
58
|
$ |
(3,104
|
) | $ |
999,475
|
|||||||
|
December 31,
2019 |
|
December 31,
2018 |
|
||||
Due in one year or less
|
$ |
1,642
|
$ |
797,649
|
||||
Due after one year through three years
|
—
|
201,826
|
||||||
Total
|
$ |
1,642
|
$ |
999,475
|
||||
|
December 31,
2019 |
|
December 31,
2018 |
|
||||
Raw materials
|
$ |
126,850
|
$ |
111,641
|
||||
Work in progress
|
15,457
|
15,552
|
||||||
Finished goods
|
178,244
|
164,376
|
||||||
Total inventories
|
$ |
320,551
|
$ |
291,569
|
||||
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|
||||
Land and land improvements
|
$ |
37,040
|
$ |
36,554
|
||||
Buildings and leasehold improvements
|
355,425
|
299,103
|
||||||
Production and other equipment
|
537,211
|
494,302
|
||||||
Construction in progress
|
57,985
|
41,909
|
||||||
Total property, plant and equipment
|
987,661
|
871,868
|
||||||
Less: accumulated depreciation and amortization
|
(570,319
|
) |
(528,785
|
) | ||||
Property, plant and equipment, net
|
$ |
417,342
|
$ |
343,083
|
||||
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
||||||||||||||||||
|
|
Gross
Carrying Amount |
|
|
Accumulated
Amortization |
|
|
Weighted-
Average Amortization Period |
|
|
Gross
Carrying Amount |
|
|
Accumulated
Amortization |
|
|
Weighted-
Average Amortization Period |
|
||||||
Capitalized software
|
|
$
|
481,986
|
|
|
$
|
333,255
|
|
|
|
5 years
|
|
|
$
|
454,307
|
|
|
$
|
307,634
|
|
|
|
5 years
|
|
Purchased intangibles
|
|
|
200,523
|
|
|
|
151,722
|
|
|
|
11 years
|
|
|
|
201,566
|
|
|
|
144,184
|
|
|
|
11 years
|
|
Trademarks and IPR&D
|
|
|
13,782
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,677
|
|
|
|
—
|
|
|
|
—
|
|
Licenses
|
|
|
5,669
|
|
|
|
5,298
|
|
|
|
6 years
|
|
|
|
5,568
|
|
|
|
4,875
|
|
|
|
6 years
|
|
Patents and other intangibles
|
|
|
83,035
|
|
|
|
54,517
|
|
|
|
8 years
|
|
|
|
77,753
|
|
|
|
49,276
|
|
|
|
8 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
784,995
|
|
|
$
|
544,792
|
|
|
|
7 years
|
|
|
$
|
752,871
|
|
|
$
|
505,969
|
|
|
|
7 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior
|
|
|
|
|
|
|
|
Face Value
|
|
|
|
|
||||
Unsecured Notes
|
|
Term
|
|
|
Interest Rate
|
|
|
(in millions)
|
|
|
Maturity Date
|
|
||||
Series L
|
|
|
7 years
|
|
|
|
3.31
|
%
|
|
$
|
200
|
|
|
|
September 2026
|
|
Series M
|
|
|
10 years
|
|
|
|
3.53
|
%
|
|
$
|
300
|
|
|
|
September 2029
|
|
|
Total
|
|
||
2020
|
$ |
100,366
|
||
2021
|
150,000
|
|||
2022
|
625,000
|
|||
2023
|
50,000
|
|||
2024
|
100,000
|
|||
Thereafter
|
660,000
|
|||
Total
|
$ |
1,685,366
|
||
|
Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
The components of income from operations before income taxes are as follows:
|
|
|
|
|||||||||
Domestic
|
$ |
97,325
|
$ |
57,822
|
$ |
55,751
|
||||||
Foreign
|
580,914
|
624,324
|
585,346
|
|||||||||
Total
|
$ |
678,239
|
$ |
682,146
|
$ |
641,097
|
||||||
|
Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
The components of the income tax provision from operations were as follows:
|
|
|
|
|||||||||
Federal
|
|
$
|
7,009
|
|
|
$
|
27,277
|
|
|
$
|
499,828
|
|
State
|
|
|
3,329
|
|
|
|
(11,964
|
)
|
|
|
21,163
|
|
Foreign
|
|
|
66,083
|
|
|
|
70,634
|
|
|
|
54,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current tax provision
|
$ |
76,421
|
$ |
85,947
|
$ |
575,276
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
6,913
|
|
|
$
|
(3,256
|
)
|
|
$
|
35,949
|
|
Stat
e
|
|
|
1,253
|
|
|
|
2,247
|
|
|
|
5,398
|
|
Foreign
|
|
|
1,454
|
|
|
|
3,414
|
|
|
|
4,163
|
|
Total deferred tax provision
|
9,620
|
2,405
|
45,510
|
|||||||||
Total
provision
|
$ |
86,041
|
$ |
88,352
|
$ |
620,786
|
||||||
|
Year Ended December 31,
|
|||||||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Federal tax computed at U.S. statutory income tax rate
|
$
|
142,430
|
$ |
143,251
|
$ |
224,384
|
||||||
Enactment of the 2017 Tax
Cuts and Jobs
Act
|
—
|
(6,059
|
) |
550,000
|
||||||||
Foreign currency exchange impact on distributed earnings
|
(3,229
|
) |
7,495
|
—
|
||||||||
GILTI, net of foreign tax credits
|
10,523
|
13,727
|
—
|
|||||||||
Settlement of tax audits
|
—
|
—
|
706
|
|||||||||
State income tax, net of federal income tax benefit
|
3,459
|
2,910
|
1,289
|
|||||||||
Net effect of foreign operations
|
(52,727
|
) |
(57,003
|
) |
(131,694
|
) | ||||||
Effect of stock-based compensation
|
(9,211
|
)
|
(9,089
|
) |
(19,566
|
) | ||||||
Other, net
|
(5,204
|
) |
(6,880
|
) |
(4,333
|
) | ||||||
Provision for income taxes
|
$ |
86,041
|
$ |
88,352
|
$ |
620,786
|
||||||
|
December 31,
|
|||||||
|
2019
|
|
2018
|
|
||||
Deferred tax assets:
|
|
|
||||||
Net operating losses and credits
|
$ |
55,939
|
$ |
63,052
|
||||
Depreciation
|
4,776
|
7,495
|
||||||
Operating leases
|
19,849
|
—
|
||||||
Amortization
|
3,738
|
3,633
|
||||||
Stock-based compensation
|
9,790
|
9,984
|
||||||
Deferred compensation
|
20,077
|
22,058
|
||||||
Unrealized foreign currency gain/loss
|
|
|
7,955
|
|
|
|
5,881
|
|
Deferred revenue
|
9,696
|
4,654
|
||||||
Revaluation of equity investments and licenses
|
3,424
|
3,148
|
||||||
Inventory
|
4,824
|
4,588
|
||||||
Accrued liabilities and reserves
|
7,215
|
7,213
|
||||||
Other
|
3,839
|
4,073
|
||||||
Total deferred tax assets
|
151,122
|
135,779
|
||||||
Valuation allowance
|
(51,221
|
) |
(53,893
|
) | ||||
Deferred tax assets, net of valuation allowance
|
99,901
|
81,886
|
||||||
Deferred tax liabilities:
|
|
|
||||||
Capitalized software
|
(21,025
|
) |
(19,491
|
) | ||||
Operating leases
|
(19,553
|
) |
—
|
|||||
Indefinite-lived intangibles
|
(14,363
|
) |
(13,753
|
) | ||||
Deferred tax liability on foreign earning
s
|
(18,027
|
) |
(20,443
|
) | ||||
Total deferred tax liabilities
|
(72,968
|
) |
(53,687
|
) | ||||
Net deferred tax assets
|
$ |
26,933
|
$ |
28,199
|
||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Balance at the beginning of the period
|
$ |
26,108
|
$ |
5,843
|
$ |
9,964
|
||||||
Net reductions for settlement of tax audits
|
—
|
—
|
(22
|
) | ||||||||
Net reductions for lapse of statutes taken during the period
|
(261
|
) |
(436
|
) |
(5,178
|
) | ||||||
Net additions for tax positions taken during the prior period
|
—
|
17,651
|
—
|
|||||||||
Net additions for tax positions taken during the current period
|
1,943
|
3,050
|
1,079
|
|||||||||
Balance at the end of the period
|
$ |
27,790
|
$ |
26,108
|
$ |
5,843
|
||||||
|
Balance at
Beginning of Period |
|
Charged to
Provision for Income Taxes* |
|
Other**
|
|
Balance at
End of Period |
|
||||||||
Valuation allowance for deferred tax assets:
|
|
|
|
|
||||||||||||
2019
|
$ |
53,893
|
$ |
(1,242
|
) | $ |
(1,430
|
) | $ |
51,221
|
||||||
2018
|
$ |
62,098
|
$ |
(2,128
|
) | $ |
(6,077
|
) | $ |
53,893
|
||||||
201
7
|
$ |
61,225
|
$ |
(6,363
|
) | $ |
7,236
|
$ |
62,098
|
* | These amounts have been recorded as part of the income statement provision for income taxes. The income statement effects of these amounts have largely been offset by amounts related to changes in other deferred tax balance sheet accounts. |
** |
The change in the valuation allowance during the year ended December 31, 2019 is primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward. The change in the valuation allowance during the year ended December 31, 2018 was primarily due to the write-off of a valuation allowance to Retained Earnings for the tax effect related to intra-entity transfers. The change in the valuation allowance during the year ended December 31, 2017 was primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward.
|
|
Financial Statement Classification
|
December 31, 2019
|
|
|||
Assets:
|
|
|
||||
Property operating lease assets
|
Operating lease assets
|
$ |
64,206
|
|||
Automobile operating lease assets
|
Operating lease assets
|
27,197
|
||||
Equipment operating lease assets
|
Operating lease assets
|
1,955
|
||||
Total lease assets
|
|
$ |
93,358
|
|||
Liabilities:
|
|
|
||||
Current operating lease liabilities
|
Current operating lease liabilities
|
$ |
27,125
|
|||
Long-term operating lease liabilities
|
Long-term operating lease liabilities
|
66,881
|
||||
Total lease liabilities
|
|
$ |
94,006
|
|||
2020
|
$ |
29,489
|
||
2021
|
21,774
|
|||
2022
|
16,743
|
|||
2023
|
9,175
|
|||
2024
|
6,867
|
|||
2025 and thereafter
|
19,311
|
|||
Total future minimum lease payments
|
103,359
|
|||
Less: amount of lease payments representing interest
|
(9,353
|
) | ||
Present value of future minimum lease payments
|
94,006
|
|||
Less: current operating lease liabilities
|
(27,125
|
) | ||
Long-term operating lease liabilities
|
$ |
66,881
|
||
2019
|
|
$
|
28,417
|
|
2020
|
|
|
23,424
|
|
2021
|
|
|
16,032
|
|
2022
|
|
|
11,816
|
|
2023 and thereafter
|
|
|
23,269
|
|
|
|
|
|
|
Total future minimum lease payments
|
|
$
|
102,958
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
||||||
Cost of sales
|
$ |
2,271
|
$ |
2,212
|
$ |
3,032
|
||||||
Selling and administrative expenses
|
30,907
|
30,443
|
33,335
|
|||||||||
Research and development expenses
|
5,399
|
4,886
|
3,069
|
|||||||||
Total stock-based compensation
|
$ |
38,577
|
$ |
37,541
|
$ |
39,436
|
||||||
Options Issued and Significant Assumptions Used to Estimate Option Fair Values
|
2019
|
|
2018
|
|
2017
|
|
||||||
Options issued in thousands
|
146
|
321
|
389
|
|||||||||
Risk-free interest rate
|
2.5
|
% |
2.7
|
% |
2.2
|
% | ||||||
Expected life in years
|
5
|
6
|
6
|
|||||||||
Expected volatility
|
24.5
|
% |
25.3
|
% |
22.7
|
% | ||||||
Expected dividends
|
—
|
—
|
—
|
Weighted-Average Exercise Price and Fair Value of Options on the Date of Grant
|
2019
|
|
2018
|
|
2017
|
|
||||||
Exercise price
|
$ |
230.37
|
$ |
196.78
|
$ |
170.24
|
||||||
Fair value
|
$ |
61.75
|
$ |
59.89
|
$ |
45.73
|
|
Number of Shares
|
|
Exercise Price per Share
|
Weighted-
Average Exercise Price
per Share
|
|
|||||||||||||||
Outstanding at December 31, 2018
|
1,790
|
$ |
38.09
|
to
|
$ |
208.47
|
$ |
142.47
|
||||||||||||
Granted
|
146
|
$ |
183.41
|
to
|
$ |
238.52
|
$ |
230.37
|
||||||||||||
Exercised
|
(406
|
) | $ |
38.09
|
to
|
$ |
208.47
|
$ |
113.06
|
|||||||||||
Canceled
|
(75
|
) | $ |
113.36
|
to
|
$ |
238.52
|
$ |
159.67
|
|||||||||||
Outstanding at December 31, 2019
|
1,455
|
$ |
61.63
|
to
|
$ |
238.52
|
$ |
158.61
|
||||||||||||
Exercise
Price Range
|
Number of Shares
Outstanding |
|
Weighted-
Average Exercise Price |
|
Remaining
Contractual Life of
Options Outstanding
|
|
Number of Shares
Exercisable |
|
Weighted-
Average Exercise Price |
|
||||||||||
$61.63 to $128.93
|
529
|
$ |
117.10
|
5.1
|
430
|
$ |
114.85
|
|||||||||||||
$128.94 to $192.62
|
520
|
$ |
160.06
|
7.7
|
208
|
$ |
149.37
|
|||||||||||||
$192.63 to $238.52
|
406
|
$ |
210.84
|
8.2
|
91
|
$ |
196.83
|
|||||||||||||
Total
|
1,455
|
$ |
158.61
|
6.9
|
729
|
$ |
134.94
|
|||||||||||||
|
Shares
|
|
Weighted-Average
Grant
Fair
Dat
e
Value per
|
|
||||
Unvested at December 31, 2018
|
304
|
$ |
153.31
|
|||||
Granted
|
86
|
$ |
235.31
|
|||||
Vested
|
(104
|
) | $ |
139.07
|
||||
Forfeited
|
(26
|
) | $ |
167.60
|
||||
Unvested at December 31, 2019
|
260
|
$ |
184.70
|
|||||
Performance Stock Units Issued and Significant Assumptions Used to Estimate Fair Values
|
2019
|
|
2018
|
|
2017
|
|
||||||
Performance stock units issued in thousands
|
13
|
40
|
40
|
|||||||||
Risk-free interest rate
|
2.4
|
% |
2.4
|
% |
1.6
|
% | ||||||
Expected life in years
|
2.8
|
3.0
|
3.0
|
|||||||||
Expected volatility
|
23.5
|
% |
22.0
|
% |
20.9
|
% | ||||||
Average volatility of peer companies
|
26.2
|
% |
25.9
|
% |
25.6
|
% | ||||||
Correlation Coefficient
|
34.2
|
% |
35.9
|
% |
37.8
|
% | ||||||
Expected dividends
|
—
|
—
|
—
|
|
Shares
|
|
Weighted-Average
Fair Value per Share |
|
||||
Unvested at December 31, 2018
|
100
|
$ |
212.34
|
|||||
Granted
|
13
|
$ |
372.68
|
|||||
Forfeited
|
(8
|
) | $ |
200.26
|
||||
Unvested at December 31, 2019
|
105
|
$ |
233.11
|
|||||
|
Year Ended December 31, 2019
|
|||||||||||
|
Net Income
|
|
Weighted-Average
Shares
|
|
Per
Share
|
|
||||||
|
(Numerator)
|
|
(Denominator)
|
|
Amount
|
|
||||||
Net income per basic common share
|
$ |
592,198
|
67,627
|
$ |
8.76
|
|||||||
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities
|
—
|
539
|
(0.07
|
) | ||||||||
Net income per diluted common share
|
$ |
592,198
|
68,166
|
$ |
8.69
|
|||||||
|
Year Ended December 31, 2018
|
|||||||||||
|
Net Income
|
|
Weighted-Average
Shares
|
|
Per
Share
|
|
||||||
|
(Numerator)
|
|
(Denominator)
|
|
Amount
|
|
||||||
Net income per basic common share
|
$ |
593,794
|
76,992
|
$ |
7.71
|
|||||||
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities
|
—
|
626
|
(0.06
|
) | ||||||||
Net income per diluted common share
|
$ |
593,794
|
77,618
|
$ |
7.65
|
|||||||
|
Year Ended December 31, 2017
|
|||||||||||
|
Net Income
|
|
Weighted-Average
Shares
|
|
Per
Share
|
|
||||||
|
(Numerator)
|
|
(Denominator)
|
|
Amount
|
|
||||||
Net income per basic common share
|
$ |
20,311
|
79,793
|
$ |
0.25
|
|||||||
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities
|
—
|
811
|
—
|
|||||||||
Net income per diluted common share
|
$ |
20,311
|
80,604
|
$ |
0.25
|
|||||||
|
Currency
Translation |
|
Unrealized Gain
(Loss) on Retirement Plans |
|
Unrealized Gain
(Loss) on Investments |
|
Accumulated
Other Comprehensive Income (Loss) |
|
||||||||
Balance at December 31, 2017
|
|
$
|
(69,418
|
)
|
|
$
|
(37,103
|
)
|
|
$
|
(3,546
|
)
|
|
$
|
(110,067
|
)
|
Other comprehensive (loss) income, net of tax
|
|
|
(36,279
|
)
|
|
|
27,234
|
|
|
|
1,141
|
|
|
|
(7,904
|
)
|
Balance at December 31, 2018
|
$ |
(105,697
|
) | $ |
(9,869
|
) | $ |
(2,405
|
) | $ |
(117,971
|
) | ||||
Other comprehensive income
(loss),
net of tax
|
1,631
|
(5,536
|
) |
2,405
|
(1,500
|
) | ||||||||||
Balance at December 31, 2019
|
$ |
(104,066
|
) | $ |
(15,405
|
) | $ |
—
|
$ |
(119,471
|
) | |||||
|
2019
|
2018
|
||||||||||||||||||||||
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
||||||||||||
Projected benefit obligation, January 1
|
$ |
972
|
$ |
17,724
|
$ |
93,722
|
$ |
168,064
|
$ |
17,121
|
$ |
96,378
|
||||||||||||
Service cost
|
—
|
499
|
4,339
|
568
|
566
|
5,368
|
||||||||||||||||||
Employee contributions
|
—
|
1,214
|
499
|
—
|
1,159
|
622
|
||||||||||||||||||
Interest cost
|
29
|
777
|
1,735
|
6,491
|
636
|
1,707
|
||||||||||||||||||
Actuarial (gains) losses
|
(32
|
) |
2,081
|
13,385
|
6,415
|
(621
|
) |
(2,274
|
) | |||||||||||||||
Benefits paid
|
—
|
(1,109
|
) |
(3,281
|
) |
(3,416
|
) |
(1,007
|
) |
(3,277
|
) | |||||||||||||
Plan amendments
|
—
|
—
|
—
|
—
|
(130
|
)
|
(44
|
) | ||||||||||||||||
Plan settlements
|
(969
|
) |
—
|
(7,407
|
) |
(177,150
|
) |
—
|
(2,791
|
) | ||||||||||||||
Other plans
|
—
|
—
|
1,598
|
—
|
—
|
1,063
|
||||||||||||||||||
Currency impact
|
—
|
—
|
(1,224
|
) |
—
|
—
|
(3,030
|
) | ||||||||||||||||
Projected benefit obligation, December 31
|
$ |
—
|
$ |
21,186
|
$ |
103,366
|
$ |
972
|
$ |
17,724
|
$ |
93,722
|
||||||||||||
|
2019
|
2018
|
||||||||||||||||||||||
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
||||||||||||
Accumulated benefit obligation
|
$ |
—
|
|
** | $ |
88,105
|
$ |
972
|
|
** | $ |
82,026
|
**
|
Not applicable.
|
|
2019
|
2018
|
||||||||||||||||||||||
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
||||||||||||
Fair value of plan assets, January 1
|
$ |
—
|
$ |
11,080
|
$ |
81,587
|
$ |
171,373
|
$ |
11,125
|
$ |
74,990
|
||||||||||||
Actual return on plan assets
|
—
|
2,140
|
6,237
|
2,555
|
(584
|
) |
1,070
|
|||||||||||||||||
Company contributions
|
969
|
448
|
6,103
|
6,625
|
387
|
10,778
|
||||||||||||||||||
Employee contributions
|
—
|
1,214
|
499
|
—
|
1,159
|
622
|
||||||||||||||||||
Plan settlements
|
(969
|
) |
—
|
(7,044
|
)
|
(177,137
|
) |
—
|
—
|
|||||||||||||||
Benefits paid
|
—
|
(1,109
|
) |
(3,281
|
) |
(3,416
|
) |
(1,007
|
) |
(3,277
|
) | |||||||||||||
Other plans
|
—
|
—
|
82
|
—
|
—
|
—
|
||||||||||||||||||
Currency impact
|
—
|
—
|
(1,172
|
) |
—
|
—
|
(2,596
|
) | ||||||||||||||||
Fair value of plan assets, December 31
|
$ |
—
|
$ |
13,773
|
$ |
83,011
|
$ |
—
|
$ |
11,080
|
$ |
81,587
|
||||||||||||
|
2019
|
2018
|
||||||||||||||||||||||
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
||||||||||||
Projected benefit obligation
|
$ |
—
|
$ |
(21,186
|
) | $ |
(103,366
|
) | $ |
(972
|
) | $ |
(17,724
|
) | $ |
(93,722
|
) | |||||||
Fair value of plan assets
|
—
|
13,773
|
83,011
|
—
|
11,080
|
81,587
|
||||||||||||||||||
Funded status
|
$ |
—
|
$ |
(7,413
|
) | $ |
(20,355
|
) | $ |
(972
|
) | $ |
(6,644
|
) | $ |
(12,135
|
) | |||||||
|
2019
|
|
2018
|
|
||||
Projected benefit obligation
|
$ |
81,566
|
$ |
60,359
|
||||
Accumulated benefit obligations
|
$ |
73,644
|
$ |
56,029
|
||||
Fair value of plan assets
|
$ |
60,832
|
$ |
44,940
|
|
2019
|
2018
|
2017
|
|||||||||||||||||||||||||||||||||
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
||||||||||||||||||
Service cost
|
$ |
—
|
$ |
499
|
$ |
4,339
|
$ |
568
|
$ |
566
|
$ |
5,368
|
$ |
450
|
$ |
546
|
$ |
5,082
|
||||||||||||||||||
Interest cost
|
29
|
777
|
1,735
|
6,491
|
636
|
1,707
|
6,829
|
618
|
1,518
|
|||||||||||||||||||||||||||
Expected return on plan assets
|
—
|
(706
|
) |
(2,154
|
) |
(6,833
|
) |
(706
|
) |
(1,974
|
) |
(10,298
|
) |
(587
|
) |
(1,688
|
) | |||||||||||||||||||
Settlement loss
|
27
|
—
|
1,548
|
45,157
|
—
|
—
|
155
|
—
|
232
|
|||||||||||||||||||||||||||
Net amortization:
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Prior service credit
|
—
|
(19
|
) |
(108
|
) |
—
|
(19
|
)
|
(108
|
) |
—
|
—
|
(168
|
) | ||||||||||||||||||||||
Net actuarial loss
|
—
|
—
|
531
|
3,082
|
—
|
680
|
2,770
|
—
|
959
|
|||||||||||||||||||||||||||
Net periodic pension cost (benefit)
|
$ |
56
|
$ |
551
|
$ |
5,891
|
$ |
48,465
|
$ |
477
|
$ |
5,673
|
$ |
(94
|
) | $ |
577
|
$ |
5,935
|
|||||||||||||||||
|
2019
|
2018
|
2017
|
|||||||||||||||||||||||||||||||||
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
||||||||||||||||||
Prior service (cost) credit
|
$ |
—
|
$ |
—
|
$ |
—
|
$ |
—
|
$ |
130
|
$ |
44
|
$ |
—
|
$ |
—
|
$ |
(636
|
)
|
|||||||||||||||||
Net gain (loss) arising during the year
|
32
|
(648
|
) |
(8,940
|
) |
(10,616
|
) |
(670
|
) |
4,088
|
8,879
|
13
|
1,609
|
|||||||||||||||||||||||
Amortization:
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Prior service credit
|
—
|
(19
|
) |
(108
|
) |
—
|
(19
|
)
|
(35
|
) |
—
|
—
|
(168
|
) | ||||||||||||||||||||||
Net loss
|
27
|
—
|
2,079
|
48,239
|
—
|
680
|
2,925
|
—
|
1,191
|
|||||||||||||||||||||||||||
Other Plans
|
—
|
—
|
18
|
—
|
—
|
(354
|
)
|
—
|
—
|
—
|
||||||||||||||||||||||||||
Currency impact
|
—
|
—
|
178
|
—
|
—
|
583
|
—
|
—
|
(2,033
|
) | ||||||||||||||||||||||||||
Total recognized in other comprehensive (loss) income
|
$ |
59
|
$ |
(667
|
) | $ |
(6,773
|
) | $ |
37,623
|
$ |
(559
|
) | $ |
5,006
|
$ |
11,804
|
$ |
13
|
$ |
(37
|
) | ||||||||||||||
|
2019
|
2018
|
||||||||||||||||||||||
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
||||||||||||
Net actuarial loss
|
$ |
—
|
$ |
(731
|
) | $ |
(20,600
|
) | $ |
(59
|
) | $ |
(83
|
) | $ |
(13,987
|
) | |||||||
Prior service credit
|
—
|
93
|
506
|
—
|
112
|
666
|
||||||||||||||||||
Total
|
$ |
—
|
$ |
(638
|
) | $ |
(20,094
|
) | $ |
(59
|
) | $ |
29
|
$ |
(13,321
|
) | ||||||||
|
2019
|
|||||||||||
|
U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
||||||
Net actuarial loss
|
$ |
—
|
$ |
—
|
$ |
(1,541
|
) | |||||
Prior service credit
|
—
|
19
|
158
|
|||||||||
Total
|
$ |
—
|
$ |
19
|
$ |
(1,383
|
) | |||||
|
2019
|
2018
|
||||||||||||||
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
U.S.
Retiree
Healthcare Plan |
|
Non-U.S.
Pension Plans |
|
||||||||
Equity securities
|
64
|
% |
6
|
% |
61
|
% |
7
|
% | ||||||||
Debt securities
|
36
|
% |
21
|
% |
39
|
% |
18
|
% | ||||||||
Cash and cash equivalents
|
0
|
% |
1
|
% |
0
|
% |
5
|
% | ||||||||
Insurance contracts and other
|
0
|
% |
72
|
% |
0
|
% |
70
|
% | ||||||||
Total
|
100
|
% |
100
|
% |
100
|
% |
100
|
% | ||||||||
|
U.S. Retiree Healthcare Plan
|
Non-U.S.
Pension Plans
Policy Target
|
|
|||||||||
|
Policy Target
|
|
Range
|
|
||||||||
Equity securities
|
60
|
% |
30%
-
90%
|
5
|
% | |||||||
Debt securities
|
35
|
% |
20% -
|
20
|
% | |||||||
Cash and cash equivalents
|
0
|
% |
0% -
|
10
|
% | |||||||
Insurance contracts and other
|
5
|
% |
0% -
|
65
|
% |
Level 1:
|
The fair value of these types of investments is based on market and observable sources from daily quoted prices on nationally recognized securities exchanges.
|
|
Level 2:
|
The fair value of these types of investments utilizes data points other than quoted prices in active markets that are observable either directly or indirectly.
|
|
Level 3:
|
These bank and insurance investment contracts are issued by well-known, highly-rated companies. The fair value disclosed represents the present value of future cash flows under the terms of the respective contracts. Significant assumptions used to determine the fair value of these contracts include the amount and timing of future cash flows and counterparty credit risk.
|
|
Total at
December 31, 2019 |
|
Quoted Prices
in Active Markets for
Identical
Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
||||||||
U.S. Retiree Healthcare Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mutual funds
(a)
|
13,773
|
13,773
|
—
|
—
|
||||||||||||
Total U.S. Retiree Healthcare Plan
|
13,773
|
13,773
|
—
|
—
|
||||||||||||
Non-U.S. Pension Plans:
|
|
|
|
|
||||||||||||
Cash equivalents
(b)
|
690
|
690
|
—
|
—
|
||||||||||||
Mutual funds
(c)
|
22,202
|
22,202
|
—
|
—
|
||||||||||||
Bank and insurance investment contracts
(d)
|
60,119
|
—
|
—
|
60,119
|
||||||||||||
Total Non-U.S. Pension Plans
|
83,011
|
22,892
|
—
|
60,119
|
||||||||||||
Total fair value of retirement plan assets
|
$ |
96,784
|
$ |
36,665
|
$ |
—
|
$ |
60,119
|
||||||||
|
Total at
December 31, 2018 |
|
Quoted Prices
in Active Markets for
Identical
(Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
|
||||||||
U.S. Retiree Healthcare Plan:
|
|
|
|
|
||||||||||||
Mutual funds
(
e
)
|
11,080
|
11,080
|
—
|
—
|
||||||||||||
Total U.S. Retiree Healthcare Plan
|
11,080
|
11,080
|
—
|
—
|
||||||||||||
Non-U.S.
Pension Plans:
|
|
|
|
|
||||||||||||
Cash equivalents
(b)
|
4,439
|
4,439
|
—
|
—
|
||||||||||||
Mutual funds
(
f
)
|
20,430
|
20,430
|
—
|
—
|
||||||||||||
Bank and insurance investment contracts
(d)
|
56,718
|
—
|
—
|
56,718
|
||||||||||||
Total
Non-U.S.
Pension Plans
|
81,587
|
24,869
|
—
|
56,718
|
||||||||||||
Total fair value of retirement plan assets
|
$
|
92,667
|
$ |
35,949
|
$ |
—
|
$ |
56,718
|
||||||||
(a) |
The mutual fund balance in the U.S. Retiree Healthcare Plan is invested in the following categories: 35% in the common stock of
large-cap
U.S. companies, 29% in the common stock of international growth companies and 36% in fixed income bonds of U.S. companies and
the
U.S. government.
|
(b) | Primarily represents deposit account funds held with various financial institutions. |
(c) |
The mutual fund balance in the
Non-U.S.
Pension Plans is primarily invested in the following categories: 57% in international bonds, 23% in the common stock of international companies and 20% in various other global investments.
|
(d) | Amount represents bank and insurance guaranteed investment contracts. |
(e) |
The mutual fund balance in the U.S.
Retiree Healthcare Plan is
invested in the following categories: 40% in the common stock of
large-cap
U.S. companies, 21% in the common stock of international growth companies and 39% in fixed income bonds
of
U.S. companies and
the
U.S. government.
|
(f) |
The mutual fund balance in the
Non-
U.S.
Pension Plans
is invested in the following categories: 56% in
international bonds,
24% in the common stock of international companies and 20%
in
various other global investments.
|
|
Insurance
Guaranteed Investment Contracts |
|
||
Fair value of assets, December 31, 2017
|
$ |
51,963
|
||
Net purchases (sales) and appreciation (depreciation)
|
4,755
|
|||
Fair value of assets, December 31, 2018
|
56,718
|
|||
Net purchases (sales) and appreciation (depreciation)
|
3,401
|
|||
Fair value of assets, December 31, 2019
|
$ |
60,119
|
||
|
2019
|
2018
|
2017
|
|||||||||||||||||||||
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
||||||||||||
Discount rate
|
3.42
|
% |
1.38
|
% |
4.40
|
% |
1.95
|
% |
3.94
|
% |
1.79
|
% | ||||||||||||
Increases in compensation levels
|
|
**
|
2.83
|
%
|
|
**
|
2.66
|
%
|
|
**
|
2.43
|
% |
** | Not applicable |
|
2019
|
2018
|
2017
|
|||||||||||||||||||||
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
U.S.
|
|
Non-U.S.
|
|
||||||||||||
Discount rate
|
4.41
|
% |
2.25
|
% |
3.96
|
% |
1.93
|
% |
4.28
|
% |
1.80
|
% | ||||||||||||
Return on plan assets
|
6.25
|
% |
3.11
|
% |
4.35
|
% |
2.75
|
% |
6.53
|
% |
2.64
|
% | ||||||||||||
Increases in compensation levels
|
|
**
|
3.20
|
%
|
|
**
|
2.70
|
%
|
|
**
|
2.63
|
% |
** | Not applicable |
|
|
Non-U.S.
Pension Plans |
|
Total
|
|
|||||||
2020
|
$ |
1,123
|
$ |
2,723
|
$ |
3,846
|
||||||
2021
|
1,209
|
4,746
|
5,955
|
|||||||||
2022
|
1,281
|
3,238
|
4,519
|
|||||||||
2023
|
1,376
|
2,749
|
4,125
|
|||||||||
2024
|
1,437
|
2,884
|
4,321
|
|||||||||
2025 - 2029
|
7,420
|
20,691
|
28,111
|
|
2019
|
|
2018
|
|
2017
|
|
||||||
Product net sales:
|
|
|
|
|||||||||
Waters instrument systems
|
$ |
963,871
|
$ |
1,000,625
|
$ |
988,750
|
||||||
Chemistry consumables
|
412,018
|
400,287
|
372,157
|
|||||||||
TA instrument systems
|
191,300
|
204,081
|
191,442
|
|||||||||
Total product sales
|
1,567,189
|
1,604,993
|
1,552,349
|
|||||||||
Service net sales:
|
|
|
|
|||||||||
Waters service
|
761,594
|
738,433
|
686,656
|
|||||||||
TA service
|
77,813
|
76,503
|
70,073
|
|||||||||
Total service sales
|
839,407
|
814,936
|
756,729
|
|||||||||
Total net sales
|
$ |
2,406,596
|
$ |
2,419,929
|
$ |
2,309,078
|
||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Net Sales:
|
|
|
|
|||||||||
Asia:
|
|
|
|
|||||||||
China
|
$ |
439,557
|
$ |
443,321
|
$ |
387,059
|
||||||
Japan
|
180,707
|
173,357
|
167,258
|
|||||||||
Asia Other
|
318,848
|
305,613
|
308,300
|
|||||||||
Total Asia
|
939,112
|
922,291
|
862,617
|
|||||||||
Americas:
|
|
|
|
|||||||||
United States
|
692,277
|
683,596
|
669,274
|
|||||||||
Americas Other
|
137,964
|
151,581
|
140,715
|
|||||||||
Total Americas
|
830,241
|
835,177
|
809,989
|
|||||||||
Europe
|
637,243
|
662,461
|
636,472
|
|||||||||
Total net sales
|
$ |
2,406,596
|
$ |
2,419,929
|
$ |
2,309,078
|
||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Pharmaceutical
|
$ |
1,365,275
|
$ |
1,365,731
|
$ |
1,294,668
|
||||||
Industrial
|
719,377
|
737,144
|
721,088
|
|||||||||
Academic and governmental
|
321,944
|
317,054
|
293,322
|
|||||||||
Total net sales
|
$ |
2,406,596
|
$ |
2,419,929
|
$ |
2,309,078
|
||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Net sales recognized at a point in time:
|
|
|
|
|||||||||
Instrument systems
|
$ |
1,155,171
|
$ |
1,204,706
|
$ |
1,180,192
|
||||||
Chemistry consumables
|
412,018
|
400,287
|
372,157
|
|||||||||
Service sales recognized at a point in time (time & materials)
|
323,247
|
317,549
|
299,385
|
|||||||||
Total net sales recognized at a point in time
|
1,890,436
|
1,922,542
|
1,851,734
|
|||||||||
Net sales recognized over time:
|
|
|
|
|||||||||
Service and software sales recognized over time (contracts)
|
516,160
|
497,387
|
457,344
|
|||||||||
Total net sales
|
$ |
2,406,596
|
$ |
2,419,929
|
$ |
2,309,078
|
||||||
|
2019
|
|
2018
|
|
2017
|
|
||||||
Long-lived assets:
|
|
|
|
|||||||||
United States
|
$ |
276,891
|
$ |
203,664
|
$ |
186,344
|
||||||
Americas Other
|
1,929
|
1,680
|
1,720
|
|||||||||
Total Americas
|
278,820
|
205,344
|
188,064
|
|||||||||
Europe
|
116,734
|
118,513
|
136,440
|
|||||||||
Asia
|
21,788
|
19,226
|
24,774
|
|||||||||
Total long-lived assets
|
$ |
417,342
|
$ |
343,083
|
$ |
349,278
|
||||||
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
|
|
||||||||||
2019
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Total
|
|
||||||||||
Net sales
|
$ |
513,862
|
$ |
599,162
|
$ |
577,278
|
$ |
716,294
|
$ |
2,406,596
|
||||||||||
Costs and operating expenses:
|
|
|
|
|
|
|||||||||||||||
Cost of sales
|
221,031
|
249,546
|
241,055
|
299,068
|
1,010,700
|
|||||||||||||||
Selling and administrative expenses
|
134,339
|
133,208
|
126,036
|
141,208
|
534,791
|
|||||||||||||||
Research and development expenses
|
35,060
|
36,490
|
34,333
|
37,072
|
142,955
|
|||||||||||||||
Purchased intangibles amortization
|
2,281
|
2,264
|
2,619
|
2,529
|
9,693
|
|||||||||||||||
Total costs and operating expenses
|
392,711
|
421,508
|
404,043
|
479,877
|
1,698,139
|
|||||||||||||||
Operating income
|
121,151
|
177,654
|
173,235
|
236,417
|
708,457
|
|||||||||||||||
Other expense
|
(525
|
) |
(342
|
) |
(496
|
) |
(2,223
|
) |
(3,586
|
) | ||||||||||
Interest expense
|
(11,563
|
) |
(11,448
|
) |
(11,456
|
) |
(14,223
|
) |
(48,690
|
) | ||||||||||
Interest income
|
8,315
|
5,871
|
3,455
|
4,417
|
22,058
|
|||||||||||||||
Income before income taxes
|
117,378
|
171,735
|
164,738
|
224,388
|
678,239
|
|||||||||||||||
Provision for income taxes
|
8,392
|
27,325
|
26,605
|
23,719
|
86,041
|
|||||||||||||||
Net income
|
$ |
108,986
|
$ |
144,410
|
$ |
138,133
|
$ |
200,669
|
$ |
592,198
|
||||||||||
Net income per basic common share
|
1.52
|
2.09
|
2.09
|
3.15
|
8.76
|
|||||||||||||||
Weighted-average number of basic common shares
|
71,704
|
68,989
|
66,226
|
63,795
|
67,627
|
|||||||||||||||
Net income per diluted common share
|
1.51
|
2.08
|
2.07
|
3.12
|
8.69
|
|||||||||||||||
Weighted-average number of diluted common shares and equivalents
|
72,415
|
69,494
|
66,768
|
64,348
|
68,166
|
|
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
|
|
||||||||||
2018
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Total
|
|
||||||||||
Net sales
|
$ |
530,670
|
$ |
596,219
|
$ |
578,021
|
$ |
715,019
|
$ |
2,419,929
|
||||||||||
Costs and operating expenses:
|
|
|
|
|
|
|||||||||||||||
Cost of sales
|
221,421
|
243,135
|
241,139
|
286,869
|
992,564
|
|||||||||||||||
Selling and administrative expenses
|
130,407
|
136,645
|
126,997
|
142,853
|
536,902
|
|||||||||||||||
Research and development expenses
|
34,480
|
35,644
|
35,173
|
38,106
|
143,403
|
|||||||||||||||
Purchased intangibles amortization
|
1,659
|
1,602
|
2,114
|
2,337
|
7,712
|
|||||||||||||||
Litigation provisions
|
(1,672
|
) |
—
|
924
|
322
|
(426
|
) | |||||||||||||
Total costs and operating expenses
|
386,295
|
417,026
|
406,347
|
470,487
|
1,680,155
|
|||||||||||||||
Operating income
|
144,375
|
179,193
|
171,674
|
244,532
|
739,774
|
|||||||||||||||
Other income (expense)
|
346
|
(1,828
|
) |
(811
|
) |
(45,501
|
) |
(47,794
|
) | |||||||||||
Interest expense
|
(13,838
|
) |
(11,692
|
) |
(11,435
|
) |
(11,676
|
) |
(48,641
|
) | ||||||||||
Interest income
|
9,666
|
8,888
|
9,802
|
10,451
|
38,807
|
|||||||||||||||
Income before income taxes
|
140,549
|
174,561
|
169,230
|
197,806
|
682,146
|
|||||||||||||||
Provision for income taxes
|
28,598
|
18,884
|
28,216
|
12,654
|
88,352
|
|||||||||||||||
Net income
|
$ |
111,951
|
$ |
155,677
|
$ |
141,014
|
$ |
185,152
|
$ |
593,794
|
||||||||||
Net income per basic common share
|
1.42
|
2.00
|
1.84
|
2.48
|
7.71
|
|||||||||||||||
Weighted-average number of basic common shares
|
78,883
|
77,833
|
76,575
|
74,802
|
76,992
|
|||||||||||||||
Net income per diluted common share
|
1.40
|
1.98
|
1.83
|
2.46
|
7.65
|
|||||||||||||||
Weighted-average number of diluted common shares and equivalents
|
79,715
|
78,438
|
77,136
|
75,345
|
77,618
|
Item 9A:
|
Controls and Procedures
|
Item 9B: Other
|
Information
|
Item 10:
|
Directors, Executive Officers and Corporate Governance
|
Item 11:
|
Executive Compensation
|
Item 12:
|
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
|
|
A
|
|
B
|
|
C
|
|
||||||
|
Number of Securities to be
Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) |
|
Weighted-Average
Exercise
Price of Outstanding Options, Warrants and Rights (1) |
|
Number of Securities
Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (A)) |
|
||||||
Equity compensation plans approved by security holders
|
1,861
|
$ |
158.61
|
2,711
|
||||||||
Equity compensation plans not approved by security holders
|
—
|
—
|
—
|
|||||||||
Total
|
1,861
|
$ |
158.61
|
2,711
|
||||||||
(1) | Column (a) includes an aggregate of 406 shares of common stock to be issued upon settlement of restricted stock, restricted stock units and performance stock units. The weighted-average share price in column (b) does not take into account restricted stock, restricted stock units or performance stock units, which do not have an exercise price. |
Item
|
13:
Certain Relationships and Related Transactions and Director
Independence
|
Item
|
14:
Principal Accountant Fees and Services
|
(1) | Financial Statements: |
(2) | Exhibits: |
Exhibit
Number |
|
Description of Document
|
||
3.1
|
Second Amended and Restated Certificate of Incorporation of Waters Corporation.(1)(P)
|
|||
3.2
|
||||
3.3
|
||||
3.4
|
||||
3.5
|
||||
4.1
|
||||
10.1
|
Waters Corporation Retirement Plan.(2)(P)(*)
|
|||
10.2
|
||||
10.3
|
||||
10.4
|
||||
10.5
|
||||
10.6
|
||||
10.7
|
||||
10.8
|
||||
10.9
|
||||
10.10
|
||||
10.11
|
||||
10.12
|
Exhibit
Number |
|
Description of Document
|
||
10.13
|
||||
10.14
|
||||
10.15
|
||||
10.16
|
||||
10.17
|
||||
10.18
|
||||
10.19
|
||||
10.20
|
||||
10.21
|
||||
10.22
|
||||
10.23
|
||||
10.24
|
||||
10.25
|
||||
10.26
|
||||
10.27
|
||||
10.28
|
||||
10.29
|
||||
10.30
|
||||
10.31
|
||||
10.32
|
||||
10.33
|
||||
10.34
|
||||
10.35
|
||||
10.36
|
||||
10.37
|
Exhibit
Number |
|
Description of Document
|
||
10.38
|
||||
10.39
|
||||
10.40
|
||||
10.41
|
||||
10.42
|
||||
10.43
|
||||
21.1
|
||||
23.1
|
||||
31.1
|
||||
31.2
|
||||
32.1
|
||||
32.2
|
||||
101
|
The following materials from Waters Corporation’s Annual Report on Form
10-K
for the year ended December 31, 2019, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Stockholders’ Equity (Deficit) and (vi) Notes to Consolidated Financial Statements.
|
|||
104
|
Cover Page Interactive Date File (formatted in iXBRL and contained in Exhibit 101).
|
(1) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated March 29, 1996 (File No.
001-14010).
|
(2) |
Incorporated by reference to the Registrant’s Registration Statement on Form
S-1
(File No.
333-96934).
|
(3) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated August 11, 1999 (File No.
001-14010).
|
(4) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated August 8, 2000 (File No.
001-14010).
|
(5) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated March 28, 2002 (File No.
001-14010).
|
(6) |
Incorporated by reference to the Registrant’s Report on Form
S-8
dated November 20, 2003 (File No.
333-110613).
|
(7) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated March 12, 2004 (File No.
001-14010).
|
(8) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated November 10, 2004 (File No.
001-14010).
|
(9) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated August 5, 2005 (File No.
001-14010).
|
(10) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated March 1, 2007 (File No.
001-14010).
|
(11) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated November 2, 2007 (File No.
001-14010).
|
(12) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated February 29, 2008 (File No.
001-14010).
|
(13) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated February 27, 2009 (File No.
001-14010).
|
(14) |
Incorporated by reference to the Registrant’s Report on Form
S-8
dated July 10, 2009 (File No.
333-160507).
|
(15) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated February 26, 2010 (File No.
001-14010).
|
(16) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated May 6, 2011 (File No.
001-14010).
|
(17) |
Incorporated by reference to the Registrant’s Report on Form
S-8
dated September 5, 2012 (File No.
333-183721).
|
(18) |
Incorporated by reference to the Registrant’s Report on Form
8-K
dated December 11, 2012 (File No.
001-14010).
|
(19) |
Incorporated by reference to the Registrant’s Report on Form
8-K
dated December 11, 2013 (File No.
001-14010).
|
(20) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated August 1, 2014 (File No.
001-14010).
|
(21) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated February 27, 2015 (File No.
001-14010).
|
(22) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated May 8, 2015 (File No.
001-14010).
|
(23) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated August 7, 2015 (File No.
001-14010).
|
(24) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated August 5, 2016 (File No.
001-14010).
|
(25) |
Incorporated by reference to the Registrant’s Report on Form
8-K
dated December 15, 2016 (File No.
001-14010).
|
(26) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated February 24, 2017 (File No.
001-14010).
|
(27) |
Incorporated by reference to the Registrant’s Report on Form
8-K
dated March 27, 2017 (File No.
001-14010).
|
(28) |
Incorporated by reference to the Registrant’s Report on Form
10-Q
dated November 3, 2017 (File No.
001-14010).
|
(29) |
Incorporated by reference to the Registrant’s Report on Form
8-K
dated December 8, 2017 (File No.
001-14010).
|
(30) |
Incorporated by reference to the Registrant’s Report on Form
10-K
dated February 27, 2018 (File No.
001-14010).
|
(31) |
Incorporated by reference to the Registrant’s Report on Form 10-K/A dated March 1, 2019 (File No.
001-14010).
|
(32) |
Incorporated by reference to the Registrant’s Report on Form
8-K
dated September 16, 2019 (File No.
001-14010).
|
(P) | Paper Filing |
(*) |
Management contract or compensatory plan required to be filed as an Exhibit to this Form
10-K.
|
(**) | 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. |
(b) | See Item 15 (a) (3) above. |
Item
|
16:
Form 10-K Summary
|
Waters Corporation
|
/s/
Sherry L. Buck
|
Sherry L. Buck
|
Senior Vice President and
|
Chief Financial Officer
|
/s/ Christopher J. O’Connell
|
Chairman of the Board of Directors and Chief
|
|
Christopher J. O’Connell
|
Executive Officer (principal executive officer)
|
|
/s/ Sherry L. Buck
|
Senior Vice President and Chief Financial Officer
|
|
Sherry L. Buck
|
(principal financial officer)
(principal accounting officer)
|
|
/s/ Linda Baddour
|
Director
|
|
Linda Baddour
|
|
|
/s/ Dr. Michael J. Berendt
|
Director
|
|
Dr. Michael J. Berendt
|
|
|
/s/ Edward Conard
|
Director
|
|
Edward Conard
|
|
|
/s/ Dr. Laurie H. Glimcher
|
Director
|
|
Dr. Laurie H. Glimcher
|
|
|
/s/ Gary Hendrickson
|
Director
|
|
Gary Hendrickson
|
|
|
/s/ Christopher A. Kuebler
|
Director
|
|
Christopher A. Kuebler
|
|
|
/s/ Flemming Ornskov
|
Director
|
|
Flemming Ornskov
|
|
|
/s/ JoAnn A. Reed
|
Director
|
|
JoAnn A. Reed
|
|
|
/s/ Thomas P. Salice
|
Director
|
|
Thomas P. Salice
|
|
Exhibit 4.1
DESCRIPTION OF REGISTRANTS SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
The following description of our common stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our Second Amended and Restated Certificate of Incorporation, as amended (our Certificate), and our Amended and Restated Bylaws (our Bylaws), each of which has been filed with the Securities and Exchange Commission as an exhibit to this Annual Report on Form 10-K or incorporated by reference therein. The summary below is also qualified by provisions of applicable law.
General
Under our Certificate, we have authority to issue up to 400,000,000 shares of common stock, par value $0.01 per share. Our common stock is registered under Section 12 of the Securities Exchange Act of 1934, as amended, and is listed on the New York Stock Exchange under the symbol WAT.
The rights, preferences and privileges of holders of common stock are subject to the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future.
Voting Rights
Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have cumulative voting rights. Our Bylaws provide that a nominee for director will be elected by the affirmative vote of a majority of the votes cast with respect to such nominee; however, if the number of nominees exceeds the number of directors to be elected, the directors will be elected by affirmative vote of a plurality of the votes cast.
Dividend Rights
Subject to the rights of holders of any outstanding shares of preferred stock, holders of our common stock are entitled to receive dividends, if any, as may be declared from time to time by our board of directors (the Board of Directors) in its discretion out of funds legally available for the payment of dividends.
Liquidation Rights
Subject to the rights of holders of any outstanding shares of preferred stock, holders of our common stock will share ratably in all assets legally available for distribution to out stockholders in the event of dissolution.
Anti-takeover Effects of the Delaware General Corporation Law and Our Certificate of Incorporation and Bylaws
Our Certificate and our Bylaws contain certain provisions that may discourage, delay, or prevent a change in our management or control over us. We expect that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with the Board of Directors, which we believe may result in an improvement of the terms of any such acquisition in favor of our stockholders. However, they may also discourage acquisitions that some stockholders may favor.
No Stockholder Action by Written Consent
Our Certificate provides that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by written consent in lieu of a meeting.
Special Meeting of Stockholders and Advance Notice Requirements for Stockholder Proposals
Our Certificate and Bylaws provide that a special meeting of our stockholders may only be called by the Board of Directors, the Chairman of the Board of Directors or our President and Chief Executive Officer, or by the Chairman of the Board of Directors, our President and Chief Executive Officer or our Secretary at the request in writing of stockholders holding at least fifty percent (50%) of the number of shares of stock outstanding and entitled to vote at such meeting.
Our Bylaws set forth advance notice procedures for stockholder proposals to be brought before an annual meeting of the stockholders, including the nomination of directors, or any special meeting of the stockholders called for the purpose of electing directors. Stockholders at an annual meeting may only consider proposals (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice required by our Bylaws and on the record date for the determination or stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in our Bylaws. To be timely, a stockholders notice must be received at our principal executive offices not less than 60 not more than 90 days prior to the date of the annual meeting; provided, however, that in the event that less than 70 days notice or prior public disclosure of the date of the annual meeting is given to stockholders, notice by the stockholder in order to be timely must be received no later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the annual meeting was made, whichever occurs first.
Nominations of persons for election to our Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice required by our Bylaws and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in our Bylaws. To be timely, a stockholders notice must be received at our principal executive offices (a) in the case of an annual meeting, not less than 60 not more than 90 days prior to the date of the annual meeting; provided, however, that in the event that less than 70 days notice or prior public disclosure of the date of the annual meeting is given to stockholders, notice by the stockholder in order to be timely must be received no later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the annual meeting was made, whichever occurs first, and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever occurs first.
These provisions could have the effect of delaying until the next stockholder meeting any stockholder actions that are favored by the holders of a majority of our outstanding voting securities.
Requirements for Removal and Interim Election of Directors
The stockholders may, at any special meeting the notice of which states that it is called for that purpose, remove, with or without cause, any director and fill the vacancy, provided that if any director was elected by the holders of any class of stock voting separately as a class under the provisions of the Certificate, such director may be removed and the vacancy filled only by the holders of that class of stock voting separately as a class. Vacancies caused by any such removal and not filled by the stockholders at the meeting at which such removal was made, or any vacancy caused by the death or resignation of any director or for any other reason, and any newly created directorship resulting from any increase in the authorized number of directors, may be filled by the affirmative vote of a majority of the directors then in office, even if less than a quorum, and any director so elected to fill any such vacancy or newly created directorship will hold office until his successor is elected and qualified or until his earlier death, resignation or removal.
In the case of the resignation of a director, a majority of the directors then in office, including those who have so resigned, will have power to fill such vacancy and the vote will take effect when such resignation becomes
effective, and each director so chosen will hold office until his successor is elected and qualified or until his earlier death, resignation or removal.
Amendment to Certificate of Incorporation and Bylaws
Our Bylaws may be amended or repealed, or new bylaws may be adopted, by our Board of Directors at any regular or special meeting by the affirmative vote of a majority of all of the members of the Board of Directors, provided, in the case of any special meeting at which all of the members of the Board of Directors are not present, that the notice of such meeting shall have stated that the amendment of the Bylaws was one of the purposes of the meeting. Our Bylaws may be altered, amended or repealed and other bylaws may be adopted by the holders of a majority of the total outstanding stock of the Corporation entitled to vote at any annual meeting or special meeting, provided, in the case of any special meeting, that notice of such proposed alteration, amendment, repeal or adoption is included in the notice of the meeting.
Any provision of our Certificate may be amended or repealed from time to time and at any time in the manner prescribed by the laws of the state of Delaware. The Delaware General Corporation Law (the DGCL) provides generally that the affirmative vote of a majority of the outstanding stock entitled to vote on amendments to a corporations certificate of incorporation or bylaws is required to approve such amendment.
Exclusive Jurisdiction of Certain Actions
Unless we consent in writing to the selection of an alternative forum, our Bylaws require that the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, be the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of fiduciary duty owed by, or other wrongdoing by, any of our directors, officers, employees or agents to us or to our stockholders, creditors or other constituents, (c) any action asserting a claim arising pursuant to any provision of the DGCL or our Certificate or Bylaws, (d) any action to interpret, apply, enforce or determine the validity of our Certificate or Bylaws or (e) any action asserting a claim governed by the internal affairs doctrine. Although we believe this provision benefits the company by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors, officers, employees or agents.
Authorized but Unissued Shares
The authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval, subject to any limitations imposed by the listing standards of the New York Stock Exchange. Our Board of Directors may issue shares of preferred stock in one or more series, to establish the number of shares to be included in each such series, and to fix the designations, powers, preferences, and rights of the share of each such series, and any qualifications limitations, or restrictions thereof. These additional shares may be used for a variety of corporate finance transactions, acquisitions and employee benefit plans. The existence of authorized but unissued common stock and preferred stock could make more difficult, or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger, or otherwise.
Exhibit 10.43
WATERS CORPORATION
2012 EQUITY INCENTIVE PLAN
PERFORMANCE STOCK UNIT AWARD AGREEMENT
THIS AGREEMENT dated as of [ ] between Waters Corporation, a corporation organized under the laws of the State of Delaware (the Company), and [ ] (the Participant or you), an employee of Waters Corporation.
1. Grant of Award. Pursuant and subject to the Companys 2012 Equity Incentive Plan (as the same may be amended from time to time, the Plan), the Company hereby grants to the Participant an award (the Award) consisting of a target number of [ ] Performance Units (the Target Award and such Performance Units, the PSUs). Each PSU represents the conditional right to receive, without payment but subject to the terms, conditions and limitations set forth in this Agreement and in the Plan, one share of the common stock, par value $.01 per share, of the Company (the Stock), subject to adjustment pursuant to Section 8 of the Plan in respect of transactions or events occurring after the date hereof. The percentage of the Target Award that may be earned by the Participant will be determined in accordance with Exhibit A hereto. The date of grant (the Grant Date) of this Award is [ ].
2. Earned PSUs. The PSUs shall become Earned PSUs following the end of the Performance Period to the extent earned in accordance with the performance criteria set forth on Exhibit A (the Performance Criteria), subject to the Compensation Committee determining, in its sole discretion, the achievement of the Performance Criteria.
3. Vesting of Earned PSUs; Termination of Employment. No portion of the Award is vested as of the date hereof. The Earned PSUs (if any) shall vest in full on March 1, 2023 (the Vesting Date), subject to your continuous employment through this date, or such earlier time as set forth in Section 4 below. Notwithstanding the foregoing, in the event of a termination of your employment due to your Retirement after the first anniversary of the Performance Period Start Date (a Qualifying Retirement) or your death, in either case, prior to the Vesting Date and prior to a Change of Control, the PSUs shall not terminate upon such termination and shall instead remain outstanding and eligible to become Earned PSUs in accordance with the terms of this Agreement and to vest on the Vesting Date. The number of Earned PSUs, if any, will be prorated based on the number of the days that have elapsed in the Performance Period from the Performance Period Start Date (as defined in Exhibit A) to the date of such termination of employment.
4. Change of Control. Notwithstanding anything contained in Section 9 of the Plan to the contrary:
(a) |
If, prior to the Performance Period End Date (as defined in Exhibit A), a Change of Control occurs, to the extent the PSUs are outstanding immediately prior to such Change of Control, the PSUs shall be deemed earned assuming the Performance Criteria have been achieved at target levels and the number of Earned PSUs shall be equal to the number of PSUs subject to the Target Award. The Earned PSUs shall continue to vest based solely on time and shall vest on the Vesting Date, subject to your remaining in continuous employment through such date, except as otherwise provided in Section 4(b)-(d) below. |
(b) |
If (A) in connection with a Change of Control described in subsection (a) above the Earned PSUs are assumed or continued, or a new award is substituted for the Earned PSUs, by the acquiror or survivor (or an affiliate of the acquiror or survivor), (B) you remain continuously employed through the date of the Change of Control, and (C) your employment is terminated by the Company without Cause or by you for Good Reason, in either case, within eighteen (18) months following the Change of Control, the Earned PSUs will automatically vest in full upon such termination of employment. |
1
(c) |
If, in connection with a Change of Control described in subsection (a) above, the Earned PSUs are not assumed or continued, or a new award is not substituted for the Earned PSUs, by the acquiror or survivor (or an affiliate of the acquiror or survivor), the Earned PSUs will automatically vest immediately prior to, but subject to the consummation of, the occurrence of such Change of Control and the Company shall deliver to you any shares in respect of Earned PSUs in a manner that will allow you to participate in the Change of Control on the same basis as other shareholders. |
(d) |
In the event a Change of Control occurs following a termination of your employment due to a Qualifying Retirement or your death and prior to the Performance Period End Date, (i) the PSUs shall become Earned PSUs as provided for in Section 4(a) above (prorated, for the avoidance of doubt, in accordance with Section 3 above (based on the original Performance Period, without regard to the Change of Control)), (ii) the Earned PSUs will automatically vest in full immediately prior to, but subject to the consummation of, the occurrence of such Change of Control, and (iii) the Company shall deliver to you any shares in respect of Earned PSUs in a manner that will allow you to participate in the Change of Control on the same basis as other shareholders. |
5. Delivery of Shares. Shares in respect of Earned PSUs that have become vested will be delivered to you as soon as practicable following vesting, but in any event no later than the March 15th following the date the Earned PSUs become vested hereunder (or any earlier date, after vesting, required to avoid characterization of this Award as non-qualified deferred compensation under Section 409A of the Code). In connection with the delivery of shares of Stock in respect of Earned PSUs, par value will be deemed paid for each share by past services rendered by you.
6. Duration of Award and Termination of Employment. This Award will expire upon the earlier of (i) the delivery of shares of Stock in respect of all vested and Earned PSUs granted pursuant to this Agreement or (ii) a termination of your employment with the Company and its Affiliates for any reason other than a Qualifying Retirement or death as provided in Section 3 above.
7. Transfer of Awards. You may not transfer this Award except by will or the laws of descent and distribution.
8. Required Holding Period for Shares. Any shares of Stock delivered to you in respect of Earned PSUs (after giving effect to the withholding of shares of Stock as contemplated by Section 12 below) may not be transferred, sold, hypothecated or otherwise disposed of for a period of [twelve (12)]1[twenty-four (24)]2 months following the Vesting Date; provided, however, that this restriction shall not apply following your death or in connection with or following a Change of Control.
9. Incorporation of Plan Terms. Except as expressly provided herein, this Award is granted subject to all of the applicable terms and provisions of the Plan, including but not limited to the provision for acceleration of vesting of this Award set forth in Section 8 (Adjustment Provisions) and the limitations on the Companys obligation to deliver shares of Stock upon settlement set forth in Section 10 (Settlement of Awards). Except as expressly provided herein, in the event of a conflict between the terms of this Agreement and the Plan, the terms of the Plan shall control.
10. Definitions. For purposes of this Award, the following terms have the following meanings:
1 |
Note to Draft: For all employees except CEO. |
2 |
Note to Draft: For CEO. |
2
(a) |
Cause shall mean, except as otherwise set forth in an employment or other individual agreement between you and the Company (it being understood that such other definition of Cause that is set forth in any such employment agreement or other individual Agreement shall control instead of this definition for so long as such employment agreement or other individual agreement is in effect): |
(i) |
the conviction of you by a court of competent jurisdiction of, or the pleading of guilty or nolo contendere to, any felony or any crime involving moral turpitude; |
(ii) |
gross negligence, breach of fiduciary duty, breach of any non-competition, non-solicitation or developments agreement or covenant in favor of the Company or material breach of any confidentiality agreement or covenant in favor of the Company; |
(iii) |
you shall have willfully and continually failed to substantially perform your duties with the Company after a written demand for substantial performance is delivered by the Company, which demand specifically identifies the manner in which the Company believes that you have not substantially performed your duties pursuant to the disciplinary procedures of the Company, and such failure of substantial performance shall have continued for a period of thirty (30) days after such written demand; |
(iv) |
you have been chronically absent from work (excluding vacations, illnesses or leaves of absences); |
(v) |
the commission by you of an act of fraud, embezzlement or misappropriation against the Company; or |
(vi) |
you shall have refused, after explicit notice, to obey any lawful resolution or direction by the Board which is consistent with your duties as an officer of the Company. |
(b) |
Good Reason shall mean, except as otherwise set forth in an employment or other individual agreement between you and the Company (it being understood that such other definition of Good Reason that is set forth in any such employment agreement or other individual agreement shall control instead of this definition for so long as such employment agreement or other individual agreement is in effect, the occurrence (without your express written consent) of one or more of the following events following a Change of Control, as the case may be: |
(i) |
a material diminution in your authority, duties, responsibilities or reporting lines from your authority, duties, responsibilities or reporting lines immediately prior to the Change of Control; |
(ii) |
a material reduction in your base salary (other than that which results in a base salary reduction of no more than ten percent (10%) in the aggregate from your highest base salary and is proportional to reductions of other senior executives) or target annual bonus opportunity; |
(iii) |
a material change in your place of business (provided, however, that travel for business purposes consistent with past practices shall not be considered a change in the place of business for the purpose of this clause (iii)); or |
3
(iv) |
a material breach by the Company of any agreement under which you provide services to the Company, or any plan of incentive compensation; |
provided, that the occurrence of any of the events listed in clauses (i) through (iv) shall not constitute Good Reason (x) unless you shall have given notice of the event to the Company within ninety (90) days after it first existed, (y) the Company shall have failed to remedy the condition within thirty (30) days after the notice, and (z) you actually terminate employment within thirty (30) days after the expiration of the Companys cure period.
(c) |
Retirement shall mean your termination of employment (other than for Cause or your voluntary resignation at a time when Cause exists) (i) at any time after you have reached age sixty (60) with ten (10) years of service to the Company and its subsidiaries and (ii) with the intention of concluding your working or professional career. |
11. Miscellaneous. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without regard to the conflict of laws principles thereof and shall be binding upon and inure to the benefit of any successor or assign of the Company and any executor, administrator, trustee, guardian, or other legal representative of you. Capitalized terms used but not defined herein shall have the meaning assigned under the Plan. This Agreement may be executed in one or more counterparts all of which together shall constitute but one instrument.
12. Tax Consequences. The Company makes no representation or warranty as to the tax treatment to you of your receipt or the vesting or settlement of this Award or upon your sale or other disposition of shares of Stock. You should rely on your own tax advisors for such advice. By accepting this Award, you hereby acknowledge and agree that the Company will hold back that number of whole shares of Stock otherwise deliverable to you under this Award having a Market Value sufficient to satisfy the statutory minimum withholding amount applicable to the shares delivered under this Award, with the Company accepting a payment in cash or by check to the extent of any withholding amounts not satisfied by such withholding of shares. Nothing in the preceding sentence shall be construed as relieving the you of any liability for satisfying your tax obligations with respect to this Award and you authorize the Company and its subsidiaries to withhold any such amounts from any amounts otherwise owed to you.
4
IN WITNESS WHEREOF, the parties have executed this Agreement as a sealed instrument as of the date first above written.
WATERS CORPORATION
By: Christopher J. OConnell
Title: Chairman and Chief Executive Officer
EMPLOYEE
Electronic Signature of Participant
5
Exhibit 21.1
Waters Corporation and Subsidiaries
12/31/2019
Waters Corporation (Delaware)
Waters Technologies Corporation (Delaware)
Environmental Resource Associates, Inc. (Colorado)
TA Instruments-Waters LLC (Delaware)
Waters AG (Switzerland)
Waters Australia PTY LTD. (Australia)
Waters India Pvt. Ltd.
Waters SA de CV (Mexico)
Waters SAS (France)
Waters Sverige AB (Sweden)
Waters Technologies do Brasil Ltda (Brazil)
Waters Global International Limited (Cayman) (1)
Waters Global Limited (UK) (1)
Waters Technologies International Limited (Cayman) (1)
Waters Asia Limited (Delaware)
Waters A/S (Denmark)
Waters Limited (Canada)
Waters China Ltd. (Hong Kong)
Waters Cromatografia SA (Spain)
Waters Korea Limited (Korea)
Waters NV (Belgium)
Waters Technologies (Beijing) Co. Ltd (China)
Waters Technologies (Shanghai) Ltd (China)
Waters Ges.MBH (Austria)
Waters Kft (Hungary)
Waters O.O.O. (Russia) (1)
Waters Sp.Zo.o (Poland)
Waters Pacific Pte Ltd. (Singapore)
Waters Analytical Instruments Sdn Bhd (Malaysia)
Waters Holdings LLC (Delaware)
Nihon Waters K.K. (Japan)
TA Instruments Japan, Inc. (Japan)
Waters SpA (Italy)
Waters European Investments LLC
Manchester International Limited
Melbourne International Limited
Milford International Limited
Waters Celtic Holdings Ltd. (Ireland)
Waters Chromatography Ireland Ltd. (Ireland)
Waters Technologies Ireland Ltd. (Ireland)
Waters Romania Srl
Waters GmbH (Germany)
Waters Luxembourg SARL (Luxembourg)
Waters (TC) Israel Ltd. (Israel)
Micromass Holdings Ltd. (UK)
ULSP BV (Netherlands)
Waters Chromatography BV (Netherlands)
Waters Chromatography Europe BV (Netherlands)
Waters Tech. LC-MS Unapessol Lda (Portugal)
Micromass Ltd. (UK)
PRA Europe Limited (UK) (1)
Waters Limited (UK)
Micromass UK Ltd. (UK)
Waters Research Center Kft (Hungary)
MPE Orbur Group Ltd. (UK)
Midland Precision Equipment Co. Ltd. (UK)
All Subsidiaries are 100% owned unless otherwise indicated
(1) |
Dormant |
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-18371, 333-81723, 333-60054, 333-92332, 333-110613, 333-137990, 333-160507, 333-183721) of Waters Corporation of our report dated February 25, 2020 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
February 25, 2020
Exhibit 31.1
CHIEF EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Christopher J. OConnell, certify that:
1. |
I have reviewed this annual report on Form 10-K of Waters Corporation; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 25, 2020 |
/s/ Christopher J. OConnell |
|||||
Christopher J. OConnell | ||||||
Chief Executive Officer |
Exhibit 31.2
CHIEF FINANCIAL OFFICER CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Sherry L. Buck, certify that:
1. |
I have reviewed this annual report on Form 10-K of Waters Corporation; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. |
The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) |
evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) |
disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. |
The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Date: February 25, 2020 |
/s/ Sherry L. Buck |
|||||
Sherry L. Buck | ||||||
Chief Financial Officer |
Exhibit 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
The certification set forth below is hereby made solely for the purpose of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes.
In connection with the Annual Report of Waters Corporation (the Company) on Form 10-K for the period ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Christopher J. OConnell, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Date: February 25, 2020
By: /s/ Christopher J. OConnell |
||||||
Christopher J. OConnell | ||||||
Chief Executive Officer |
Exhibit 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
The certification set forth below is hereby made solely for the purpose of satisfying the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be relied upon or used for any other purposes.
In connection with the Annual Report of Waters Corporation (the Company) on Form 10-K for the period ended December 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Sherry L. Buck, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Date: February 25, 2020
By: /s/ Sherry L. Buck |
||||||
Sherry L. Buck | ||||||
Chief Financial Officer |