UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2020~~

2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number:

01-14010

Waters Corporation

(Exact name of registrant as specified in its charter)


Delaware		13-3668640
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

34 Maple Street

Milford, Massachusetts 01757

(Address, including zip code, of principal executive offices)

(508) 478-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	WAT	New York Stock Exchange, Inc.


Securities registered pursuant to Section 12(g) of the Act:		None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑

No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ~~Yes��~~Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in

Rule 12b-2

of the Exchange Act. (Check one):


Large accelerated filer ☑	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to

§240.10D-1(b).

☐

Indicate by check mark whether the registrant is a shell company (as defined in

Rule 12b-2

of the Act). Yes ☐ No ☑

State the aggregate market value of the registrant’s common stock held by

non-affiliates

of the registrant as of

~~6/27/2020: $~~

~~10,820,434,917.~~

June 30, 2023: $15,633,596,711.

Indicate the number of shares outstanding of the registrant’s common stock as of February

19 23, 2024: 59,202,626

~~, 2021: 62,185,690~~

~~DOCUMENTS INCORPORATED BY REFERENCE~~

~~Portions of the registrant’s definitive proxy statement that will be filed for the 2021 Annual Meeting of Stockholders are incorporated by reference in Part III.~~

PART I

Item 1:

Business

General

Waters Corporation (the “Company,” “Waters,” “we,” “our,” or “us”) is, a ~~specialty measurement company that operates with a fundamental underlying purpose to advance the science that enables our customers to enhance human health~~global leader in analytical instruments and ~~well-being. Waters~~

software, has pioneered ~~analytical workflow solutions involving liquid~~innovations in chromatography, mass spectrometry and thermal analysis ~~innovations~~ serving ~~the~~ life, materials and food sciences for more than 6065 years. With approximately 7,900 employees worldwide, Waters operates directly in over 35 countries and has products available in more than 100 countries. The Company primarily designs, manufactures, sells and services ~~high performance~~high-performance liquid chromatography (“HPLC”), ultra-performance liquid chromatography (“~~UPLC~~

”UPLC” and together with HPLC, referred to as “LC”) and mass spectrometry (“MS”) technology systems and support products, including chromatography columns, other consumable products and comprehensive post-warranty service plans. These systems are complementary products that are frequently employed together

(“LC-MS”)

and sold as integrated instrument systems using common software platforms. In addition, the Company designs, manufactures, sells and services thermal analysis, rheometry and calorimetry instruments through its TA

Instruments^TM

(“TA”) product line. The Company is also a developer and supplier of advanced software-based products that interface with the Company’s instruments, as well as other manufacturers’ instruments.

The Company’s products are used by pharmaceutical, clinical, biochemical, industrial, nutritional safety, environmental, academic and governmental customers working in research and development, quality assurance and other laboratory applications. LC is a standard technique and is utilized in a broad range of industries to detect, identify, monitor and measure the chemical, physical and biological composition of materials, and to purify a full range of compounds. MS technology, principally in conjunction with chromatography, is employed in drug discovery and development, including clinical trial testing, the analysis of proteins in disease processes (known as “proteomics”), nutritional safety analysis and environmental testing.

LC-MS

instruments combine a liquid phase sample introduction and separation system with mass spectrometric compound identification and quantification. The Company’s thermal analysis, rheometry and calorimetry instruments are used in predicting the suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals and viscous liquids for various industrial, consumer goods and healthcare products, as well as for life science research.

Waters Corporation, organized as a Delaware corporation in 1991, is a holding company that owns all of the outstanding common stock of Waters Technologies Corporation, its operating subsidiary. Waters Corporation became a ~~publicly-traded~~publicly traded company with its initial public offering (“IPO”) in November 1995. Since the IPO, the Company has added ~~two~~three significant and complementary technologies to its range of products with the acquisitions of TA Instruments in May 1996, ~~and~~ Micromass Limited in September ~~1997.~~

1997 and Wyatt Technology in May 2023. On May 16, 2023, the Company completed the acquisition of Wyatt Technology, LLC and its three operating subsidiaries, Wyatt Technology Europe GmbH, Wyatt Technology France and Wyatt Technology UK Ltd. (collectively, “Wyatt”), for a total purchase price of $1.3 billion in cash. Wyatt is a pioneer in innovative light scattering and field-flow fractionation instruments, software, accessories and services. The acquisition will expand Waters^TM portfolio and increase exposure to large molecule applications.

Business Segments

The Company’s business activities, for which discrete financial information is available, are regularly reviewed and evaluated by the chief operating decision maker. As a result of this evaluation, the Company determined that it has two operating segments: Waters and TA. The Waters operating segment is primarily in the business of designing, manufacturing, selling and servicing LC and MS instrument systems, columns and other precision chemistry consumables that can be integrated and used along with other analytical instruments. The TA operating segment is primarily in the business of designing, manufacturing, selling and servicing thermal analysis, rheometry and calorimetry instruments. The Company’s two operating segments have similar economic characteristics; product processes; products and services; types and classes of customers; methods of distribution;

and regulatory environments. Because of these similarities, the two segments have been aggregated into one reporting segment for financial statement purposes.

Operations of the recently acquired Wyatt business are part of the Waters operating segment.

Information concerning revenues and long-lived assets attributable to each of the Company’s products, services and geographic areas is set forth in Note 18 in the Notes to the Consolidated Financial Statements, which is incorporated herein by reference.

Waters Products and Markets

~~High Performance~~

High-Performance and ~~Ultra Performance~~Ultra-Performance Liquid Chromatography

HPLC is a standard technique used to identify and analyze the constituent components of a variety of chemicals and other materials. The Company believes that HPLC’s performance capabilities enable it to separate, identify and quantify a high proportion of all known chemicals. As a result, HPLC is used to analyze substances in a wide variety of industries for research and development purposes, quality control and process engineering applications.

The most significant

end-use

markets for HPLC are those served by the pharmaceutical and life science industries. In these markets, HPLC is used extensively to understand diseases, identify new drugs, develop manufacturing methods and assure the potency and purity of new pharmaceuticals. HPLC is also used in a variety of other applications, such as analyses of foods and beverages for nutritional labeling and compliance with safety regulations and the testing of water and air purity within the environmental testing industry, as well as applications in other industries, such as chemical and consumer products. Waters also has in vitro diagnostic ~~(IVD)~~ labelled products that are used as general-purpose instruments for clinical diagnostic applications, such as newborn screening and therapeutic drug management, in countries where these products are registered. HPLC is also used by universities, research institutions and governmental agencies, such as the United States Food and Drug Administration (“FDA”) and the United States Environmental Protection Agency (“EPA”) and their foreign counterparts that mandate safety and efficacy testing.

In 2004, Waters introduced a novel technology that the Company describes as ~~ultra performance~~ultra-performance liquid chromatography that utilizes a packing material with small, uniform diameter particles and a specialized instrument, the ACQUITY^TM UPLC

^TM

, System, to accommodate the increased pressure and narrower chromatographic bands that are generated by these small and tightly packed particles. By using the ACQUITY UPLC System, researchers and analysts are able to achieve more comprehensive chemical separations and faster analysis times in comparison with many analyses previously performed by HPLC. In addition, in using the ACQUITY UPLC System, researchers have the potential to extend the range of applications beyond that of HPLC, enabling them to uncover more levels of scientific information. While offering significant performance advantages, the ACQUITY UPLC System is also compatible with the Company’s software products and the general operating protocols of HPLC. For these reasons, the Company’s customers and field sales and support organizations are well positioned to utilize this innovative technology and instrument. In 2018, the Company introduced the ACQUITY ~~ARC~~

Arc^TM

Bio System, a versatile, iron-free,

bio-inert,

quaternary liquid chromatograph specifically engineered to improve bioseparation analytical methods. The Company also introduced the ACQUITY

UPLC PLUS System series in 2018, consisting of the

ACQUITY UPLC H-Class

~~PLUS,~~

~~H-Class~~

PLUS System, ACQUITY UPLC H-Class PLUSBio System and

ACQUITY UPLC I-Class

PLUS ~~systems,~~ Systems, which incorporate foundational enhancements into the legacy systems. ~~In 2019, the Company introduced the ACQUITY~~

~~Advanced Polymer Chromatography~~

System, which is the first fully solvent-compatible UPLC system to perform size exclusion, gradient polymer elution and solvent compatible reversed-phase liquid chromatographic separations on a single platform. The

~~all-in-one~~

~~system gives research scientists greater analytical versatility and speed when conducting research on next-generation polymers. In 2020, the Company introduced the Waters Arc~~

HPLC System, a new HPLC system for routine testing in the pharmaceutical, food, academic and materials markets. A key target application is quality control in laboratories performing batch release tests on small molecule pharmaceuticals.

Waters manufactures LC instruments that are offered in configurations that allow for varying degrees of automation, from component configured systems for academic teaching and research applications to fully automated systems for regulated and high sample throughput testing, and that have a variety of detection technologies, from optical-based ultra-violet ~~(“UV”)~~ absorbance, refractive index and fluorescence detectors to a suite of

MS-based

detectors, optimized for certain analyses.

In 2019, the Company introduced the ACQUITY Advanced Polymer Chromatography^TM System, which is the first fully solvent-compatible UPLC System to perform size exclusion, gradient polymer elution and solvent compatible reversed-phase liquid chromatographic separations on a single platform. The all-in-one system gives research scientists greater analytical versatility and speed when conducting research on next-generation polymers. In 2020, the Company introduced the Waters Arc HPLC System, a new HPLC system for routine testing in the pharmaceutical, food, academic and materials markets. A key target application is quality control in laboratories performing batch release tests on small molecule pharmaceuticals. In 2021, the Company introduced the new ACQUITY Premier LC solution and the Arc Premier System both featuring Waters MaxPeak^TM High Performance Surface (“HPS”) Technology. MaxPeak HPS Technology, which was first introduced with the Company’s introduction of ACQUITYPremier Columns in 2020, is a surface technology that forms a barrier between the sample and the metal surfaces of both the system and column, eliminating the need for system passivation, mitigating the loss of metal-sensitive analytes and yielding higher quality data in less time and effort.

During the second half of 2023, Waters introduced the DynaPro^TM ZetaStar^TM instrument through its Wyatt Technology^TM portfolio for nanoparticle analysis. The new instrument simultaneously enables dynamic and static light scattering and dynamic and electrophoretic light scattering measurements, all in one device. By combining multiple light scattering techniques and automatically assessing data quality and performing adaptive data capture, the ZetaStar instrument delivers both increased sensitivity and faster measurements to aid the precise development of complex biologics, using extremely low sample volumes.

The primary consumable products for LC instruments are chromatography columns. These columns are packed with separation media used in the LC testing process and are typically replaced at regular intervals. The chromatography column contains one of several types of packing material, typically stationary phase particles made from silica or polymeric resins. As a pressurized sample is introduced to the column inlet and permeates through the packed column, it is separated into its constituent components.

Waters HPLC columns can be used on Waters-branded and competitors’ LC systems. The Company believes that it is one of a few suppliers in the world that manufactures silica and polymeric resins, packs columns and distributes its own products. In doing so, the Company believes it can better ensure product consistency, a key attribute for its customers in quality control laboratories and can react quickly to new customer requirements. The Company believes that its ACQUITY UPLC ~~lines of columns~~Columns are used primarily on its ACQUITY UPLC ~~instrument systems~~Systems and, furthermore, that its ACQUITY UPLC ~~instruments~~Systems primarily use ACQUITY UPLC ~~columns. In 2018, the Company introduced the BioResolve~~

~~RP mAb Polyphenyl columns, which improve the consistency and reliability of the overly complex separations of monoclonal antibodies and antibody-drug conjugates.~~Columns. In 2019, the Company introduced the ~~BioResolv~~BioResolve^TM SCX mAb Columns and VanGuard

^TM

FIT Cartridge technologies. These new cation exchange column lines with specialized consumables are designed to simplify and improve the characterization and monitoring of monoclonal antibody ~~(mAb)~~(“mAb”) therapeutics, as well as enable mAb charge-variant analyses as required by the World Health Organization, the FDA and the International Conference on Harmonization for confirming the efficacy and safety of biologics and biosimilars with discovery, development and manufacturing applications. In 2020, Waters introduced ACQUITY

~~PREMIER~~ Premier Columns, at the time a new family of premium

sub-2-micron

columns featuring MaxPeak

~~high-performance surface technology.~~ HPS Technology. The columns are for use with any brand of UPLC ~~system~~System and can measurably improve data quality by mitigating the loss of sample analytes due to

analyte-to-surface

interactions.

The Company’s precision chemistry consumable products also include environmental and nutritional safety testing products, including Certified Reference Materials ~~(“CRM”s)~~ and Proficiency Testing ~~(“PT”)~~ products. Laboratories around the world and across multiple industries use these products for quality control and proficiency testing and also purchase product support services required to help with their federal and state mandated accreditation requirements or with quality control over critical pharmaceutical analysis.

In ~~2018,~~2023, the Company introduced the ~~VICAM~~first in a new line of size exclusion chromatography columns aimed at improving analysis while lowering the cost of gene therapies, specifically adeno-associated viral (“AAV”) vectors. The new Waters XBridge^TM Premier GTx BEH^TM size exclusion chromatography columns double the

~~BPATest~~

~~, which provides~~

speed of measuring the potency and safety of AAVs. Combining the columns with light scattering technologies from its Wyatt Technology portfolio deepens the level of information acquired from a ~~sensitive, precise determination~~single experiment and optimizes the manufacturing of ~~Bisphenol A in as little as ten minutes. VICAM also introduced a user-friendly lateral flow zearalenone strip test, the~~

~~Zearala-V~~

~~AQUA~~

~~in 2018.~~

these novel gene delivery vehicles.

In 2020, the Company acquired all of the outstanding stock of Andrew Alliance, S.A. ~~and its two operating subsidiaries,~~ (“Andrew ~~Alliance USA, Inc. and Andrew Alliance France, SASU (collectively, “Andrew~~ Alliance”)~~, for $80 million, net of cash acquired.~~. Andrew Alliance offers lab workflow automation solutions with the combination of its software platform and smart, connected laboratory equipment and accessories. The ~~Company expects the acquisition~~addition of Andrew Alliance to our portfolio has allowed us to positively impact our customers’ workflows by improving the repeatability, performance and speed of laboratory operations and chemistry workflows.

In 2023, the Company introduced the Alliance^TM iS HPLC System, the next-generation intelligent HPLC System, designed to reduce compliance risk by adding new levels of proactive error detection, troubleshooting and ease-of-use. When combined with Waters compliance-ready Empower^TM Chromatography Software and eConnect^TM HPLC Columns, the Alliance iS HPLC System streamlines the task of making accurate and precise measurements by detecting and eliminating common errors. In doing so, the Alliance iS HPLC System helps quality control laboratories to consistently meet quality, safety, compliance and on-time product delivery goals. This system also integrates with the cloud-native waters_connect^TM System Monitoring Software enabling real-time monitoring of the Alliance iS HPLC System and any other chromatography instruments controlled by Empower Software. Laboratory managers can view the live status of their HPLC instrument fleet from anywhere and at any time to further improve equipment utilization and overall productivity.

Also in 2023, the Company introduced the new bioprocess walk-up solutions designed to further simplify biologic sample preparation and analysis. This solution eliminated the need to send bioreactor samples to a central laboratory for analysis making it even easier to accelerate upstream bioprocess development by up to six weeks over traditional methods.

Mass Spectrometry and Liquid Chromatography-Mass Spectrometry

MS is a powerful analytical technology that is used to identify unknown compounds, to quantify known materials and to elucidate the structural and chemical properties of molecules by measuring the masses of molecules that have been converted into ions.

The Company is a technology and market leader in the development, manufacture, sale and service of MS instruments and components. These instruments are typically integrated and used along with other complementary analytical instruments and systems, such as LC, chemical electrophoresis and gas chromatography. A wide variety of instrumental designs fall within the overall category of MS instrumentation, including devices that incorporate quadrupole, ion trap,

time-of-flight

(“Tof”), magnetic sector and ion mobility technologies. Furthermore, these technologies are often used in tandem

~~(MS-MS)~~

to maximize the speed and/or efficacy of certain experiments.

Currently, the Company offers a wide range of MS instrument systems utilizing various combinations of quadrupole, Tof and ion mobility designs. These instrument systems are used in drug discovery and development, as well as for environmental, clinical and nutritional safety testing. The overwhelming majority of mass spectrometers sold by the Company are designed to utilize an LC system and a liquid compatible interface (such as an electrospray ionization source) as the sample introduction device. These products supply a diverse market with a strong emphasis on the pharmaceutical, biomedical, clinical, food and beverage and environmental market segments worldwide.

MS is an increasingly important detection technology for LC. The Company’s

smaller-sized

mass spectrometers, such as the single quadrupole detector ~~(“SQD”)~~ and the tandem quadrupole detector (“TQD”), are often referred to as LC “detectors” and are typically sold as part of an LC system or as an LC system upgrade. Larger quadrupole systems, such as the Xevo

^TM

TQ MS System and Xevo

TQ-S

~~instruments,~~ MS System, are used primarily for experiments performed for late-stage drug development, including clinical trial testing. Quadrupoletime-of-flight

~~time-of-flight~~

(“Q-Tof”)

instruments, such as the Company’s SYNAPT

^TM

G2-S

HDMS System, are often used to analyze the role of proteins in disease processes, an application sometimes referred to as ~~“proteomics”. In 2018, the Company introduced the DART QDa~~

~~system with LiveID~~

~~, a direct-from-sample analytical system that verifies sample authenticity or adulteration, specifically for food applications. The Company also introduced the Xevo~~

~~TQ-GC~~

~~mass spectrometer in 2018, which allows laboratories to meet and exceed low~~

~~part-per-billion~~

~~limits of detection when quantifying pesticide residues and other contaminants in food using~~

~~GC-MS/MS~~

~~methods set forth by worldwide regulatory agencies/authorities. In addition, the Company introduced the RenataDX~~

screening system, a flow-injection tandem mass spectrometry system for rapid high-throughput analysis of extracted dried blood spots and other human biological matrices. In 2019, the Company introduced the BioAccord

~~system, a liquid chromatography-mass spectrometry solution that expands access to high-resolution~~

~~time-of-flight~~

mass spectrometry capabilities. The system provides new levels of user experience with automated setup and self-diagnosis delivered through an intuitive user interface. Also in 2019, the Company introduced the Cyclic IMS system, which seamlessly integrates cyclic ion mobility technology into a high-performance research-grade

~~time-of-flight~~

mass spectrometer. In addition, the Company introduced the SYNAPT XS, a new highly flexible, high-resolution mass spectrometer for research and development labs focused on discovery applications. The Company also reinforced its tandem quadrupole mass spectrometry portfolio during the current year with upgrades to the Xevo

~~TQ-S~~

~~micro and the introduction of the new Xevo~~

~~TQ-S~~

~~cronos. The Xevo~~

~~TQ-S~~

~~micro features new performance enhancements that bring the quantitation of highly polar, ionic compounds in food to a higher level. The Xevo~~

~~TQ-S~~

~~cronos is a new, tandem quadrupole mass spectrometer purposely-built for routine quantitation of large numbers of small-molecule organic compounds over a wide concentration range. The Xevo~~

~~TQ-S~~

~~micro and the Xevo~~

~~TQ-S~~

cronos are also well suited to meet regulatory requirements for pesticide residue analysis, the monitoring for contaminants in processed foods, identifying drugs of abuse, and performing impurity profiling of pharmaceuticals. In 2020, the Company introduced the new RADIAN

~~ASAP~~

~~System, a novel direct mass detector engineered for~~

~~non-mass~~

~~spectrometry experts to conduct fast and accurate analyses of solids and liquids with minimal sample prep. Also in 2020, the Company introduced enhancements for the Waters Xevo~~

~~G2-XS~~

~~QTof SYNAPT XS and SELECT SERIES Cyclic IMS, including a new fragmentation technique and imaging option.~~

“proteomics.”

LC and MS are typically embodied within an analytical system tailored for either a dedicated class of analyses or as a ~~general purpose~~general-purpose analytical device. An increasing percentage of the Company’s customers are purchasing LC and MS components simultaneously and it has become common for LC and MS instrumentation to be used within the same laboratory and operated by the same user. The descriptions of LC and MS above reflect the historical segmentation of these analytical technologies and the historical categorization of their respective practitioners. Increasingly in today’s instrument market, this segmentation and categorization is becoming obsolete as a high percentage of instruments used in the laboratory embody both LC and MS technologies as part of a single device. In response to this development and to further promote the high utilization of these hybrid instruments, the Company has organized its Waters operating segment to develop, manufacture, sell and service integrated

LC-MS

systems.

In 2019, the Company introduced the BioAccord^TMSystem, a liquid chromatography-mass spectrometry solution that expands access to high-resolution time-of-flight mass spectrometry capabilities. The system provides new levels of user experience with automated setup and self-diagnosis delivered through an intuitive user interface. Also in 2019, the Company introduced the SELECT SERIES^TMCyclic^TM IMS System, which seamlessly integrates cyclic ion mobility technology into a high-performance research-grade time-of-flight mass spectrometer. In addition, the Company introduced the SYNAPT XS System, a new highly flexible, high-resolution mass spectrometer for research and development labs focused on discovery applications. The Company also reinforced its tandem quadrupole mass spectrometry portfolio during the current year with upgrades to the Xevo TQ-S micro MS System and the introduction of the new Xevo TQ-S cronos MS System. The Xevo TQ-S micro System features new performance enhancements that bring the quantitation of highly polar, ionic compounds in food to a higher level. The Xevo TQ-S cronos System is a new, tandem quadrupole mass spectrometer purposely built for routine quantitation of large numbers of small-molecule organic compounds over a wide concentration range. The Xevo TQ-S micro System and the Xevo TQ-S cronos System are also well suited to meet regulatory requirements for pesticide residue analysis, the monitoring for contaminants in processed foods, identifying drugs of abuse, and performing impurity profiling of pharmaceuticals. In 2020, the Company introduced the RADIAN^TMASAP^TM System, a novel direct mass detector engineered for non-mass spectrometry experts to conduct fast and accurate analyses of solids and liquids with minimal sample prep. Also in 2020, the Company introduced enhancements for the Waters Xevo G2-XS QTof System, SYNAPT XS System and SELECT SERIES Cyclic IMS System, including a new fragmentation technique and imaging option.

In 2021, the Company introduced the SELECT SERIES MRT MS System, a high-resolution mass spectrometer that combines Multi-Reflecting Time-of-Flight (“MRT”) technology with enhanced desorption electrospray ionization and new matrix-assisted laser desorption ionization imaging sources. The platform will serve as the basis for Waters next generation Tof instruments with applications in pharmaceutical, biomedical, natural products, and materials research. Also in 2021, the Company released the ACQUITY RDa^TM Detector featuring SmartMS^TM Technology, the company’s newest Tof MS designed to improve the ease and reliability of small molecule analysis for pharmaceutical, academic, food, and forensic applications. The Company also introduced a new peptide multi-attribute method workflow for the BioAccord LC-MS System in 2021, which is an end-to-end workflow for analyzing monoclonal antibodies and other protein and peptide-based drugs.

In 2022, the Company introduced the Xevo TQ Absolute System, the most sensitive and compact benchtop tandem mass spec in its class. The Company introduced the new Xevo G3 Q-Tof Mass Spectrometer with CONFIRM Sequence, a new oligonucleotide sequencing confirmation app for the waters_connect Software platform and an electrospray ionization source for the high-resolution SELECT SERIES MRT Mass Spectrometer.

Based upon 2023 reports from independent marketing research firms and ~~publicly-disclosed~~publicly disclosed sales figures from competitors, the Company believes that it is one of the world’s largest manufacturers and distributors of LC and

LC-MS

instrument systems, chromatography columns and other consumables and related services.

The Company has been a developer and supplier of software-based products that interface with both the Company’s ~~instruments, as well as~~and other suppliers’ instruments. The Company’s newest software technology ~~UNIFI~~

~~, is a scientific information system that~~for mass spectrometry is the ~~culmination~~waters_connect Software platform. In 2019, the Company introduced the first of a ~~multi-year effort~~series of applications on this platform supporting the BioAccord System and the Xevo G2 XS Mass Spectrometer. These applications support biopharmaceutical workflows, simplifying the collection of often complex LCMS data for use in biopharmaceutical development and into QC where it is used to ~~substantially bring all~~assure the quality of ~~Waters’ preexisting, distinct software systems under one operating system. UNIFI~~existing medicines and new drug formulations. The platform design of waters_connect Software has enabled rapid delivery of several major updates including new biopharma application workflows designed in close collaboration with biopharmaceutical innovators to solve specific challenges they face with existing solutions. The platform also provides the foundation for the connected lab of the future where data is no longer siloed but can be securely shared among a community of connected scientists. The waters_connect Software joins ~~Waters’~~the existing suite of

informatics ~~products –~~products: Empower

Chromatography Data Software, MassLynx

^TM

Mass Spectrometry Software and NuGenesis

^TM

Scientific Data Management System, each of which is used to support innovations within world-leading institutions. UNIFI is the industry’s first comprehensive software that seamlessly integrates UPLC chromatography, mass spectrometry and informatics data workflows. In 2018, the Company announced new analysis capabilities across a variety of molecules by integrating UNIFI acquired data from the Company’s

~~Vion~~

~~IMS QTof~~

~~or Xevo~~

~~GS XS mass spectrometers with Molecular Discovery’s Mass-MetaSite and WebMetabase processing software.~~ In 2020, Waters announced the availability of ~~Waters~~ Empower BC LAC/E

^TM

Solution with SecureSync, ~~a newly~~an enhanced ~~data~~

~~back-up~~

~~and recovery~~ solution ~~purpose-built~~to preserve the ability for laboratories to work locally when organizations with distributed laboratory ~~environments.~~

environments experience an enterprise interruption.

On December 15, 2020, the Company acquired all of the outstanding stock of Integrated Software Solutions Pty Limited and its two operating subsidiaries Integrated Software Solutions Limited and Integrated Software Solutions USA, LLC (collectively, “ISS”), for $4 million, net of cash acquired. In addition, the Company may have to pay additional consideration which has an estimated fair value of $1 million as of the close date. The contingent consideration is recorded as a liability and will be paid to the prior shareholders of ISS if certain revenue and customer account conditions are achieved over the next two years after the acquisition date.. ISS offers clinical laboratory software systems that ~~will~~ support and further expand product offerings within our clinical business. The net assets acquired primarily relate to ISS’ laboratory information system,

OMNI-Lab.

In 2022, the Company introduced a new Per-and Polyfluoroalkyl Substances (“PFAS”) quantitation workflow enabled by enhancements to its waters_connect Software for quantitation software and the Company introduced Extraction+^TM Connected Device, a new software-controlled product for the Waters Andrew+^TM Pipetting Robot that automates the preparation of biological, food, forensics and environmental samples by solid phase extraction.

In 2023, the Company introduced the next generation Xevo TQ Absolute IVD Mass Spectrometer, expanding its family of MassTrak^TM IVD LC-MS/MS Systems for clinical diagnostic applications. The powerful analytical performance of the Xevo TQ Absolute IVD Mass Spectrometer is up to five times more sensitive for quantifying clinical analytes. This sensitivity enables clinical laboratories to detect and measure trace level analytes within a sample at lower detection levels than previously possible. It can also extend the testing capabilities of the clinical laboratory to include lower volume samples obtained in less-invasive assays such as saliva, breath, dried blood spots and multiplex panels and large molecules. The new MassTrak LC-MS/MS IVD System includes the ACQUITY UPLC I-Class PLUS System with the Xevo TQ Absolute IVD Mass Spectrometer. The ACQUITY UPLC I-Class PLUS System is designed to deliver rapid and accurate sample analysis to enhance the sensitivity of any mass spectrometer and simplify the characterization of the most complex sample. The Xevo TQ Absolute IVD System provides more consistent instrument-to-instrument performance, with a user-friendly design that maximizes service uptime. Its innovative design is also 45% smaller and uses 50% less nitrogen gas and electricity than comparable tandem quadrupole-mass spectrometry systems, making it ideal for hospital labs and independent commercial labs with both sustainability and business growth goals to meet.

In addition, in 2023, the Company introduced the industry’s first targeted imaging mass spectrometer based on its Xevo TQ Absolute Tandem Quadrupole Mass Spectrometer which is the most sensitive and compact mass spectrometer in its class. The new instrument combines the Waters DESI XS source with the Xevo TQ Absolute

System and is five times more sensitive and five times faster than discovery-based imaging systems at precisely determining whether a particular small molecule drug product, and how much of it, reaches its intended target, such as a brain, liver or lung, in a test subject.

Also in 2023, the Company announced new updates to its SELECT SERIES MRT System that increases its specificity and utility for UPLC-MS/MS metabolomics and drug discovery applications and for mass spectrometry imaging experiments. The MRT System now offers 50% higher resolution, making it capable of 300,000 FWHM resolution, a 3X faster scan rate and parts-per-billion mass accuracy. These MRT System enhancements are designed to help research scientists unambiguously identify analytes of interest in samples of blood, urine and tissue, contributing to a greater understanding of molecules and their mechanisms of action in numerous scientific fields. It is compatible with numerous MS imaging sources including DESI and MALDI, and generates crystal-clear, high-resolution images without compromising mass spectral resolution or accuracy.

In addition, in 2023, the Company combined its BioAccord LC-MS System and the Waters Andrew+ Pipetting Robot, connecting via new protocols in OneLab^TMSoftware to create fully integrated and easy-to-use bioprocess walk-up solutions. It is designed to enable less experienced LC-MS users to acquire critical quality attribute data for analysis of drug product and cell culture media. Capturing data directly at the bioproduction laboratory can help bioprocess engineers improve process understanding, leading to more robust manufacturing processes and accelerated development timelines.

Waters Service

Services provided by Waters enable customers to maximize technology productivity, support customer compliance activities and provide transparency into enterprise resource management efficiencies. The customer benefits from improved budget control, data-driven technology adoption and accelerated workflow at a site or on a global perspective. The Company considers its service offerings to be highly differentiated from ~~our~~its competition, as evidenced by a consistent increase in annual service revenues. The Company’s principal competitors in the service market include ~~PerkinElmer,~~Revvity, Inc., Agilent Technologies, Inc., and Thermo Fisher Scientific Inc. ~~and General Electric Company.~~ These competitors can provide certain services on Waters instruments to varying degrees and always present competitive risk.

The servicing and support of instruments, software and accessories is an important source of revenue and represented over 35% of sales for Waters in ~~2020.~~2023. These revenues are derived primarily through the sale of support plans, demand services, spare parts, customer performance validation services and customer training. Support plans typically involve scheduled instrument maintenance and an agreement to promptly repair a

non-functioning

instrument in return for a fee described in a contract that is priced according to the configuration of the instrument.

The waters_connect System Monitoring is a new Software-as-a-Service application that enables laboratory managers and analysts to monitor the real-time status of any chromatography instruments, regardless of the manufacturer, running on Waters Empower Software. The waters_connect System Monitoring application was developed especially for high-volume quality assurance/quality control laboratories. It can reduce the turnaround time of product release samples and facilitate the planning and progress of critical analyses via live, at-a-glance dashboard views of the operational status of chromatography instruments. The cloud-native application also helps lab managers utilize capital resources better by providing an understanding of instrument history and usage levels and improve the productivity of their teams.

TA Products and Markets

Thermal Analysis, Rheometry and Calorimetry

Thermal analysis measures the physical or thermodynamic characteristics of materials as a function of temperature. Changes in temperature affect several characteristics of materials, such as their heat flow

characteristics, physical state, weight, dimension and mechanical and electrical properties, which may be measured by one or more thermal analysis techniques, including calorimetry. Consequently, thermal analysis techniques are widely used in the development, production and characterization of materials in various industries, such as plastics, chemicals, automobiles, pharmaceuticals and electronics.

Rheometry instruments often complement thermal analyzers in characterizing materials. Rheometry characterizes the flow properties of materials and measures their viscosity, elasticity and deformation under different types of “loading” or other conditions. The information obtained under such conditions provides insight into a material’s behavior during processing, packaging, transport, usage and storage.

Thermal analysis, rheometry and calorimetry instruments are heavily used in material testing laboratories and, in many cases, provide information useful in predicting the suitability and stability of industrial polymers, fine chemicals, pharmaceuticals, water, metals and viscous liquids in various industrial, consumer goods and healthcare products, as well as for life science research. As with systems offered by Waters, a range of instrument configurations is available with increasing levels of sample handling and information processing automation. In addition, systems and accompanying software packages can be tailored for specific applications.

~~In 2019, TA introduced a range of new instruments including the TMA 450, a Rheo-Raman~~

~~capability for the DHR product line, and a High Sensitivity Pressure Cell for the~~

~~ARES-G2~~

~~Rheometer. The Discovery~~

™

~~TMA 450, precisely measures dimensional changes of materials from (150) to 1,000~~

C and handles virtually all sample configurations for testing in expansion, compression, flexure and tension modes. The Rheo-Raman capability for the DHR product line combines a Raman spectrometer with the DHR to enable simultaneous collection of rheology and Raman spectroscopy data. This combination allows for direct correlation between flow characteristics and the unique spectroscopic fingerprints of each material including information about its chemical and morphological structure. The High Sensitivity Pressure Cell for the

~~ARES-G2~~

Rheometer enables scientists to perform sensitive viscoelastic measurements under controlled atmospheric pressure and temperature and gain detailed understanding of complex fluid behavior in complex environments.

Also in 2019, TA introduced the MSF16 Multi-Specimen Fatigue Instrument. The MSF16 extends the capability of accelerated cyclic components and products under repeated loading, significantly accelerating fatigue analysis.

In 2020, TA introduced the new Discovery^TM X3^TM Differential Scanning Calorimeter (“X3 DSC”), Discovery Hybrid Rheometers and TAM IV Micro XL isothermal microcalorimeter. ~~These products support~~The X3 DSC accelerates productivity in customers’ laboratories by enabling three samples to be measured in a single experiment, compared to the single-sample series operation of the other available DSC offerings in the market. This particularly addresses a need in high-throughput laboratories in industries such as composites, electronics and polymer manufacturing. The new line of Discovery Hybrid Rheometers provides increased sensitivity and versatility of rheometry measurements, supporting the development of next-generation, high-performance materials by improving the productivity and efficiency of materials science research. The TAM IV Micro XL isothermal calorimeter supports the development of new battery chemistries by measuring self-discharge and unwanted reactions that reduce battery life and efficiency.

In 2021, TA introduced the TMA 450 RH Instrument and the Discovery SA Instrument. The TMA 450 RH Instrument provides measurements of dimensional compatibility of materials under controlled temperature and humidity that are important for the development of new electronic devices. The Discovery SA Instrument is used in pharmaceutical development to assess the impact of moisture in drug product processing and storage on crystalline structure, which is related to drug product efficacy.

In 2021, TA introduced the TRIOS^TM AutoPilot Software for its thermal analyzer product line. This software helps laboratory staff using TA’s thermal analyzers create routine and streamlined standard operating procedures improving the speed and productivity of thermal analysis measurements.

In 2022, TA introduced the Powder Rheology Accessory, which enables our Discovery Hybrid Rheometers to characterize the behavior of powders during storage, dispensing, processing and end-use. The Powder Rheology Accessory provides relevant property and processing measurements for battery electrode coatings to prevent defects that cause cell failure and pharmaceutical tablets to prevent instabilities of API blends.

In 2022, TA introduced Polymer Workflow Guided Methods, which provides walk up and use functionality by codifying polymer workflows. Guided Methods leverages the power of TRIOS AutoPilot Software and enables novice users to quickly learn and use the instrument to set up test methods, run tests, and execute analyses across our Thermal Analysis and Rheology product lines.

In 2023, TA introduced a new Battery Cycler Microcalorimeter Solution for high-resolution characterization of battery cells. The instrument and software combination enables non-destructive testing under real-world operating conditions and significantly reduces experiment time from months to weeks, while providing decisive insights for greater battery efficiency, safety and stability.

TA Service

Similar to Waters, the servicing and support of TA’s instruments is an important source of revenue and represented more than 25% of sales for TA in ~~2020.~~2023. TA operates independently from the Waters operating segment, though many of its overseas offices are ~~situated in Waters’ facilities~~jointly occupied with Waters to achieve operational efficiencies. TA has dedicated field sales and service operations. Service sales are primarily derived from the sale of support plans, replacement parts and billed labor fees associated with the repair, maintenance and upgrade of installed systems.

Global Customers

The Company typically has a broad and diversified customer base that includes pharmaceutical accounts, other industrial accounts, universities and governmental agencies. Purchase of the Company’s instrument systems is often dependent on its customers’ capital spending, or funding as in the cases of academic, governmental and research institutions, which often fluctuate from year to year. The pharmaceutical segment represents the Company’s largest sector and includes multinational pharmaceutical companies, generic drug manufacturers, contract research organizations (“~~CRO”s)~~CROs”) and biotechnology companies. The Company’s other industrial customers include chemical manufacturers, polymer manufacturers, food and beverage companies and environmental testing laboratories. The Company also sells to universities and governmental agencies worldwide. The Company’s technical sales and support staff members work closely with its customers in developing and implementing applications that meet their full range of analytical requirements. During ~~2020, 59%~~2023, 57% of the Company’s net sales were to pharmaceutical accounts, ~~30%~~31% to other industrial accounts and ~~11%~~12% to academic institutions and governmental agencies.

Although the Company transacts business with various government agencies, no government contract is of such magnitude that a renegotiation of profits or termination of the contract at the election of the government agency would have a material adverse effect on the Company’s financial results.

The Company typically experiences seasonality in its orders that is reflected as an increase in sales in the fourth quarter, as a result of purchasing habits for capital goods of many customers who tend to exhaust their spending budgets by calendar ~~year end.~~year-end. The Company does not rely on any single customer for a material portion of its sales. During fiscal years ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, no single customer accounted for more than 2% of the Company’s net sales.

Sales and Service

The Company has one of the largest direct sales and service organizations focused exclusively on the analytical workflows offered by the Company. Across these product technologies, using respective specialized sales and service workforces, the Company serves its customer base with 8385 sales offices throughout the world as of December 31, ~~2020~~2023 and approximately ~~4,000, 4,000~~4,300, 4,500 and ~~3,900~~4,300 field representatives in ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively. This investment in sales and service personnel serves to maintain and expand the Company’s installed base of instruments. The Company’s sales representatives have direct responsibility for account relationships, while service representatives work in the field to install instruments, train customers and minimize instrument downtime.

In-house

and field-based technical support representatives work directly with customers, providing them assistance with applications and procedures on Company products. The Company provides customers with comprehensive information through various corporate and ~~regional~~geographic-specific internet websites and product literature, and also makes consumable products available through electronic ordering facilities and a dedicated catalog.

Manufacturing and Distribution

The Company provides high product quality by overseeing each stage of the production of its instruments, columns and chemical reagents.

The Company currently assembles a portion of its LC instruments at its facility in Milford, Massachusetts, where it performs machining, assembly and testing. The Milford facility maintains quality management and environmental management systems in accordance with the requirements of ISO 9001:2015, ISO 13485:2016, ISO 45001:2018 and ISO 14001:2015, and adheres to applicable regulatory requirements (including the FDA Quality System Regulation and the European

In-Vitro

Diagnostic Directive). The Company outsources manufacturing of certain electronic components, such as computers, monitors and circuit boards, to outside vendors that meet the Company’s quality requirements. In addition, the Company outsources the manufacturing of certain LC instrument systems and components to well-established contract manufacturing firms in Singapore. The Company’s Singapore entity is ISO 9001:2015 certified and manages all Asian outsourced manufacturing as well as the distribution of all products from Asia. The Company may pursue outsourcing opportunities as they arise but believes it maintains adequate supply chain and manufacturing capabilities in the event of disruption or natural disasters.

The Company primarily manufactures and distributes its LC columns at its facilities in Taunton, Massachusetts and Wexford, Ireland. In February 2018, the Company’s Board of Directors approved expanding its Taunton ~~location and anticipates spending an estimated $215 million to build and equip this new~~

~~state-of-the-art~~

~~manufacturing facility.~~location. The Company has incurred ~~$151~~costs of approximately $248 million on a new state-of-the-art facility, which is substantially complete as of ~~costs on this facility through the end of 2020.~~December 31, 2023. The Taunton facility processes, sizes and treats silica and polymeric media that are packed into columns, solid phase extraction cartridges and bulk shipping containers in both Taunton and Wexford. The Wexford facility also manufactures and distributes certain data, instruments and software components for the Company’s LC, MS and TA product lines. The Company’s Taunton facility is certified to ISO 9001:2015 and ISO 14001:2015. The Wexford facility is certified to ISO 9001:2015, ~~and~~ ISO 13485:2016/EN ISO 13485:~~2016.~~2016 and ISO 14001:2015. VICAM

manufactures antibody-linked resins and magnetic beads that are packed into columns and kits in Milford, Massachusetts and Nixa, Missouri. The Company manufactures and distributes its Analytical Standards and Reagents and Environmental Resource Associates (“ERA”) product lines at its facility in Golden, Colorado, which is certified to ISO 9001:2015 and accredited to ISO/IEC 17025:2017, ISO/IEC 17034:16, ISO/IEC 17043:2010 and ~~ISO Guide 34.~~TNI Standard Vol. 3:2016. Some ERA products are also manufactured in the Wexford, Ireland facility, which is also accredited to ISO/IEC 17025:~~2005,~~2017 and ISO/IEC 17034:2016.

The Company manufactures and distributes its MS products at its facilities in Wilmslow, England and Wexford, Ireland. Certain components or modules of the Company’s MS instruments are manufactured at its facility in Solihull, England and by long-standing outside contractors. Each stage of this supply chain is closely monitored by the Company to maintain high quality and performance standards. The instruments, components or

modules are then returned to the Company’s facilities, where its engineers perform final assembly, calibrations to customer specifications and quality control procedures. The Company’s MS facilities are certified to ISO 9001:2015, ~~and~~ ISO 13485:2016/EN ISO 13485:2016 and ISO 14001:2015 (Wexford only) and adhere to applicable regulatory requirements (including the FDA Quality System Regulation and the European

In-Vitro

Diagnostic Directive).

TA’s thermal analysis, rheometry and calorimetry products are manufactured and distributed at the Company’s New Castle, Delaware, ~~Wakefield, Massachusetts,~~ Eden Prairie, Minnesota, Lindon, Utah and ~~Huellhorst,~~Hüllhorst, Germany facilities. Similar to MS, elements of TA’s products are manufactured by outside contractors and are then returned to the Company’s facilities for final assembly, calibration and quality control. The Company’s New Castle facility is certified to the ISO 9001:2015 ~~and ISO 17025:2005 standards~~standard and the Eden Prairie facility is certified to both ISO 9001:2015 and ISO/IEC 17025:2017 ~~standards.~~

standards, and the Lindon facility is certified to ISO 9001:2015.

All instrument manufacturing for Wyatt products takes place at its facilities in Santa Barbara, California. The Company’s Wyatt facility in Santa Barbara, California is certified to ISO 9001:2015

Raw Materials

The Company purchases a variety of raw materials, primarily consisting of high temperature alloy sheet metal and castings, forgings,

pre-plated

metals and electrical components from various vendors. The materials used by

the Company’s operations are generally available from a number of sources and in sufficient quantities to meet current requirements subject to normal lead times.

The Company is subject to rules of the Securities and Exchange Commission (“SEC”) under the Dodd-Frank Wall Street Reform and Consumer Protection Act, ~~requiring~~which require disclosure as to whether certain materials (tantalum, tin, gold and tungsten), known as conflict minerals, which may be contained in the Company’s products, are mined from the Democratic Republic of the Congo and adjoining countries. In ~~2019,~~2022, the Company was not able to determine with certainty the country of origin of some of the conflict minerals in its manufactured products. However, the Company does not have knowledge that any of its conflict minerals originated from the Democratic Republic of the Congo or adjoining countries. The Company is in the process of evaluating its ~~2020~~2023 supply chain, and the Company plans to file its ~~2020~~2023 Form SD with the SEC in May ~~2021.~~2024. The results of this and future evaluations may impose additional costs and may introduce new risks related to the Company’s ability to verify the origin of any conflict minerals contained in its products.

In addition, the Company continues to monitor environmental, health and safety regulations in countries in which it operates throughout the world, in particular, European Union and China Restrictions on the use of certain Hazardous Substances in electrical and electronic equipment ~~(RoHS)~~ and European Union Waste Electrical and Electronic Equipment directives. Further information regarding these regulations is available on the Company’s website,

www.waters.com,

, under the caption “About Waters / Corporate Governance”.

Research and Development

The Company maintains an active research and development program focused on the development and commercialization of products that extend, complement and update its existing product offering. The Company’s research and development expenditures for ~~2020, 2019~~2023, 2022 and ~~2018~~2021 were ~~$141~~$175 million, ~~$143~~$176 million and ~~$143~~$168 million, respectively. In addition, the Company is party to an existing licensing arrangement for certain intellectual property relating to mass spectrometry technologies yet to be commercialized and for which there was no future alternative use as of the acquisition date. This licensing arrangement is significantly related to new, biologically-focused applications, as well as other applications, and requires the Company to make additional future payments of up to $7 million if certain milestones are achieved, as well as royalties on future net sales.

Nearly all of the Company’s LC products have been developed at the Company’s main research and development center located in Milford, Massachusetts, with input and feedback from the Company’s extensive field organizations and customers. The majority of the Company’s MS products are developed at facilities in England and most of the Company’s current materials characterization products are developed at the Company’s research and development center in New Castle, Delaware. At December 31, ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, there were ~~1,112, 1,089 and 1,011~~approximately 1,200 employees ~~respectively,~~ involved in the Company’s research and development efforts.

The Company has increased research and development expenses from its continued commitment to invest significantly in new product development and existing product enhancements, and as a result of acquisitions. Despite the Company’s active research and development programs, there can be no assurance that the Company’s product development and commercialization efforts will be successful or that the products developed by the Company will be accepted by the marketplace.

In 2020, the Company opened a new research laboratory in Cambridge, MA, which ~~will serve~~serves as a strategic, collaborative space in the community, where Waters can partner with academia, research and industry to accelerate the next generation of scientific advancements.

Human Capital

We believe that our people differentiate our business and are vital to our continued success. As a result, we have made important investments in our workforce through initiatives and programs that support talent development and inclusion and enhance our Total Rewards programs.

Employees

The Company employed approximately ~~7,400, 7,500~~7,900, 8,200 and ~~7,200~~7,800 employees at December 31, ~~2020, December 31, 2019~~2023, 2022 and ~~2018,~~2021, respectively, with approximately 38% of the Company’s employees located in the United States. The

Company believes its employee relations are generally good. The Company’s employees are not unionized or affiliated with any internal or external labor organizations.

Talent Development

We believe that our future success depends in a significant part on our continued ability to attract and retain highly skilled employees and then contribute to the growth and development of these employees.

We further the growth and development of our employees by investing in various programs, digital platforms and workshops that build professional and technical skills.

In addition, management periodically assesses succession planning for certain key positions and reviews our workforce to identify high potential employees for future growth and development.

Inclusion & Diversity

We believe inclusion is a core tenet of organizational success and that fostering a sense of inclusivity allows our employees to maximize their performance contribution to our business. ~~We celebrate difference~~In 2021, we hired our first Director of Diversity, Equity and ~~diversity in~~Inclusion to help strategize and focus our inclusivity efforts. As part of our company-led initiatives to drive an inclusive workplace, we have created Employee Circles and Employee Hubs, which are ~~composed~~voluntary, employee-driven employee resource groups worldwide to foster a diverse and inclusive culture through awareness, education and employee connections. Our five Employee Circles are people of color, LGBTQ+ pride, veterans, women and disability. Our global Employee Circles provide opportunities for Waters employees ~~from~~to connect with teammates throughout the company, which provide a forum in which to promote topics related to diversity and inclusion focusing on gender, Multicultural, Veterans and LGBTQ+ employees and allies. All employees are encouraged to participate in theseworld, while Employee ~~Circles~~Hubs encourage engagement at the local level. Our Employee Circles and ~~global levels.~~

~~Waters has focused on expanding diversity~~Hubs led various initiatives in ~~our recruitment processes. We have developed hiring partnerships with agencies such as the National Society~~2023 to build a strong culture of ~~Black Engineers, Recruit Military, Out in Tech~~inclusion and ~~Power to Fly to expand the pipeline of strong candidates.~~awareness. We have also rolled out training to all employees to support an inclusive culture that values diverse perspectives.

We believe that part of fostering a diverse, inclusive and equitable organization and workforce means understanding the makeup of our current employees. As of December 31, 2023, our workforce identifies as:

32% female, with women occupying 34% of company leadership roles (defined as Senior Director or above) compared with 22% in 2017, an increase of 12 percentage points; and

23% racially and/or ethnically diverse, with 11% of our workforce identifying as Asian, 3.5% as identifying as Black or African American, 7% identifying as Hispanic/Latinx and 1% identifying as two or more races.

Recruitment

Waters has focused on expanding diversity in our recruitment processes, including developing partnerships with organizations that support diversity in hiring and employee engagement. Current partnerships include: the National Organization of Black Chemists and Chemical Engineers, Out in Tech, Vercida, Home Base and Fairygodboss to expand the pipeline of strong candidates.

Health and Safety

The health and safety of our employees is our highest priority. Through online and

in-person

training programs, we believe that we foster a safe workplace and ensure that all employees are empowered to prevent accidents and injuries.

We manufacture products deemed essential to critical infrastructure, including health and safety, food and agriculture, and energy, and as a result, the majority of our production sites continued operating during the

COVID-19

pandemic.

~~Table of Contents~~

~~During the pandemic, we invested in maintaining safe work environments for our employees. We responded to the~~

~~COVID-19~~

~~pandemic by, among other things:~~

~~Adding work from home flexibility;~~

~~Adjusting attendance policies to encourage those who are sick to stay home;~~

~~Increasing cleaning protocols across all work locations;~~

~~Initiating regular communication regarding impacts of the~~

~~COVID-19~~

~~pandemic, including health and safety protocols and procedures;~~

~~Establishing new physical distancing and safety procedures for employees who need to be onsite;~~

~~Modifying workspaces as appropriate; and~~

~~Implementing protocols to address actual and suspected~~

~~COVID-19~~

~~cases and potential exposure.~~

Competition

The analytical instrument systems, supplies and services market is highly competitive. The Company encounters competition from several worldwide suppliers and other companies in both domestic and foreign markets for each of its three primary technologies. The Company competes in its markets primarily on the basis of product performance, reliability, service and, to a lesser extent, price. Competitors continuously introduce new products and have instrument businesses that are generally more diversified than the Company’s business. Some competitors have greater financial resources and broader distribution than the Company’s.

In the markets served by Waters, the Company’s principal competitors include: Agilent Technologies, Inc., Shimadzu Corporation, Bruker Corporation, Danaher Corporation and Thermo Fisher Scientific Inc. In the markets served by TA, the Company’s principal competitors include: ~~PerkinElmer, Inc., Mettler-Toledo International~~Perkin Elmer, Inc., NETZSCH-Geraetebau GmbH, Thermo Fisher Scientific Inc., Malvern PANalytical Ltd., a subsidiary of Spectris plc, Anton-Paar GmbH and ~~Anton-Paar GmbH.~~

others not identified here.

The market for consumable LC products, including separation columns, is highly competitive and generally more fragmented than the analytical instruments market. The Company encounters competition in the consumable columns market from chemical companies that produce column sorbents and small specialized companies that primarily pack purchased sorbents into columns and subsequently package and distribute columns. The Company believes that it is one of the few suppliers that processes silica and polymeric resins, packs columns and distributes its own products. The Company competes in this market on the basis of performance, reproducibility, reputation and, to a lesser extent, price. In recent years, the Company’s principal competitors for consumable products have included: Danaher Corporation; Merck KGaA; Agilent Technologies, Inc.; General Electric Company and Thermo Fisher Scientific Inc. The ACQUITY UPLC ~~instrument~~Instrument is designed to offer a predictable level of performance when used with ACQUITY UPLC ~~columns~~Columns and the Company believes that the expansion of the ACQUITY UPLC ~~instrument~~Instrument base will enhance its chromatographic column business because of the high level of synergy between ACQUITY UPLC ~~columns~~Columns and the ACQUITY UPLC ~~instruments.~~

Instruments.

Patents, Trademarks and Licenses

The Company owns a number of United States and foreign patents and has patent applications pending in the United States and abroad. Certain technology and software has been acquired or is licensed from third parties. The Company also owns a number of trademarks. The Company’s patents, trademarks and licenses are viewed as valuable assets to its operations. However, the Company believes that no one patent or group of patents, trademark or license is, in and of itself, essential to the Company such that its loss would materially affect the Company’s business as a whole.

~~Table of Contents~~

Environmental Matters and Climate Change

The Company is subject to foreign and U.S. federal, state and local laws, regulations and ordinances that (i) govern activities or operations that may have adverse environmental effects, such as discharges to air and water as well as handling and disposal practices for solid and hazardous wastes, and (ii) impose liability for the costs of cleaning up and certain damages resulting from sites of past spills, disposals or other releases of hazardous substances. The Company believes that it currently conducts its operations and has operated its business in the past in substantial compliance with applicable environmental laws. From time to time, Company operations have resulted or may result in noncompliance with environmental laws or liability for cleanup pursuant to environmental laws. The Company does not currently anticipate any material adverse effect on its

operations, financial condition or competitive position as a result of its efforts to comply with environmental laws.

The Company is sensitive to the growing global debate with respect to climate change. An internal sustainability working group develops increasingly robust data with respect to the Company’s utilization of carbon producing substances in an effort to continuously reduce the Company’s carbon footprint. In 2019, the Company published a sustainability report identifying the various actions and behaviors the Company adopted in 2018 concerning its commitment to both the environment and the broader topic of social responsibility. The Company has continued to publish a sustainability report (which was renamed the ESG Report in 2022) on an annual basis. In November 2023, the Company published its 2023 ESG Report, detailing the Company’s efforts to address its environmental impact and uphold its social responsibilities in 2023. See Item 1A, Risk Factors –

The effects of climate change could harm the Company’s business,

, for more information on the potential significance of climate change legislation. See also Note 18 in the Notes to the Consolidated Financial Statements for financial information about geographic areas.

Available Information

The Company files or furnishes all required reports with the SEC. The Company is an electronic filer and the SEC maintains a website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The address of the SEC electronic filing website is

http://~~www.sec.gov~~

.www.sec.gov. The Company also makes available, free of charge on its website, its annual report on

Form 10-K,

quarterly reports on

Form 10-Q,

current reports on

Form 8-K

and any amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. The website address for Waters Corporation is

http://www.waters.com

and SEC filings can be found under the caption “Investors”.

~~Forward-Looking Statements~~

~~Certain~~ The Company is providing its website address solely for the information of investors. The Company does not intend the address to be an active link or to otherwise incorporate the contents of the ~~statements~~website, including any reports that are noted in this annual report on Form

10-K

(this “Annual Report”) as being posted on the website, into this Annual Report. Investors and others should note that we may announce material information to our investors using our investor relations website (ir.waters.com), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors and the public about our Company, our business and other issues. It is possible that the information that we post on these channels could be deemed to be material information. We therefore encourage investors to visit these websites from time to time.

Forward-Looking Statements

This Annual Report, including the information incorporated by reference herein, ~~may contain~~contains forward-looking statements ~~with respect to future results and events, including any statements regarding, among other items, anticipated trends or growth in~~within the ~~Company’s business, including, but not limited to, the impact~~meaning of Section 27A of the ~~ongoing~~

~~COVID-19~~

~~pandemic; the impact~~Securities Act of new or proposed tariff or trade regulations or changes in the interpretation or enforcement of existing regulations; the impact of foreign currency translation on financial results; development of products by acquired businesses; the growth rate of sales1933, as amended (the “Securities Act”), and research and development expenses; the impact of costs associated with developing new technologies and bringing these new technologies to market; the impact of new product launches and the associated costs, such as the amortization expense related to software platforms; geographic sales mix of business; development of products by acquired businesses and the amount of contingent payments to the sellers of an acquired business; anticipated expenses, including interest expense, capitalized software costs and effective tax rates; the impactSection 21E of the ~~Tax Cuts and Jobs~~Securities Exchange Act of 1934, as amended (the ~~“2017 Tax~~“Exchange Act”) in the U.S.; the impact and outcome of the Company’s various ongoing tax audit examinations; the achievement of contractual milestones to preserve foreign tax rates; the impact and outcome of litigation matters; the impact of the loss of intellectual property protection; the impact of new accounting standards and pronouncements; the adequacy of the Company’s supply chain and manufacturing capabilities and facilities; the impact of regulatory compliance; the Company’s expected cash flow, borrowing capacity, debt repayment and refinancing; the Company’s ability to fund working capital, capital expenditures, service debt,

~~Table of Contents~~

repay outstanding lines of credit, make authorized share repurchases, fund potential acquisitions and pay any adverse litigation or tax audit liabilities, particularly in the U.S.; future impairment charges; the Company’s contributions to defined benefit plans; the Company’s expectations regarding changes to its financial position; compliance with applicable environmental laws; and the impact of recent acquisitions on sales and earnings.

~~Many of these statements appear, in particular, in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form~~

~~10-K.~~

. Statements that are not statements of historical fact may be deemed forward-looking statements. You can identify these forward-looking statements by the use of the words “feels”, “believes”, “anticipates”, “plans”, “expects”, “may”, “will”, “would”, “intends”, “suggests”, “appears”, “estimates”, “projects”, “should” and similar expressions, whether in the negative or affirmative. These forward-looking statements are subject to various risks and uncertainties, many of which are outside the control of the Company, including, and without limitation:

•

foreign currency exchange rate fluctuations potentially affecting translation of the Company’s future non-U.S. operating results, particularly when a foreign currency weakens against the U.S. dollar;

~~Risks related to the effects of the~~

~~COVID-19~~

pandemic on our business, including: portions of our global workforce being unable to work fully and/or effectively due to working remotely, illness, quarantines, government actions, facility closures or other reasons related to the pandemic, increased risks of cyber-attacks resulting from our temporary remote working model, disruptions in our manufacturing capabilities or to our supply chain, volatility and uncertainty in global capital markets limiting our ability to access capital, customers being unable to make timely payment for purchases and volatility in demand for our products.

~~Foreign currency exchange rate fluctuations that could adversely affect translation of the Company’s future sales, financial operating results and the condition of its~~

~~non-U.S.~~

~~operations, especially when a currency weakens against the U.S. dollar.~~

~~Current~~

current global economic, sovereign and political conditions and uncertainties, ~~particularly regarding~~including the effect of new or proposed tariff or trade ~~regulations;~~regulations, changes in inflation and interest rates, the ~~United Kingdom’s exit from~~impacts and costs of war, in particular as a result of the ~~European Union, as well as~~ongoing conflicts between Russia and Ukraine and in the Middle East, and the possibility of further escalation resulting in new geopolitical and regulatory instability and the Chinese government’s ongoing tightening of restrictions on procurement by government-funded customers;

the Company’s ability to access capital, ~~and~~ maintain liquidity and service the Company’s debt in volatile market conditions;

risks related to the effects of any pandemic on our business, financial condition, results of operations and prospects;

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~~as a result of fluctuations in their expenditures or ~~are unable~~ability to obtain ~~funding, as in~~ funding;

the ~~cases of academic, governmental and research institutions;~~ability to realize the ~~effect of mergers and acquisitions on customer demand for~~expected benefits related to the Company’s ~~products;~~various cost-saving initiatives, including workforce reductions and organizational restructurings;

the ~~Company’s ability to sustain~~introduction of competing products by other companies and ~~enhance service.~~loss of market share, as well as pressures on prices from competitors and/or customers;

~~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;~~introductions, lack of acceptance of new ~~products;~~products and inability to grow organically through innovation;

rapidly changing technology and product obsolescence;

risks associated with previous or future acquisitions, strategic investments, joint ventures and divestitures, including risks associated with achieving the anticipated financial results and operational synergies; contingent purchase price payments; and expansion of our business ininto new or developing markets; ~~spending by certain~~

~~end-markets;~~

risks associated with unexpected disruptions in operations;

failure to adequately protect the Company’s intellectual property, infringement of intellectual property rights of third parties and inability to obtain licenses on commercially reasonable terms;

the Company’s ability to ~~obtain alternative~~acquire adequate sources of supply and its reliance on outside contractors for certain components and ~~modules; and the possibility that future sales of new products related to acquisitions, which trigger contingent purchase payments, may exceed the Company’s expectations.~~

~~Increased regulatory burdens as the Company’s business evolves, especially with respect to the FDA and EPA, among others,~~modules, 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’ abilitydisruptions to ~~obtain letters of credit or other financing alternatives.~~its supply chain;

~~Risks~~

risks associated with ~~lawsuits, particularly involving claims for infringement of patents~~third-party sales intermediaries and ~~other intellectual property rights.~~resellers;

~~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

~~Table~~ as well as shifts in taxable income among jurisdictions with different effective tax rates, the outcome of ~~Contents~~ongoing and future tax examinations and changes in legislation affecting the Company’s effective tax rate;

the Company’s ability to attract and retain qualified employees and management personnel;

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.

risks associated with cybersecurity and technology, including attempts by third parties to defeat the security measures of the Company and its third-party partners;

increased regulatory burdens as the Company’s business evolves, especially with respect to the U.S. Food and Drug Administration and U.S. Environmental Protection Agency, among others, and in connection with government contracts;

regulatory, environmental and logistical obstacles affecting the distribution of the Company’s products, completion of purchase order documentation and the ability of customers to obtain letters of credit or other financing alternatives;

risks associated with litigation and other legal and regulatory proceedings; and

the impact and costs incurred from changes in accounting principles and practices.

Certain of these and other factors are further described below in Item 1A, Risk Factors, of this ~~Form~~

~~10-K.~~

Annual Report. Actual results or events could differ materially from the plans, intentions and expectations disclosed in

the forward-looking statements, whether because of these factors or for other reasons. All forward-looking statements speak only as of the date of this ~~annual report on Form~~

~~10-K~~

Annual Report, and forward-looking statements in documents that are incorporated by reference hereto speak only as of the date of those documents. Such forward-looking statements are expressly qualified in their entirety by the cautionary statements included in this report. Except as required by law, the Company does not assume any obligation to update any forward-looking statements.

Item 1A:

Risk Factors

The Company is subject to risks and uncertainties, including, but not limited to, the following:

~~RISKS RELATED TO THE CORONAVIRUS~~

~~(COVID-19)~~

~~PANDEMIC~~

~~The Company’s business has been and may continue to be negatively affected by outbreaks of disease, such as epidemics or pandemics, including the ongoing~~

~~COVID-19~~

~~pandemic.~~

Outbreaks of disease, such as epidemics or pandemics, have and could continue to negatively affect the Company’s business. Both the Company’s domestic and international operations have been and continue to be adversely affected by the ongoing global

~~COVID-19~~

~~pandemic and the resulting volatility and uncertainty it has caused in the U.S. and international markets. Since being declared a pandemic in March 2020 by the World Health,~~

~~COVID-19~~

~~has continued to spread throughout the U.S. and globally. The~~

~~COVID-19~~

pandemic has caused significant volatility and uncertainty in U.S. and international markets, which has disrupted and is expected to continue to disrupt the Company’s business and could result in a prolonged economic downturn. The Company operates in over 35 countries, including those in the regions most impacted by the

~~COVID-19~~

~~pandemic. Many countries, including the U.S., have implemented measures such as quarantine,~~

~~shelter-in-place,~~

curfew and similar isolation measures, including government orders and other restrictions on the conduct of business operations. Such measures have had and are expected to continue to have adverse impacts on the U.S. and foreign economies of uncertain severity and duration and have had and may continue to have a negative impact on the Company’s operations, including the Company’s sales, supply chain and cash flow. Certain jurisdictions have experienced increased numbers of

~~COVID-19~~

~~infections following the~~

~~re-openings~~

of their economies and easing of restrictions, which, in some cases, has required closings of certain business activity and the imposition of other restrictions in response. It is unclear whether the increases in the number of infections will continue and amplify or whether any

~~so-called~~

~~“second waves” of~~

~~COVID-19~~

infections will be experienced in the United States or elsewhere and, if so, what the impact of that would be on human health and safety, the economy and our business. Although the FDA has approved certain therapies and two vaccines for emergency use and distribution, the initial rollout of vaccine distribution has encountered significant delays and there remains uncertainties about the amount of vaccine available for distribution, the logistics of implementing a national vaccine program and the overall efficacy of the vaccines once widely administered, especially as new strains of

~~COVID-19~~

have been discovered, and the level of resistance these new strains have to the existing vaccines remains unknown. Additionally, the widespread pandemic has caused and is expected to continue to cause significant disruption of global financial markets, which may reduce the Company’s ability to access capital.

~~The~~

~~COVID-19~~

pandemic also has the potential to significantly impact our supply chain if our manufacturing facilities or those of third parties to whom we outsource certain manufacturing processes, the distribution centers where our inventory is managed or the operations of our logistics and other service providers are disrupted, temporarily closed or experience worker shortages. We may also see disruptions or delays in shipments of certain materials or components of our products.

~~As a result of the ongoing~~

~~COVID-19~~

pandemic, the Company has transitioned the majority of its workforce to a temporary remote working model, which may result in the Company experiencing lower workforce efficiency and productivity, which in turn may adversely affect the Company’s business, results of operations and financial condition. As company employees work from home and access the Company’s system remotely, the Company may be subject to heightened security risks, including the risks of cyber-attacks. Additionally, if any of the Company’s key management employees are unable to perform their duties for a period of time, including as the result of illness, the Company’s business, results of operations and financial condition could be adversely affected.

~~The Company cannot reasonably estimate the length or severity of the~~

~~COVID-19~~

~~pandemic or the related response, or the extent to which the disruption may continue to impact the Company’s business, financial position, results of operations and cash flows. Ultimately, the~~

~~COVID-19~~

~~pandemic could have a material adverse impact on the Company’s business, financial positions, results of operations and cash flows.~~

RISKS RELATED TO MACROECONOMIC CONDITIONS

The Company’s international operations may be negatively affected by political events, wars or terrorism, economic conditions and regulatory changes, related to either a specific country or a larger region. These potential political, currency and economic disruptions, as well as foreign currency exchange rate fluctuations, could have a material adverse effect on the Company’s results of operations or financial condition.

Approximately ~~71%~~69% and 70% of the Company’s net sales in ~~both 2020~~2023 and ~~2019~~2022, respectively, were outside of the United States and were primarily denominated in foreign currencies. In addition, the Company has considerable manufacturing operations in Ireland and the U.K., as well as significant subcontractors located in Singapore. As a result, a significant portion of the Company’s sales and operations are subject to certain risks, including adverse developments in the political, regulatory and economic environment, in particular, uncertainty regarding possible changes to foreign and domestic trade policy; the effect of the U.K.’s exit from the European Union as well as the financial difficulties and debt burden experienced by a number of European countries; impact and costs of terrorism or war, in particular as a result of the ~~instability~~ongoing conflict between Russia and ~~potential impact~~Ukraine and in the Middle East, and the possibility of ~~war or terrorism;~~further escalation resulting in new geopolitical and regulatory instability; the instability and possible dissolution of the ~~Euro~~euro as a single currency; sudden movements in a country’s foreign exchange rates due to a change in a country’s sovereign risk profile or foreign exchange regulatory practices; ~~tariffs~~trade protection measures including embargoes, sanctions and ~~other trade barriers;~~tariffs; differing tax laws and changes in those laws; restrictions on investments and/or limitations regarding foreign ownership; nationalization of private enterprises which may result in the confiscation of assets; credit risk and uncertainties regarding the collectability of accounts receivable; the impact of ~~public~~global health pandemics and epidemics, such as COVID-19; changes in inflation and interest rates; instability in the ~~coronavirus currently impacting China~~global banking industry; rising energy prices and ~~elsewhere;~~potential energy shortages; difficulties in protecting intellectual property; difficulties in staffing and managing foreign operations; and associated adverse operational, contractual and tax consequences.

In 2023, the Company generated $441 million of total net sales from China, down from $565 million in 2022. This significant 22% reduction in sales from China resulted from lower customer demand for our products across all customer classes, driven by various factors. Such factors include a decline in the economic conditions in China, trade tensions and tariffs between the U.S. and China and their impact on our customers’ purchasing decisions, increased competition from local and international competitors in China, the Chinese government’s ongoing tightening of restrictions on procurement by government-funded customers and other regulatory and compliance challenges and uncertainties in the Chinese market, all of which had, and may continue to have, an adverse effect on our business and operations in China.

In particular, China’s government continues to play a significant role in regulating industry development by imposing sector-specific policies, and it maintains control over China’s economic growth through setting monetary policy and determining treatment of particular industries or companies. The U.S. government has called for substantial changes to foreign trade policy with China and has recently raised, and has proposed to further raise in the future, tariffs on several Chinese goods. China has retaliated with increased tariffs on U.S. goods, which may increase our cost of doing business in China. Any further changes in U.S. trade policy could trigger retaliatory actions by affected countries, including China, resulting in trade wars and increased costs for

goods imported into the U.S. and impacting our ability to sell our products in China and other affected countries. Accordingly, our financial position or results of operations can be adversely influenced by political, economic, legal, compliance, social and business conditions in China generally.

Additionally, the U.S. dollar value of the Company’s net sales, cost of sales, operating expenses, interest, taxes and net income varies with foreign currency exchange rate fluctuations. Significant increases or decreases in the value of the U.S. dollar relative to certain foreign currencies, particularly the ~~Euro,~~euro, Japanese yen, ~~and~~ British pound and Chinese renminbi, could have a material adverse effect or benefit on the Company’s results of operations or financial condition.

From time to time, the Company enters into certain foreign currency exchange contracts that are intended to offset some of the market risk associated with sales denominated in foreign currencies. We cannot predict the effectiveness of these transactions or their impact upon our future operating results, and from time to time they may negatively affect our quarterly earnings.

Global economic conditions may ~~decrease~~have an adverse effect on the demand for, and supply of, the Company’s products and harm the Company’s financial results.

The Company is a global business that may be adversely affected by changes in global economic ~~conditions.~~conditions such as changes in the rate of inflation (including the cost of raw materials, commodities and supplies) and interest rates. Both our domestic and international markets experience varying degrees of inflationary and interest rate pressures. These changes in global economic conditions ~~both inside and outside the U.S.,~~ may affect the demand for, and supply of, the Company’s products and services. This may result in a decline in sales in the future, increased rate of order cancellations or delays, increased risk of excess or obsolete inventories, longer sales cycles and potential difficulty in collecting sales proceeds. There can be no assurance regarding demand for the Company’s products and services in the future.

Disruption in worldwide financial markets could adversely impact the Company’s access to capital and financial condition.

Financial markets in the U.S., Europe and Asia have experienced times of extreme disruption, including, among other things, sharp increases in the cost of new capital, credit rating downgrades and bailouts, severely

diminished capital availability and severely reduced liquidity in money markets. Financial and banking institutions have also experienced disruptions, resulting in large asset write-downs, higher costs of capital, rating downgrades and reduced desire to lend money. There can be no assurance that there will not be future deterioration or prolonged disruption in financial markets or financial institutions. Any future deterioration or prolonged disruption in financial markets or financial institutions in which the Company participates may impair the Company’s ability to access its existing cash, utilize its existing syndicated bank credit facility funded by such financial institutions ~~and impair its ability to~~or access sources of new ~~capital.~~capital, which it may need to meet its capital needs. The cost to the Company of any new capital raised and interest expense would increase if this were to occur.

Public health crises, epidemics or pandemics, such as the COVID-19 pandemic have had, and could in the future have, a negative impact on the Company’s business and operations.

Public health crises, epidemics or pandemics have had, and could in the future have, a negative impact on our business and operations, including Company sales and cash flow. Such public health crises, epidemics and pandemics have the potential to create significant volatility, uncertainty and worldwide economic disruption, resulting in an economic slowdown of potentially extended duration, as seen with the COVID-19 pandemic from 2020 to 2022. The Company’s global operations expose it to risks associated with such public health crises, epidemics and pandemics, which could have an adverse effect on its business, results of operations and financial condition. The degree to which such public health crisis, epidemics or pandemics ultimately affects the Company’s business, results of operations and financial condition is highly uncertain and cannot be predicted.

RISKS RELATED TO OUR BUSINESS

The Company’s financial results are subject to changes in customer demand, which may decrease for a number of reasons, many beyond the Company’s control.

The demand for the Company’s products is dependent upon the size of the markets for its LC,

LC-MS,

light scattering, thermal analysis, rheometry and calorimetry products; the timing and level of capital spending and expenditures of the Company’s customers; changes in governmental regulations, particularly those affecting drug, food and drinking water testing; funding available to academic, governmental and research institutions; general economic conditions and the rate of economic growth in the Company’s major markets; and competitive considerations. The Company typically experiences seasonality in its orders that is reflected as an increase in sales in its fourth quarter as a result of purchasing habits for capital goods by customers that tend to exhaust their spending budgets by calendar ~~year end.~~year-end. However, there can be no assurance that the Company will effectively forecast customer demand and appropriately ~~allocated~~allocate research and development expenditures to products with high growth and high margin prospects. Additionally, there can be no assurance that the Company’s results of operations or financial condition will not be adversely impacted by a change in any of the factors listed above or the continuation of uncertain global economic conditions.

~~Additionally, the~~

The analytical instrument market may also, from time to time, experience low sales growth. Approximately ~~59%~~57% and ~~57%~~59% of the Company’s net sales in ~~2020~~2023 and ~~2019,~~2022, respectively, were to worldwide pharmaceutical ~~and biotechnology companies,~~accounts, which ~~may be~~are periodically subject to unfavorable market conditions and consolidations. Unfavorable industry conditions could have a material adverse effect on the Company’s results of operations or financial condition.

Competitors may introduce more effective or less expensive products than the Company’s, which could result in decreased sales. The competitive landscape may transform as a result of potential changes in ownership, mergers and continued consolidations among the Company’s competitors, which could harm the Company’s business.

The analytical instrument market, and, in particular, the portion related to the Company’s HPLC, UPLC,

LC-MS,

light scattering, thermal analysis, rheometry and calorimetry product lines, is highly ~~competitive and subject to rapid changes in technology.~~competitive. The Company encounters competition from several international instrument suppliers and other companies in both domestic and foreign markets. Some competitors have instrument businesses that are generally more diversified than the Company’s business, but are typically less focused on the Company’s chosen markets. Over the years, some competitors have merged with other competitors for various reasons, including increasing product line offerings, improving market share and reducing costs. There can be no assurance that the Company’s competitors will not introduce new, disruptive technologies that displace the Company’s existing technologies or more effective and less costly products than those of the Company or that the Company will be able to increase its sales and profitability from new product introductions. There can be no assurance that the Company’s sales and marketing forces will compete successfully against the Company’s competitors in the future.

Strategies for organic growth require developing new technologies and bringing these new technologies to market, which could negatively impact the Company’s financial results.

The Company’s corporate strategy is fundamentally based on winning through organic innovation and deep application expertise. The Company is in the process of developing new products with recently acquired

technologies. The future development of these new products will require a significant amount of spending over the next few years before any significant, robust sales will be realized. Furthermore, these new products will be sold into both the

non-clinical

and clinical markets, and any new products requiring FDA clearance may take longer to bring to market. There can be no assurance given as to the timing of these new product launches and the ultimate realization of sales and profitability in the future.

In addition, the Company’s products are subject to rapid changes in technology. Rapidly changing technology could make some or all of our product lines obsolete unless the Company is able to continually improve our existing products and develop new products. If the Company fails to develop and introduce products

in a timely manner in response to changing technology, market demands or the requirements of our customers, the Company’s product sales may decline, and we could experience an adverse effect on our results of operations or financial condition.

The Company may face risks associated with previous or future acquisitions, strategic investments, joint ventures and divestitures.

In the normal course of business, the Company may engage in discussions with third parties relating to possible acquisitions, strategic investments, joint ventures and divestitures. The Company may pursue transactions that complement or augment its existing products and services, such as the Wyatt acquisition that was completed in May 2023. Such transactions involve numerous risks, including difficulties in integrating the acquired operations, technologies and products; diversion of management’s attention from other business concerns; inability to predict financial results; potential departures of key employees of the acquired company; and difficulties in effectively transferring divested businesses and liabilities. If the Company successfully identifies acquisitions in the future, completing such acquisitions may result in new issuances of the Company’s stock that may be dilutive to current owners; increases in the Company’s debt and contingent liabilities; and additional amortization expense related to intangible assets. For example, the Company financed the Wyatt acquisition, in part, through borrowings under its revolving credit facility, resulting in a significant increase in the Company’s outstanding debt. Acquired businesses may also expose the Company to new risks and new markets, and the Company may have difficulty addressing these risks in a cost-effective and timely manner. Any of these transaction-related risks could have a material adverse effect on the Company’s profitability. In addition, the Company may not be able to identify, successfully complete, or integrate potential acquisitions in the future. Even if the Company can do so, it cannot be sure that these acquisitions will have a positive impact on the Company’s business or operating results.

The Company’s software or hardware may contain coding or manufacturing errors that could impact their function, performance and security, and result in other negative consequences.

Despite testing prior to the release and throughout the lifecycle of a product or service, the detection and correction of any errors in released software or hardware can be time consuming and costly. This could delay the development or release of new products or services, or new versions of products or services, create security vulnerabilities in the Company’s products or services, and adversely affect market acceptance of products or services. If the Company experiences errors or delays in releasing its software or hardware, or new versions thereof, its sales could be affected and revenues could decline. Errors in software or hardware could expose the Company to product liability, performance and warranty claims as well as harm to brand and reputation, which could impact future sales.

A successful product liability claim brought against the Company in excess of, or outside the coverage of, the Company’s insurance coverage could have a material adverse effect on our business, financial condition and results of operations. The Company may not be able to maintain product liability insurance on acceptable terms, if at all, and insurance may not provide adequate coverage against potential liabilities.

Disruption of operations at the Company’s manufacturing facilities could harm the Company’s financial condition.

The Company manufactures LC instruments at facilities in Milford, Massachusetts and through a subcontractor in Singapore; precision chemistry separation columns at its facilities in Taunton, Massachusetts and Wexford, Ireland; MS products at its facilities in Wilmslow, England, Solihull, England and Wexford, Ireland; thermal analysis and rheometry products at its facilities in New Castle, ~~Delaware~~Delaware; and other instruments and consumables at various other locations as a result of the Company’s acquisitions. Any prolonged disruption to the operations at any of these facilities, whether due to labor difficulties, destruction of or damage to any facility, power interruptions, cybersecurity incidents, weather events or natural disasters (including the potential impacts of climate change) or other reasons, could harm our customer relationships, impede our ability to generate sales and have a material adverse effect on the Company’s results of operations or financial condition.

Failure to adequately protect intellectual property could have materially adverse effects on the Company’s results of operations or financial condition.

Our success depends on our ability to obtain, maintain, and enforce patents on our technology, maintain our trademarks, and protect our trade secrets. There can be no assurance that any patents held by the Company will not be challenged, invalidated or circumvented or that the rights granted thereunder will provide competitive advantages to the Company. Additionally, there could be successful claims against the Company by third-party patent holders with respect to certain Company products that may infringe the intellectual property rights of such third parties. In the event that a claim relating to intellectual property is asserted against the Company, or third parties hold pending or issued patents that relate to the Company’s products or technology, the Company may seek licenses to such intellectual property or challenge those patents. However, the Company may be unable to obtain these licenses on commercially reasonable terms, if at all, and the challenge of the patents may be unsuccessful. The Company’s failure to obtain the necessary licenses or other rights could impact the sale, manufacture, or distribution of its products and, therefore, could have a material adverse effect on its results of operations and financial condition. The Company’s patents, including those licensed from others, expire on various dates.

The Company also depends in part on its trademarks and the strength of its proprietary brands, which the Company considers important to its business. The Company’s inability to protect or preserve the value of its intellectual property rights for any reason, including the Company’s inability to successfully defend against counterfeit, knock-offs, grey-market, infringing or otherwise unauthorized products, could damage the Company’s brand and reputation and harm its business.

The Company also relies on trade secrets and proprietary know-how with which it seeks to protect its products, in part, by confidentiality agreements with its collaborators, employees and consultants. These agreements may not adequately protect the Company’s trade secrets and other proprietary rights. These agreements may be breached, and the Company may not have adequate remedies for any breach. In addition, the Company’s trade secrets may otherwise become known or be independently developed by its competitors. If the Company is unable to protect its intellectual property rights, it could have an adverse and material effect on the Company’s results of operations or financial condition.

The Company’s business would suffer if the Company were unable to acquire adequate sources of supply.

Most of the raw materials, components and supplies purchased by the Company are available from a number of different suppliers; however, a number of items are purchased from limited or single sources of ~~supply and disruption~~supply. Consolidation among such suppliers could also result in other limited or sole-source suppliers for the Company in the future. Disruption of these sources could have, at a minimum, a temporary adverse effect on shipments and the financial results of the Company. In addition, price increases from these suppliers could have an adverse effect on the Company’s margins. A prolonged inability to obtain certain materials or components could have an adverse effect on the Company’s financial condition or results of operations and could result in damage to its relationships with its customers and, accordingly, adversely affect the Company’s business.

The Company’s sales would deteriorate if the Company’s outside contractors fail to provide necessary components or modules.

Certain components or modules of the Company’s LC and MS instruments are manufactured by outside contractors, including the manufacturing of LC instrument systems and related components by contract

manufacturing firms in Singapore. ~~Disruptions~~The ability of ~~service~~these contractors to perform their obligations is largely outside of the Company’s control. Failure by these outside contractors to perform their obligations in a timely manner or at satisfactory quality levels could have an adverse effect on the supply chain and the financial results of the Company. In addition, if one or more of such contractors experience significant disruption in services or institute a significant price increase, the Company may have to seek alternative providers, its costs could increase and the delivery of its products could be prevented or delayed. A prolonged inability to obtain these components or modules could have an adverse effect on the Company’s financial condition or results of operations.

The Company’s business could be harmed by actions of ~~distributors~~third-party sales intermediaries and other third parties that sell our products.

The Company sells some products through third parties, including ~~distributors~~third-party sales intermediaries and value-added resellers. This exposes us to various risks, including competitive pressure, concentration of sales volumes, credit risks and compliance risks. We may rely on one or a few key ~~distributors~~third-party sales intermediaries for a product or market and the loss of these ~~distributors~~third-party sales intermediaries could reduce our revenue or net earnings. ~~Distributors~~Third-party sales intermediaries may also face financial difficulties, including bankruptcy, which could harm our collection of accounts receivable. ~~Violations~~Moreover, violations of the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act or similar anti-bribery laws by distributors or other third-party intermediaries could materially and adversely impact our ~~business.~~business, reputation and results of operations. Risks related to our use of ~~distributors~~third-party sales intermediaries and other third parties may reduce sales, increase expenses and weaken our competitive position.

The Company is subject to laws and regulations governing government contracts, and failure to address these laws and regulations or comply with government contracts could harm its business by leading to a reduction in revenues associated with these customers.

The Company derives a portion of its revenue from direct and indirect sales to U.S. federal, state and local as well as foreign governments and their respective agencies, and, as a result, it is subject to various statutes and regulations that apply to companies doing business with the government. The laws governing government contracts differ from the laws governing private contracts and government contracts may contain pricing terms and conditions that are not applicable to private contracts. The Company is also subject to investigation for compliance with the regulations governing government contracts. A failure to comply with these regulations could result in suspension of these contracts, criminal, civil and administrative penalties or debarment, which could negatively impact the Company’s business and operations. If the Company’s government contracts are terminated, if it is suspended from government work or if its ability to compete for new contracts is adversely affected, the Company’s business could be negatively impacted.

The Company’s financial results are subject to unexpected shifts in

pre-tax

income between tax jurisdictions, changing application of tax law and tax audit examinations.

The Company is subject to rates of income tax that range from 0% up to 34% in various jurisdictions in which it conducts business. In addition, the Company typically generates a substantial portion of its income in the fourth quarter of each fiscal year. Geographical shifts in income from previous quarters’ projections caused by factors including, but not limited to, changes in volume and product mix and fluctuations in foreign currency translation rates, could therefore have potentially significant favorable or unfavorable effects on the Company’s income tax expense, effective tax rate and results of operations.

Governments in the jurisdictions in which the Company operates implement changes to tax laws and regulations from time to time. ~~Any~~From 2024, various foreign jurisdictions are beginning to implement aspects of the guidance issued by the Organization for Economic Co-operation and Development related to the new Pillar Two system of global minimum tax rules. These new tax laws and regulations, and any changes in corporate income tax rates or regulations regarding transfer pricing or repatriation of dividends or capital, as well as changes in the interpretation of existing tax laws and regulations, ~~in the jurisdictions in which the Company operates~~ could adversely affect the Company’s cash flow and lead to increases in its overall tax burden, which would negatively affect the Company’s profitability.

The Company ~~has a tax exemption in Singapore on certain types of income through March 2021, based upon~~continues to monitor the achievement and continued satisfaction of certain operational and financial milestones, which the Company met as of December 31, 2020 and expects to maintain through March 2021. Currently, the Company has determined that it is more likely than not to realize the tax exemption in Singapore and, accordingly, has not recognized any reserves for unrecognized tax benefits on its balance sheet related to this tax exemption. In the event that anyadoption of the ~~milestone targets were not met, the~~Pillar Two rules in additional jurisdictions.

The Company would not be entitled to the tax exemption on income earned in Singapore dating back to the start date of the agreement (April 1, 2016), and all the tax benefits previously recognized would be reversed, resulting in the recognition of income tax expense equal to the statutory tax of 17% on income earned during that period. In addition, the Company hasentered into a new Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5% on certain types of income for the period April 1, 2021 through March 31, 2026. Prior to April 1, 2021, the Company had a tax exemption in Singapore on certain types of income, based upon the achievement and continued satisfaction of certain operational and financial milestones, which the Company met as of December 31, 2020 and maintained through March 2021. The Company had determined that it was more likely than not to realize the tax exemption in Singapore and, accordingly, did not recognize any reserves for unrecognized tax benefits on its balance sheet related to this tax exemption. If any of the milestone targets were not met, the Company would not have been entitled to the tax exemption on income earned in Singapore dating back to the start date of the agreement (April 1, 2016), and all the tax benefits previously

recognized would be reversed, resulting in the recognition of income tax expense equal to the statutory tax of 17% on income earned during that period.

As a global business, the Company is subject to tax audit examinations in various jurisdictions throughout the world. The Company must manage the cost and disruption of responding to governmental audits, ~~investigation~~investigations and proceedings. In addition, the impact of the settlement of pending or future tax audit examination could have an unfavorable effect on the Company’s income tax expense, effective tax rate and results of operations.

December 31, 2023, the net carrying value of the Company’s goodwill and other intangible assets totaled approximately $1.9 billion. The Wyatt acquisition significantly increased the carrying value of the Company’s goodwill and other intangible assets, which could lead to potential impairments if Wyatt’s financial results are significantly less than anticipated in the future. In accordance with generally accepted accounting principles, the Company periodically assesses these assets to determine if they are impaired. Significant negative industry or economic trends, disruptions to the Company’s business, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of our assets, changes in the structure of our business, divestitures, market capitalization declines or increases in associated discount rates can impair the Company’s goodwill and other intangible assets. Any charges relating to such impairments adversely affect the Company’s financial statements in the periods recognized.

RISKS RELATED TO HUMAN CAPITAL MANAGEMENT

We may not be able to attract and retain qualified employees.

Our future success depends upon the continued service of our executive officers and other key management and technical personnel, and on our ability to continue to identify, attract, retain and motivate them. Implementing our business strategy requires specialized engineering and other talent, as our revenues are highly dependent on technological and product innovations. The market for employees in our industry is extremely competitive, and competitors for talent, particularly engineering talent, increasingly attempt to hire, and to varying degrees have been successful in hiring, our employees. A number of such competitors for talent are significantly larger than us and are able to offer compensation in excess of what we are able to offer. Additionally, macroeconomic conditions, including wage inflation, could have a material impact on our ability to attract and retain talent, our turnover rate and the cost of operating our business. In July 2023, the Company made organizational changes to better align its resources with its growth and innovation strategies, resulting in a worldwide workforce reduction that impacted approximately 5% of the Company’s employees. These workforce reductions may not have the desired impact on our cost-saving initiatives, as they could adversely affect our productivity, morale, customer relationships, product quality, innovation capabilities and ability to execute our strategic plans. Moreover, these workforce reductions could expose us to potential litigation, severance costs, reputational damage and loss of key personnel. If we are unable to manage the effects of these workforce reductions or achieve the expected benefits from them, our business, financial condition and results of operations could be materially and adversely affected. Further, existing immigration laws make it more difficult for us to recruit and retain highly skilled foreign national graduates of universities in the United States, making the pool of available talent even smaller. If we are unable to attract and retain qualified employees, our business may be harmed.

The loss of key members of management and the risks inherent in succession planning could adversely affect the Company’s results of operations or financial condition.

The operation of the Company requires managerial and operational expertise. None of the Company’s key management employees, with the exception of the ~~President~~Chief Executive Officer and Chief ~~Executive~~Financial Officer, have an employment contract with the Company and there can be no assurance that such individuals will remain with the Company. On December 31, 2020, our Senior Vice President and Chief Financial Officer departed from the Company and the Company appointed an interim Chief Financial Officer, effective January 1, 2021. We are currently conducting a search for a new Chief Financial Officer. Competition for experienced talent is intense and our process to search for a successor may be time-consuming and divert the board of directors’ and managements’ attention away from our business. This search and any eventual transition to a permanent Chief Financial Officer may be disruptive to our operations. Any delay or failure in identifying, attracting or retaining a permanent Chief Financial Officer, and successfully managing this leadership transition could have an adverse effect on our results of operations or financial condition. Additionally, if,If, for any reason, other key personnel do not continue to be active in management, the Company’s results of operations or financial condition could be adversely affected. The Company’s success also depends on its ability to execute leadership succession plans. The inability to successfully transition key management roles could have a material adverse effect on the Company’s operating results.

RISKS RELATED TO CYBERSECURITY ~~AND DATA PRIVACY~~

Disruption, cyber-attack or unforeseen problems with the security, maintenance or upgrade of the Company’s information and

web-based

systems could have an adverse effect on the Company’s business strategy, results of operations and financial condition.

The Company relies on its technology infrastructure and that of its third-party partners, including its software and banking partners, among other functions, to interact with suppliers, sell products and services, fulfill contract obligations, ship products, collect and make electronic wire and check based payments and otherwise conduct business. The Company’s technology infrastructure and that of its third-party partners has been, and may in the future be, vulnerable to damage or interruption from, but not limited to, natural disasters, power loss, telecommunication failures, terrorist attacks, computer viruses, ransomware, unauthorized access to customer or employee data, unauthorized access to and funds transfers from Company bank accounts and other attempts to harm the Company’s systems. In the event of such an incident, the Company has in the past, and may in the future, suffer interruptions in service, loss of assets or data or reduced functionality. The Company attempts to mitigate cybersecurity risks by employing a number of proactive measures, including mandatory ongoing employee training and awareness, technical security controls, enhanced data protection and maintenance of backup and protective systems. Despite these mitigation measures, the Company’s systems and those of its partners remain potentially vulnerable to cybersecurity threats, any of which could have a material adverse effect on the Company’s business. To date, cybersecurity incidents have not resulted in a material adverse impact to the Company’s business strategy, results of operations, or financial condition, but future incidents could have such an impact. Additionally, wethe Company must maintain and periodically upgrade ~~our~~its information and web-based systems, which has caused and will in the future cause temporary interruptions to ~~our~~its technology infrastructure. Any prolonged disruption to the Company’s technology infrastructure, at any of its facilities, could have a material adverse effect on the Company’s business strategy, results of operations or financial condition.

While the Company maintains cyber insurance, this insurance may not, however, be sufficient to cover the financial, legal, business or reputational losses that may result from an interruption or breach of its systems.

If the Company’s security measures are compromised or fail to adequately protect its technology infrastructure, research and development efforts or manufacturing operations, the Company’s products and services may be perceived as vulnerable or unreliable, the information protected by the Company’s controls and processes may be subject to unauthorized access, acquisition or modification, the Company’s brand and reputation could be damaged, the services that the Company provides to its customers could be disrupted, and customers may stop using the Company’s products and services, all of which could reduce the Company’s revenue and earnings, increase its expenses and expose ~~the Company~~it to legal claims and regulatory actions.

The Company is in the business of designing, manufacturing, selling and servicing analytical instruments to life science, pharmaceutical, biochemical, industrial, nutritional safety and environmental, academic and governmental customers working in research and development, quality assurance and other laboratory applications, and the Company is also a developer and supplier of software and software-based products that support instrument systems. Many of the Company’s customers are in highly regulated industries. While the Company has invested time and resources implementing measures designed to protect the integrity and security of its technology infrastructure, research and development processes, manufacturing operations, products and services, and the internal and external data managed by the Company, there is a risk these measures will be defeated or compromised or that they are otherwise insufficient to protect against existing or emerging threats. The Company also has acquired companies, products, services and technologies over time and may face inherent risk when integrating these acquisitions into the Company. In addition, at times, the Company faces attempts by third parties to defeat its security measures or exploit vulnerabilities in its systems. These risks will increase as the Company continues to grow and expand geographically, and its systems, products and services become increasingly digital and ~~sensor- and~~

sensor-and web-based.

The Company could suffer significant damage to its brand and reputation if a security incident resulted in unauthorized access to, acquisition of, or modification to the Company’s technology infrastructure, research and development processes, manufacturing operations, its products and services as well as the internal and external

data managed by the Company. Such an incident could disrupt the Company’s operations and customers could lose confidence in the Company’s ability to deliver quality and reliable products or services. This could negatively impact sales and could increase costs related to fixing and addressing these incidents and any vulnerabilities exposed by them, as well as to lawsuits, regulatory investigations, claims or legal liability including contractual liability, costs and expenses owed to customers and business partners.

RISKS RELATED TO COMPLIANCE, REGULATORY OR LEGAL ~~CHANGES~~

~~Compliance~~MATTERS

Changes in governmental regulations and compliance failures could harm the Company’s business.

The Company is subject to regulation by various federal, state and foreign governments and agencies in areas including, among others, health and safety, import/export, privacy and data protection, FCPA and environmental laws and regulations. A portion of the Company’s operations are subject to regulation by the FDA and similar foreign regulatory agencies. These regulations are complex, can change frequently and govern an array of product activities, including design, development, labeling, manufacturing, promotion, sales and distribution. Any failure by the Company to comply with applicable governmental regulations could result in product recalls, the imposition of fines, restrictions on the Company’s ability to conduct or expand its operations or the cessation of all or a portion of its operations.

Additionally, the Company develops, configures and markets its products and services to meet customer needs created by these regulations, and any significant change in regulations could reduce demand for its products, increase its expenses or otherwise materially impact its financial position and results of operations.

Regulators globally are increasingly imposing greater fines and penalties for privacy and data protection violations, and the European Union, as an example, has enacted a broad data protection regulation with fines based on a percentage of global revenues. Changes in laws or regulations associated with enhanced protection of certain sensitive types of personal information, such as information related to health, could greatly increase the cost of compliance and the cost of providing the Company’s products or services. Any failure, or perceived failure, by the Company to comply with laws and regulations on privacy, data security or consumer protection, or other policies, public perception, standards, self-regulatory requirements or legal obligations, could result in lost or restricted business, proceedings, actions or fines brought against the Company or levied by governmental entities or others, or could otherwise adversely affect the business and harm the Company’s reputation.

Some of the Company’s operations are subject to domestic and international laws and regulations with respect to the manufacturing, handling, use or sale of toxic or hazardous substances. This requires the Company to devote substantial resources to maintain compliance with those applicable laws and regulations. If the Company fails to comply with such requirements in the manufacturing or distribution of its products, it could face civil and/or criminal penalties and potentially be prohibited from distributing or selling such products until they are compliant.

Some of the Company’s products are also subject to the rules of certain industrial standards bodies, such as the International Standards Organization. The Company must comply with these rules, as well as those of other agencies, such as the United States Occupational Safety and Health Administration. Failure to comply with such rules could result in the loss of certification and/or the imposition of fines and penalties, which could have a material adverse effect on the Company’s operations.

As a publicly-traded company, the Company is subject to the rules of the SEC and the New York Stock Exchange. In addition, the Company must comply with the Sarbanes-Oxley regulations, which require the Company to establish and maintain adequate internal control over financial reporting. The Company’s efforts to comply with such laws and regulations are time consuming and costly. While we continue to enhance our controls, we cannot be certain that we will be able to prevent future significant deficiencies or material weaknesses. Failure to comply with such regulations or having inadequate internal controls could have a material adverse effect on the Company’s financial condition and operations, which could cause investors to lose confidence in our reported financial information and could have a negative effect on the trading price of our stock and our access to capital.

The Company is subject to the rules of the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act, ~~requiring~~which require disclosure as to whether certain materials (tantalum, tin, gold and tungsten), known as conflict minerals, which may be contained in the Company’s products, are mined from the Democratic Republic of the Congo and adjoining countries. In ~~2019,~~2022, the Company was not able to determine with certainty the country of origin of some of the conflict minerals in its manufactured products. However, the Company does not have knowledge that any of its conflict minerals originated from the Democratic Republic of the Congo or adjoining countries. The Company is in the process of evaluating its ~~2020~~2023 supply chain, and the Company plans to file its ~~2020~~2023 Form SD with the SEC in May ~~2021.~~2024. The results of this and future evaluations may impose additional costs and may introduce new risks related to the Company’s ability to verify the origin of any conflict minerals contained in its products.

The Company may be harmed by improper conduct of any of our employees, agents or business partners.

We cannot provide assurance that our internal controls and compliance systems will always protect the Company from acts committed by employees, agents or business partners that would violate domestic and international laws, including laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, export and import compliance, money laundering and data privacy. In particular, the FCPA, the U.K. Bribery Act and similar anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business, and we operate in many parts of the world that have experienced governmental corruption to some degree. Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the U.S. and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and

non-monetary

penalties and could cause us to incur significant legal and investigatory fees. In addition, the government may seek to hold us liable as a successor for violations committed by companies in which we invest or that we acquire. We also rely on our suppliers to adhere to our supplier standards of conduct and material violations of such standards of conduct could occur that could have a material effect on our business, reputation and financial statements. In addition, any allegations of issues resulting from the misuse of our products could, even if untrue, adversely affect our reputation and our customers’ willingness to purchase products from us. Any such allegations could cause us to lose customers and divert our resources from other tasks, which could materially and adversely affect our business and operating results.

Environmental, social and corporate governance (“ESG”) issues, including those related to climate change and sustainability, may have an adverse effect on our business, financial condition and results of operations and damage our reputation.

There is an increasing focus from certain investors, customers, consumers, employees and other stakeholders concerning ESG matters. Additionally, public interest and legislative pressure related to public companies’ ESG practices continue to grow. If our ESG practices fail to meet regulatory requirements or investor, customer, consumer, employee or other stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship and sustainability, support for local communities, director and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, corporate governance and transparency, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to continue to conduct business with us.

Customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, energy and water use, plastic waste and other sustainability concerns. Concern over climate change or plastics and packaging materials, in particular, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Changing customer and consumer preferences or increased regulatory requirements may result in increased demands or requirements regarding plastics and packaging materials, including single-use and non-recyclable plastic products and packaging, other components of our products and their environmental impact on sustainability, or increased customer and

consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of substances present in certain of our products. Complying with these demands or requirements could cause us and companies in our supply chain to incur additional manufacturing, operating or product development costs.

If we do not adapt to or comply with new regulations, or fail to meet evolving investor, industry or stakeholder expectations and concerns regarding ESG issues, investors may reconsider their capital investment in our Company, and customers and consumers may choose to stop purchasing our products, which could have a material adverse effect on our reputation, business or financial condition.

The Company is subject to or otherwise responsible for a variety of litigation and other legal and regulatory proceedings in the ordinary course of business that can adversely affect our business, results of operations and financial condition.

From time to time, the Company and its subsidiaries are subject to or otherwise responsible for a variety of litigation and other legal and regulatory proceedings in the ordinary course of business, as well as regulatory subpoenas, requests for information, investigations and enforcement. Defending or otherwise responding to these matters can divert the Company’s management’s attention and may cause it to incur significant expenses. The Company believes it has meritorious arguments in its current litigation matters and believes any outcome, either individually or in the aggregate, will not be material to the Company’s financial position or results of operations. However, each of these matters is subject to uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company.

GENERAL RISK FACTORS

The effects of climate change could harm the Company’s business.

The Company’s manufacturing processes for certain of its products involve the use of chemicals and other substances that are regulated under various international, federal, state and local laws governing the environment. In the event that any future climate change legislation would require that stricter standards be imposed by domestic or international environmental regulatory authorities with respect to the use and/or levels of possible

emissions from such chemicals and/or other substances, the Company may be required to make certain changes and adaptations to its manufacturing processes. Any such changes could have a material adverse effect on the financial statements of the Company.

Another potential effect of climate change is an increase in the severity of global weather conditions. The Company’s manufacturing facilities are located in the U.S., U.K., Ireland and Germany. In addition, the Company manufactures a growing percentage of its HPLC, UPLC and MS products in both Singapore and Ireland. Severe weather and geological conditions or events, including earthquakes, hurricanes and/or tsunamis, could potentially cause significant damage to the Company’s manufacturing facilities in each of these countries. The effects of such damage and the resulting disruption of manufacturing operations and the impact of lost sales could have a material adverse impact on the financial results of the Company.

Estimates and assumptions made in accounting for the Company’s results from operations are dependent on future results, which involve significant judgments and may be imprecise and may differ materially from actual results.

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities at the dates of the financial statements. These estimates and assumptions must be made due to certain information used in preparation of our financial statements which is dependent on future events, cannot be calculated with a high degree of precision from data available or is not capable of being readily calculated based on generally accepted methodologies. The Company believes that the accounting related to revenue recognition, ~~bad debts, inventory valuation,~~ goodwill and intangible assets, income taxes, ~~warranty and installation provisions,~~uncertain tax positions, litigation, ~~retirement plan obligations, stock-based compensation,~~ business combinations and asset acquisitions ~~uncertain tax positions~~ and ~~contingencies~~inventory valuation involves

significant judgments and estimates. Actual results for all estimates could differ materially from the estimates and assumptions used, which could have a material adverse effect on our financial condition and results of operations.

The Company’s financial condition and results of operations could be adversely affected by changes to the Company’s retirement plans or retirement plan assets.

The Company sponsors various retirement plans, both inside and outside the ~~U.S.~~United States. Any changes in regulations made by governments in countries in which the Company sponsors retirement plans could adversely impact the Company’s cash flows or results of operations. In connection with these retirement plans, the Company is exposed to market risks associated with changes in the various capital markets. For example, changes in long-term interest rates affect the discount rate that is used to measure the Company’s retirement plan obligations and related expense. In addition, changes in the market value of investments held by the retirement plans could materially impact the funded status of the retirement plans, and affect the related pension expense and level and timing of contributions required under applicable laws.

The Company’s financial condition and results of operations could be adversely affected if the Company is unable to maintain a sufficient level of cash flow.

The Company had ~~$1.4~~$2.4 billion in debt and ~~$443~~$396 million in cash, cash equivalents and investments as of December 31, ~~2020.~~2023. As of December 31, ~~2020,~~2023, the Company also had the ability to borrow an additional ~~$1.4~~$0.9 billion from its existing, committed credit facility. All but a small portion of the Company’s debt was in the U.S. There is a substantial cash requirement in the ~~U.S.~~United States to fund operations and capital expenditures, service debt interest obligations, finance potential ~~U.S.~~United States acquisitions and continue authorized stock repurchase programs. As such, the Company’s financial condition and results of operations could be adversely impacted if the Company is unable to generate and maintain a sufficient level of cash flow to address these requirements through (1) cash from operations, (2) the Company’s ability to access its existing cash and revolving credit facility, (3) the ability to expand the Company’s borrowing capacity and (4) other sources of capital obtained at an acceptable cost.

Debt covenants, and the Company’s failure to comply with them, could negatively impact the Company’s capital and financial results.

The Company’s existing debt is, and future debt may be, subject to restrictive debt covenants that limit the Company’s ability to engage in certain activities that could otherwise benefit the Company. These debt covenants include restrictions on the Company’s ability to enter into certain contracts or agreements, which may limit the Company’s ability to make dividend or other payments, secure other indebtedness, enter into transactions with affiliates and consolidate, merge or transfer all or substantially all of the Company’s assets. The Company is also required to meet specified financial ratios under the terms of the Company’s debt agreements. The Company’s ability to comply with these financial restrictions and all other covenants is dependent on the Company’s future performance, which is subject to, but not limited to, prevailing economic conditions and other factors, including factors that are beyond the Company’s control, such as foreign exchange rates, interest rates, changes in technology and changes in the level of competition. Failure to comply with restrictive debt covenants that are not waived or cured could result in an event of default under the applicable debt instrument, which could permit acceleration of the applicable debt and require the Company to prepay the debt before its scheduled due date.

Item 1B: Unresolved Staff Comments

None.

Item 1C: Cybersecurity

We maintain a robust system of data protection and cybersecurity resources, technology and processes. We regularly evaluate new and emerging risks and ever-changing legal and compliance requirements. We make

strategic investments to address these risks and legal and compliance requirements to keep Company, customer and employee data secure. We monitor risks of sensitive information compromise at our business partners where relevant and reevaluate these risks on a periodic basis. We also perform annual and ongoing cybersecurity training and awareness for our employees.

We have a longstanding information security risk management framework structured according to the National Institute of Standards and Technology Cybersecurity Framework, industry best practices, privacy legislation, and other global and local standards and regulations. This risk management framework is under the specific oversight of the Company’s Vice President and Chief Information Officer (the “CIO”) and includes a defense-in-depth approach with multiple layers of security controls, including network segmentation, security monitoring, endpoint protection, and identity and access management, as well as data protection best practices and data loss prevention controls. Our Audit and Finance Committee is updated on the overall performance of our information security risk management framework on an annual basis by the CIO.

Our cybersecurity awareness program includes regular phishing simulations, annual general cybersecurity awareness, and data protection modules, as well as more contextual and personalized modules for targeted users and roles. We also perform simulations and drills at both a technical and leadership level at least annually. We incorporate external expertise and guidance in all aspects of our cybersecurity program. We complete annual internal security audits and vulnerability assessments of the Company’s information systems and related controls, including systems affecting personal data. In addition, we leverage cybersecurity specialists to complete annual external audits and objective assessments of our cybersecurity program and practices, including our data protection practices, as well as to conduct targeted attack simulations. We continually enhance our information security capabilities in order to protect against emerging threats, while also increasing our ability to detect and respond to cyber incidents and maximize our resilience to recover from potential cyber-attacks. We have a robust incident response plan in place that provides a documented playbook for responding to cybersecurity incidents and facilitates coordination across multiple parts of our Company. Additionally, we have purchased network security and cyber liability insurance in order to provide a level of financial protection, should a data breach occur.

Despite the existence of mitigation measures, the Company’s systems and those of its partners remain potentially vulnerable to cybersecurity threats, any of which could have a material adverse effect on the Company’s business. To date, cybersecurity incidents have not resulted in a material adverse impact to the Company’s business strategy, results of operations and financial condition, but future incidents could have such an impact. See Item 1A, Risk Factors - Risks Related to Cybersecurity.

The Board of Directors oversees the Company’s information security risk management framework that seeks to identify new risks, develop and implement risk mitigation plans, and monitor the results affecting the Company’s business and operations on an ongoing basis. The CIO manages this framework, in collaboration with the Company’s businesses and functions. The CIO presents updates to the Audit and Finance Committee at least annually and, as necessary, to the full Board of Directors. These reports include detailed updates on the Company’s performance preparing for, preventing, detecting, responding to and recovering from cyber incidents. The CIO also promptly informs and updates the Board of Directors about any information security incidents that may pose significant risk to the Company. The Company’s program is periodically evaluated by external experts, and the results of those reviews are reported to the Audit and Finance Committee and the Board of Directors. Together with management, the Audit and Finance Committee reviews the Company’s risk assessment and risk management practices and discusses major cybersecurity risk exposures as well as steps taken by management to monitor and control such exposures.

The Company’s Vice President and Chief Information Officer has over 24 years of business experience managing risks from cybersecurity threats/developing and implementing cybersecurity policies and procedures, as well as several relevant certifications.

~~Item 1B:~~

~~Unresolved~~

~~Staff Comments~~

~~None.~~

Item 2:

Properties

Waters Corporation operates 2021 United States facilities and 71 international facilities, including field offices. The Company believes its facilities are suitable and adequate for its current production level and for reasonable growth over the next several years. The Company’s primary facilities are summarized in the table below.

Primary Facility Locations

(1)


Location	Function ~~(1)~~ (2)	Owned/Leased
Golden, CO	M, R, S, D, A	Leased
New Castle, DE	M, R, S, D, A	Owned
Franklin, MA	D	Leased
Milford, MA	M, R, S, A	Owned
Taunton, MA	M, R	Owned
Cambridge, MA	R, S	Leased
Eden Prairie, MN	M, R, S, D, A	Leased
Nixa, MO	M, S, D, A	Leased
Lindon, UT	M, R, S, D, A	Leased
~~Newcastle, England~~ Santa Barbara, CA	M, R, S, D, A	Leased
Beijing, China	S, A	Leased
Shanghai, China	R, S, A	Leased
Solihull, England	M,A	Owned
Wilmslow, England	M, R, S, D, A	Owned
St. Quentin, France	S, A	Leased
~~Huellhorst,~~ Hüllhorst, Germany	M, R, S, D, A	Owned
~~Budapest, Hungary~~	R	~~Leased~~
Wexford, Ireland	M, R, D, A	Owned
Bangalore, India	M, R, S, D, A	~~Owned~~Owned/Leased
Etten-Leur, Netherlands	S, D, A	Owned
Brasov, Romania	R, A	Leased
Singapore	R, S, D, A	Leased

(1)	The Company operates more than one primary facility within certain states and foreign countries.

(2)	M = Manufacturing; R = Research; S = Sales and Service; D = Distribution; A = Administration

The Company operates and maintains 10 field offices in the United States and 5958 field offices abroad in addition to sales offices in the primary facilities listed above. The Company’s field office locations are listed below.

Field Office Locations ~~(2)~~

(3)


United States	International

Costa Mesa, CA	Australia	~~Hungary~~Hong Kong	~~Norway~~People’s Republic of China
Pleasanton, CA	Austria	India	~~People’s Republic of China~~Portugal
Wood Dale, IL	Belgium	Ireland	~~Portugal~~Poland
Carmel, IN	Brazil	Israel	~~Poland~~Puerto Rico
~~Columbia, MD~~ Woburn, MA	Canada	Italy	Spain
~~Morrisville, NC~~ Columbia, MD	Czech Republic	Japan	Sweden
~~Parsippany, NJ~~ Morrisville, NC	Denmark	Korea	Switzerland
~~Plymouth Meeting, PA~~ Parsippany, NJ	Finland	Malaysia	Taiwan
~~Bellaire, TX~~ Plymouth Meeting, PA	France	Mexico	United Arab Emirates
~~Salt Lake City, UT~~ Bellaire, TX	Germany	Netherlands	United Kingdom
	Hungary	Norway

~~(2)~~(3)

The Company operates more than one field office within certain states and foreign countries.

Item 3:

Legal Proceedings

From time to time, the Company and its subsidiaries are involved in various ~~litigation~~lawsuits, claims, investigations and proceedings covering a wide range of matters ~~arising~~that arise in the ordinary course of business. The Company believes it has meritorious arguments in its current litigation matters and believes any outcome, either individually or in the aggregate, will not be material to the Company’s financial position or results of operations.

However, each of these matters is subject to uncertainties, and it is possible that some of these matters may be resolved unfavorably to the Company.

Item 4:

Mine Safety Disclosures

Not applicable.

~~INFORMATION ABOUT OUR EXECUTIVE OFFICERS~~

~~Officers of the Company are elected annually by the Board of Directors and hold office at the discretion of the Board of Directors. The following persons serve as executive officers of the Company:~~

Dr. Udit Batra, 50, was appointed a Director of the Company as well as President and CEO on September 1, 2020. He most recently served as Chief Executive Officer of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates as MilliporeSigma in the United States and Canada, and as a member of its Executive Board, roles he held from 2014 and 2016, respectively, through July 2020. Prior to that, Dr. Batra served as President and Chief Executive Officer of Merck KGaA, Darmstadt, Germany’s Consumer Health business. Dr. Batra oversaw the company’s Bioethics Advisory Panel and had Board responsibility for the global Information Technology function. Before joining Merck KGaA, Darmstadt, Germany, Dr. Batra held several positions of increasing responsibility at Novartis, including Global Head of Corporate Strategy in Switzerland, Country President for the Pharma Business of Novartis in Australia and New Zealand and the Global Head of Public Health and Market Access in Cambridge, Massachusetts. Dr. Batra also served at the global consultancy McKinsey & Company across the healthcare, consumer and

~~non-profit~~

~~sectors. Dr. Batra started his career at Merck Research Labs in West Point, Pennsylvania as a research engineer.~~

Keeley Aleman, 44, was appointed Senior Vice President, General Counsel and Secretary in October of 2019. Ms. Aleman joined Waters Corporation in 2006 as the Assistant General Counsel and held various legal roles focusing on business transactions, commercial strategies, international development, compliance, corporate governance and organizational matters. Prior to joining Waters Corporation she held corporate associate positions at Goodwin Procter, LLP, and Testa, Hurwitz & Thibeault, LLP.

Robert G. Carson, 47, was appointed Senior Vice President, Corporate Development in February 2018. Prior to joining Waters Corporation, he held several positions during his 16 years at Medtronic plc, including Vice President and General Manager, Pacemaker Business from January 2017 to January 2018. In addition, Mr. Carson spent nearly 12 years in Medtronic’s spinal implants and biologics business, serving as Vice President and General Manager from July 2016 to January 2017, Vice President of Global Marketing & Strategy from April 2015 to July 2016 and Vice President & Therapy Segment Leader from October 2012 to April 2015. Mr. Carson began his career with Banc of America Securities.

Dr. Michael C. Harrington, 60, was appointed Senior Vice President, Global Markets in February 2016. Dr. Harrington joined Waters Corporation in 1987 and has held several senior positions with Waters Corporation, including Vice President, Europe and Asia Pacific Operations, Senior Director of US Sales Operations, Director of US Chemistry Sales and General Manager of Phase Separations. Prior to joining Waters Corporation, Dr. Harrington held senior sales positions at Celsis, Inc.

Belinda Hyde, 50, was appointed Senior Vice President, Global Human Resources of Waters Corporation in January 2021. She is responsible for all aspects of the Global Human Resources function including talent management, total rewards, HR business partners, HR operations and technology, employee engagement and diversity and inclusion. Prior to joining Waters, Belinda served as the Chief Human Resources Officer for SPX FLOW, from July 2015 to December 2020, and Schnitzer Steel. She has also held leadership roles in business and cultural transformation, executive development, talent management, compensation, benefits, training, internal communications and business partner support at companies such as Caltex Petroleum, Dell Technologies, Invitrogen and Celanese Corporation. Belinda earned a Bachelor of Arts in psychology from the University of Texas, as well as both a master’s degree and doctorate in industrial and organizational psychology from the University of Houston.

Ian S. King, 64, was appointed Senior Vice President, Global Products in July 2017. Mr. King joined Waters in 1982 and previously served as Senior Vice President, Instrument Technology; Vice President, Separations Technologies; and Vice President and General Manager of Consumable Division, as well as a variety of scientific and management positions in Waters Corporation’s international subsidiaries. Prior to joining Waters Corporation, Mr. King worked at Edinburgh University as a research scientist.

Jonathan M. Pratt, 51, was appointed Senior Vice President and President, TA Instruments in August 2019. Prior to joining Waters Corporation, Mr. Pratt was President of Beckman Coulter Life Sciences from January 2017 to April 2019. Additionally, he held senior positions at Pall Corporation from 2001 to 2017, where he was Vice President and General Manager from October 2015 to December 2016 following Pall Corporation’s acquisition by Danaher Corporation and, prior to that, President of its Food & Beverage, Laboratory and ForteBio businesses from April 2011 to October 2015. In August 2020, Mr. Pratt was appointed to the Board of SPX FLOW, Inc. (NYSE:FLOW) as an independent director and a member of the Audit, Compensation, and Nominating & Governance Committees.

Michael F. Silveira, 54, was elected by the Board of Directors of the Company to serve as the interim Chief Financial Officer, effective January 1, 2021. Mr. Silveira has been with the Company for 16 years and is a Certified Public Accountant. He joined Waters Corporation in 2004 as Assistant Corporate Controller and was most recently appointed Vice President and Corporate Controller in 2013. Prior to joining the Company, he held several financial management positions with

~~Astro-Med,~~

~~Inc (nka AstroNova), Textron, Inc. and KPMG.~~

Dan Welch, 59, was appointed Senior Vice President, Global Operations in July 2020 and was Vice President of Global Supply Chain since July 2019 and Senior Director, Supply Chain Management since August 2017. Mr. Welch joined Waters Corporation in May 2012 as General Manager and Senior Director of Manufacturing Operations. Prior to joining Waters Corporation, he held senior operations and engineering positions at semiconductor and solar energy companies.

PART II

Item 5:

Market for Registrant’s Common Equity, Related Stockholder

Matters and Issuer Purchases of Equity Securities

The Company’s common stock is registered under the ~~Securities~~ Exchange Act ~~of 1934, as amended (the “Exchange Act”),~~ and is listed on the New York Stock Exchange under the symbol “WAT”. As of February ~~19, 2021,~~23, 2024, the Company had 7869 common stockholders of record. The Company has not declared or paid any dividends on its common stock in its past three fiscal years and does not intend to pay cash dividends in the foreseeable future. Any future determination to pay cash dividends will be made at the discretion of the Board of Directors and will depend on restrictions and other factors the Board of Directors may deem relevant. The Company has not made any sales of unregistered equity securities in the years ended December 31, ~~2020, 2019 or 2018.~~

2023, 2022 and 2021.

Securities Authorized for Issuance under Equity Compensation Plans

Equity compensation plan information is incorporated by reference from Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, of this document and should be considered an integral part of this Item 5.

Stock Price Performance Graph

The following performance graph and related information shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act ~~of 1933, as amended,~~ or the Exchange Act, except to the extent that the Company specifically incorporates it by reference into such filing.

The following graph compares the cumulative total return on $100 invested as of December 31, ~~2015~~2018 (the last day of public trading of the Company’s common stock in fiscal year ~~2015)~~2018) through December 31, ~~2020~~2023 (the last day of public trading of the common stock in fiscal year ~~2020)~~2023) in the Company’s common stock, the NYSE Market Index, the SIC Code 3826 Index and the S&P 500 Index. The return of the indices is calculated assuming reinvestment of dividends during the period presented. The Company has not paid any dividends since its IPO. The stock price performance shown on the graph below is not necessarily indicative of future price performance.

COMPARISON OF CUMULATIVE TOTAL RETURN SINCE DECEMBER 31, ~~2015~~

2018

AMONG WATERS CORPORATION, NYSE MARKET INDEX, SIC CODE 3826 INDEX – LABORATORY ANALYTICAL INSTRUMENTS AND S&P 500 INDEX

LOGO


	2018		2019		2020		2021		2022		2023
WATERS CORPORATION		100.00		123.85		131.15		197.51		181.60		174.52
NYSE MARKET INDEX		100.00		125.51		134.28		162.04		146.89		167.12
SIC CODE INDEX		100.00		124.58		165.82		209.38		140.93		125.60
S&P 500 INDEX		100.00		131.49		155.68		200.37		164.08		207.21

2015

2016

2017

2018

2019

2020

WATERS CORPORATION
   100.00    99.86    143.55    140.18    173.61    183.85
NYSE MARKET INDEX
   100.00    111.94    132.90    121.01    151.87    162.49
SIC CODE INDEX
   100.00    111.96    136.40    130.42    171.49    203.04
S&P 500 INDEX
   100.00    92.16    141.00    148.46    185.11    229.68

Purchases of Equity Securities by the Issuer

The following table provides information about purchases by the Company during the three months ended December 31, ~~2020~~2023 of equity securities registered by the Company under the Exchange Act (in thousands, except per share data):

Period

Total
Number of
Shares
Purchased (1)

Average
Price Paid
per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced
Programs

Maximum Dollar
Value of Shares that
May Yet Be
Purchased Under
the Programs (2)

September 27, 2020 to October 24, 2020
   —      $ —      —      $ 1,524,905
October 25, 2020 to November 21, 2020
   —      $ —      —      $ 1,524,905
November 22, 2020 to December 31, 2020
   —      $ —      —      $ 1,524,905

Total
   —      $ —      —      $ 1,524,905


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Programs (2)
October 1, 2023 to October 28, 2023		—	$	—		—	$	961,207
October 29, 2023 to November 25, 2023		—	$	—		—	$	961,207
November 26, 2023 to December 31, 2023		2	$	317.00		—	$	961,207

Total		2	$	317.00		—	$	961,207

(1)	The Company repurchased ~~less than~~approximately one thousand shares of common stock at a cost of less than $1 million related to the vesting of restricted stock during the three months ended December 31, ~~2020.~~ 2023.

(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. ~~During the second quarter of 2020, the Company temporarily suspended its share repurchases due to the uncertain business conditions caused by the~~

~~COVID-19~~

~~pandemic.~~ In December 2020, the Company’s Board of Directors authorized the extension of the share repurchase program through January 21, 2023.

~~Item 6:~~

~~Selected Financial Data~~

The following table sets forth selected historical consolidated financial and operating data for the periods indicated. The statement of operations and balance sheet data is derived from financial statements for the years 2020, 2019, 2018, 2017 and 2016. The Company’s financial statements as of December 31, 2020 and 2019, and for each of the three years in the period ended December 31, 2020 are included in Part II, Item 8, Financial Statements and Supplementary Data, of this Form

~~10-K.~~

In thousands, except per share
and employees data

2020

2019

2018

2017

2016

STATEMENT OF OPERATIONS DATA:

Net sales
   $ 2,365,365    $ 2,406,596 $ 2,419,929    $ 2,309,078    $ 2,167,423
Income from operations before income taxes
   $ 610,914    $ 678,239 $ 682,146    $ 641,097    $ 600,114
Net income*
   $ 521,571    $ 592,198 $ 593,794    $ 20,311    $ 521,503
Net income per basic common share*
   $ 8.40    $ 8.76 $ 7.71    $ 0.25    $ 6.46
Weighted-average number of basic common shares
   62,094    67,627 76,992    79,793    80,786
Net income per diluted common share*
   $ 8.36    $ 8.69 $ 7.65    $ 0.25    $ 6.41
Weighted-average number of diluted common shares and equivalents
   62,414    68,166 77,618    80,604    81,417
BALANCE SHEET AND OTHER DATA:

Cash, cash equivalents and investments
   $ 443,146    $ 337,144 $ 1,735,224    $ 3,393,701    $ 2,813,032
Working capital, including current maturities of debt**
   $ 596,050    $ 721,157 $ 2,214,232    $ 3,663,977    $ 3,115,124
Total assets**
   $ 2,839,920    $ 2,557,055 $ 3,727,426    $ 5,324,354    $ 4,662,059
Long-term debt
   $ 1,206,515    $ 1,580,797 $ 1,148,172    $ 1,897,501    $ 1,701,966
Stockholders’ equity (deficit)***
   $ 232,144    $ (216,281 ) $ 1,567,258    $ 2,233,788    $ 2,301,949
Employees
   7,412    7,467 7,246    7,020    6,899

~~The provision for income taxes for 2017 includes a $550 million estimate for~~ In December 2022, the ~~impact~~Company’s Board of Directors amended and extended this repurchase program’s term by one year such that it shall now expire on January 21, 2024 and increased the total authorization to $4.8 billion, an increase of $750 million. In December 2023, the Company’s Board of Directors authorized the extension of the ~~enactment~~share repurchase program through January 21, 2025. The Company’s remaining authorization is $1.0 billion. The size and timing of ~~the 2017 Tax Act, which was signed into law~~these purchases, if any, will depend 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,~~our stock price and market and business conditions, 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%.

other factors.

The Company adopted new accounting guidance related to stock-based compensation in 2017. The new accounting guidance requires the excess tax benefits or deficiencies related to stock-based compensation to be reflected in the consolidated statements

Item 6: Reserved

Item 7: Management’s Discussion and Analysis of ~~operations as a component~~Financial Condition and Results of the provision for income taxes, whereas they were previously recognized in equity. This aspect of the new accounting guidance was required to be adopted on a prospective basis for the statement of operations and retroactive restatement was not permitted. In 2020, 2019 and 2018, the Company recognized an excess tax benefit, which decreased income tax expense by $7 million, $9 million and $9 million, respectively, and added $0.11, $0.14 and $0.11, respectively, to net income per diluted share.

~~In addition, in December 2018, the Company settled a pension plan obligation by making~~

~~lump-sum~~

cash payments and purchasing annuity contracts for participants to permanently extinguish the pension plan’s obligations. As a result, the Company recorded a $46 million charge, which consisted of a $6 million cash contribution to the plan and a $40 million

~~non-cash~~

~~charge related to the reversal of unrecognized actuarial losses recorded in accumulated other comprehensive income in the stockholders’ equity. The $46 million~~

~~pre-tax~~

~~charge reduced net income per diluted share by $0.39.~~

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 stockholders’ equity (deficit).~~

~~***~~

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~~

Operations

Business ~~and Financial~~ Overview

The Company has two operating segments: Waters

and TA

.TA. Waters products and services primarily consist of ~~high performance~~high-performance liquid chromatography (“HPLC”), ~~ultra performance~~ultra-performance liquid chromatography (“~~UPLC~~

”UPLC” and, together with HPLC, referred to as “LC”), mass spectrometry (“MS”) and precision chemistry consumable products and related services. TA products and services primarily consist of thermal analysis, rheometry and calorimetry instrument systems and service sales. The Company’s products are used by pharmaceutical, biochemical, industrial, nutritional safety, environmental, academic and ~~governmental~~government customers. These customers use the Company’s products to detect, identify, monitor and measure the chemical, physical and biological composition of materials and to predict the suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals and viscous liquids in various industrial, consumer goods and healthcare products.

~~Both~~ Operations of the ~~Company’s domestic~~recently acquired Wyatt business are part of the Waters operating segment.

Wyatt Acquisition

On May 16, 2023, the Company completed the acquisition of Wyatt Technology, LLC and ~~international operations have been~~its three operating subsidiaries, Wyatt Technology Europe GmbH, Wyatt Technology France and ~~continue~~Wyatt Technology UK Ltd. (collectively, “Wyatt”), for a total purchase price of $1.3 billion in cash. Wyatt is a pioneer in innovative light scattering and field-flow fractionation instruments, software, accessories, and services. The acquisition will expand Waters portfolio and increase exposure to ~~be adversely affected by the ongoing global pandemic of a novel strain of coronavirus~~

~~(“COVID-19”)~~

~~that has led to volatility and uncertainty in the U.S. and international markets.~~large molecule applications. The Company ~~is actively managing~~financed this transaction with a combination of cash on its ~~business to respond to the~~

~~COVID-19~~

~~impact; however, the Company cannot reasonably estimate the length or severity of the~~

~~COVID-19~~

pandemic or the related response, or the extent to which the disruption may materially impact the Company’s business, consolidated financial position, consolidated results of operations or consolidated cash flows in the future.

~~In 2020, the~~

~~COVID-19~~

~~pandemic did not materially impact the Company’s manufacturing facilities or those of the third parties to whom it outsources certain manufacturing processes, the distribution centers where~~balance sheet and borrowings under its ~~inventory is managed, or the operations of its logistics and other service providers.~~revolving credit facility. The ~~Company also did not see material disruptions or delays in shipments of certain materials or components of its products.~~

At every stage of the pandemic, the Company has taken decisive and appropriate actions, including a mandatory remote work policy for all employees with the exception of those in manufacturing, distribution, and certain laboratory environments, as well as restrictions on

~~non-essential~~

travel and visitors into its facilities. The Company has engaged a medical advisor to guide its policy deployment, and the Company continues to take proactive measures to guard the health of its global employee base, and the safety of all customer interactions. The Company has implemented rigorous protocols to promote a safe work environment in all of its locations around the world and continues to closely monitor and update its multi-phase process that was developed during the year to ensure for the safe return of employees to its physical workplaces as social distancing, governmental requirements and other protocols allow.

The vast majority of the markets the Company serves, most notably the pharmaceutical, biomedical research, food/environmental and clinical markets, have continued to operate at various levels, and the Company is working closely with these customers to facilitate their seamless operation. Over the last several years, the Company has executed on a digital workplace strategy focused on providing modern connectivity and

~~collaboration tools to its employees. The Company’s strategic technology investments have enabled it to swiftly meet remote working needs as the~~

~~COVID-19~~

situation has escalated and evolved. From a customer-facing perspective, the Company is leveraging digital demand generation activities, including virtual demos across all regions in which it operates, remote instrument installations, virtual sales seminars, online product training, and a rapid acceleration in

~~one-on-one~~

~~communications over emails, phone and video conferencing.~~

~~While the Company initially anticipated that the~~

~~COVID-19~~

~~pandemic would have the biggest impact on the~~ Company’s financial results infor the ~~second quarter of 2020, and future quarters would improve as countries lifted their business restrictions,~~year ended December 31, 2023 include the ~~new outbreaks of~~

~~COVID-19~~

~~in the U.S. and elsewhere throughout the world have demonstrated that the~~

~~COVID-19~~

pandemic continues to be fluid with uncertainties and risks remaining across the global economy. The Company took a proactive approach to managing through this unpredictability and implemented a series of cost reduction actions that include salary reductions, furloughs and reductions in

~~non-essential~~

~~spending and other working capital reductions in order to preserve liquidity and enhance~~ financial ~~flexibility. These cost reductions were completed by the end of 2020; however, the Company’s plan will be adjusted accordingly depending on the pace~~results of the ~~recovery and any further lockdowns.~~

Wyatt acquisition from the acquisition date.

Financial Overview

The Company’s operating results are as follows for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (dollars in thousands, except per share data):


	Year Ended December 31,									% change
	2023			2022			2021			2023 vs 2022			2022 vs 2021
Revenues:
Product sales	$	1,903,050		$	1,988,169		$	1,822,070			(4	%)		9	%
Service sales		1,053,366			983,787			963,804			7	%		2	%

Total net sales		2,956,416			2,971,956			2,785,874			(1	%)		7	%
Costs and operating expenses:
Cost of sales		1,195,223			1,248,182			1,156,533			(4	%)		8	%
Selling and administrative expenses		736,014			658,026			626,968			12	%		5	%
Research and development expenses		174,945			176,190			168,358			(1	%)		5	%
Purchased intangibles amortization		32,558			6,366			7,143			411	%		(11	%)
Acquired in-process research and development		—			9,797			—			*	*		*	*
Litigation provision		—			—			5,165			—			*	*

Operating income		817,676			873,395			821,707			(6	%)		6	%
Operating income as a % of sales		27.7	%		29.4	%		29.5	%
Other income, net		807			2,228			17,203			(64	%)		(87	%)
Interest expense, net		(82,240	)		(37,777	)		(32,717	)		118	%		15	%

Income before income taxes		736,243			837,846			806,193			(12	%)		4	%
Provision for income taxes		94,009			130,091			113,350			(28	%)		15	%

Net income	$	642,234		$	707,755		$	692,843			(9	%)		2	%

Net income per diluted common share	$	10.84		$	11.73		$	11.17			(8	%)		5	%

**	Percentage not meaningful

Year Ended December 31,

% change


2020

2019

2018

2020 vs.
2019

2019 vs.
2018

Revenues:

Product sales
   $ 1,497,333 $ 1,567,189 $ 1,604,993

(4
%)

(2
%)
Service sales
   868,032 839,407 814,936

3
%

3
%

Total net sales
   2,365,365 2,406,596 2,419,929

(2
%)

(1
%)
Costs and operating expenses:

Cost of sales
   1,006,689 1,010,700 992,564

—

2
%
Selling and administrative expenses
   553,698 534,791 536,902

4
%

—

Research and development expenses
   140,777 142,955 143,403

(2
%)

—

Purchased intangibles amortization
   10,587 9,693 7,712

9
%

26
%
Asset impairments
   6,945 —   —

*
*

—

Litigation provision (settlement)
   1,180 —   (426 )

*
*

*
*

Operating income
   645,489 708,457 739,774

(9
%)

(4
%)
Operating income as a % of sales


27.3
%

29.4
%

30.6
%

Other expense
   (1,775 ) (3,586 ) (47,794 )

(51
%)

*
*
Interest expense, net
   (32,800 ) (26,632 ) (9,834 )

23
%

*
*

Income before income taxes
   610,914 678,239 682,146

(10
%)

(1
%)
Provision for income taxes
   89,343 86,041 88,352

4
%

(3
%)

Net income
   $ 521,571 $ 592,198 $ 593,794

(12
%)

—


Net income per diluted common share
   $ 8.36 $ 8.69 $ 7.65

(4
%)

14
%

** Percentage not meaningful

The Company’s net sales decreased ~~approximately 2%~~1% in ~~2020~~2023 as compared to ~~2019,~~2022 and ~~decreased 1%~~increased 7% in ~~2019~~2022 as compared to ~~2018.~~2021. The ~~decline in~~Company’s sales in ~~2020 can be attributed~~2023 were negatively impacted by a 22% reduction of sales in China due to ~~the~~ lower customer demand ~~due to interruption~~for our products. The sales growth in ~~business activities caused~~2022 was driven by ~~the uncertainties from the~~

~~COVID-19 pandemic~~

strong customer demand across ~~the world. The negative impact of~~

~~COVID-19~~

~~on our business was more pronounced in the first half of 2020 as~~most major geographies, end markets and product categories. Excluding China, the Company’s sales ~~declined 12% as compared to the prior year. In the second half of 2020, our customers began to resume laboratory~~growth increased 5% and ~~manufacturing operations~~6% in 2023 and ~~it resulted in the Company’s second half sales growing 7% as compared to the prior year.~~

2022, respectively. Foreign currency translation decreased sales growth by 1% and 5% in 2023 and 2022, respectively. The Wyatt acquisition increased sales growth by ~~less than 1% and decreased sales by 2%~~3% in 2020 and 2019, respectively. The Company’s acquisitions of Andrew Alliance (as defined below) and ISS (as defined below) did not have material impacts on sales growth in 2020. Unless otherwise noted, sales growth or decline percentages are presented as compared with the same period in the prior year.

2023.

Instrument system sales decreased 8%7% in 2023 as compared to 2022 and 4%increased 11% in ~~2020 and 2019, respectively.~~2022 as compared to 2021. In ~~2020,~~2023, the decrease in instrument system sales ~~was attributable to the~~resulted from weaker ~~demand for our products by our customers due to interruption of business activities and the uncertainty caused by~~

~~the COVID-19 pandemic. As~~

customer demand ~~started to return to normal levels,~~in China, which was partially offset by sales growth in the U.S. and Europe. Excluding China, the Company’s instrument system sales ~~increased 3% in the second half of 2020 as compared to the prior year period, after having declined 22% in the first half of 2020 compared to the prior year period.~~grew 1%. In ~~2019, the decrease in~~addition, Wyatt’s instrument system sales added 4% to the Company’s instrument system sales growth. In 2022, the increase was ~~primarily~~ driven by ~~weaker~~the broad-based increase in customer demand ~~for our products by our customers due to uncertainty caused by macroeconomic conditions~~across all existing and ~~governmental policy changes.~~newly introduced LC, LC-MS, and Thermal Analysis instrument system sales. Foreign currency translation ~~increased~~decreased instrument system sales growth by 1% and 5% in ~~2020~~2023 and ~~decreased sales by 1% in 2019.~~ 2022, respectively.

Recurring revenues (combined sales of precision chemistry consumables and services) increased 4%6% and 3% in ~~2020~~2023 and 2019, respectively, as a result of a larger installed base of customers and higher billing demand for service sales. In 2020, recurring revenues were also impacted by the interruption of business activities and the uncertainty caused by

~~the COVID-19 pandemic.~~

As our customers began to resume laboratory and manufacturing operations, recurring revenues increased 10% in the second half of 2020 as compared to the prior year period, after having declined 3% in the first half of 2020 compared to the prior year period.2022, respectively. Recurring revenues were ~~positively~~negatively impacted by foreign currency translation in ~~2020,~~2023 and 2022, which ~~increased~~decreased sales by 1%~~; however~~ and 6%, respectively.

Operating income was $818 million in 2023, a decrease of 6% as compared to 2022. This decrease in operating income was primarily due to higher salary expenses related to merit compensation, $26 million in severance-related costs associated with a workforce reduction and costs related to the Wyatt acquisition, including $13 million in due diligence costs, $27 million of intangible asset amortization and $19 million of costs associated with retention agreements. The negative effect of foreign currency translation lowered operating income by approximately $23 million during 2023.

In July 2023, the Company made organizational changes to better align its resources with its growth and innovation strategies, resulting in a worldwide workforce reduction that impacted approximately 5% of the Company’s employees. The Company incurred approximately $26 million of severance-related costs and paid approximately $19 million of severance-related costs in 2023, with the remaining costs to be paid in the first half of 2024. The Company estimates that the savings from this reduction in workforce will be approximately $48 million on an annual basis.

Operating income was $873 million in 2022, an increase of 6% as compared to 2021. This increase was primarily a result of the increase in sales volume and pricing increases, partially offset by higher electronic component and freight inflationary costs and the negative effect of foreign currency translation. The effect of foreign currency translation lowered operating income by approximately $71 million during 2022.

Operating income as a percentage of sales was 27.7%, 29.4% and 29.5% in 2023, 2022 and 2021, respectively.

The Company’s effective tax rates were 12.8%, 15.5% and 14.1% for 2023, 2022 and 2021, respectively. Net income per diluted share was $10.84, $11.73 and $11.17 in 2023, 2022 and 2021, respectively.

The Company generated $603 million, $612 million and $747 million of net cash flows provided by operating activities in 2023, 2022 and 2021, respectively. The decrease in 2023 operating cash flow was primarily a result of lower sales volumes, higher income tax payments and higher incentive compensation payments in 2023 as compared to 2022.

Net cash used in investing activities included $1.3 billion for the Wyatt acquisition in 2023 and capital expenditures related to property, plant, equipment and software capitalization of $161 million, $176 million and

$161 million in 2023, 2022 and 2021, respectively. The cash flows used in investing activities in 2023, 2022 and 2021 included $16 million, $32 million, and $49 million, respectively, of capital expenditures related to the major expansion of the Company’s precision chemistry consumable operations in the United States.

During 2023, the Company funded the Wyatt acquisition with a combination of cash on hand and borrowings under its revolving credit facility. The Company’s outstanding debt on December 31, 2023 was $2.4 billion, a change of $0.8 billion from December 31, 2022, which resulted in the Company’s interest expense in 2023 increasing by $50 million to $99 million.

On March 3, 2023, the Company entered into an agreement to amend the credit agreement governing its revolving credit facility (the “2023 Amendment”). The 2023 Amendment increases the borrowing capacity by $200 million to an aggregate total borrowing capacity of $2.0 billion.

In December 2023, the Company’s Board of Directors authorized the extension of the existing share repurchase program through January 21, 2025. The Company’s remaining authorization is $1.0 billion. During the years ended December 31, 2023, 2022 and 2021, the Company repurchased $58 million, $616 million and $640 million of the Company’s outstanding common stock, respectively, under the share repurchase programs. While the Company believes that it has the financial flexibility to fund these share repurchases, as well as to invest in research, technology and business acquisitions, given current cash levels and debt borrowing capacity, it has temporarily suspended its share repurchases due to its acquisition of Wyatt in the second quarter of 2023.

Results of Operations

Sales by Geography

Geographic sales information is presented below for the years ended December 31, 2023, 2022 and 2021 (dollars in thousands):


	Year Ended December 31,						% change
	2023		2022		2021		2023 vs. 2022			2022 vs. 2021
Net Sales:
Asia:
China	$	440,707	$	565,143	$	521,128		(22	%)		8	%
Japan		167,202		167,220		182,597		—			(8	%)
Asia Other		399,916		399,380		372,040		—			7	%

Total Asia		1,007,825		1,131,743		1,075,765		(11	%)		5	%
Americas:
United States		927,982		886,140		774,014		5	%		14	%
Americas Other		180,591		169,495		151,206		7	%		12	%

Total Americas		1,108,573		1,055,635		925,220		5	%		14	%
Europe		840,018		784,578		784,889		7	%		—

Total net sales	$	2,956,416	$	2,971,956	$	2,785,874		(1	%)		7	%

In 2023, sales decreased 1% as compared to 2022, primarily as a result of a 22% decrease in China sales during 2023, which was partially offset by broad-based sales growth across most other major regions. The decline in China sales was primarily driven by lower demand for our instrument systems and chemistry products resulting from increased government regulations and lower spending by our customers due to weak economic conditions in China. Excluding China, the Company’s sales increased 5% and 6% in 2023 and 2022, respectively. Foreign currency translation decreased sales growth by 1% and 5% in 2023 and 2022, respectively.

In 2023, sales increased 5% in the U.S. and 7% in Europe, while decreasing 11% in Asia, with the effect of foreign currency translation increasing sales growth in Europe by 2% and decreasing sales growth in Asia by 4%,

which includes a 9% decrease in sales in Japan resulting from foreign currency translation. Wyatt’s sales contributed 5% and 3% of sales growth to the U.S. and Europe in 2023, respectively.

The sales growth in 2022 was broad-based across most major regions. Foreign currency translation decreased total sales growth by 5% in 2022 as the U.S. dollar strengthened significantly against all other major currencies. The geographies that were the most negatively impacted ~~sales~~ by 2%the strengthening of the U.S. dollar in ~~2019.~~

~~Geographically, the sales declines in 2020~~2022 were ~~broad-based across the world, except for~~ Europe and ~~were due to~~Japan, as the ~~weaker demand~~weakening of the euro and ~~disruption of business activities caused~~Japanese yen lowered sales growth in Europe and Japan by

~~the COVID-19 lockdowns.~~

~~Sales~~ 10% and 17%, respectively. China sales increased 8% in ~~Asia decreased 4% in 2020 and increased 2% in 2019,~~2022, with foreign currency translation ~~having minimal~~decreasing China sales growth by 2% in 2022. This increase in China sales was driven by strong customer demand for our products and services despite the negative impact that the COVID-19 pandemic had on ~~sales~~our business in ~~2020 and negatively impacting~~China in 2022.

Sales by Trade Class

Net sales by 1%customer class are presented below for the years ended December 31, 2023, 2022 and 2021 (dollars in ~~2019.~~ thousands):


	Year Ended December 31,						% change
	2023		2022		2021		2023 vs. 2022			2022 vs. 2021
Pharmaceutical	$	1,696,875	$	1,751,665	$	1,667,061		(3	%)		5	%
Industrial		909,003		909,805		829,204		—			10	%
Academic and government		350,538		310,486		289,609		13	%		7	%

Total net sales	$	2,956,416	$	2,971,956	$	2,785,874		(1	%)		7	%

In ~~2020, the~~2023, sales ~~decline in Asia was~~to pharmaceutical customers decreased 3%, primarily driven by ~~the 8% decrease~~weakness in ~~sales~~customer demand in China, ~~due to lower demand caused by the~~

~~COVID-19~~

~~pandemic. Excluding sales in China, the Company’s 2020 sales were flat~~ with foreign currency translation ~~positively impacting~~decreasing pharmaceutical sales growth by 1%~~. The decline in~~ and Wyatt contributing 3% to the Company’s pharmaceutical sales in 2019 was a result of increased sales in the U.S., Canada, Japan and the rest of Asia being offset by a decrease in sales in other geographies on weaker demand for our products due to uncertainty caused by macroeconomic conditions, primarily from Brexit as well as Latin America, and governmental policy changes in China.

Sales in Europe increased 5% in 2020 and decreased 4% in 2019, with foreign currency translation positively impacting sales by 3% in 2020 and negatively impacting sales by 4% in 2019. Sales in the Americas decreased 4% and 1% in 2020 and 2019, respectively, with foreign currency translation having minimal impact on sales in 2020 and negatively impacting sales by 1% in 2019.

Sales to pharmaceutical customers increased 2% and were flat in 2020 and 2019, respectively, with foreign currency translation positively impacting sales by 1% in 2020 and negatively impacting sales by 2% in 2019.growth. Combined sales to industrial customers, which include material characterization, food, environmental and fine chemical markets, ~~declined 2%~~were flat in ~~both 2020 and 2019,~~2023, with foreign currency translation ~~positively impacting~~decreasing industrial sales growth by 1% ~~in 2020. The lower volume of~~and Wyatt contributing 1% to industrial sales ~~to both pharmaceutical and industrial customers in 2020 was primarily due to the disruption in business activities caused~~

~~by COVID-19.~~

~~Similarly, TA sales declined 8% and 4% in 2020 and 2019, respectively.~~

growth. Combined sales to academic and ~~governmental~~government customers ~~decreased 16%~~increased 13% in ~~2020 and increased 2% in 2019,~~2023, with foreign currency translation ~~having minimal impact on~~decreasing academic and government sales ~~in 2020 and decreasing sales~~growth by 1% ~~in 2019. The decline in sales~~and Wyatt contributing 4% to academic and governmental customers in 2020 was due to the lower demand for our products and services as the academic and governmental institutions adjusted their spending during the year to mitigate the effects of

~~the COVID-19 pandemic.~~

~~The most significant decline in academic and governmental~~government sales ~~in 2020 occurred in China where sales declined 31% due to government-mandated spending reductions.~~

growth. Sales to our academic and ~~governmental~~government customers are highly dependent on when institutions receive funding to purchase our instrument systems and, as such, sales can vary significantly from period to period.

~~Operating income was $645 million~~

In 2022, sales to pharmaceutical customers increased 5%, driven by strong growth in ~~2020, a decrease of 9% as compared to 2019. This decrease can be attributed to the decline in sales volumes caused by~~

~~the COVID-19 pandemic,~~

unfavorable manufacturing absorption and unfavorable foreign currency translation. The operating income decline was somewhat mitigated by a series of cost reduction actions that included salary reductions, furloughs and reductions

~~in non-essential spending~~

that increased operating income by approximately $103 million in 2020 versus our operating plan. Operating income in 2020 also included $27 million of severance-related costs in connection with a reduction in workforce and lease termination and exit costs.

Operating income decreased 4% in 2019 as compared to 2018. This decrease can be attributed to lower sales volume, the effect of foreign currency translation and $10 million of severance-related costs in connection with a reduction in workforce that occurred in early 2019,most major regions, partially offset by ~~lower variable incentive compensation costs.~~

The Company’s effective tax rates were 14.6%, 12.7% and 13.0% for 2020, 2019 and 2018, respectively. Net income per diluted share was $8.36, $8.69 and $7.65 in 2020, 2019 and 2018, respectively. In 2018, the ~~Company settled a pension plan obligation and incurred a $46 million expense which reduced the net income per diluted share by $0.39.~~

~~The Company generated $791 million, $643 million and $604 million of net cash flows~~negative impact from operations in 2020, 2019 and 2018, respectively. The increase in operating cash flow in 2020 was primarily a result of the $103 million reduction in expense from the cost actions implemented and working capital improvements during the year. The increase in operating cash flow in 2019 was primarily a result of payments made in 2018 that did not recur, including $103 million of income tax payments made in the U.S. relating to the Company’s estimated 2017 transition tax liability and 2018 estimated tax payments, a $15 million litigation settlement payment and $11 million of contributions to certain defined benefit pension plans. Included in the 2020 and 2019 net cash flow from operations is $38 million and $29 million, respectively, of income tax payments made in the U.S. in relation to the 2017 transition tax liability. Over the next two years, the Company is required to make annual U.S. federal tax payments of approximately $38 million to tax authorities in connection with the Company’s estimated remaining transition tax liabilities of $365 million under the 2017 Tax Act. The final 60% of the total liability is required to be paid over a three-year period beginning in 2023.

Cash flows used in investing activities included capital expenditures related to property, plant, equipment and software capitalization of $172 million, $164 million and $96 million in 2020, 2019 and 2018, respectively. In January of 2020, the Company acquired all of the outstanding stock of Andrew Alliance, S.A. and its two operating subsidiaries, Andrew Alliance USA, Inc. and Andrew Alliance France, SASU (collectively “Andrew Alliance”), for $80 million, net of cash acquired. The Company had an equity investment in Andrew Alliance that was valued at $4 million and included as part of the total consideration. In December 2020, the Company acquired all of the outstanding stock of Integrated Software Solutions Pty Limited and its two operating subsidiaries, Integrated Software Solutions Limited and Integrated Software Solutions USA, LLC (collectively, “ISS”), for $4 million, net of cash acquired. Neither of these acquisitions had a material effect on the Company’s sales and expenses in 2020.

The cash flows from investing activities in 2020 also included $70 million of capital expenditures related to the expansion of the Company’s precision chemistry consumable operations in the U.S. The Company has incurred $151 million on this facility through the end of 2020 and anticipates spending a total of $215 million to build and equip this

~~new state-of-the-art~~

~~manufacturing facility.~~

~~In January 2019, the Company’s Board of Directors authorized the Company to repurchase up to $4 billion of its outstanding common stock over a~~

~~two-year~~

~~period. During 2020, 2019 and 2018, the Company repurchased~~

0.8 million, 11.1 million and 6.8 million shares of the Company’s outstanding common stock at a cost of $167 million, $2.5 billion and $1.3 billion, respectively, under authorized share repurchase programs. As of December 31, 2020, the Company has a total of $1.5 billion authorized for future repurchases. In December 2020, the Company’s Board of Directors authorized the extension of the share repurchase program through January 21, 2023. While the Company believes that it has the financial flexibility to fund these share repurchases given current cash and investment levels and debt borrowing capacity, as well as to invest in research, technology and business acquisitions to further grow the Company’s sales and profits, the Company has temporarily suspended its share repurchases due to the uncertain business conditions caused by

~~the COVID-19 pandemic.~~

~~Results of Operations~~

~~Sales by Geography~~

~~Geographic sales information is presented below for the years ended December 31, 2020, 2019 and 2018 (dollars in thousands):~~

Year Ended December 31,

% change


2020

2019

2018

2020 vs.
2019

2019 vs.
2018

Net Sales:

Asia:

China
   $ 404,352    $ 439,557    $ 443,321

(8
%)

(1
%)
Japan
   179,815    180,707    173,357

—

4
%
Asia Other
   315,010    318,848    305,613

(1
%)

4
%








Total Asia
   899,177    939,112    922,291

(4
%)

2
%
Americas:

United States
   678,313    692,277    683,596

(2
%)

1
%
Americas Other
   119,529    137,964    151,581

(13
%)

(9
%)








Total Americas
   797,842    830,241    835,177

(4
%)

(1
%)
Europe
   668,346    637,243    662,461

5
%

(4
%)








Total net sales
   $ 2,365,365    $ 2,406,596    $ 2,419,929

(2
%)

(1
%)

~~In 2020, sales decreased 2% as compared to 2019, as the~~

~~COVID-19 pandemic~~

caused interruptions in business activities and uncertainties that resulted in our customers reducing purchases of our products and services. Foreign currency translation had minimal impact on sales in 2020 and negatively impacted sales by 2% in 2019. The sales declines in 2020 occurred in all geographies and were a result of the weaker demand and disruption of business activities caused by

~~the COVID-19 lockdowns,~~

except in Europe where sales increased 5% as compared to the prior year. The most significant decline in sales in 2020 occurred in China, where sales declined 8%, as well as declines of 2% in the U.S. and 13% in the Americas Other region.

In 2019, sales in China were negatively impacted by economic uncertainty caused by certain regulatory changes in our food and pharmaceutical markets. The 4% increase in sales in Japan was driven by instrument systems, primarily to pharmaceutical and academic and governmental customers, as well as foreign currency translation, which increased Japan’s sales by 1% in 2019. Sales growth in Asia Other was due primarily to pharmaceutical and academic and governmental customer classes in 2019. Sales in the U.S. increased by 1% despite large pharmaceutical customers slowing capital spending on our instrument systems. Sales declines in Americas Other and Europe were broad-based across all product and customer classes due to macroeconomic conditions and political instability, except in Europe where sales to academic and governmental customers grew 8%. Sales in Europe were also negatively impacted by the effect of foreign currency translation which decreased ~~sales 4% in 2019.~~

~~Sales by Trade Class~~

~~Net~~pharmaceutical sales by ~~customer class are presented below for the years ended December 31, 2020, 2019 and 2018 (dollars in thousands):~~

Year Ended December 31,

% change


2020

2019

2018

2020 vs.
2019

2019 vs.
2018

Pharmaceutical
   $ 1,386,966    $ 1,365,275    $ 1,365,731

2
%

—

Industrial
   707,772    719,377    737,144

(2
%)

(2
%)
Academic and governmental
   270,627    321,944    317,054

(16
%)

2
%








Total net sales
   $ 2,365,365    $ 2,406,596    $ 2,419,929

(2
%)

(1
%)

~~In 2020,~~5%. Combined sales to ~~pharmaceutical~~industrial customers increased 2%10%, with foreign currency translation ~~positively impacting~~decreasing sales growth by 1%5%. ~~The lower sales volumes to pharmaceutical customers in the first half of 2020 can be attributed to the disruption in business activities caused~~

~~by COVID-19, despite~~

~~increased demand for our products and services from certain pharmaceutical customers who are~~

~~involved with COVID-19 diagnostic testing~~

and the development of new drugs and therapies. Sales to industrial customers in 2020 declined 2%, which were significantly impacted by the TA sales declines of 8% in 2020. The sales declines to academic and governmental customers were broad-based across all product classes as academic and governmental customers adjusted their spending to mitigate the effects of

~~the COVID-19 pandemic,~~

~~which significantly impacted sales in China.~~

In 2019, sales to pharmaceutical customers were negatively impacted by the effect of foreign currency translation, which decreased sales to pharmaceutical customers by 2%, as well as a slower release of capital budgets by our customers due to uncertain macroeconomic conditions due to Brexit and regulatory changes in our food and pharmaceutical markets in China. Offsetting those declines was an increase in the need for global access to prescription drugs and the testing of newer and complex biologic drugs. The decline in sales to industrial customers in 2019 was due to weaker demand for our

~~LC-MS~~

~~instruments and also a 4% decline in TA sales. The increase in~~Combined sales to academic and ~~governmental~~government customers ~~was primarily due to higher instrument system sales.~~increased 7%, with foreign currency translation decreasing academic and government sales growth by 6%.

Waters Products and Services Net Sales

Net sales for Waters products and services were as follows for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (dollars in thousands):

Year Ended December 31,

% change


2020

% of
Total

2019

% of
Total

2018

% of
Total

2020 vs.
2019

2019 vs.
2018

Waters instrument systems
   $ 890,855

42
%
$ 963,871

45
%
$ 1,000,625

47
%

(8
%)

(4
%)
Chemistry consumables
   432,080

20
%
412,018

19
%
400,287

18
%

5
%

3
%








Total Waters product sales
   1,322,935

62
%
1,375,889

64
%
1,400,912

65
%

(4
%)

(2
%)
Waters service
   794,189

38
%
761,594

36
%
738,433

35
%

4
%

3
%








Total Waters net sales
   $ 2,117,124

100
%
$ 2,137,483

100
%
$ 2,139,345

100
%

(1
%)

—


	Year Ended December 31,															% change
	2023		% of Total			2022		% of Total			2021		% of Total			2023 vs. 2022			2022 vs. 2021
Waters instrument systems	$	1,108,702		43	%	$	1,210,456		46	%	$	1,089,248		44	%		(8	%)		11	%
Chemistry consumables		541,469		20	%		525,399		20	%		507,209		21	%		3	%		4	%

Total Waters product sales		1,650,171		63	%		1,735,855		66	%		1,596,457		65	%		(5	%)		9	%
Waters service		951,419		37	%		890,607		34	%		876,626		35	%		7	%		2	%

Total Waters net sales	$	2,601,590		100	%	$	2,626,462		100	%	$	2,473,083		100	%		(1	%)		6	%

Waters products and service sales decreased 1% and 6% in ~~2020~~2023 and ~~were flat~~2022, respectively, with the effect of foreign currency translation decreasing Waters sales growth by 1% and 6% in ~~2019.~~2023 and 2022, respectively. The Wyatt acquisition increased Waters products and service sales by approximately 3% in 2023. Waters instrument system sales (LC and MS technology-based) decreased 8% in ~~2020~~2023, primarily ~~attributed~~driven by weaker customer demand in China. Excluding China, the Company’s instrument system sales were flat as compared to 2022. In addition, Wyatt’s instrument system sales contributed 5% to Waters instrument system sales growth in 2023. Waters chemistry consumables sales were significantly impacted by the ~~weaker~~lower customer demand in China for our ~~products and services by our customers~~products. Excluding China, the Company’s chemistry sales grew 7% in 2023. This sales growth was primarily due to the ~~disruption and uncertainty caused~~

continued strong demand in most major geographies, driven by the ~~COVID-19 pandemic.~~

~~Precision~~uptake in columns and application-specific testing kits to pharmaceutical customers, partially offset by the negative impact from foreign currency translation, which decreased chemistry ~~consumables~~ sales ~~increased 5% and 3%~~growth by 1% in ~~2020 and 2019, respectively, despite the disruption in business activities caused~~

~~by COVID-19~~

~~in 2020.~~2023. Waters service sales increased ~~4% and 3%~~7% in ~~2020 and 2019, respectively, primarily~~2023 due to ~~increased sales of service plans and~~ higher service demand ~~billings~~

~~to a higher installed base of customers respectively, with sales in 2020 being~~billing, partially offset by the ~~weaker demand and disruption of business activities caused by~~

~~the COVID-19 lockdowns.~~

~~The effect of~~negative impact from foreign currency translation, ~~increased Waters~~which decreased service sales growth by 1% in ~~2020~~2023. Wyatt service revenues added 2% to Waters service revenue growth in 2023.

In 2022, Waters products and ~~decreased~~service sales ~~by 2% in 2019.~~

~~In 2020, Waters sales in Europe and Japan~~ increased 6% ~~and 2%~~, ~~respectively,~~ with foreign currency translation ~~adding 3% to~~decreasing Waters sales growth ~~in Europe.~~by 6%. Waters instrument system sales ~~in India increased less than 1%~~grew 11%, ~~while all other geographies’~~with foreign currency translation lowering sales ~~declined with the most significant sales decline occurring in China, which was down 9%~~growth by 5%. ~~In 2019, Waters sales increased 2% in Asia, were flat~~The increase in the ~~Americas and decreased 3%~~Waters instrument system sales can be attributed to strong customer demand for our existing products as well as growing contributions made by recent product introductions. The increase in ~~Europe, where~~Waters chemistry consumables sales was primarily due to the ~~effect of~~strong demand in most major geographies, partially offset by the negative impact from foreign currency translation which decreased sales by 4%5%. ~~Within Asia,~~ Waters service sales ~~decreased 1%~~increased due to higher service demand billing, particularly in China and ~~increased 4% in Japan and 9% in~~ the ~~rest of Asia, excluding India.~~

United States, partially offset by the negative impact from foreign currency translation which decreased by 6%.

TA Product and Services Net Sales

Net sales for TA products and services were as follows for the years ended December 31, ~~2020~~2023, 2022 and ~~December 31, 2019~~2021 (dollars in thousands):

Year Ended December 31,

% change


2020

% of
Total

2019

% of
Total

2018

% of
Total

2020 vs.
2019

2019 vs.
2018

TA instrument systems
   $ 174,398

70
%
$ 191,300

71
%
$ 204,081

73
%

(9
%)

(6
%)
TA service
   73,843

30
%
77,813

29
%
76,503

27
%

(5
%)

2
%








Total TA net sales
   $ 248,241

100
%
$ 269,113

100
%
$ 280,584

100
%

(8
%)

(4
%)


	Year Ended December 31,															% change
	2023		% of Total			2022		% of Total			2021		% of Total			2023 vs. 2022			2022 vs. 2021
TA instrument systems	$	252,879		71	%	$	252,314		73	%	$	225,613		72	%		—			12	%
TA service		101,947		29	%		93,180		27	%		87,178		28	%		9	%		7	%

Total TA net sales		354,826		100	%		345,494		100	%		312,791		100	%		3	%		10	%

TA ~~product~~instrument system and service sales ~~declines~~increased 3% and 10% in ~~2020 were primarily due to lower customer demand resulting from the~~

~~COVID-19 pandemic.~~

~~TA’s instrument system sales declined in 2019 primarily due to lower customer demand resulting from macroeconomic conditions, tariff posturing~~2023 and ~~political instability. TA service sales increased in 2019 due to sales of service plans and billings to a higher installed base of customers. The effect of foreign~~2022, respectively. Foreign currency translation had a minimal impact on ~~TA’s~~ sales growth in ~~both 2020~~2023 and ~~2019.~~decreased sales growth by 6% in 2022. In

2023, sales ~~declined~~growth was broad-based across most major geographies, partially offset by weakness in ~~all major regions in 2020. In 2019, TA~~China and the rest of Asia. These increases were primarily driven by strong customer demand for our thermal analysis instruments and services.

Cost of Sales

Cost of sales decreased 4% in ~~the Americas, 12% in Europe and increased 1% in Asia.~~

~~Cost of Sales~~

~~Cost of sales were flat in 2020~~2023 as compared to ~~2019,~~2022, primarily due to ~~lower sales volume,~~the change in sales mix ~~unfavorable manufacturing absorption~~ and the ~~effect of foreign currency translation increasing~~lower material and freight costs. In 2022, cost of sales ~~by 1%~~increased 8% as compared to 2021, primarily due to the increase in ~~2020, primarily from~~sales volumes during the ~~favorable foreign currency translation effect the British Pound had on the Company’s U.K. manufacturing operations.~~

year as well as an increase in electronic component and freight inflationary costs.

Cost of sales is affected by many factors, including, but not limited to, foreign currency translation, product mix, product costs of instrument systems and amortization of software platforms. At current foreign currency exchange rates, the Company expects foreign currency translation to ~~slightly increase sales and~~be neutral to gross profit during ~~2021.~~

2024.

Selling and Administrative Expenses

Selling and administrative expenses increased 4%12% and 5% in ~~2020~~2023 and ~~were flat in 2019.~~2022, respectively. The increase in ~~selling and administrative expenses in 2020 can be attributed to the salary merit and incentive compensation increases along with the~~2023 is primarily driven by severance-related costs in connection with a reduction in workforce, which increased expenses by 4%; the Wyatt acquisition due diligence and ~~lease-termination~~integration costs, which increased expenses by 2%; and ~~exit~~the Wyatt acquisition-related retention expense, which increased expenses by 3%. These increases were partially offset by lower incentive compensation costs. ~~Severance and lease termination and exit costs were $27 million and $10 million in 2020 and 2019, respectively. Offsetting these increases~~The increase in selling and administrative expenses ~~were $70 million~~in 2022 as compared to 2021 can be attributed to higher salary merit and variable incentive compensation costs due to an increase in the number of ~~savings in 2020, which~~

~~includes COVID-19 and~~

~~restructuring cost saving actions that reduced planned salaries~~

~~and non-essential spending.~~

employees. The effect of foreign currency translation had minimal impact on selling and administrative expenses in ~~2020~~2023 and decreased ~~selling and administrative~~ expenses by 1%4% in ~~2019.~~

2022.

As a percentage of net sales, selling and administrative expenses were ~~23.4%~~24.9%, ~~22.2%~~22.1% and ~~22.2%~~22.5% for ~~2020, 2019~~2023, 2022, and ~~2018,~~2021, respectively.

Research and Development Expenses

Research and development expenses decreased 2%1% and increased 5% in ~~2020~~2023 and ~~were flat~~2022, respectively. The decrease in ~~2019. Research~~research and development expenses in ~~2020 include $15 million of cost action savings~~2023 can be attributed to increases from ~~salary reductions, furloughs and reductions~~

~~in non-essential spending.~~

~~Research and development expenses in both 2020 and 2019 were impacted by additional headcount,~~ merit compensation and costs associated with new products and the development of new technology ~~initiatives. Foreign~~initiatives, being offset by lower incentive compensation costs. The impact of foreign currency ~~translation had minimal impact on research~~exchange decreased expenses by 1% and ~~development costs~~3% in ~~2020~~2023 and ~~decreased research and development costs by 2% in 2019.~~

~~Asset Impairments~~

~~During 2020, due to a shift in strategic priorities, the Company recorded a~~

~~non-cash~~

charge of $10 million for the impairment of certain intangible assets associated with the acquisition of Medimass Research Development and Service Kft (“Medimass”). In conjunction with the intangible asset impairment, the Company also reduced its liability for contingent consideration of $3 million during 2020 as the carrying value of this liability is based on the future sales of the Medimass intangible assets that were impaired. See Note 2, Basis of Presentation and Summary of Significant Accounting Policies, under the heading “Asset Impairments” in the Notes to Consolidated Financial Statements for a description of the impairment charge.

~~Interest Expense, Net~~

2022, respectively.

Purchased Intangibles Amortization

The increase in ~~net interest expense~~purchased intangible amortization of $26 million in ~~2020~~2023 can be attributed to ~~lower~~the Wyatt acquisition intangible assets.

Acquired In-Process Research & Development

In 2022, the Company completed an asset acquisition in which the CDMS technology assets of Megadalton were acquired for approximately $10 million in total purchase price, of which $5 million was paid at closing and the remaining $4 million will be paid in the future at various dates through 2029.

Other (Expense) Income, net

In 2022, the Company sold equity an equity investment for $10 million in cash and recorded a gain on the sale of approximately $7 million in other income, net on the statement of operations. The Company also incurred $6 million in losses on an equity investment ~~balances~~within other income, net on the statement of operations.

In 2021, the Company executed a settlement agreement to resolve patent infringement litigation with Bruker Corporation and Bruker Daltronik GmbH regarding their timsTOF product line. In connection with the

settlement, the Company is entitled to receive $10 million in ~~2020~~guaranteed payments, including minimum royalty payments. In 2021, the Company recorded an unrealized gain of $10 million due to an observable change in the fair value of an existing investment that the Company does not have the ability to exercise significant influence over.

Interest Expense, net

Net interest expense in 2023 increased $44 million as compared to ~~2019.~~

2022 due to the additional borrowings by the Company to fund the Wyatt acquisition in 2023. Net interest expense in 2022 increased $5 million as compared to 2021 due to the lower interest income benefit from the lower notional amount of interest rate cross currency swap agreements.

Provision for Income Taxes

~~The Company’s effective tax rates were 14.6%, 12.7% and 13.0% in 2020, 2019 and 2018, respectively.~~

~~The Company’s effective income tax rate differs from the U.S. federal statutory rate each year due to differences in the proportionate amounts of~~

~~pre-tax~~

~~income recognized in jurisdictions with different effective tax rates and the items discussed below.~~

The four principal jurisdictions in which the Company manufactures are the U.S., Ireland, the U.K. and Singapore, where the statutory tax rates were 21%, 12.5%, ~~19%~~25% and 17%, respectively, as of December 31, ~~2020.~~2023. The Company has received a tax exemption on income arising from qualifying activities in Singapore through March 2021, based upon the achievement of certain contractual milestones, which the Company met as of December 31, 2020 and expects to maintain through March 2021. The effect of applying the 0% concessionary income tax rate rather than the statutory tax rate to income arising from qualifying activities in Singapore increased the Company’s net income during the years ended December 31, 2020, 2019 and 2018 by $21 million, $24 million and $28 million, respectively, and increased the Company’s net income per diluted share by $0.33, $0.35 and $0.36, respectively. In addition, the Company has a new Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5% on certain types of income for the period of April 1, 2021 through March 31, 2026.

~~During~~ Prior to April 1, 2021, the Company had a tax exemption on income arising from qualifying activities in Singapore based upon the achievement of certain contractual milestones, which the Company met as of December 31, 2020 and maintained through March 2021. The effect of applying the concessionary income tax rates rather than the statutory tax rate to income arising from qualifying activities in Singapore increased the Company’s net income by $16 million, $20 million and $20 million, and increased the Company’s net income per diluted share by $0.27, $0.33 and $0.32 for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company’s effective tax rate for the years ended December 31, 2023, 2022 and 2021 was 12.8%, 15.5% and 14.1%, respectively.

The 2023 effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, an $18 million recognition of a ~~$13~~previously unrecognized tax benefit as a result of the completion of a tax examination, a $15 million provision related to the Global Intangible

Low-Taxed

Income (“GILTI”) tax and a tax benefit of $7$3 million on stock-based compensation.

The ~~2019~~2022 effective tax rate differed from the 21% U.S. ~~federal~~ statutory tax rate primarily due to the jurisdictional mix of earnings, an ~~$11~~$18 million provision related to the GILTI tax and a tax benefit of $9$7 million on stock-based compensation.

The ~~2018~~2021 effective tax rate differed from the U.S. federal statutory tax rate primarily due to the jurisdictional mix of earnings, a ~~$14~~$10 million provision related to the GILTI tax ~~an $8~~and a tax benefit of $7 million ~~provision~~on stock-based compensation.

Effective starting in 2024, various foreign jurisdictions are beginning to implement aspects of the guidance issued by the Organization for ~~a change in foreign currency exchange rates~~Economic Co-operation and Development related to the ~~transition~~new Pillar Two system of global minimum tax ~~a $9 million benefit related to stock-based compensation and a $6 million net benefit related to the finalization of the impact of the Tax Cuts and Jobs Act (the “2017 Act”).~~

At the end of 2018, and as a result of the enactment of the 2017 Act, we reevaluated our historic assertion and no longer considered undistributed earnings from foreign subsidiaries to be indefinitely reinvested.rules. The Company recorded a tax provision of $3 million, $3 million and $4 million for 2020, 2019 and 2018, respectively, for future withholding taxes and U.S. state taxes on the repatriation of 2020, 2019 and 2018 undistributed earnings.

~~The Company’s effective tax rate is influenced by many significant factors, including, but~~does not ~~limited to, the wide range of income tax rates in jurisdictions in which the Company operates; sales volumes and profit levels in each tax jurisdiction;~~believe these changes in tax ~~laws, tax rates and policies; the outcome of various ongoing tax audit examinations; and the~~law will have a material impact ~~of foreign currency transactions and translation. As a result of variability in these factors,~~on the Company’s ~~effective tax rates~~financial position, results of operations and cash flows in 2024. The Company continues to monitor the ~~future may not be similar to~~adoption of the ~~effective tax rates for the current or prior years, or for previously forecasted periods.~~Pillar Two rules in additional jurisdictions.

Liquidity and Capital Resources

Condensed Consolidated Statements of Cash Flows (in thousands):

Year Ended December 31,


2020

2019

2018

Net income
   $ 521,571 $ 592,198 $ 593,794
Depreciation and amortization
   125,361 105,296 108,408
Asset impairments
   6,945 —   —
Stock-based compensation
   36,865 38,577 37,541
Deferred income taxes
   (2,693 ) 9,620 2,405
Change in accounts receivable
   37,467 (22,195 ) (47,921 )
Change in inventories
   18,940 (31,854 ) (25,396 )
Change in accounts payable and other current liabilities
   140,598 9,784 (81,663 )
Change in deferred revenue and customer advances
   11,073 12,189 2,721
Effect of the 2017 Tax Cuts and Jobs Act
   —   (3,229 ) (6,059 )
Other changes
   (105,620 ) (67,299 ) 20,616


Net cash provided by operating activities
   790,507 643,087 604,446
Net cash (used in) provided by investing activities
   (264,094 ) 768,802 1,683,302
Net cash used in financing activities
   (440,502 ) (1,872,678 ) (2,119,522 )
Effect of exchange rate changes on cash and cash equivalents
   15,069 224 (14,265 )


Increase (decrease) in cash and cash equivalents
   $ 100,980 $ (460,565 ) $ 153,961


	Year Ended December 31,
	2023			2022			2021
Net income	$	642,234		$	707,755		$	692,843
Depreciation and amortization		165,905			130,423			131,680
Stock-based compensation		36,868			42,564			29,918
Deferred income taxes		(1,197	)		(31,988	)		16,633
Observable unrealized gain on investment		—			—			(9,707	)
Acquired in-process research and development and other non-cash items		—			10,003			—
Change in accounts receivable		49,179			(137,874	)		(62,448	)
Change in inventories		(45,443	)		(101,902	)		(67,250	)
Change in accounts payable and other current liabilities		(79,524	)		60,984			46,110
Change in deferred revenue and customer advances		10,433			12,862			37,845
Other changes		(175,646	)		(81,166	)		(68,350	)

Net cash provided by operating activities		602,809			611,661			747,274
Net cash used in investing activities		(1,442,265	)		(107,967	)		(231,630	)
Net cash used in financing activities		754,951			(509,633	)		(438,275	)
Effect of exchange rate changes on cash and cash equivalents		(948	)		(14,766	)		(12,830	)

(Decrease) increase in cash and cash equivalents	$	(85,453	)	$	(20,705	)	$	64,539

Cash Flow ~~Provided By~~from Operating Activities

Net cash provided by operating activities was ~~$791~~$603 million, ~~$643~~$612 million and ~~$604~~$747 million in ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively. The decrease in 2023 operating cash flow was primarily a result of lower net income, higher inventory levels, higher income tax payments and higher incentive compensation payments in 2023 as compared to 2022. The changes within net cash provided by operating activities include the following significant changes in the sources and uses of net cash provided by operating activities, ~~aside from~~in addition to the changes in net income:

The changes in accounts receivable were primarily attributable to timing of payments made by customers and timing of sales. Days sales outstanding was 7078 days at December 31, ~~2020,~~2023, 77 days at December 31, ~~2019~~2022 and 7466 days at December 31, ~~2018.~~2021.

The ~~change~~increase in inventory ~~in 2020 compared~~can primarily be attributed to ~~2019 is a result of the Company’s efforts to reduce its inventory levels during the~~

~~COVID-19~~

~~pandemic to preserve its liquidity. The changes in inventory in 2019 and 2018 were primarily attributable to new product launches and the~~higher material costs as well as an increase in safety stock ~~in advance of Brexit.~~levels to help mitigate any future supply chain issues.

The changes in accounts payable and other current liabilities were ~~the~~a result of the timing of payments to ~~vendors. In addition,~~vendors, as well as the ~~changes~~annual payment of management incentive compensation.

An increase in ~~2020, 2019 and 2018 include $38 million, $29 million and $103 million, respectively, of~~ income tax payments ~~made in the U.S. relating~~of $83 million as compared to the ~~Company’s estimated 2017 tax reform liability~~prior year and ~~2018 estimated income tax payments and a $15~~the payment of $26 million ~~litigation settlement payment made~~ in ~~2019.~~Wyatt acquired liabilities.

Net cash provided from deferred revenue and customer advances results from annual increases in new service contracts as a higher installed base of customers renew annual service contracts.

Other changes were attributable to variation in the timing of various provisions, expenditures, prepaid income taxes and accruals in other current assets, other assets and other ~~liabilities, 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.~~liabilities.

Cash ~~(Used in) Provided By~~Flow from Investing Activities

Net cash used in investing activities totaled ~~$264~~$1.4 billion, $108 million and $232 million in ~~2020. Net cash provided by investing activities totaled $769 million~~2023, 2022 and ~~$1,683 million in 2019 and 2018,~~2021, respectively. Additions to fixed assets and capitalized software were ~~$172~~$161 million, ~~$164~~$176 million and ~~$96~~$161 million

in ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively. ~~In February 2018,~~The cash flows from investing activities in 2023, 2022 and 2021 include $16 million, $32 million and $49 million, respectively, of capital expenditures related to the major expansion of the Company’s ~~Board of Directors approved expanding its~~precision chemistry ~~synthesis~~consumable operations in the ~~U.S.~~United States. The ~~Company anticipates spending an estimated $215 million to build and equip this new~~

~~state-of-the-art~~

~~manufacturing facility, which will be paid for with existing cash, investments and debt capacity. Through December 31, 2020, the~~ Company has incurred ~~$151~~costs of $248 million on this new state-of-the-art facility, which is substantially complete as of ~~costs for this facility.~~

December 31, 2023.

During ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, the Company purchased ~~$26~~$2 million, ~~$37~~$11 million and ~~$1.0 billion~~$280 million of investments, ~~respectively. During 2020, 2019 and 2018, $21~~respectively, while $2 million, ~~$978~~$78 million and ~~$2.8 billion~~$218 million of investments matured, ~~respectively.~~respectively, and were used for financing activities described below.

In 2023, the Company completed the acquisition of Wyatt for a total purchase price of $1.3 billion in cash. Wyatt is a pioneer in innovative light scattering and field-flow fractionation instruments, software, accessories, and services. The ~~majority~~acquisition will expand Waters’ portfolio and increase exposure to large molecule applications.

In 2022, the Company paid $5 million for the CDMS technology and intellectual property right asset from Megadalton, and the Company is required to make an additional $4 million of guaranteed payments at various dates in the ~~proceeds received~~future through 2029. The total purchase price of approximately $10 million was accounted for as Acquired In-Process Research and Development and expensed as part of costs and operating expenses in ~~2019 and 2018 were repatriated into~~ the ~~U.S. at lower income tax rates as a result~~statement of ~~the 2017 Tax Act and used to reduce the Company’s debt and to repurchase shares.~~

~~Asset and business acquisitions, net of cash acquired, were $81 million and $31 million during 2020 and 2018, respectively.~~ operations in 2023.

There were no business acquisitions in ~~2019. During 2020, 2019~~2022 and ~~2018,~~2021.

In 2022, the Company received $10 million in proceeds and made ~~$6 million, $9 million and $8~~$1 million of investments in ~~unaffiliated companies, respectively.~~

certain equity investments. In ~~January 2020,~~2021, the ~~company entered into a definitive agreement to acquire Andrew Alliance, an innovator~~Company made $2 million of investments in ~~specialty laboratory automation technology, including software and robotics for approximately $80 million in cash. The Company had an~~certain equity investment in Andrew Alliance that was valued at $4 million and included as part of the total consideration. This acquisition did not have a material effect on the Company’s sales and expenses in 2020.

In December 2020, the company entered into a definitive agreement to acquire ISS, a provider of clinical laboratory software systems, for $4 million in cash. This acquisition did not have a material effect on the Company’s sales and expenses in 2020.

investments.

Cash ~~Used in~~Flow from Financing Activities

~~In November 2017, the~~

The Company entered into a credit agreement ~~(the “2017 Credit Agreement”), which provides for a $1.5~~in September 2021 governing the Company’s five-year, $1.8 billion revolving facility ~~and a $300 million term loan. The revolving facility and term loan both mature on November 30, 2022 and require no scheduled prepayments before~~ that ~~date.~~

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,closing of the ~~amount of the revolving facility commitments and the outstanding term loan. The 2017 Credit Agreement requires that~~Wyatt acquisition, the Company ~~comply with~~entered into an ~~interest coverage ratio test~~agreement to amend the credit agreement governing its revolving credit facility (the “2023 Amendment”). The 2023 Amendment increases the borrowing capacity by $200 million to an aggregate total borrowing capacity 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.

Interest on the Company’s fixed rate senior unsecured notes is payable semi-annually each year. Interest on the floating rate senior unsecured notes is payable quarterly. The Company may prepay all or some of the senior unsecured notes at any time in an amount not less than 10% of the aggregate principal amount outstanding, plus the applicable make-whole amount or prepayment premium for Series H and J senior unsecured notes. In the event of a change in control of the Company (as defined in the note purchase agreement), the Company may be required to prepay the senior unsecured notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest. These senior unsecured notes require that the Company comply with an interest coverage ratio test of not less than 3.50:1 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, these senior unsecured notes include customary negative covenants, affirmative covenants, representations and warranties and events of default.

~~The Company’s net debt borrowings decreased by $325 million in 2020, increased by $535 million in 2019 and decreased by $850 million in 2018.~~$2.0 billion. As of December 31, ~~2020,~~2023, the Company had a total of ~~$1.4~~$2.4 billion in outstanding debt, which consisted of ~~$960 million~~$1.3 billion in outstanding senior unsecured notes ~~$300~~and $1.1 billion in borrowings under its credit agreement. The Company’s net debt borrowings as of December 31, 2023, 2022 and 2021 were $780 million, ~~borrowed under a term loan~~$60 million and ~~$100~~$160 million ~~borrowed under a revolving credit facility, with both the term loan~~higher than as of December 31, 2022, 2021 and ~~revolving credit facilities under the 2017 Credit Agreement.~~ 2020, respectively.

As of December 31, 2020, the Company had a total amount available to borrow under the 2017 Credit Agreement of $1.4 billion after outstanding letters of credit. As of December 31, 2020, the Company was in compliance with all debt covenants.

~~As of December 31, 2020,~~2023, the Company has entered into three-year interest rate cross-currency swap derivative agreements with a notional value ~~of $560~~$625 million to hedge the variability in the movement of foreign currency exchange rates on a portion of its ~~Euro-denominated~~euro-denominated and yen-denominated net asset investments. As a result of entering into these agreements, the Company lowered ~~its~~ net interest expense by approximately $11 million, $9 million and $15 million ~~$12 million~~in 2023, 2022 and ~~$3 million during 2020, 2019 and 2018,~~2021, respectively. The Company anticipates that these swap agreements will lower net interest expense by approximately ~~$11 million annually in 2021 and $1~~$7 million in ~~2022 as the three-year term of the agreements expire.~~

~~In January 2019, the Company’s Board of Directors authorized the Company to repurchase up to $4 billion of its outstanding common stock over a~~

~~two-year~~

period. During 2020, 2019 and 2018, the Company repurchased 0.8 million, 11.1 million and 6.8 million shares of the Company’s outstanding common stock at a cost of $167 million, $2.5 billion and $1.3 billion, respectively, under the January 2019 authorization and other previously announced programs. 2024.

In December ~~2020,~~2023, the Company’s Board of Directors authorized the extension of the existing share repurchase program through January 21, ~~2023.~~2025. The Company’s remaining authorization is $1.0 billion. During 2023, 2022 and 2021, the Company repurchased $58 million, $616 million and $640 million, respectively, of the Company’s outstanding common stock under authorized share repurchase programs. In addition, the Company repurchased $9$12 million, $8$11 million and ~~$10~~$9 million of common stock related to the vesting of restricted stock units during ~~the years ended December 31, 2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively.

The Company received ~~$66~~$30 million, ~~$54~~$43 million and ~~$52~~$56 million of proceeds from the exercise of stock options and the purchase of shares pursuant to the Company’s employee stock purchase plan ~~in 2020, 2019~~during 2023, 2022 and ~~2018,~~2021, respectively.

The Company had cash, cash equivalents and investments of ~~$443~~$396 million as of December 31, ~~2020.~~2023. The majority of the Company’s cash and cash equivalents are generated from foreign operations, with ~~$364~~$321 million held by foreign subsidiaries at December 31, ~~2020,~~2023, of which ~~$254~~$233 million was held in currencies other than U.S. dollars. ~~While~~

As of December 31, 2023, the Company’s material cash requirements include the following contractual and other obligations:

Long-term debt. As of December 31, 2023, the Company ~~believes it has sufficient levels~~had $2.4 billion of cash ~~flow~~requirements for the principal on long-term debt that will mature and ~~access~~be paid as follows: $50 million in 2024; $1.5 billion in 2026; $50 million in 2028; $300 million in 2029; $50 million in 2030 and $400 million in 2031.

Interest on Senior Unsecured Notes. As of December 31, 2023, the Company had $189 million of cash requirements for the interest on senior unsecured notes that is to ~~its existing cash~~be paid as follows: $39 million in 2024; $38 million in 2025; $32 million in 2026; $25 million in 2027; $23 million in 2028; $20 million in 2029; $10 million in 2030; and cash equivalents, as well as the ability to raise funds from external sources and the borrowing capacity from existing, committed credit facilities, to fund operations and capital expenditures, service debt interest, finance potential acquisitions and continue the authorized stock repurchase program$2 million in 2031. See also Note 9 in the ~~U.S., we have temporarily suspended our share repurchases due~~Notes to the ~~uncertain business conditions caused~~Consolidated Financial Statements for financial information about interest payable.

2017 Tax Act liabilities. As a result of the 2017 Tax Act, the Company incurred a Transition Toll Tax, that would be paid over an eight-year period, starting in 2018, and will not accrue interest. As of December 31, 2023, the Company had a remaining cash requirement of $216 million of which $96 million and $120 million will be paid in 2024 and 2025, respectively. See also Note 10 in the Notes to the Consolidated Financial Statements for financial information about tax liabilities.

Operating Leases. The Company’s cash requirements for future lease payments were approximately $93 million as of December 31, 2023. See also Note 12 in the Notes to the Consolidated Financial Statements for financial information about lease liabilities.

Long-term Software Contract Commitments. For contracts the Company is committed to that are not cancelable without penalties. The Company’s contractual obligation with these vendors was approximately $22 million as of December 31, 2023.

Wyatt Retention Agreements. In conjunction with the Wyatt acquisition, the Company entered into retention agreements with certain employees, in which the Company agreed to pay a total of $40 million by the

~~COVID-19~~

~~pandemic.~~

end of the second anniversary of the acquisition date provided the employees remain employed over that period of time.

Management believes, as of the date of this report, that the Company’s financial position, along with expected future cash flows from earnings based on historical trends and the ability to raise funds from external sources and the borrowing capacity from existing, committed credit facilities, will be sufficient to service debt and fund working capital and capital spending requirements, authorized share repurchase amounts and potential acquisitions for at least the next twelve months.

~~Contractual Obligations and Commercial Commitments~~

~~The following is a summary of the Company’s known contractual obligations as of December 31, 2020 (in thousands):~~

Payments Due by Year (1)

Total

2021

2022

2023

2024

2025

2026

After 2026

Notes payable and debt
$ 150,000 $ 150,000 $ —   $ —   $ —   $ —   $ —   $ —
Interest on senior unsecured notes
180,198 30,273 28,160 27,182 24,654 22,714 17,801 29,414
Long-term debt (2)
1,210,000 —   400,000 50,000 100,000 —   360,000 300,000
2017 Tax Act liability
365,314 38,454 38,454 72,101 96,135 120,170 —   —
Long-term software subscriptions
41,593 13,075 12,636 10,309 5,573 —   —   —
Operating leases
103,705 29,599 23,453 14,569 10,951 8,269 5,682 11,182

Total
$ 2,050,810 $ 261,401 $ 502,703 $ 174,161 $ 237,313 $ 151,153 $ 383,483 $ 340,596

~~(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, 2020, the Company was in compliance with all such covenants.

~~The following is a summary of the Company’s known commercial commitments as of December 31, 2020 (in thousands):~~

Amount of Commitments Expiration Per Period


Total

2021

2022

2023

2024

2025

2026

After
2026

Letters of credit
   $ 1,961    $ 1,961    $ —      $ —      $ —      $ —      $ —      $ —

The Company has long-term liabilities for deferred employee compensation, including pension and supplemental executive retirement plans. The payments related to the supplemental retirement plan are not included above since they are dependent upon when the employee retires or leaves the Company and whether the employee elects

~~lump-sum~~

~~or annuity payments. During fiscal year 2021, the Company expects to contribute approximately $3 million to $6 million to the Company’s defined benefit plans.~~

The Company has contingent consideration for an earnout pertaining to its December 2020 acquisition of the net assets of ISS. The earnout payments are not included above since they are dependent upon many factors that cannot be predicted with any certainty. The estimated fair value of the contingent consideration as of December 31, 2020 is $1 million.

The Company licenses certain technology and software from third parties. Future minimum license fees payable under existing license agreements as of December 31, 2020 are immaterial. The Company enters into licensing arrangements with third parties that require future milestone or royalty payments contingent upon future events. Upon the achievement of certain milestones in existing agreements, the Company could make additional future payments of up to $7 million, as well as royalties on future net sales. It is not possible to predict with reasonable certainty whether these milestones will be achieved or the timing for achievement. As a result, these potential payments are not included in the table above.

~~The Company has not paid any dividends and has no plans, at this time, to pay any dividends in the future.~~

~~Off-Balance~~

~~Sheet Arrangements~~

~~The Company has not created, and is not party to, any special-purpose or~~

~~off-balance~~

sheet entities for the purpose of raising capital, incurring debt or operating parts of its business that are not consolidated (to the extent of the Company’s ownership interest therein) into the consolidated financial statements. The Company has not entered into any transactions with unconsolidated entities whereby it has subordinated retained interests, derivative instruments or other contingent arrangements that expose the Company to material continuing risks, contingent liabilities or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the Company.

respect to its current products, as well as claims relating to property damage or personal injury resulting from the performance of services by the Company or its subcontractors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. Historically, the Company’s costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and management accordingly believes the estimated fair value of these agreements is immaterial.

Critical Accounting Policies and Estimates

Summary

The preparation of consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. Critical accounting policies are those that are central to the presentation of the Company’s financial condition and results of operations that require management to make estimates about matters that are highly uncertain and that would have a material impact on the Company’s results of operations given changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that reasonably could have been used in the current period. On an ongoing basis, the Company evaluates its policies and

estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual amounts may differ from these estimates under different assumptions or conditions. There are other items within the Company’s consolidated financial statements that require estimation, but are not deemed critical as defined above. Changes in estimates used in these and other items could potentially have a material impact on the Company’s consolidated financial statements.

Revenue Recognition

The Company recognizes revenue upon transfer of control of promised products and services to customers in an amount that reflects the consideration the Company expects to receive in exchange for those products or services. The Company generally enters into contracts that include a combination of products and services. Revenue is allocated to distinct performance obligations and is recognized net of allowances for returns and discounts.

The Company recognizes revenue on product sales at the time control of the product transfers to the customer. In substantially all of the Company’s arrangements, title of the product transfers at shipping point and, as a result, the Company determined control transfers at the point of shipment. In more limited cases, there are destination-based shipping terms and, thus, control is deemed to transfer when the products arrive at the customer site. All incremental costs of obtaining a contract are expensed as and when incurred if the expected amortization period of the asset that would have been recognized is one year or less. Shipping and handling costs are included as a component of cost of sales. In situations where the control of the goods transfers prior to the completion of the Company’s obligation to ship the products to its customers, the Company has elected the practical expedient to account for the shipping services as a fulfillment cost. Accordingly, such costs are recognized when control of the related goods is transferred to the customer. In more rare situations, the Company has revenue associated with products that contain specific customer acceptance criteria and the related revenue is not recognized before the customer acceptance criteria are satisfied. The Company elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transactions and collected by the Company from a customer.

Generally, the Company’s contracts for products include a performance obligation related to installation. The Company has determined that the installation represents a distinct performance obligation and revenue is recognized separately upon the completion of installation. The Company determines the amount of the transaction price to allocate to the installation service based on the standalone selling price of the product and the service, which requires judgment. The Company determines the relative standalone selling price of installation based upon a number of factors, including hourly service billing rates and estimated installation hours. In developing these estimates, the Company considers past history, competition, billing rates of current services and other factors.

The Company has sales from standalone software, which are included in ~~instrument systems~~product revenue. These arrangements typically include software licenses and maintenance contracts, both of which the Company has determined are distinct performance obligations. The Company determines the amount of the transaction price to allocate to the license and maintenance contract based on the relative standalone selling price of each performance obligation. Software license revenue is recognized at the point in time when control has been transferred to the customer. The revenue allocated to the software maintenance contract is recognized on a straight-line basis over the maintenance period, which is the contractual term of the contract, as a time-based measure of progress best reflects the Company’s performance in satisfying this obligation. Unspecified rights to software upgrades are typically sold as part of the maintenance contract on a

when-and-if-available

basis.

Payment terms and conditions vary among the Company’s revenue streams, although terms generally include a requirement of payment within 30 to 60 days of product shipment. Prior to providing payment terms to customers, an evaluation of their credit risk is performed. Returns and customer credits are infrequent and insignificant and are recorded as a reduction to sales. Rights of return are not included in sales arrangements and, therefore, there is minimal variable consideration included in the transaction price of our products.

Service revenue includes (i) service and software maintenance contracts and (ii) service calls (time and materials). Instrument service contracts and software maintenance contracts are typically annual contracts, which are billed at the beginning of the contract or maintenance period. The amount of the service and software maintenance contract is recognized on a straight-line basis to revenue over the maintenance service period, which is the contractual term of the contract, as a time-based measure of progress best reflects the Company’s performance in satisfying this obligation. There are no deferred costs associated with the service contract, as the cost of the service is recorded when the service is performed. Service calls are recognized to revenue at the time a service is performed.

The Company’s deferred revenue liabilities at December 31, ~~2020~~2023 of ~~$240~~$324 million on the consolidated balance sheets consist of ~~the obligation on~~ instrument service ~~contracts~~contract obligations and customer payments received in advance, prior to transfer of control of the instrument. The Company records deferred revenue primarily related to its service contracts, where consideration is billable at the beginning of the service period.

~~Allowance for credit losses on Accounts Receivable~~

The Company maintains allowances for expected credit losses based on applying a historical loss rate to trade receivable aging balances to estimate a general reserve balance on current receivables along with an additional adjustment for any specific receivables with known or anticipated issues affecting the likelihood of recovery. The historical loss rate is calculated by comparing the prior year actual sales and accounts receivable balances to estimate the period of collection of trade receivables by aging category. This collection information by aging category is then compared to write offs over the same prior year period to estimate the amount of allowance that is attributable to each category of our accounts receivable aging. Past due balances with a probability of default based on historical data as well as relevant available forward-looking information are included in the specific adjustment. If the financial condition of the Company’s customers were to deteriorate beyond what is estimated in the current expected credit loss model, resulting in an impairment of their ability to make payments, additional allowances may be required. The Company does not request collateral from its customers, but collectibility is enhanced through the use of credit card payments and letters of credit. The Company assesses collectibility based on a number of factors, including, but not limited to, past transaction history with the customer, the credit-worthiness of the customer, industry trends and the macro-economic environment. Historically, the Company has not experienced significant credit losses. Sales returns and allowances are estimates of future product returns related to current period revenue. Material differences may

result in the amount and timing of revenue for any period if management made different judgments or utilized different estimates for sales returns and allowances for doubtful accounts. The Company’s accounts receivable balance at December 31, 2020 was $573 million, net of allowances for expected credit losses of $14 million.

Loss Provision on Inventory

The Company values all of its inventories at the lower of cost or net realizable value on a

first-in,

first-out

basis (“FIFO”). The Company estimates revisions to its inventory valuations based on technical obsolescence, historical demand, projections of future demand, including ~~that~~ in the Company’s current backlog of orders, and industry and market conditions. If actual future demand or market conditions are less favorable than those projected by management, additional write-downs may be required. The Company’s inventory balance at December 31, ~~2020~~2023 was recorded at its net realizable value of ~~$304~~$516 million, which is net of write-downs of ~~$29~~$41 million.

Long-Lived Assets, Intangible Assets and Goodwill

~~The Company assesses the~~

Goodwill and indefinite-lived intangible assets are not amortized, but are evaluated for impairment ~~of identifiable intangibles, long-lived assets and goodwill whenever~~on an annual basis, or on an interim basis when events or changes in circumstances indicate that the carrying value may not be recoverable. ~~Factors~~In assessing the ~~Company considers important which could trigger impairment include, but are not limited to,~~recoverability of goodwill and indefinite-lived intangible assets, we must make assumptions regarding the ~~following:~~

~~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.

When the Company determines that the carrying value of an individual intangible asset, long-lived asset or goodwill may not be recoverable based upon the existence of one or more of the above indicators, an estimate of undiscountedestimated future cash flows, ~~produced by that intangible asset, long-lived asset~~including forecasted revenue growth and the discount rate to determine the fair value of these assets. If these estimates or their related assumptions change in the future, we may be required to record impairment charges against these assets in the reporting period in which the impairment is determined.

We test goodwill ~~including its eventual residual value,~~for impairment at the reporting unit level, which is ~~compared to~~ the ~~carrying value~~operating segment or one level below an operating segment. We have the option of performing a qualitative assessment to determine whether further impairment ~~exists. In~~testing is necessary before performing the ~~event~~quantitative assessment. If as a result of the qualitative assessment, it is more-likely-than-not that ~~such cash flows are not expected to~~the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test will be ~~sufficient to recover~~required. Otherwise, no further testing will be required. If a quantitative impairment test is performed, we compare the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. Estimating the fair value of the reporting units requires significant judgment by management. If the carrying amount of a reporting unit exceeds the ~~asset,~~fair value of the ~~asset~~reporting unit, an impairment charge is ~~written-down~~recognized for the amount by which the carrying value amount exceeds the reporting unit’s fair value up to the total amount of goodwill allocated to the reporting unit. The Company performs an annual goodwill impairment assessment for its ~~estimated fair value. Net intangible assets, long-lived assets and goodwill amounted to $259 million, $494 million and $444 million, respectively,~~reporting units as of December 31 ~~2020.~~

~~The Company performs annual impairment reviews of its goodwill on December 31 of~~ each year. ~~For goodwill impairment review purposes, the~~The Company has two reporting units: Waters and TA. ~~The Company currently does not expect~~Goodwill is allocated to ~~record an impairment charge in the foreseeable future as the estimated fair values of~~ the reporting units ~~significantly exceeds the carrying value of the reporting units; however, there can be no assurance that,~~ at the time ~~future reviews~~of acquisition.

The Company’s intangible assets include purchased technology; capitalized software; costs associated with acquiring Company patents, trademarks and intellectual properties, such as licenses; and acquired IPR&D. Purchased intangibles are ~~completed,~~recorded at their fair market values as of the acquisition date and amortized over their estimated useful lives, ranging from one to fifteen years. Other intangibles are amortized over a ~~material impairment charge will not be recorded. The factors that could cause a material goodwill impairment charge in~~period ranging from one to ten years. Acquired IPR&D is amortized from the ~~future include, but are not limited~~date of completion of the acquired program over its estimated useful life.

Goodwill totaled $1.3 billion and $430 million as of December 31, 2023 and 2022, respectively. Net intangible assets and long-lived assets amounted to ~~the following:~~

~~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~~$629 million and $639 million, as of ~~comparable companies;~~

~~adverse action or assessment by a regulator;~~December 31, 2023, respectively, and

~~unanticipated competition.~~

December 31, 2022, respectively.

Income Taxes

As part of the process of preparing the consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process involves the Company estimating its income taxes, taking into account the amount, timing and character of taxable income, tax deductions and credits and assessing changes in tax laws, regulations, agreements and treaties. Differing treatment of items for tax and accounting purposes, such as depreciation, amortization and inventory reserves, result in deferred tax assets and liabilities, which are included within the consolidated balance sheets. In the event that actual results differ from these estimates, or the Company adjusts these estimates in future periods, such changes could materially impact the Company’s financial position and results of operations.

The ~~accounting standards for income taxes require that a company~~Company continually ~~evaluate~~evaluates the necessity of establishing or changing a valuation allowance for deferred tax assets depending on whether it is more likely than not that the actual benefit of those assets will be realized in future periods.

Uncertain Tax Positions

The Company accounts for its uncertain tax return positions in accordance with the accounting standards for income taxes, which require financial statement reporting of the expected future tax consequences of uncertain tax positions on the presumption that all concerned tax authorities possess full knowledge of those tax positions, as well as all of the pertinent facts and circumstances, but prohibit any discounting of unrecognized tax benefits associated with those positions for the time value of money. The Company classified interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. At December 31, ~~2020,~~2023, the Company had unrecognized tax benefits, excluding interest and penalties, of ~~$29 million.~~

~~The Company has~~$14 million, which represents a decrease of $15 million resulting, primarily, from the completion of a tax ~~exemption~~examination in ~~Singapore on certain types of income through March 2021, based upon~~2023. This decrease reduced the achievement and continued satisfaction of certain operational and financial milestones, which the Company met as of December 31, 2020 and expects to maintain through March 2021. These milestones include the following types of objectives: reaching and maintaining annual revenue and business spending targets; meeting capital expenditures targets; attaining and sustaining employment targets; and establishing a local research and development and service center. Currently, the Company has determined that it is more likely than not to realize the tax exemption in Singapore and, accordingly, has not recognized any reserves for unrecognized tax benefits on its balance sheet related to this exemption. In the event that any of the milestone targets were not met, the Company would not be entitled to the tax exemption on income earned in Singapore dating back to the start date of the agreement (April 1, 2016), and all the tax benefits previously recognized would be reversed, resulting in the recognition of income tax expense ~~equal to~~in the ~~statutory tax~~statement of ~~17% on income earned during that period.~~

~~In addition, the~~operations and did not impact cash flows.

The Company has a new Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5% on certain types of income for the period April 1, 2021 through March 31, 2026. This new incentive has similar requirements for business spending targets, attaining and sustaining employment targets and performance of certain research and manufacturing ~~activities.~~

~~Warranty~~

~~Product warranties are recorded at the time revenue is recognized for certain product shipments. While~~activities as previous agreements. Prior to April 1, 2021, the Company ~~engages~~had a tax exemption on income arising from qualifying activities in ~~extensive product quality programs and processes, including actively monitoring and evaluating~~Singapore, based upon the ~~quality~~achievement of its component suppliers, the Company’s warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from the Company’s previous estimates, revisions to the estimated warranty liability would be required. At December 31, 2020, the Company’s warranty liability was $11 million.

~~Litigation~~

~~As described in Part I, Item 3, Legal Proceedings, of this~~

~~Form 10-K,~~

certain contractual milestones, which the Company is a party to various pending litigation matters. With respect to each pending claim, management determines whether it can reasonably estimate whether a loss is probable and, if so, the probable range of that loss. If and when management has determined, with respect to a particular claim, both that a loss is probable and that it can reasonably estimate the range of that loss, the Company records a charge equal to either its best estimate of that loss or the lowest amount in that probable range of loss. The Company will disclose additional exposures when the range of loss is subject to considerable uncertainty.

~~Pension and Other Retirement Benefits~~

In 2018, the Company settled its defined benefit pension plan in the U.S. As a result of this settlement, the Company’s defined benefit pension obligations were significantly reduced in 2018 and 2019. The Company still maintains a number of smaller defined benefit pension plans and other retirement benefits throughout the world. Assumptions used in determining projected benefit obligations and the fair values of plan assets for the Company’s remaining less significant pension plans and other retirement benefits are evaluated periodically by management. Changes in assumptions are based on relevant Company data. Critical assumptions, such as the discount rate used to measure the benefit obligations and the expected long-term rate of return on plan assets, are evaluated and updated annually. The Company has assumed that the weighted-average expected long-term rate of return on plan assets will be 6.25% for its U.S. benefit plans and 2.99% for its

~~non-U.S.~~

~~benefit plans.~~

At the end of each year, the Company determines the discount rate that reflects the current rate at which the pension liabilities could be effectively settled. The Company utilized Milliman’s Bond Matching model to determine the discount rate for its U.S. benefit plans. The Company determined the discount rate for its

~~non-U.S.~~

~~benefit plans based on the analysis of the Mercer Pension Discount Curve for high quality investments~~met as of December 31, 2020 and maintained through March 2021. These milestones include the following types of objectives: reaching and maintaining annual revenue and business spending targets; meeting capital expenditures targets; attaining and sustaining employment targets; and establishing a local research and development and service center. The Company determined that ~~best matched~~it was more likely than not to realize the ~~timing~~tax exemption in Singapore and, accordingly, did not recognize any reserves for unrecognized tax benefits on its balance sheet related to this exemption. In the event that any of the ~~plan’s future cash flows for~~milestone targets were not met, the ~~period to maturity of the pension benefits. Once the interest rates were determined, the plan’s cash flow was discounted at the spot interest rate back~~Company would not be entitled to the ~~measurement date. At December 31, 2020,~~tax exemption on income earned in Singapore and all the ~~Company determined~~tax benefits previously recognized would be reversed, resulting in the ~~weighted-average discount~~recognition of income tax expense equal to the statutory tax of 17% on income earned during that period.

The effect of applying these concessionary income tax rates rather than the statutory tax rate to ~~be 2.25% for the U.S. benefit plans and 1.12% for the~~

~~non-U.S.~~

~~benefits plans.~~

~~one-quarter~~

~~percentage point increase~~income arising from qualifying activities in ~~the assumed long-term rate of return would decrease~~Singapore increased the Company’s net ~~periodic benefit cost~~income by ~~less than $1 million. A~~

~~one-quarter~~

~~percentage point increase in the discount rate would decrease~~$16 million, $20 million and $20 million and increased the Company’s net ~~periodic benefit cost~~income per diluted share by ~~less than $1 million.~~

~~Stock-based Compensation~~

~~The accounting standards~~$0.27, $0.33 and $0.32 for ~~stock-based compensation require that all share-based payments to employees be recognized~~the years ended December 31, 2023, 2022 and 2021, respectively.

Business Combinations and Asset Acquisitions

We use assumptions and estimates in ~~the statements of operations based on their fair values. The Company has used the Black-Scholes option pricing model and Monte Carlo simulation model to determine~~determining the fair value of ~~its stock option awards~~assets acquired and ~~performance stock unit awards, respectively. Under the fair-value recognition provisions~~liabilities assumed in a business combination. The determination of ~~this statement, share-based compensation cost is measured at the grant date based on the value of the award and is recognized as expense over the vesting period. Determining~~ the fair value of share-based awards at the grant date requires judgment, including estimating stock price volatility and employee stock option exercise behaviors. If actual results differ significantly from these estimates, stock-based compensation expense and the Company’s resultsintangible assets, which represents a significant portion of operations could be materially impacted. As stock-based compensation expense recognized in the consolidated statements of operations is based on awards that ultimately are expected to vest, the amount of the expense has been reduced for estimated forfeitures. These accounting standards require forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical experience. If factors change and the Company employs different assumptions in the application of these accounting standards, the compensation expense that the Company records in future periods may differ significantly from what the Company has recorded in the current period. The Company recognizes the expense using the straight-line attribution method.

~~As of December 31, 2020, unrecognized compensation costs and related weighted-average lives over which the costs will be amortized were as follows (in millions):~~

Unrecognized
Compensation
Costs

Weighted-Average

Life in Years

Stock options
   $ 22    3.3
Restricted stock units
   42    3.3
Performance stock units
   9    1.9
Restricted stock
   —      —



Total
   $ 73    3.1

~~Business Combinations and Asset Acquisitions~~

The Company accounts for business acquisitions under the accounting standards for business combinations. The results of each acquisition are included in the Company’s consolidated results as of the acquisition date and the purchase price in our recent acquisition of ~~an acquisition is allocated~~Wyatt, requires the use of significant judgment with regard to ~~tangible~~(i) the fair value; and (ii) whether such intangibles are amortizable or non-amortizable and, if the former, the period and the method by which the intangible ~~assets~~asset will be amortized. We utilize commonly accepted valuation techniques, such as the income, cost and ~~assumed liabilities based on their estimated fair values. Any excess of~~market approaches, as appropriate, in establishing the fair value ~~consideration transferred over the estimated fair values~~of intangible assets. Typically, key assumptions include projections of cash flows that arise from identifiable intangible assets of acquired businesses as well as discount rates based on an analysis of the ~~net~~weighted average cost of capital, adjusted for specific risks associated with the assets.

In our recent acquisition of Wyatt, customer relationship intangible assets have been the most significant identifiable assets acquired. The customer relationships were valued using the multi-period excess earnings method under the income approach. Our cash flow projections for the customer relationships acquired ~~is recognized as goodwill. Acquired~~

~~in-process~~

~~research~~included significant judgments and ~~development (“IPR&D”) included in a business combination is capitalized as an indefinite-lived intangible asset. Development costs incurred after the acquisition are expensed as incurred~~assumptions related to customer attrition rate, discount rate, and ~~acquired IPR&D is tested for impairment annually until completion~~forecasted revenues. The value of the client relationships acquired programs. Upon commercialization, this indefinite-lived intangible asset is then accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life, subjectwas $331 million in fiscal year 2023, the majority of which relates to periodic impairment reviews. If the research and development project is abandoned, the indefinite-lived asset is charged to expense. Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred.US customer relationships.

The Company also acquires intellectual property through licensing arrangements. These arrangements often require upfront payments and may include additional milestone or royalty payments, contingent upon certain future events. IPR&D acquired in an asset acquisition (as opposed to a business combination) is expensed immediately unless there is an alternative future use. Subsequent payments made for the achievement of milestones are evaluated to determine whether they have an alternative future use or should be expensed. Payments made to third parties subsequent to commercialization are capitalized and amortized over the remaining useful life of the related asset, and are classified as intangible assets.

Recent Accounting Standard Changes and Developments

Information regarding recent accounting standard changes and developments is incorporated by reference from Part II, Item 8, Financial Statements and Supplementary Data, of this document and should be considered an integral part of this Item 7. See Note 2 in the Notes to the Consolidated Financial Statements for recently adopted and issued accounting standards.

~~Item 7A:~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

Item 7A: Quantitative and Qualitative Disclosures About Market Risk

Derivative Transactions

The Company is a global company that operates in over 35 countries and, as a result, the Company’s net sales, cost of sales, operating expenses and balance sheet amounts are significantly impacted by fluctuations in foreign currency exchange rates. The Company is exposed to currency price risk on foreign currency exchange rate fluctuations when it translates its

non-U.S.

dollar foreign subsidiaries’ financial statements into U.S. dollars, and when any of the Company’s subsidiaries purchase or sell products or services in a currency other than its own currency.

The Company’s principal strategies in managing exposures to changes in foreign currency exchange rates are to (1) naturally hedge the foreign-currency-denominated liabilities on the Company’s balance sheet against corresponding assets of the same currency, such that any changes in liabilities due to fluctuations in foreign currency exchange rates are typically offset by corresponding changes in assets and (2) mitigate foreign exchange risk exposure of international operations by hedging the variability in the movement of foreign currency exchange rates on a portion of its ~~Euro-denominated~~euro-denominated and yen-denominated net asset investments. The Company presents the derivative transactions in financing activities in the statement of cash flows.

Foreign Currency Exchange Contracts

The Company does not specifically enter into any derivatives that hedge foreign-currency-denominated operating assets, liabilities or commitments on its balance sheet, other than a portion of certain third-party accounts receivable and accounts payable, and the Company’s net worldwide intercompany receivables and payables, which are eliminated in consolidation. The Company periodically aggregates these net worldwide balances by currency and then enters into foreign currency exchange contracts that mature within 90 days to hedge a portion of the remaining balance to minimize some of the Company’s currency price risk exposure. The foreign currency exchange contracts are not designated for hedge accounting treatment. Principal hedged currencies include the ~~Euro,~~euro, Japanese yen, British pound, Mexican peso and Brazilian real.

Cash Flow Hedges

The Company’s Credit Facility is a variable borrowing and has interest payments based on a contractually specified interest rate index. The contractually specified index on the Credit Facility is the 3-month Term SOFR. The variable rate interest payments create interest risk for the Company as interest payments will fluctuate based on changes in the contractually specified interest rate index over the life of the Credit Facility. In order to reduce interest rate risk, the Company enters into interest rate swaps that will effectively lock-in the forecasted interest payments on the variable rate borrowing over its term. The interest rate swaps represent cash flow hedges and are assessed for hedge effectiveness each reporting period. When the hedge relationship is highly effective at achieving offsetting changes in cash flows, the Company will record the entire change in fair value of the interest rate swaps in accumulated other comprehensive loss. The amount in accumulated other comprehensive loss is reclassified to earnings in the period that the underlying transaction impacts consolidated earnings. If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be de-designated and amounts accumulated in other comprehensive loss will be reclassified to earnings in the current period. Interest settlements due to benchmark interest rate changes are recorded in interest income or interest expense. For the year ended December 31, 2023, the Company did not have any cash flow hedges that were deemed ineffective.

Interest Rate Cross-Currency Swap Agreements

As of December 31, ~~2020,~~2023, the Company ~~has entered into~~had three-year interest rate cross-currency swap derivative agreements with a notional value of ~~$560~~$625 million to hedge the variability in the movement of foreign currency exchange rates on a portion of its ~~Euro-denominated~~euro-denominated and yen-denominated net asset investments. Under hedge accounting, the change in fair value of the derivative that relates to changes in the foreign currency spot rate are recorded in the currency

translation adjustment in other comprehensive income and remain in accumulated other comprehensive income in stockholders’ equity ~~(deficit)~~ until the sale or substantial liquidation of the foreign operation. The difference between the interest rate received and paid under the interest rate cross-currency swap derivative agreement is recorded in interest income in the statement of operations.

The Company’s foreign currency exchange contracts, ~~and~~ interest rate cross-currency swap agreements and interest rate swap agreements designated as cash flow hedges are included in the consolidated balance sheets are classified as follows (in thousands):

December 31, 2020

December 31, 2019


Notional
Value

Fair
Value

Notional
Value

Fair
Value

Foreign currency exchange contracts:

Other current assets
   $ 66,690    $ 836 $ 119,576    $ 16
Other current liabilities
   $ 20,000    $ 185 $ 29,495    $ 1,028
Interest rate cross-currency swap agreements:

Other (liabilities) assets
   $ 560,000    $ (44,996 ) $ 560,000    $ 4,485
Accumulated other comprehensive loss (income)
      $ 44,996    $ (4,485 )


	December 31, 2023					December 31, 2022
	Notional Value		Fair Value			Notional Value		Fair Value
Foreign currency exchange contracts:
Other current assets	$	24,155	$	183		$	42,047	$	231
Other current liabilities	$	16,000	$	207		$	13,450	$	98
Interest rate cross-currency swap agreements:
Other assets	$	220,000	$	4,835		$	400,000	$	19,163
Other liabilities	$	405,000	$	13,384		$	185,000	$	4,783
Accumulated other comprehensive (loss) income			$	(7,975	)			$	10,026
Interest rate swap cash flow hedges:
Other liabilities	$	100,000	$	2,974		$	—	$	—
Accumulated other comprehensive (loss) income			$	(2,974	)			$	—

The following is a summary of the activity included in the consolidated statements of operations and statements of comprehensive income related to the foreign currency exchange contracts, and interest rate cross-currency swap agreements and interest rate swap agreements designated as cash flow hedges (in thousands):

Financial

Statement

Classification

Year Ended December 31,

2020

2019

2018

Foreign currency exchange contracts:

Realized gains (losses) on closed contracts
   Cost of sales $ 1,444 $ (3,552 ) $ (6,684 )
Unrealized gains (losses) on open contracts
   Cost of sales 1,663 (1,292 ) (105 )


Cumulative net
pre-tax
gains (losses)
   Cost of sales $ 3,107 $ (4,844 ) $ (6,789 )


Interest rate cross-currency swap agreements:

Interest earned
   Interest income $ 15,296 $ 11,709 $ 2,713
Unrealized (losses) gains on open contracts
   Stockholders’
equity (deficit) $ (44,996 ) $ 4,485 $ 1,093


	Financial Statement Classification	Year Ended December 31,
	Financial Statement Classification	2023			2022			2021
Foreign currency exchange contracts:
Realized gains (losses) on closed contracts	Cost of sales	$	224		$	(3,855	)	$	(1,973	)
Unrealized losses on open contracts	Cost of sales		(156	)		(176	)		(343	)

Cumulative net pre-tax gains (losses)	Cost of sales	$	68		$	(4,031	)	$	(2,316	)

Interest rate cross-currency swap agreements:
Interest earned	Interest income	$	10,974		$	8,872		$	11,084
Unrealized (losses) gains on open contracts	Accumulated other comprehensive loss	$	(18,001	)	$	25,969		$	29,052
Interest rate swap cash flow hedges:
Interest earned	Interest income	$	326		$	—		$	—
Unrealized losses on open contracts	Accumulated other comprehensive loss	$	(2,974	)	$	—		$	—

Assuming a hypothetical adverse change of 10% in

year-end

exchange rates (a strengthening of the U.S. dollar), the fair market value of the foreign currency exchange contracts outstanding as of December 31, ~~2020~~2023 would ~~decrease~~

increase pre-tax

earnings by approximately $9$5 million. Assuming a hypothetical adverse change of 10% in

year-end

exchange rates (a strengthening of the U.S. dollar), the fair market value of the interest rate

cross-currency swap agreements outstanding as of December 31, ~~2020~~2023 would increase by approximately ~~$56~~$1 million and would be recorded to foreign currency translation in other comprehensive income within stockholders’ ~~equity (deficit).~~equity. The related impact on interest income would not have a material effect on

pre-tax

earnings.

The Company’s cash and cash equivalents are not subject to significant interest rate risk due to the short maturities of these instruments. The Company’s cash equivalents represent highly liquid investments, with original maturities of 90 days or less, primarily in bank deposits, U.S. treasury bill money market funds and commercial paper. As of December 31, ~~2020,~~2023, the carrying value of the Company’s cash and cash equivalents approximated fair value.

The Company is exposed to the risk of interest rate fluctuations from the investments of cash generated from operations. Investments with maturities greater than 90 days are classified as investments, and are held primarily in U.S. dollar-denominated treasury bills and commercial paper, bank deposits and corporate debt securities. As of December 31, ~~2020,~~2023, the Company estimates that a hypothetical adverse change of 100 basis points across all maturities would not have a material effect on the fair market value of its portfolio.

The Company is also exposed to the risk of exchange rate fluctuations. The Company maintains cash balances in various operating accounts in excess of federally insured limits, and in foreign subsidiary accounts in currencies other than the U.S. dollar. As of December 31, ~~2020~~2023 and ~~2019, $364~~2022, $321 million out of ~~$443~~$396 million and ~~$249~~$472 million out of ~~$337~~$481 million, respectively, of the Company’s total cash, cash equivalents and investments were held by foreign subsidiaries. In addition, ~~$254~~$233 million out of ~~$443~~$396 million and ~~$176~~$336 million out of ~~$337~~$481 million of cash, cash equivalents and investments were held in currencies other than the U.S. dollar at December 31, ~~2020~~2023 and ~~2019,~~2022, respectively. As of December 31, ~~2020,~~2023, the Company had no holdings in auction rate securities or commercial paper issued by structured investment vehicles.

Assuming a hypothetical adverse change of 10% in

year-end

exchange rates (a strengthening of the U.S. dollar), the fair market value of the Company’s cash, cash equivalents and investments held in currencies other than the U.S. dollar as of December 31, ~~2020~~2023 would decrease by approximately ~~$25~~$23 million, of which the majority would be recorded to foreign currency translation in other comprehensive income within stockholders’ ~~equity (deficit).~~equity.

DOCUMENTS INCORPORATED BY REFERENCE

51Portions of the registrant’s definitive proxy statement that will be filed for the 2024 Annual Meeting of Stockholders are incorporated by reference in Part III.

~~Table of Contents~~

~~Item 8:~~

Item 8:

Financial Statements and Supplementary Data

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in

Rules 13a-15(f)

and

15d-15(f)

under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in

Internal Control

— Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under the framework in

Internal Control

— Integrated Framework (2013)

, our management, including our chief executive officer and chief financial officer, concluded that our internal control over financial reporting was effective as of December 31, ~~2020.~~2023.

We excluded Wyatt Technology, LLC, and its three operating subsidiaries, (Wyatt Technology Europe GmbH, Wyatt Technology France and Wyatt Technology UK Ltd) (collectively “Wyatt”) from our assessment of internal control over financial reporting as of December 31, 2023, because Wyatt was acquired by the Company in a purchase business combination during 2023. The total assets and total revenues of Wyatt represent 2% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

The effectiveness of our internal control over financial reporting as of December 31, ~~2020~~2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

5250

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Waters Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Waters Corporation and its subsidiaries (the “Company”) as of December 31, ~~2020~~2023 and ~~2019,~~2022, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity ~~(deficit)~~ and of cash flows for each of the three years in the period ended December 31, ~~2020,~~2023, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, ~~2020,~~2023, based on criteria established in

Internal Control—Integrated Framework

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, ~~2020~~2023 and ~~2019,~~2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2020~~2023 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2020,~~2023, based on criteria established in

Internal Control—Integrated Framework

(2013) issued by the COSO.

~~Change in Accounting Principle~~

~~As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.~~

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control ~~Over~~over Financial Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Wyatt Technology, LLC, and its three operating subsidiaries, Wyatt Technology Europe GmbH, Wyatt Technology France, and Wyatt Technology UK Ltd (collectively Wyatt) from its assessment of internal control over financial reporting as of December 31, 2023, because it was acquired by the Company in a purchase

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business combination during 2023. We have also excluded Wyatt from our audit of internal control over financial reporting. Wyatt is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 2% and 2%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit ~~matter~~matters communicated below ~~is a matter~~are matters arising from the current period audit of the consolidated financial statements that ~~was~~were communicated or required to be communicated to the audit committee and that (i) ~~relates~~relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit ~~matter~~matters below, providing a separate ~~opinion~~opinions on the critical audit ~~matter~~matters or on the accounts or disclosures to which ~~it relates.~~they relate.

~~Goodwill Impairment Assessment~~Product Revenue Recognition

As described in ~~Notes~~Note 2 ~~and 8~~ to the consolidated financial statements, the ~~Company’s consolidated goodwill balance was $444 million as~~Company recognizes revenue upon transfer of December 31, 2020. Management tests for goodwill impairment using a fair-value approach at the reporting unit level annually, or earlier, if an event occurs or circumstances change that would more likely than not reduce the fair valuecontrol of a reporting unit below its carrying amount. The Company performs an annual goodwill impairment assessment for its reporting units as of December 31 each year. Under the impairment assessment, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognizedpromised products to customers in an amount ~~equal~~that reflects the consideration the Company expects to receive in exchange for those products. The Company recognizes revenue on product sales at the time control of the product transfers to the ~~amount~~customer. Certain of the ~~excess carrying amount~~Company’s customers have terms where control of the ~~reporting unit over its fair value. This impairment is limited~~product transfers to the ~~total amount~~customer on shipment, while others have terms where control transfers to the customer on delivery. Product sales totaled $1.9 billion for the year ended December 31, 2023.

The principal consideration for our determination that performing procedures relating to product revenue recognition is a critical audit matter is a high degree of ~~goodwill allocated~~auditor effort in performing procedures related to ~~that reporting unit. The fair value~~the Company’s product revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of ~~reporting units was estimated using~~controls relating to product revenue recognition. These procedures also included, among others, (i) evaluating the recognition of revenue for a ~~discounted cash flows technique, which includes certain management assumptions,~~sample of transactions by obtaining and inspecting source documents, such as invoices, customer purchase orders, and shipping documents, and (ii) obtaining and inspecting evidence of remittance of cash payment from customers, as applicable, related to product revenue.

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Acquisition of Wyatt Technology, LLC—Valuation of U.S. Customer Relationships

As described in Notes 1, 2 and 7 to the consolidated financial statements, on May 16, 2023, the Company completed the Wyatt acquisition for a total purchase price of $1.3 billion. Management allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated ~~future cash flows, estimated growth rates and discount rates.~~fair values as of the acquisition date. As disclosed by management, ~~the estimated fair value~~ of the ~~reporting units significantly exceeds~~$330.6 million of customer relationships recorded in connection with the ~~carrying value.~~acquisition, a majority relates to U.S. customer relationships. The customer relationships were valued using the multi-period excess earnings method under the income approach. Management’s cash flow projections for the customer relationships acquired included significant judgments and assumptions related to customer attrition rate, discount rate, and forecasted revenues.

The principal considerations for our determination that performing procedures relating to the ~~goodwill impairment assessment~~valuation of U.S. customer relationships acquired in the acquisition of Wyatt Technology, LLC is a critical audit matter are (i) the significant judgment by management when ~~developing~~determining the fair value ~~measurement~~estimate of the ~~reporting units, which in turn led to~~U.S. customer relationships acquired; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the ~~estimated growth rates.~~customer attrition rate, discount rate, and forecasted revenues, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to ~~management’s goodwill impairment assessment,~~the acquisition accounting, including controls over ~~the~~management’s valuation of the ~~Company’s reporting units.~~U.S. customer relationships acquired. These procedures also included, among others, (i) reading the purchase agreement; (ii) testing management’s process for developing the fair value ~~estimates; (ii)~~estimate of the U.S. customer relationships acquired; (iii) evaluating the appropriateness of the ~~discounted cash flow models;~~

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~~(iii)~~multi-period excess earnings method used by management; (iv) testing the completeness and accuracy of the underlying data used in the ~~models;~~multi-period excess earnings method; and ~~(iv)~~(v) evaluating the reasonableness of the significant assumptions used by management related to the ~~estimated growth rates.~~customer attrition rate, discount rate, and forecasted revenues. Evaluating ~~management’s~~the reasonableness of the significant assumptions ~~related to estimated revenue growth rates involved evaluating whether the growth rates~~ used by management ~~were reasonable~~related to the customer attrition rate, discount rate and forecasted revenues involved considering (i) the current and past performance of the ~~reporting units~~Wyatt business; (ii) the consistency with external market and industry data; and (iii) whether ~~those growth rates~~the assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings method under the income approach and (ii) the reasonableness of the customer attrition, discount rate, and forecasted revenue assumptions.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

February ~~24, 2021~~27, 2024

We have served as the Company’s auditor since 1994.

5553

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WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31,


2020

2019


(In thousands, except per share data)

ASSETS

Current assets:

Cash and cash equivalents

$ 436,695

$ 335,715
Investments

6,451

1,429
Accounts receivable, net

573,316

587,734
Inventories

304,281

320,551
Other current assets

80,290

67,062

Total current assets

1,401,033

1,312,491
Property, plant and equipment, net

494,003

417,342
Intangible assets, net

258,645

240,203
Goodwill

444,362

356,128
Operating lease assets

93,252

93,358
Other assets

148,625

137,533

Total assets

$ 2,839,920

$ 2,557,055

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

Notes payable and debt

$ 150,000

$ 100,366
Accounts payable

72,212

49,001
Accrued employee compensation

72,166

43,467
Deferred revenue and customer advances

198,240

176,360
Current operating lease liabilities

27,764

27,125
Accrued income taxes

76,558

45,967
Accrued warranty

10,950

11,964
Other current liabilities

197,093

137,084

Total current liabilities

804,983

591,334
Long-term liabilities:

Long-term debt

1,206,515

1,580,797
Long-term portion of retirement benefits

72,620

59,159
Long-term income tax liabilities

357,493

394,562
Long-term operating lease liabilities

68,197

66,881
Other long-term liabilities

97,968

80,603

Total long-term liabilities

1,802,793

2,182,002

Total liabilities

2,607,776

2,773,336
Commitments and contingencies (Notes 6, 9, 10, 11, 12, 13 and 17)

0

0
Stockholders’ equity (deficit):

Preferred stock, par value $0.01 per share, 5,000 shares authorized, 0ne issued at December 31, 2020 and December 31, 2019

0

0
Common stock, par value $0.01 per share, 400,000 shares authorized, 161,666 and 161,030 shares issued, 62,309 and 62,587 shares outstanding at December 31, 2020 and December 31, 2019, respectively

1,617

1,610
Additional
paid-in
capital

2,029,465

1,926,753
Retained earnings

7,107,989

6,587,403
Treasury stock, at cost, 99,357 and 98,443 shares at December 31, 2020 and December 31, 2019, respectively

(8,788,984 )

(8,612,576 )
Accumulated other comprehensive loss

(117,943 )

(119,471 )

Total stockholders’ equity (deficit)

232,144

(216,281 )

Total liabilities and stockholders’ equity (deficit)

$ 2,839,920

$ 2,557,055


	December 31,
	2023			2022
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	395,076		$	480,529
Investments		898			862
Accounts receivable, net		702,168			722,892
Inventories		516,236			455,710
Other current assets		138,489			103,910

Total current assets		1,752,867			1,763,903
Property, plant and equipment, net		639,073			582,217
Intangible assets, net		629,187			227,399
Goodwill		1,305,446			430,328
Operating lease assets		84,591			86,506
Other assets		215,690			191,100

Total assets	$	4,626,854		$	3,281,453

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and debt	$	50,000		$	50,000
Accounts payable		84,705			93,302
Accrued employee compensation		69,391			103,300
Deferred revenue and customer advances		256,675			227,908
Current operating lease liabilities		27,825			26,429
Accrued income taxes		120,257			132,545
Accrued warranty		12,050			11,949
Other current liabilities		168,677			140,304

Total current liabilities		789,580			785,737
Long-term liabilities:
Long-term debt		2,305,513			1,524,878
Long-term portion of retirement benefits		47,559			38,203
Long-term income tax liabilities		137,123			248,496
Long-term operating lease liabilities		58,926			62,108
Other long-term liabilities		137,812			117,543

Total long-term liabilities		2,686,933			1,991,228

Total liabilities		3,476,513			2,776,965
Commitments and contingencies (Notes 9, 10, 11, 12, 13 and 17 )
Stockholders’ equity:
Preferred stock, par value $0.01 per share, 5,000 shares authorized, none issued at December 31, 2023 and December 31, 2022		—			—
Common stock, par value $0.01 per share, 400,000 shares authorized, 162,709 and 162,425 shares issued, 59,176 and 59,104 shares outstanding at December 31, 2023 and December 31, 2022, respectively		1,627			1,624
Additional paid-in capital		2,266,265			2,199,824
Retained earnings		9,150,821			8,508,587
Treasury stock, at cost, 103,533 and 103,321 shares at December 31, 2023 and December 31, 2022, respectively		(10,134,252	)		(10,063,975	)
Accumulated other comprehensive loss		(134,120	)		(141,572	)

Total stockholders’ equity		1,150,341			504,488

Total liabilities and stockholders’ equity	$	4,626,854		$	3,281,453

The accompanying notes are an integral part of the consolidated financial statements.

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WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,


2020

2019

2018


(In thousands, except per share data)

Revenues:

Product sales
   $ 1,497,333 $ 1,567,189 $ 1,604,993
Service sales
   868,032 839,407 814,936

Total net sales
   2,365,365 2,406,596 2,419,929
Costs and operating expenses:

Cost of product sales
   638,033 642,706 656,275
Cost of service sales
   368,656 367,994 336,289
Selling and administrative expenses
   553,698 534,791 536,902
Research and development expenses
   140,777 142,955 143,403
Purchased intangibles amortization
   10,587 9,693 7,712
Asset impairments
   6,945 —   —
Litigation provision (settlement) (Note 11)
   1,180 —   (426 )

Total costs and operating expenses
   1,719,876 1,698,139 1,680,155

Operating income
   645,489 708,457 739,774
Other expense
   (1,775 ) (3,586 ) (47,794 )
Interest expense
   (49,070 ) (48,690 ) (48,641 )
Interest income
   16,270 22,058 38,807

Income before income taxes
   610,914 678,239 682,146
Provision for income taxes
   89,343 86,041 88,352

Net income
   $ 521,571 $ 592,198 $ 593,794

Net income per basic common share
   $ 8.40 $ 8.76 $ 7.71
Weighted-average number of basic common shares
   62,094 67,627 76,992
Net income per diluted common share
   $ 8.36 $ 8.69 $ 7.65
Weighted-average number of diluted common shares and equivalents
   62,414 68,166 77,618


	Year Ended December 31,
	2023			2022			2021
	(In thousands, except per share data)
Revenues:
Product sales	$	1,903,050		$	1,988,169		$	1,822,070
Service sales		1,053,366			983,787			963,804

Total net sales		2,956,416			2,971,956			2,785,874
Costs and operating expenses:
Cost of product sales		766,374			836,209			752,514
Cost of service sales		428,849			411,973			404,019
Selling and administrative expenses		736,014			658,026			626,968
Research and development expenses		174,945			176,190			168,358
Purchased intangibles amortization		32,558			6,366			7,143
Litigation provision		—			—			5,165
Acquired in-process research and development		—			9,797			—

Total costs and operating expenses		2,138,740			2,098,561			1,964,167

Operating income		817,676			873,395			821,707
Other income, net		807			2,228			17,203
Interest expense		(98,861	)		(48,797	)		(44,938	)
Interest income		16,621			11,020			12,221

Income before income taxes		736,243			837,846			806,193
Provision for income taxes		94,009			130,091			113,350

Net income	$	642,234		$	707,755		$	692,843

Net income per basic common share	$	10.87		$	11.80		$	11.25
Weighted-average number of basic common shares		59,076			59,985			61,575
Net income per diluted common share	$	10.84		$	11.73		$	11.17
Weighted-average number of diluted common shares and equivalents		59,270			60,331			62,028

The accompanying notes are an integral part of the consolidated financial statements.

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WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31,


2020

2019

2018


(In thousands)

Net income
   $ 521,571 $ 592,198 $ 593,794
Other comprehensive income (loss):

Foreign currency translation
   5,984 1,631 (36,279 )
Unrealized gains on investments before income taxes
   — 3,046 698
Income tax (expense)

benefit
   — (641 ) 443

Unrealized gains on investments, net of tax
   — 2,405 1,141
Retirement liability adjustment before reclassifications
   (6,786 ) (9,360 ) (6,722 )
Amounts reclassified to other expense
   1,389 1,979 48,792

Retirement liability adjustment before income taxes
   (5,397 ) (7,381 ) 42,070
Income tax benefit (expense)
   941 1,845 (14,836 )

Retirement liability adjustment, net of tax
   (4,456 ) (5,536 ) 27,234
Other comprehensive income (loss)
   1,528 (1,500 ) (7,904 )

Comprehensive income
   $ 523,099 $ 590,698 $ 585,890


	Year Ended December 31,
	2023			2022			2021
	(In thousands)
Net income	$	642,234		$	707,755		$	692,843
Other comprehensive income (loss):
Foreign currency translation		17,761			(46,135	)		(1,903	)
Unrealized losses on derivative instruments before reclassifications		(2,648	)		—			—
Amounts reclassified to interest income		(326	)		—			—

Unrealized losses on derivative instruments before income taxes		(2,974	)		—			—
Income tax benefit		714			—			—

Unrealized losses on derivative instruments, net of tax		(2,260	)		—			—
Unrealized gains (losses) on investments before income taxes		—			26			(26	)
Income tax (expense) benefit		—			(6	)		6

Unrealized gains (losses) on investments, net of tax		—			20			(20	)
Retirement liability adjustment before reclassifications		(10,153	)		20,953			9,342
Amounts reclassified to other income, net		(98	)		574			1,167

Retirement liability adjustment before income taxes		(10,251	)		21,527			10,509
Income tax benefit (expense)		2,202			(5,119	)		(2,508	)

Retirement liability adjustment, net of tax		(8,049	)		16,408			8,001
Other comprehensive income (loss)		7,452			(29,707	)		6,078

Comprehensive income	$	649,686		$	678,048		$	698,921

The accompanying notes are an integral part of the consolidated financial statements.

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WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,


2020

2019

2018


(In thousands)

Cash flows from operating activities:

Net income

$
521,571

$
592,198

$
593,794

Adjustments to reconcile net income to net cash provided by operating activities:

Stock-based compensation


36,865

38,577

37,541

Deferred income taxes


(2,693
)

9,620

2,405

Depreciation


68,685

53,839

57,952

Amortization of intangibles


56,676

51,457

50,456

Asset impairments
   6,945
—

—

Change in operating assets and liabilities, net of acquisitions:

Decrease (increase) in accounts receivable


37,467

(22,195
)

(47,921
)
Decrease (increase) in inventories


18,940

(31,854
)

(25,396
)
Increase in other current assets


(27,030
)

(10,918
)

(12,446
)
(Increase) decrease in other assets


(37,865
)

(16,470
)

6,047

Increase (decrease) in accounts payable and other current liabilities


140,598

9,784

(81,663
)
Increase in deferred revenue and customer advances


11,073

12,189

2,721

Effect of the 2017 Tax Cuts and Jobs Act


—

(3,229
)

(6,059
)
(Decrease) increase in other liabilities


(40,725
)

(39,911
)

27,015


Net cash provided by operating activities

790,507

643,087

604,446
Cash flows from investing activities:


Additions to property, plant, equipment and software capitalization

(172,384 )

(163,823 )

(96,079 )

Asset and business acquisitions, net of cash acquired

(80,545 )

—


(31,486 )

Investment in unaffiliated company

(6,143 )

(8,843 )

(7,615 )

Purchases of investments

(25,884 )

(36,951 )

(1,006,080 )

Maturities and sales of investments

20,862

978,419

2,824,562

Net cash (used in) provided by investing activities

(264,094 )

768,802

1,683,302
Cash flows from financing activities:


Proceeds from debt issuances

315,000

925,670

274

Payments on debt

(640,366 )

(390,482 )

(850,435 )

Payments of debt issuance costs

—

(2,932 )

—


Proceeds from stock plans

66,033

53,715

52,429

Purchases of treasury shares

(196,409 )

(2,469,258 )

(1,315,106 )

Proceeds from (payments for) derivative contracts

15,240

10,609

(6,684 )

Net cash used in financing activities

(440,502 )

(1,872,678 )

(2,119,522 )
Effect of exchange rate changes on cash and cash equivalents

15,069

224

(14,265 )

Increase (decrease) in cash and cash equivalents

100,980

(460,565 )

153,961
Cash and cash equivalents at beginning of period

335,715

796,280

642,319

Cash and cash equivalents at end of period

$ 436,695

$ 335,715

$ 796,280

Supplemental cash flow information:


Income taxes paid

$ 97,621

$ 87,998

$ 159,397
Interest paid

$ 52,103

$ 42,843

$ 50,798


	Year Ended December 31,
	2023			2022			2021
		(In thousands)
Cash flows from operating activities:
Net income	$	642,234		$	707,755		$	692,843
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		36,868			42,564			29,918
Deferred income taxes		(1,197	)		(31,988	)		16,633
Depreciation		84,625			71,998			71,560
Amortization of intangibles		81,280			58,425			60,120
Observable unrealized gain on investment		—			—			(9,707	)
Realized gain on sale of investment		(742	)		—			—
In-process research and development and other non-cash charges		—			10,003			—
Change in operating assets and liabilities, net of acquisitions:
Decrease (increase) in accounts receivable		49,179			(137,874	)		(62,448	)
Increase in inventories		(45,443	)		(101,902	)		(67,250	)
Increase in other current assets		(43,164	)		(23,074	)		(20,765	)
(Increase) decrease in other assets		(26,264	)		(5,514	)		4,490
(Decrease) increase in accounts payable and other current liabilities		(79,524	)		60,984			46,110
Increase in deferred revenue and customer advances		10,433			12,862			37,845
Decrease in other liabilities		(105,476	)		(52,578	)		(52,075	)

Net cash provided by operating activities		602,809			611,661			747,274
Cash flows from investing activities:
Additions to property, plant, equipment and software capitalization		(160,632	)		(175,921	)		(161,266	)
Asset and business acquisitions, net of cash acquired		(1,282,354	)		—			—
Proceeds from (investments in) equity investments, net		742			8,903			(1,788	)
Payments for intellectual property licenses		—			(7,535	)		(7,000	)
Purchases of investments		(1,791	)		(11,407	)		(279,660	)
Maturities and sales of investments		1,770			77,993			218,084

Net cash used in investing activities		(1,442,265	)		(107,967	)		(231,630	)
Cash flows from financing activities:
Proceeds from debt issuances		1,450,040			205,000			510,000
Payments on debt		(670,040	)		(145,000	)		(350,000	)
Payments of debt issuance costs		(400	)		—			(8,537	)
Proceeds from stock plans		29,792			42,801			55,643
Purchases of treasury shares		(70,277	)		(626,061	)		(648,930	)
Proceeds from derivative contracts		15,836			13,627			3,549

Net cash provided by (used in) financing activities		754,951			(509,633	)		(438,275	)
Effect of exchange rate changes on cash and cash equivalents		(948	)		(14,766	)		(12,830	)

(Decrease) increase in cash and cash equivalents		(85,453	)		(20,705	)		64,539
Cash and cash equivalents at beginning of period		480,529			501,234			436,695

Cash and cash equivalents at end of period	$	395,076		$	480,529		$	501,234

Supplemental cash flow information:
Income taxes paid	$	243,316		$	160,082		$	153,504
Interest paid	$	94,099		$	48,083		$	42,408

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ~~(DEFICIT)~~

Number of
Common
Shares

Common
Stock

Additional
Paid-In
Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Income (Loss)

Total
Stockholders’
Equity
(Deficit)

(In thousands)

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 )

Adoption of new accounting pronouncement
— — — (985 ) — — (985 )
Net income
— — — 521,571 — — 521,571
Other comprehensive income
— — — — — 1,528 1,528
Issuance of common stock for employees:

Employee Stock Purchase Plan
43 — 7,531 — — — 7,531
Stock options exercised
456 5 58,497 — — — 58,502
Treasury stock
— — — — (176,408 ) — (176,408 )
Stock-based compensation
137 2 36,684 — — — 36,686

Balance December 31, 2020
161,666 $ 1,617 $ 2,029,465 $ 7,107,989 $ (8,788,984 ) $ (117,943 ) $ 232,144


	Number of Common Shares		Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
	(In thousands)
Balance December 31, 2020		161,666	$	1,617	$	2,029,465	$	7,107,989	$	(8,788,984	)	$	(117,943	)	$	232,144
Net income		—		—		—		692,843		—			—			692,843
Other comprehensive income		—		—		—		—		—			6,078			6,078
Issuance of common stock for employees:
Employee Stock Purchase Plan		40		—		9,578		—		—			—			9,578
Stock options exercised		282		3		46,062		—		—			—			46,065
Treasury stock		—		—		—		—		(648,930	)		—			(648,930	)
Stock-based compensation		96		1		29,775		—		—			—			29,776

Balance December 31, 2021		162,084	$	1,621	$	2,114,880	$	7,800,832	$	(9,437,914	)	$	(111,865	)	$	367,554

Net income		—		—		—		707,755		—			—			707,755
Other comprehensive loss		—		—		—		—		—			(29,707	)		(29,707	)
Issuance of common stock for employees:
Employee Stock Purchase Plan		37		—		10,952		—		—			—			10,952
Stock options exercised		192		2		31,676		—		—			—			31,678
Treasury stock		—		—		—		—		(626,061	)		—			(626,061	)
Stock-based compensation		112		1		42,316		—		—			—			42,317

Balance December 31, 2022		162,425	$	1,624	$	2,199,824	$	8,508,587	$	(10,063,975	)	$	(141,572	)	$	504,488

Net income		—		—		—		642,234		—			—			642,234
Other comprehensive income		—		—		—		—		—			7,452			7,452
Issuance of common stock for employees:
Employee Stock Purchase Plan		41		—		11,124		—		—			—			11,124
Stock options exercise d		100		1		17,635		—		—			—			17,636
Treasury stock		—		—		—		—		(70,277	)		—			(70,277	)
Stock-based compensation		143		2		37,682		—		—			—			37,684

Balance December 31, 2023		162,709	$	1,627	$	2,266,265	$	9,150,821	$	(10,134,252	)	$	(134,120	)	$	1,150,341

The accompanying notes are an integral part of the consolidated financial statements.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 Description of Business and Organization

Waters Corporation (the “Company,” “we,” “our,” or “us”) is, a ~~specialty measurement company that operates with a fundamental underlying purpose to advance the science that enables our customers to enhance human health~~global leader in analytical instruments and ~~well-being. The Company~~software, has pioneered ~~analytical workflow solutions involving liquid~~innovations in chromatography, mass spectrometry and thermal analysis ~~innovations~~ serving ~~the~~ life, materials and food sciences for more than 6065 years. The Company primarily designs, manufactures, sells and services ~~high performance~~high-performance liquid chromatography (“HPLC”), ~~ultra performance~~ultra-performance liquid chromatography (“~~UPLC~~

(“LC-MS”)

and sold as integrated instrument systems using common software platforms. LC is a standard technique and is utilized in a broad range of industries to detect, identify, monitor and measure the chemical, physical and biological composition of materials, and to purify a full range of compounds. MS technology, principally in conjunction with chromatography, is employed in drug discovery and development, including clinical trial testing, the analysis of proteins in disease processes (known as “proteomics”), nutritional safety analysis and environmental testing.

LC-MS

instruments combine a liquid phase sample introduction and separation system with mass spectrometric compound identification and quantification. In addition, the Company designs, manufactures, sells and services thermal analysis, rheometry and calorimetry instruments through its TA

Instruments product line. These instruments are used in predicting the suitability and stability of fine chemicals, pharmaceuticals, water, polymers, metals and viscous liquids for various industrial, consumer goods and healthcare products, as well as for life science research. The Company is also a developer and supplier of advanced software-based products that interface with the Company’s instruments, as well as other manufacturers’ instruments.

On May 16, 2023, the Company completed the acquisition of Wyatt Technology, LLC and its three operating subsidiaries, Wyatt Technology Europe GmbH, Wyatt Technology France and Wyatt Technology UK Ltd. (collectively, “Wyatt”), for a total purchase price of $1.3 billion in cash. Wyatt is a pioneer in innovative light scattering and field-flow fractionation instruments, software, accessories and services. The acquisition will expand Waters’ portfolio and increase exposure to large molecule applications. The Company financed this transaction with a combination of cash on its balance sheet and borrowings under its revolving credit facility.

2 Basis of Presentation and Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities at the dates of the financial statements. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, goodwill and intangible assets, income taxes, litigation ~~stock-based compensation~~ and ~~contingencies, and to a lesser extent, product returns and allowances, bad debts,~~ inventory ~~valuation, warranty and installation provisions, retirement plan obligations and equity investments, which are not as significant to our financial statements.~~valuation. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual amounts may differ from these estimates under different assumptions or conditions.

Risks and Uncertainties

The Company is subject to risks common to companies in the analytical instrument industry, including, but not limited to, global economic and financial market conditions, fluctuations in foreign currency exchange rates, fluctuations in customer demand, development by its competitors of new technological innovations, costs of developing new technologies, levels of debt and debt service requirements, risk of disruption, dependence on key personnel, protection and litigation of proprietary technology, shifts in taxable income between tax jurisdictions and compliance with regulations of the U.S. Food and Drug Administration and similar foreign regulatory authorities and agencies.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Both the Company’s domestic and international operations have been and continue to be adversely affected by the ongoing global pandemic of a novel strain of coronavirus~~

~~(“COVID-19”) and~~

~~the resulting volatility and uncertainty it has caused in the U.S. and international markets. Since being declared a pandemic in March 2020 by the World Health Organization,~~

~~COVID-19~~

~~has continued to spread throughout the U.S. and globally.~~

~~The COVID-19 pandemic~~

has caused significant volatility and uncertainty in U.S. and international markets, which has disrupted and is expected to continue to disrupt the Company’s business and could result in a prolonged economic downturn. It is unclear whether increases in the number of infections will continue and amplify as certain areas of the economy

~~are re-opened and~~

~~restrictions are eased, or whether so called “second waves”~~

~~of COVID-19~~

~~infections will be experienced in the U.S. and globally. The Company operates in over 35 countries, including those in the regions most impacted by~~

~~the COVID-19 pandemic.~~

~~COVID-19~~

and the related economic uncertainty adversely impacted sales of the Company for the year ended December 31, 2020; however, through the date of the issuance of these financial statements, the Company’s consolidated financial position, results of operations and cash flows have not been materially impacted and, thus, the Company concluded that no interim goodwill or long-lived asset impairment analyses were required. Further, there have been no violations of debt covenants. Any prolonged material disruption to the Company’s employees, suppliers, manufacturing, or customers could result in a material impact to its consolidated financial position, results of operations or cash flows in the future.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries, which are wholly owned. The Company consolidates entities in which it owns or controls ~~fifty percent~~50% or more of the voting shares. All inter-company balances and transactions have been eliminated.

Translation of Foreign Currencies

The functional currency of each of the Company’s foreign operating subsidiaries is the local currency of its country of domicile, except for the Company’s subsidiaries in Hong Kong, Singapore and the Cayman Islands, where the underlying transactional cash flows are denominated in currencies other than the respective local currency of domicile. The functional currency of the Hong Kong, Singapore and Cayman Islands subsidiaries is the U.S. dollar, based on the respective entity’s cash flows.

For ~~most of~~ the Company’s foreign operations, assets and liabilities are translated into U.S. dollars at exchange rates prevailing on the balance sheet date, while revenues and expenses are translated at average exchange rates prevailing during the respective period. Any resulting translation gains or losses are included in accumulated other comprehensive ~~income~~loss in the consolidated balance sheets.

The Company’s net sales derived from operations outside the United States were ~~71%~~69%, ~~71%~~70% and 72% in ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively. Gains and losses from foreign currency transactions are included primarily in cost of sales in the consolidated statements of operations. In ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, foreign currency transactions resulted in net losses of $7$16 million, $9$31 million and $3$5 million, respectively.

Seasonality of Business

The Company typically experiences seasonality in its orders that is reflected as an increase in sales in the fourth quarter, as a result of purchasing habits for capital goods of customers that tend to exhaust their spending budgets by calendar ~~year end.~~

year-end.

Cash, Cash Equivalents and Investments

Cash equivalents represent highly liquid investments, with original maturities of 90 days or less, primarily in bank deposits, U.S. treasury bill money market funds and commercial paper. Investments with longer maturities

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

are classified as investments, and are held primarily in U.S. treasury bills, U.S. dollar-denominated treasury bills and commercial paper, bank deposits and corporate debt securities.

Investments are classified as

available-for-sale

(“AFS”) debt securities. If the AFS debt security’s fair value exceeds the security’s amortized cost the unrealized gain is recognized in accumulated other comprehensive ~~income~~loss in stockholders’ equity (deficit), net of the related tax effects. If the AFS debt security’s fair value declines below its amortized cost the Company considers all available evidence to evaluate the extent to which the decline is due to credit-related factors or noncredit-related factors. If the decline is due to noncredit-related factors then no credit loss is recorded and the unrealized loss is recognized in accumulated other comprehensive income in stockholders’ equity, ~~(deficit),~~ net of the related tax effects. If the decline is considered to be a credit-related impairment, it is recognized as an allowance on the consolidated balance sheet with a corresponding charge to the statement of operations. The credit allowance is limited to the difference between the fair value and the amortized cost basis. No credit-related allowances or impairments have been recognized on the Company’s investments in

available-for-sale

debt securities. The Company classifies its investments exclusive of those categorized as cash equivalents.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company maintains cash balances in various operating accounts in excess of federally insured limits, and in foreign subsidiary accounts in currencies other than the U.S. dollar. As of December 31, ~~2020~~2023 and ~~2019, $364~~2022, $321 million out of ~~$443~~$396 million and ~~$249~~$472 million out of ~~$337~~$481 million, respectively, of the Company’s total cash, cash equivalents and investments were held by foreign subsidiaries. In addition, ~~$254~~$233 million out of ~~$443~~$396 million and ~~$176~~$336 million out of ~~$337~~$481 million of cash, cash equivalents and investments were held in currencies other than the U.S. dollar at December 31, ~~2020~~2023 and ~~2019,~~2022, respectively.

Accounts Receivable and Allowance for Credit Losses

The Company adopted new accounting guidance regarding the accounting for credit losses as of January 1, 2020 using a modified retrospective transition approach that was applied to the trade receivable balance as of January 1, 2020. This new accounting guidance required the Company to move from an incurred loss model to a current expected credit loss (“CECL”) model. Upon adoption, the Company recorded a net decrease of approximately $1 million to the Company’s stockholders’ deficit as of January 1, 2020. The adoption of this standard did not have a material impact on the Company’s balance sheets, results of operations or cash flows.

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company has very limited use of rebates and other cash considerations payable to customers and, as a result, the transaction price determination does not have any material variable consideration. The Company does not consider there to be significant concentrations of credit risk with respect to trade receivables due to the short-term nature of the balances, the Company having a large and diverse customer base, and the Company having a strong historical experience of collecting receivables with minimal defaults. As a result, credit risk is considered low across territories and trade receivables are considered to be a single class of financial asset. The allowance for credit losses is based on a number of factors and is calculated by applying a historical loss rate to trade receivable aging balances to estimate a general reserve balance along with an additional adjustment for any specific receivables with known or anticipated issues affecting the likelihood of recovery. Past due balances with a probability of default based on historical data as well as relevant available forward-looking information are included in the specific adjustment. The historical loss rate is reviewed on at least an annual basis and the allowance for credit losses is reviewed quarterly for any required adjustments. The Company does not have any

off-balance

sheet credit exposure related to its customers.

Trade receivables related to instrument sales are collateralized by the instrument that is sold. If there is a risk of default related to a receivable that is collateralized, then the fair value of the collateral is calculated and adjusted for the cost to

re-possess,

refurbish and

re-sell

the instrument. This adjusted fair value is compared to the receivable balance and the difference would be recorded as the expected credit loss.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~Any recovery of amounts that were written off prior to adoption of the new CECL standard that are received after adoption are recorded in income in the period in which they are received.~~

The following is a summary of the activity of the Company’s allowance for credit losses for the ~~year~~twelve months ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (in thousands)~~. The December 31, 2020 balance is calculated using the CECL method and the December 31, 2019 and 2018 balances are calculated using the incurred loss method under legacy GAAP:~~:

Balance at
Beginning of Period

Impact of
CECL
Adoption

Additions

Deduction
s

Balance at
End of Period

Allowance for Doubtful Accounts

December 31, 2020
   $ 9,560    $ 985    $ 9,051    $ (5,215 ) $ 14,381
December 31, 2019
   $ 7,663    $ —      $ 4,701    $ (2,804 ) $ 9,560
December 31, 2018
   $ 6,109    $ —      $ 6,333    $ (4,779 ) $ 7,663


	Balance at Beginning of Period		Additions		Deductions			Balance at End of Period
Allowance for Credit Losses
December 31, 2023	$	14,311	$	8,120	$	(3,096	)	$	19,335
December 31, 2022	$	13,228	$	6,509	$	(5,426	)	$	14,311
December 31, 2021	$	14,381	$	5,380	$	(6,533	)	$	13,228

Concentration of Credit Risk

The Company sells its products and services to a significant number of large and small customers throughout the world, with net sales to the pharmaceutical industry of approximately 57%, 59% and 60% in ~~2020~~

2023, 2022 and ~~57% in both 2019 and 2018.~~2021, respectively. None of the Company’s individual customers accounted for more than 2% of annual Company sales in ~~2020, 2019~~2023, 2022 or ~~2018.~~2021. The Company performs continuing credit evaluations of its customers and generally does not require collateral, but in certain circumstances may require letters of credit or deposits. Historically, the Company has not experienced significant ~~bad debt~~credit losses.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Inventory

The Company values all of its inventories at the lower of cost or net realizable value on a

first-in,

first-out

basis (“FIFO”).

Income Taxes

The accounting standards for income taxes require that a company continually evaluate the necessity of establishing or changing a valuation allowance for deferred tax assets depending on whether it is more likely than not that the actual benefit of those assets will be realized in future periods.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~As part of the 2017 Tax Act, there is a provision for the taxation of~~

~~certain off-shore earnings~~

~~referred to as the Global~~

~~Intangible Low-Taxed Income~~

~~(“GILTI”) provision. This provision~~

~~taxes off-shore earnings~~

~~at a rate of 10.5%, partially offset with foreign tax credits. In connection with this provision, the Company’s accounting policy is to treat this tax as a current period cost.~~

Leases

The Company adopted new accounting guidance regarding the accounting for leases as of January 1, 2019 using a modified retrospective transition approach that was applied to leases existing as of, or entered into after, January 1, 2019. The Company elected the package of transition provisions available for expired or existing contracts, which allowed the Company to carryforward historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs. Upon adoption, the Company recorded a

~~right-of-use~~

lease asset and lease liability in the amount of $100 million as of January 1, 2019. The adoption of this standard did not have a material impact on the Company’s results of operations, cash flows and retained earnings.

The Company’s lease portfolio consists primarily of operating leases. The Company’s operating leases consist of property leases for sales, demonstration, laboratory, warehouse and office spaces, automotive leases for sales and service personnel and equipment leases, primarily used in our manufacturing and distribution operations. The Company categorizes leases as either operating or finance leases at the commencement date of the lease. The Company does not have any material financing leases.

The Company makes variable lease payments that do not depend on a rate or index, primarily for items such as real estate taxes and other expenses. These expenses are recorded as variable costs in the period incurred. For the years ended December 31, ~~2020~~2023, 2022 and ~~2019, respectively,~~2021, variable costs incurred were not material.

The Company’s lease agreements may include tenant improvement allowances, rent holidays, and/or contingent rent provisions as well as a certain number of these leases contain rental escalation clauses that are either fixed or adjusted periodically for inflation of market rates which are factored into our determination of lease payments at lease inception. The Company’s leases also sometimes include renewal options and/or termination options which are included in the determination of the lease term when they are reasonably certain to be exercised.

The Company has lease agreements which contain lease and

non-lease

components, which are accounted for as a single lease component for all underlying classes of assets.

For leases with terms greater than 12 months, the Company records a

right-of-use

asset and lease liability at the present value of lease payments over the term of the leases and records rent expense on a straight-line basis over the lease term. The Company has elected not to apply the recognition requirements to short-term leases with terms less than 12 months. For short-term leases, the Company recognizes lease payments in net income on a

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

straight-line basis over the term of the lease. For the years ended December 31, ~~2020 or 2019, respectively,~~2023, 2022 and 2021, costs incurred related to short-term leases were not material.

When available, the Company uses the rate implicit in the lease to discount lease payments to determine the present value of the lease liabilities; however, most of the leases do not provide a readily determinable implicit rate and, as required by the accounting guidance, the Company estimates its incremental secured borrowing rate to discount the lease payments based on information available at lease commencement (or, for the leases in existence on the adoption date, the January 1, 2019 information). The Company’s incremental borrowing rate reflects the estimated rate of interest that the Company would pay to borrow on a collateralized basis over a similar term to the lease payments in a similar economic environment.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Expenditures for maintenance and repairs are charged to expense, while the costs of significant improvements are capitalized. Depreciation is provided using the straight-line method over the following estimated useful lives: buildings —

fifteen

thirty-nine

years; building

improvements —

five

to ten years; leasehold improvements — the shorter of the economic useful life or life of lease; and production and other equipment — three to ten years. Upon retirement or sale, the cost of the assets disposed of and the related accumulated depreciation are eliminated from the consolidated balance sheets and related gains or losses are reflected in the consolidated statements of operations.

Asset Impairments

The Company reviews its long-lived assets for impairment in accordance with the accounting standards for property, plant and equipment. Whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable, the Company evaluates the recoverability of the carrying value of the asset based on the expected future cash flows, relying on a number of factors, including, but not limited to, operating results, business plans, economic projections and anticipated future cash flows. If the asset is deemed not recoverable, it is written down to fair value and the impairment is recorded in the consolidated statements of operations.

During ~~2020,~~2022, the Company recorded a total

non-cash

charge of ~~$10~~$6 million in other income (expense), net in the consolidated statement of operations for the impairment of ~~certain intangible assets associated with its 2014 acquisition~~various equity investments without readily determinable fair values accounted for under the measurement alternative or the equity method of ~~Medimass Research Development and Service Kft (“Medimass”).~~accounting. The ~~impairment charge was due to a shift in strategic priorities. In conjunction with~~impairments resulted from the ~~intangible asset impairment the Company also reduced its liability for contingent consideration of $3 million during 2020 as the carrying value of this liability is based on the future sales~~substantial doubt of the ~~Medimass intangible assets that were impaired. The net impact of $7 million is reported separately within the consolidated statements of operations.~~ investees ability to continue as a going concern.

Business Combinations and Asset Acquisitions

The Company accounts for business acquisitions under the accounting standards for business combinations. The results of each acquisition are included in the Company’s consolidated results as of the acquisition date and the purchase price of an acquisition is allocated to tangible and intangible assets and assumed liabilities based on their estimated fair values. Any excess of the fair value consideration transferred over the estimated fair values of the net assets acquired is recognized as goodwill. ~~Acquired~~

~~in-process~~

~~research~~We use assumptions and ~~development (“IPR&D”) included~~estimates in ~~a business combination is capitalized as an indefinite-lived intangible asset. Development costs incurred after~~determining the ~~acquisition are expensed as incurred~~fair value of assets acquired and ~~acquired IPR&D is tested for impairment annually until completion~~liabilities assumed. The determination of the ~~acquired programs. Upon commercialization, this indefinite-lived~~fair value of intangible assets, which represents a significant portion of the purchase price in our recent acquisition of Wyatt, requires the use of significant judgment with regard to (i) the fair value; and (ii) whether such intangibles are amortizable or

non-amortizable

and, if the former, the period and the method by which the intangible asset ~~is then accounted for~~will be amortized. We utilize commonly accepted valuation techniques, such as ~~a finite-lived~~the income, cost and market approaches, as appropriate, in establishing the fair value of intangible ~~asset and amortized~~

sets. Typically, key assumptions include projections of cash flows that arise from identifiable intangible assets of acquired businesses as well as discount rates based on a straight-line basis over its estimated useful life, subject to periodic impairment reviews. If the research and development project is abandoned, the indefinite-lived asset is charged to expense. Legal costs, due diligence costs, business valuation costs and all other business acquisition costs are expensed when incurred.

The Company also acquires intellectual property through licensing arrangements. These arrangements often require upfront payments and may include additional milestone or royalty payments, contingent upon certain future events. IPR&D acquired in an asset acquisition (as opposed to a business combination) is expensed immediately unless there is an alternative future use. Subsequent payments made for the achievement of milestones are evaluated to determine whether they have an alternative future use or should be expensed. Payments made to third parties subsequent to commercialization are capitalized and amortized over the remaining useful lifeanalysis of the ~~related asset, and are classified as intangible~~weighted average cost of capital, adjusted for specific risks associated with the assets.

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~~NOTES~~N

OTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

cash

flow projections for the customer relationships acquired included significant judgments and assumptions related to customer attrition rate, discount rate, and forecasted revenues.

Goodwill and Other Intangible Assets

Goodwill and indefinite-lived intangible assets are not amortized, but are evaluated for impairment on an annual basis, or on an interim basis when events or changes in circumstances indicate that the carrying value may not be recoverable. In assessing the recoverability of goodwill and indefinite-lived intangible assets, we must make assumptions regarding the estimated future cash flows, including forecasted revenue growth and the discount rate to determine the fair value of these assets. If these estimates or their related assumptions change in the future, we may be required to record impairment charges against these assets in the reporting period in which the impairment is determined.

~~The Company tests~~We test goodwill for ~~goodwill~~ impairment ~~using a fair-value approach~~ at the reporting unit level, ~~annually,~~which is the operating segment or ~~earlier, if~~one level below an ~~event occurs or circumstances change~~ operating segment. We have the option of performing a qualitative assessment to determine whether further impairment testing is necessary before performing the quantitative assessment. If as a result of the qualitative assessment, it is

more-likely-than-not

that ~~would more likely than not reduce~~ the fair value of a reporting unit ~~below~~is less than its carrying ~~amount.~~amount, a quantitative impairment test will be required. Otherwise, no further testing will be required. If a quantitative impairment test is performed, we compare the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. Estimating the fair value of the reporting units requires significant judgment by management. If the carrying amount of a reporting unit exceeds the fair value of the reporting unit, an impairment charge is recognized for the amount by which the carrying value amount exceeds the reporting unit’s fair value up to the total amount of goodwill allocated to the reporting unit. The Company performs an annual goodwill impairment assessment for its reporting units as of December 31 each year. The ~~goodwill and other intangible assets~~

accounting standards define a reporting unit as an operating segment, or one level below an operating segment, if discrete financial information is prepared and reviewed by management. For goodwill impairment review purposes, the Company has 2

two

reporting units: Waters

and TA

.TA. Goodwill is allocated to the reporting units at the time of acquisition.

As of January 1, 2020, the Company adopted a new accounting standard which eliminated the requirement to calculate the implied fair value of goodwill as noted above to measure a goodwill impairment charge. Under the prior accounting standard, if a reporting unit’s carrying amount exceeds its estimated fair value, goodwill impairment is recognized to the extent that the carrying amount of goodwill exceeds the implied fair value of the goodwill. Under the new accounting standard impairment assessment, an impairment charge is based on the excess of a reporting unit’s carrying amount over its fair value. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to the amount of the excess carrying amount of the reporting unit over its fair value This impairment is limited to the total amount of goodwill allocated to that reporting unit. The fair value of reporting units was estimated using a discounted cash flows technique, which includes certain management assumptions, such as estimated future cash flows, estimated growth rates and discount rates.

The Company’s intangible assets include purchased technology; capitalized ~~software development costs;~~software; costs associated with acquiring Company patents, trademarks and intellectual properties, such as licenses; and acquired IPR&D. Purchased intangibles are recorded at their fair market values as of the acquisition date and amortized over their estimated useful lives, ranging from

one

to fifteen years. Other intangibles are amortized over a period ranging from

one

to ten years. Acquired IPR&D is amortized from the date of completion of the acquired program over its estimated useful life. ~~IPR&D~~

Goodwill totaled $1.3 billion and ~~indefinite-lived intangibles are tested annually for impairment.~~$430 million as of December 31, 2023 and 2022, respectively. Net intangible assets and long-lived assets amounted to $629 million and $639 million, as of December 31, 2023, respectively, and $227 million and $582 million as of December 31, 2022, respectively.

Software Development Costs

The Company capitalizes internal and external software development costs for products offered for sale in accordance with the accounting standards for the costs of software to be sold, leased, or otherwise marketed. Capitalized costs are amortized to cost of sales over the period of economic benefit, which approximates a straight-line basis over the estimated useful lives of the related software products, generally

three

to ten years.

The Company capitalized ~~$53~~ $

million, $

4046

million and $

3436

million of direct expenses that were related to the development of software in ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively. Net capitalized software included in intangible assets totaled

~~175~~165

million and $

~~149~~148

million at December

31,

~~2020~~

2023 and

~~2019~~

, 2022, respectively. See Note

~~, “Goodwill~~ Goodwill and Other ~~Intangibles”.~~Intangibles.

The Company capitalizes software development costs for internal use. Capitalized internal software development costs are amortized over the period of economic benefit, which approximates a straight-line

basis

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

over

ten ~~years.~~years

. Net capitalized internal software included in property, plant and equipment totaled $8$

million and $3$

million at December 31, ~~2020~~2023 and ~~2019,~~2022, respectively.

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Other Investments

The Company accounts for its investments that represent less than twenty percent ownership, and for which the Company does not have the ability to exercise significant influence, using the accounting standards for investments in equity securities. Investments for which the Company does not have the ability to exercise significant influence, and for which there is not a readily determinable market value, are accounted for at cost, adjusted for subsequent observable price changes as applicable. The Company periodically evaluates the carrying value of its investments for which the Company does not have the ability to exercise significant influence, and for which there is not a readily determinable fair value and carries them at cost, less impairment, adjusted for subsequent observable price changes. For equity investments in which the Company has the ability to exercise significant influence over operating and financial policies of the investee, the equity method of accounting is used. The Company’s share of net income or losses of equity method investments is included in the consolidated statements of operations and was not material in any period presented.

During the year ended 2023, the Company received $1 million in proceeds from, and made no investments in, unaffiliated companies. During the year ended December 31, ~~2020 and year~~2022 the Company received $10 million in proceeds from unaf

iliated companies. During the years ended December 31, ~~2019,~~2022 and 2021, the Company made investments of $1 million and $2 million in unaffiliated companies, respectively.

In 2022, the Company recorded a realized gain of $7 million in other income (expense), net in the consolidated statement of operations due to the sales of various equity investments as well as incurring $6 million ~~and $9~~in impairment losses. The Company also recognized an additional $2 million ~~respectively. During~~

non-cash

gain on the ~~year ended December 31, 2018,~~cashless exercise of a warrant.

In 2021, the Company ~~made a $8~~recorded an unrealized gain of $10 million ~~investment in a developer of analytical system solutions~~

~~used~~due to ~~make measurements, predict stability and accelerate product discovery~~an observable change in the ~~routine analytic, process monitoring and quality control release processes for life science and biopharmaceutical markets.~~fair value of an existing investment the Company does not have the ability to exercise significant influence over.

Fair Value Measurements

In accordance with the accounting standards for fair value measurements and disclosures, certain of the Company’s assets and liabilities are measured at fair value on a recurring basis as of December 31, ~~2020~~2023 and ~~2019.~~2022. Fair values determined by Level 1 inputs utilize observable data, such as quoted prices in active markets. Fair values determined by Level 2 inputs utilize data points other than quoted prices in active markets that are observable either directly or indirectly. Fair values determined by Level 3 inputs utilize unobservable data points for which there is little or no market data, which require the reporting entity to develop its own assumptions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2023 (in thousands):


	Total at December 31, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Time deposits	$	898	$	—	$	898	$	—
Waters 401(k) Restoration Plan assets		28,995		28,995		—		—
Foreign currency exchange contracts		183		—		183		—
Interest rate cross-currency swap agreements		4,835		—		4,835		—

Total	$	34,911	$	28,995	$	5,916	$	—

Liabilities:
Foreign currency exchange contracts	$	207	$	—	$	207	$	—
Interest rate cross-currency swap agreements		13,384		—		13,384		—
Interest rate swap cash flow hedge		2,974		—		2,974		—

Total	$	16,565	$	—	$	16,565	$	—

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, ~~2020~~2022 (in thousands):

Total at
December 31,
2020

Quoted Prices
in Active
Markets

for Identical
Assets

(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs

(Level 3)

Assets:

Time deposits
   $ 6,451    $ —    $ 6,451    $ —
Waters 401(k) Restoration Plan assets
   38,988    38,988    0    —
Foreign currency exchange contracts
   836    —    836    —

Total
   $ 46,275    $ 38,988    $ 7,287    $ 0

Liabilities:

Contingent consideration
   $ 1,185    $ —    $ —    $ 1,185
Foreign currency exchange contracts
   185    —    185    —
Interest rate cross-currency swap agreements
   44,996    —    44,996    —

Total
   $ 46,366    $ 0    $ 45,181    $ 1,185

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2019 (in thousands):~~

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, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Time deposits	$	862	$	—	$	862	$	—
Waters 401(k) Restoration Plan assets		25,532		25,532		—		—
Foreign currency exchange contracts		231		—		231		—
Interest rate cross-currency swap agreements		19,163		—		19,163		—

Total	$	45,788	$	25,532	$	20,256	$	—

Liabilities:
Contingent consideration	$	1,509	$	—	$	—	$	1,509
Foreign currency exchange contracts		98		—		98		—
Interest rate cross-currency swap agreements		4,783		—		4,783		—

Total	$	6,390	$	—	$	4,881	$	1,509

Fair Value of 401(k) Restoration Plan Assets

The 401(k) Restoration Plan is a nonqualified defined contribution plan and the assets were held in registered mutual funds and have been classified as Level 1. The fair values of the assets in the plan are determined through market and observable sources from daily quoted prices on nationally recognized securities exchanges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Fair Value of Cash Equivalents, Investments, Foreign Currency Exchange Contracts, Interest Rate Cross-Currency Swaps Agreements and Interest Rate ~~Cross-Currency~~ Swap ~~Agreements~~Cash Flow Hedges

The fair values of the Company’s cash equivalents, investments, ~~and~~ foreign currency exchange contracts, interest rate cross-currency swap agreements and interest rate swap cash flow hedges are determined through market and observable sources and have been classified as Level 2. These assets and liabilities have been initially valued at the transaction price and subsequently valued, typically utilizing third-party pricing services. The pricing services use many inputs to determine value, including reportable trades, benchmark yields, credit spreads, broker/dealer quotes, current spot rates and other industry and economic events. The Company validates the prices provided by third-party pricing services by reviewing their pricing methods and obtaining market values from other pricing sources.

Fair Value of Contingent Consideration

The fair value of the Company’s liability for contingent consideration ~~relates to earnout payments in connection with certain acquisitions and~~ is determined using a probability-weighted discounted cash flow model, which uses significant unobservable inputs, and has been classified as Level 3. Subsequent changes in the fair value of the contingent consideration liability are recorded in the results of operations. The fair value of the contingent consideration liability associated with future earnout payments is based on several factors, including the estimated future results and a discount rate that reflects both the likelihood of achieving the estimated future results and the Company’s creditworthiness. A change in any of these unobservable inputs can significantly change the fair value of the contingent consideration.

The fair value of future contingent consideration payments related to the December 2020 acquisition of ISS was estimated to be $1 million at December 31, 2020. The fair value is based on the achievement of certain revenue and customer account over the next two years after the acquisition date.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~The fair value of future contingent consideration payments related to the July 2014 acquisition of Medimass Research, Development and Service Kft. was estimated to be $3~~

million at December 31, 2019, based on the Company’s best estimate, as the earnout is based on future sales of certain products, some of which are currently in development, through 2034. During 2020, due to a shift in strategic priorities, the Company recorded a

~~non-cash~~

charge of $10 million for the impairment of certain intangible assets associated with the Medimass acquisition. In conjunction with the intangible asset impairment, the Company also reduced its liability for contingent consideration of $3 million during 2020 as the carrying value of this liability is based on the future sales of the Medimass intangible assets that were impaired.

Fair Value of Other Financial Instruments

The Company’s accounts receivable and accounts payable ~~and variable interest rate debt~~ are recorded at cost, which approximates fair value due to their short-term nature. The carrying value of the Company’s variable interest rate debt approximates fair value due to the variable nature of the interest rate. The carrying value of the Company’s fixed interest rate debt was ~~$910 million and $1.0~~$1.3 billion at both December 31, ~~2020~~2023 and ~~2019, respectively.~~2022. The fair value of the Company’s fixed interest rate debt was estimated using discounted cash flow models, based on estimated current rates offered for similar debt under current market conditions for the Company. The fair value of the Company’s fixed interest rate debt was estimated to be ~~$963 million~~$1.2 billion and ~~$1.0~~$1.1 billion at December 31, ~~2020~~2023 and ~~2019,~~2022, respectively, using Level 2 inputs.

Derivative Transactions

non-U.S.

dollar foreign subsidiaries’ financial statements into U.S. dollars and when any of the Company’s subsidiaries purchase or sell products or services in a currency other than its own currency.

yen-denominated

net asset investments. The Company presents the derivative transactions in financing activities in the statement of cash flows.

Foreign Currency Exchange Contracts

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

receivable

and accounts payable, and the Company’s net worldwide intercompany receivables and payables, which are eliminated in consolidation. The Company periodically aggregates its net worldwide balances by currency and then enters into foreign currency exchange contracts that mature within 90 days to hedge a portion of the remaining balance to minimize some of the Company’s currency price risk exposure. The foreign currency exchange contracts are not designated for hedge accounting treatment. Principal hedged currencies include the ~~Euro,~~euro, Japanese yen, British pound, Mexican peso and Brazilian real.

Cash Flow Hedges

3-month

Term SOFR. The variable rate interest payments create interest risk for the Company as interest payments will fluctuate based on changes in the contractually specified interest rate index over the life of the Credit Facility. In order to reduce interest rate risk, the Company enters into interest rate swaps that will effectively

lock-in

the forecasted interest payments on the variable rate borrowing over its term. The interest rate swaps represent cash flow hedges and are assessed for hedge effectiveness each reporting period. When the hedge relationship is highly effective at achieving offsetting changes in cash flows, the Company will record the entire change in fair value of the interest rate swaps in accumulated other comprehensive loss. The amount in accumulated other comprehensive loss is reclassified to earnings in the period that the underlying transaction impacts consolidated earnings. If it becomes probable that the forecasted transaction will not occur, the hedge relationship will be

0de-designated

and amounts accumulated in other comprehensive loss will be reclassified to earnings in the current period. Interest settlements due to benchmark interest rate changes are recorded in interest income or interest expense. For the year ended December 31, 2023, the Company did not have any cash flow hedges that were deemed ineffective.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Interest Rate Cross-Currency Swap Agreements

of December 31, ~~2020,~~2023, the Company had entered into ~~three-year~~ interest rate cross-currency swap derivative agreements with durations up to three years with an aggregate notional value of ~~$560~~$

625

million to hedge the variability in the movement of foreign currency exchange rates on a portion of its ~~Euro-denominated~~ euro-denominated and

yen-denominated

net asset investments. Under hedge accounting, the change in fair value of the derivative that relates to changes in the foreign currency spot rate are recorded in the currency translation adjustment in other comprehensive income and remain in accumulated other comprehensive ~~income~~loss in stockholders’ equity ~~(deficit)~~ until the sale or substantial liquidation of the foreign operation. The difference between the interest rate received and paid under the interest rate cross-currency swap derivative agreement is recorded in interest income in the statement of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s foreign currency exchange contracts, ~~and~~ interest rate cross-currency swap agreements in

cand

~~luded~~interest rate swap agreements designated as cash flow hedges are included in the consolidated balance sheets are classified as follows (in thousands):


	December 31, 2023					December 31, 2022
	Notional Value		Fair Value			Notional Value		Fair Value
Foreign currency exchange contracts:
Other current assets	$	24,155	$	183		$	42,047	$	231
Other current liabilities	$	16,000	$	207		$	13,450	$	98

Interest rate cross-currency swap agreements:
Other assets	$	220,000	$	4,835		$	400,000	$	19,163
Other liabilities	$	405,000	$	13,384		$	185,000	$	4,783
Accumulated other comprehensive (loss) income			$	(7,975	)			$	10,026

Interest rate swap cash flow hedges:
Other liabilities	$	100,000	$	2,974		$	—	$	—
Accumulated other comprehensive (loss) income			$	(2,974	)			$	—

December 31, 2020

December 31, 2019


Notional Value

Fair Value

Notional Value

Fair Value

Foreign currency exchange contracts:

Other current assets
   $ 66,690    $ 836 $ 119,576    $ 16
Other current liabilities
   $ 20,000    $ 185 $ 29,495    $ 1,028

Interest rate cross-currency swap agreements:

Other (liabilities) assets
   $ 560,000    $ (44,996 ) $ 560,000    $ 4,485
Accumulated other comprehensive loss (income)
      $ 44,996    $ (4,485 )

The following is a summary of the activity included in the consolidated statements of operations and statements of comprehensive income related to the foreign currency exchange contracts, interest rate cross-currency swap agreements and interest rate swap agreements designated as cash flow hedges (in thousands):

Financial
Statement
Classification

Year Ended December 31,


2020

2019

2018

Foreign currency exchange contracts:

Realized gains (losses) on closed contracts
   Cost of sales    $ 1,444 $ (3,552 ) $ (6,684 )
Unrealized gains (losses) on open contracts
   Cost of sales    1,663 (1,292 ) (105 )

Cumulative net
pre-tax
gains (losses)
   Cost of sales    $ 3,107 $ (4,844 ) $ (6,789 )

Interest rate cross-currency swap agreements:

Interest earned
   Interest income    $ 15,296 $ 11,709 $ 2,713
Unrealized (losses) gains

on open contracts
   Stockholders’ equity (deficit)    $ (44,996 ) $ 4,485 $ 1,093


	Financial Statement Classification		Year Ended December 31,
	Financial Statement Classification		2023			2022			2021
Foreign currency exchange contracts:
Realized gains (losses) on closed contracts		Cost of sales	$	224		$	(3,855	)	$	(1,973	)
Unrealized losses on open contracts		Cost of sales		(156	)		(176	)		(343	)

Cumulative net pre-tax gains (losses)		Cost of sales	$	68		$	(4,031	)	$	(2,316	)

Interest rate cross-currency swap agreements:
Interest earned		Interest income	$	10,974		$	8,872		$	11,084
Unrealized (losses) gains on open contracts		Accumulated other comprehensive loss	$	(18,001	)	$	25,969		$	29,052
Interest rate swap cash flow hedges:
Interest earned		Interest income	$	326		$	—		$	—
Unrealized losses on open contracts		Accumulated other comprehensive loss	$	(2,974	)	$	—		$	—

Stockholders’ Equity

~~Equity~~

~~(Deficit)~~

In ~~January 2019,~~December 2023, the Company’s Board of Directors authorized the ~~Company to~~extension of the existing share repurchase ~~up to $4 billion of its outstanding common stock over a~~program through January 21, 2025. The Company’s remaining authorization is $

~~two-year~~1.0

~~period.~~ billion. During ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, the Company repurchased ~~0.8~~

0.2 million, ~~11.1~~2.0 million and ~~6.8~~2.0 million shares of the Company’s outstanding common stock at a cost of ~~$167~~$58 million, ~~$2.5 billion~~$616 million and ~~$1.3 billion,~~$640 million, respectively, under the January 2019 authorization and other previously announced programs. In addition, the Company repurchased $9$12 million, $8$11 million and ~~$10~~$9 million of common stock related to the vesting of restricted stock units during the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively. As of December 31, ~~2020,~~2023, the Company has a total of ~~$1.5 billion~~$1.0

illion authorized for future repurchases. ~~In December 2020, the Company’s Board of Directors authorized the extension of the share repurchase program through January 21, 2023.~~

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company accrued $20 million and $23 million at December 31, 2019 and 2018, respectively, as a result of treasury stock purchases that were unsettled. These transactions were settled in January 2020 and 2019, respectively. There was no such accrual at December 31, 2020.

Revenue Recognition

The Company recognizes revenue on product sales at the time control of the product transfers to the customer. ~~In substantially all~~Certain of the Company’s ~~arrangements, title~~customers have terms where control of the product transfers ~~at shipping point and, as a result,~~to the ~~Company determined~~customer on shipment, while others have terms where control transfers ~~at the point of shipment. In more limited cases, there are destination-based shipping terms and, thus, control is deemed~~ to ~~transfer when the products arrive at~~ the customer ~~site.~~on delivery. All incremental costs of obtaining a contract are expensed as and when incurred if the expected amortization period of the asset that would have been recognized is one year or less. Shipping and handling costs are included as a component of cost of sales. In situations where the control of the goods transfers prior to the completion of the Company’s obligation to ship the products to its customers, the Company has elected the practical expedient to account for the shipping services as a fulfillment cost. Accordingly, such costs are recognized when control of the related goods is transferred to the customer. In more rare situations, the Company has revenue associated with products that contain specific customer acceptance criteria and the related revenue is not recognized before the customer acceptance criteria are satisfied. The Company elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with specific revenue-producing transactions and collected by the Company from a customer.

when-and-if-available

basis.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Service revenue includes (1) service and software maintenance contracts and (2) service calls (time and materials). Instrument service contracts and software maintenance contracts are typically annual contracts, which are billed at the beginning of the contract or maintenance period. The amount of the service and software maintenance contract is recognized on a straight-line basis to revenue over the maintenance service period, which

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

is the contractual term of the contract, as a time-based measure of progress best reflects the Company’s performance in satisfying this obligation. There are no deferred costs associated with the service contract, as the cost of the service is recorded when the service is performed. Service calls are recognized to revenue at the time a service is performed.

Product Warranty Costs

The Company accrues estimated product warranty costs at the time of sale, which are included in cost of sales in the consolidated statements of operations. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, the Company’s warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. The amount of the accrued warranty liability is based on historical information, such as past experience, product failure rates, number of units repaired and estimated costs of material and labor. The liability is reviewed for reasonableness at least quarterly.

The following is a summary of the activity of the Company’s accrued warranty liability for the ~~years~~twelve months ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (in thousands):

Balance at
Beginning of Period

Accruals for
Warranties

Settlements
Made

Balance at
End of Period

Accrued warranty liability:

December 31, 2020
   $ 11,964    $ 7,909    $ (8,923 ) $ 10,950
December 31, 2019
   $ 12,300    $ 7,540    $ (7,876 ) $ 11,964
December 31, 2018
   $ 13,026    $ 5,033    $ (5,759 ) $ 12,300


	Balance at Beginning of Period		Accruals for Warranties		Settlements Made			Balance at End of Period

Accrued warranty liability:
December 31, 2023	$	11,949	$	7,727	$	(7,626	)	$	12,050
December 31, 2022	$	10,718	$	10,067	$	(8,836	)	$	11,949
December 31, 2021	$	10,950	$	8,799	$	(9,031	)	$	10,718

Advertising Costs

All advertising costs are expensed as incurred and are included in selling and administrative expenses in the consolidated statements of operations. Advertising expenses were ~~$6 million, $6 million and~~ $7

million for ~~2020, 2019~~the years ended December 31, 2023, 2022 and ~~2018, respectively.~~2021.

Research and Development Expenses

Research and development expenses are comprised of costs incurred in performing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract services and other outside costs. Research and development expenses are expensed as incurred.

Stock-Based Compensation

The Company has two stock-based compensation plans, which are described in Note 14, “Stock-Based Compensation”.

Earnings Per Share

In accordance with the earnings per share accounting standards, the Company presents two earnings per share (“EPS”) amounts. Income per basic common share is based on income available to common shareholders and the

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

weighted-average number of common shares outstanding during the periods presented. Income per diluted common share includes additional dilution from potential common stock, such as stock issuable pursuant to the exercise of stock options outstanding.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Retirement Plans

The Company sponsors various retirement plans, which are described in Note 17, “Retirement Plans”.

Comprehensive Income

The Company accounts for comprehensive income in accordance with the accounting standards for comprehensive income, which establish the accounting rules for reporting and displaying comprehensive income. These standards require that all components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements.

Restructuring

In July 2023, the Company made organizational changes to better align its resources with its growth and innovation strategies, resulting in a worldwide workforce reduction, that has impacted approximately 5% of the Company’s employees. During 2023, the Company incurred $26

million of severance-related costs in connection with this reduction, which was recorded in selling and administrative expenses in the consolidated statement of operations. During 2023, the Company paid $

million of these costs with the majority of the remaining costs to be paid in the first half of 2024.

Recently Adopted Accounting Standards

In ~~June 2016,~~October 2021, accounting guidance was issued that ~~modifies the recognition of credit losses related~~requires acquirers in a business combination to ~~financial~~recognize and measure contract assets ~~such as debt securities, trade receivables, net investments~~and contract liabilities acquired in ~~leases, off-balance sheet credit exposures, and other financial assets that have the contractual right to receive cash. Prior guidance required the recognition of~~ a credit loss when it was considered probable that a loss event had occurred. The current guidance requires the measurement of expected credit losses to be based upon relevant information, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the asset. As such, expected credit losses may be recognized sooner under the new guidance due to the broader range of information that will be required to determine credit loss estimates.business combination in accordance with Topic 606. The new guidance ~~also amends~~requires that at the acquisition date, the acquirer should account for the related revenue contracts in accordance with 606 as if it had originated the contracts. This guidance differs from current ~~other-than-temporary impairment model used~~GAAP which requires an acquirer to recognize assets acquired and liabilities assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers and other similar contracts that are accounted for ~~debt securities classified as available-for-sale. When the~~in accordance with 606, at fair value ~~of an available-for-sale debt security is below its amortized cost,~~on the new guidance requires the total unrealized loss to be bifurcated into its credit and non-credit components. Any expected credit losses or subsequent recoveries will be recognized in earnings and any changes not considered credit related will continue to be recognized within other comprehensive income.acquisition date. This guidance is effective for ~~annual and interim periods~~public business entities for fiscal years beginning after December 15, 2019. On January 1, 2020 the Company adopted this new standard using a modified retrospective method for all financial assets measured at amortized cost which only impacted the Company’s allowance on trade accounts receivable. The Company did not have any significant off-balance sheet credit exposures which would be impacted by the new guidance. Results for reporting periods beginning after January 1, 2020 are presented under the new standard while prior period amounts continue to be reported in accordance with previously applicable GAAP.

~~The Company recorded a net decrease of~~

~~million to stockholders’ deficit as of January~~

~~2020~~

for the cumulative effect of adopting the new standard due to converting to the current expected credit loss model for the allowance recorded against trade accounts receivables. This accounting standard did not have an impact on the Company’s results of operations and cash flows.

In January 2017, accounting guidance was issued that simplifies the accounting for goodwill impairment. The guidance eliminates step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. This guidance is effective for annual and2022, including interim periods ~~beginning after December 15, 2019.~~within those years. The Company adopted this standard on January 1, ~~2020. The adoption of this standard did not have a material effect on the Company’s financial position, results of operations and cash flows.~~

In August 2018, accounting guidance was issued that modifies the disclosure requirements of fair value measurements. The amendments remove disclosures that are no longer considered cost beneficial, clarify the specific requirements of disclosure and add disclosure requirements identified as relevant. This guidance is effective for annual and interim periods beginning after December 15, 2019. The Company adopted this standard

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~on January 1, 2020.~~2023. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations and cash flows.

In August 2018, accounting guidance was issued that modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The amendments remove disclosures that are no longer considered cost beneficial, clarify the specific requirements of disclosure and add disclosure requirements identified as relevant. This guidance is effective for annual and interim periods ending after December 15, 2020. The Company adopted this standard on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s financial position, results of operations and cash flows.

Recently Issued Accounting Standards

In December 2019, accounting guidance was issued that simplifies the accounting for income taxes by removing certain exceptions within the current guidance, including the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The amendment also improves consistent application by clarifying and amending

existing guidance related to aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step up in the tax basis of goodwill. This guidance is effective for annual and interim periods beginning after December 15, 2020 and early adoption is permitted. The Company does not expect that the adoption of this standard will have a material impact on the Company’s financial position, results of operations and cash flows.

In January 2020, accounting guidance was issued that clarifies the accounting guidance for equity method investments, joint ventures, and derivatives and hedging. The update clarifies the interaction between different sections of the accounting guidance that could be applicable and helps clarify which guidance should be applied in certain situations which should increase relevance and comparability of financial statement information. This guidance is effective for annual and interim periods beginning after December 15, 2020 and early adoption is permitted. The Company does not expect that the adoption of this standard will have a material impact on the Company’s financial position, results of operations and cash flows.

In March 2020, accounting guidance was issued that facilitates the effects of reference rate reform on financial reporting. The amendments in the update provide optional guidance for a limited period of time to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting and apply to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. In January of 2021, an update was issued to clarify that certain optional expedients and exceptions under the reference rate reform guidance for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in the reference rate reform guidance, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.

This temporary guidance is effective for all entities as of March 12, 2020, through December 31, 2022. In December 2022, an update was issued because the cessation date for overnight LIBOR rates being published was extended to June 30, 2023, which was beyond the current expiration date of this guidance. The update extended the sunset date to December 31, 2024. The Company may elect to apply this guidance for all contract modifications or eligible hedging relationships during that time period subject to certain criteria. The Company does not believe that it has material reference

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

rate exposure which would require utilizing the guidance under this accounting pronouncement and if adopted does not believe that this standard would have a material impact on the Company’s financial position, results of operations and cash flows.

In November 2023, accounting guidance was issued that requires additional disclosures of reportable segment information. The guidance requires that public entities disclose, on an annual and interim basis (1) significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, (2) an amount for other segment items by reportable segment and a description of its composition (the other segment items category is ~~still~~the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss), (3) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, (4) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit. However, at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in the public entity’s consolidated financial statements, (5) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources, and (6) if a public entity has a single reportable segment to provide all the disclosures required by the amendments in this update and all existing segment disclosures in Topic 280. The amendments in this update do not change how operating segments are identified or aggregated nor how the quantitative thresholds are applied to determine its reportable segments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments in this update should be applied retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The Company does not believe this accounting standard update will have material impact on the Company’s financial position, results of operations and cash flows. The Company is currently evaluating the impact the adoption of ~~reference~~this accounting standard update will have on our footnote disclosures.

In December 2023, accounting guidance was issued to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this update change disclosure requirements related to the rate ~~reform~~reconciliation, income taxes paid and ~~whether~~other disclosures. For the rate reconciliation the amendments require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. For income taxes paid the amendments require that all entities disclose on an annual basis the following information; (1) the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes, (2) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5

percent of total income taxes paid (net of refunds received). Finally, for other disclosures the amendments require that all entities disclose the following information: (1) income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and (2) income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. This update also eliminates the requirement for all entities to (1) disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or (2) make a statement that an estimate of the range cannot be made. As well as removing the requirement to disclose the cumulative amount of each type of temporary difference when a deferred tax liability is not recognized because of the exceptions to comprehensive recognition of deferred taxes related to subsidiaries and corporate joint ventures. The amendments in this ~~guidance~~update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis and retrospective application is permitted. The Company does not believe this accounting standard update will ~~be adopted.~~have material impact on the Company’s financial position, results of operations and cash flows. The Company is currently evaluating the impact the adoption of this accounting standard update will have on our footnote disclosures.

3 Revenue Recognition

The Company’s deferred revenue liabilities onin the consolidated balance sheets consist of the obligation on instrument service contracts and customer payments received in advance, prior to transfer of control of the instrument. The Company records deferred revenue primarily related to its service contracts, where consideration is billable at the beginning of the service period.

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

The following is a summary of the activity of the Company’s deferred revenue and ~~cust~~

~~mer~~customer advances for the ~~year~~twelve months ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (in thousands):


	December 31,									December 31,
	2020			2019			2018			2023			2022			2021
Balance at the beginning of the period	$	213,695		$	204,257		$	192,589		$	285,175		$	273,598		$	239,759
Recognition of revenue included in balance at beginning of the period		(198,209	)		(176,981	)		(159,258	)		(240,808	)		(230,615	)		(216,920	)
Revenue deferred during the period, net of revenue recognized		224,273			186,419			170,926			279,149			242,192			250,759

Balance at the end of the period	$	239,759		$	213,695		$	204,257		$	323,516		$	285,175		$	273,598

The Company classified ~~$42~~$67 million and ~~$38~~$57 million of deferred revenue and customer advances in other long-term liabilities at December 31, ~~2020~~2023 and ~~2019,~~2022, respectively.

The amount of deferred revenue and customer advances equals the transaction price allocated to unfulfilled performance obligations for the period presented. Such amounts are expected to be recognized in the future as follows (in thousands):

December 31, 2020

Deferred revenue and customer advances expected to be recognized in:

One year or less
   $ 198,240
13-24
months
   23,647
25 months and beyond
   17,872

Total
   $ 239,759


	December 31, 2023
Deferred revenue and customer advances expected to be recognized in:
One year or less	$	256,675
13-24 months		39,326
25 months and beyond		27,515

Total	$	323,516

4 Marketable Securities

The Company’s marketable securities within cash equivalents and investments included in the consolidated balance sheets ~~are detailed as follows (in thousands):~~consist of time deposits that mature in one year or less with an amortized cost and a fair value of $0.9 million at both December 31, 2023 and 2022.

December 31, 2020


Amortized

Unrealized

Unrealized

Fair

C
ost

Gain

Loss

Value

Time deposits
   6,451    —    —    6,451

Total
   $ 6,451    $ —    $ —    $ 6,451

Amounts included in:

Investments
   6,451    —    —    6,451

Total
   $ 6,451    $ —    $ —    $ 6,451

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2019


Amortized

Unrealized

Unrealized

Fair


Cost

Gain

Loss

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

~~The estimated fair value of marketable debt securities by maturity date is as follows (in thousands):~~

December 31,

2020

December 31,

2019

Due in one year or less
   $ 6,451    $ 1,642

Total
   $ 6,451    $ 1,642

~~Net realized gains and losses on sales of investments were not material in 2020, 2019 and 2018.~~

5 Inventories

Inventories are classified as follows (in thousands):

December 31,

2020

December 31,

2019

Raw materials
   $ 133,490    $ 126,850
Work in progress
   18,678    15,457
Finished goods
   152,113    178,244

Total inventories
   $ 304,281    $ 320,551


	December 31, 2023		December 31, 2022
Raw materials	$	233,952	$	205,760
Work in progress		20,198		19,899
Finished goods		262,086		230,051

Total inventories	$	516,236	$	455,710

During ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, the Company recorded inventory-related excess and obsolescence provisions of ~~$12~~$11 million, ~~$13~~$14 million and $8$9 million, respectively.

6 Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):


	December 31,						December 31,
	2020			2019			2023			2022
Land and land improvements	$	36,884		$	37,040		$	35,635		$	34,663
Buildings and leasehold improvements		376,705			355,425			488,667			444,994
Production and other equipment		588,625			537,211			748,411			640,460
Construction in progress		125,925			57,985			118,492			164,222

Total property, plant and equipment		1,128,139			987,661			1,391,205			1,284,339
Less: accumulated depreciation and amortization		(634,136	)		(570,319	)		(752,132	)		(702,122	)

Property, plant and equipment, net	$	494,003		$	417,342		$	639,073		$	582,217

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~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

In February 2018, the Company’s Board of Directors approved expanding its precision chemistry consumable manufacturing operations in the U.S. The Company anticipates spending an estimated $215 million to buildDuring 2023, 2022 and ~~equip this new~~

~~state-of-the-art~~

~~manufacturing facility, and has spent $151 million on this facility through December 31, 2020.~~

~~During 2020, 2019 and 2018,~~2021, the Company retired and disposed of approximately ~~$19~~$48 million, ~~$11~~$24 million and $9$23 million of property, plant and equipment, respectively, most of which was fully depreciated and no longer in use. Gains or losses on disposals were immaterial for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018.~~2021.

7 Acquisitions

On ~~January 15, 2020,~~May 16, 2023, the Company acquired all of the issued and outstanding ~~stock~~equity interests of ~~Andrew Alliance, S.A. and its two operating subsidiaries, Andrew Alliance USA, Inc. and Andrew Alliance France, SASU (collectively, “Andrew Alliance”),~~Wyatt for ~~$80 million,~~$1.3 billion, net of cash acquired. Wyatt is a pioneer in innovative light scattering and field-flow fractionation instruments, software, accessories and services. The ~~Company had an equity investment in Andrew Alliance that was valued at $4 million~~acquisition will expand Waters portfolio and ~~included as part~~increase exposure to large molecule applications. As a result of the ~~total consideration.~~

~~Andrew Alliance offers lab workflow automation solutions with~~acquisition, the ~~combination~~results of ~~its software platform and smart, connected laboratory equipment and accessories.~~Wyatt are included in the Company’s consolidated financial statements from the acquisition date.

The Company allocated ~~$7 million~~the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. The purchase price allocation was based upon preliminary information and is subject to change if additional information about the facts and circumstances that existed at the acquisition date becomes available. The Company is in the ongoing process of conducting a valuation of the assets acquired and liabilities assumed related to the acquisition. The final fair value of the net assets acquired may result in adjustments to these assets and liabilities, including goodwill.

The intangible assets were valued with input from valuation specialists. The Company used variations of the income approach, which uses Level 3 inputs, in determining the fair value of intangible assets acquired in the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Wyatt acquisition. Specifically, the customer relationships were valued using the multi-period excess earnings method under the income approach. The Company utilized the relief from royalty method to determine the fair value of the tradename and the developed technology. The following table presents the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed on the closing date of May 16, 2023 (in thousands):


Purchase Price
Cash paid	$	1,307,978
Less: cash acquired		(25,624	)

Net cash consideration		1,282,354

Identifiable Net Assets (Liabilities) Acquired
Accounts receivable		20,099
Inventory		14,706
Deferred tax assets		11,335
Prepaid and other assets		1,096
Property, plant and equipment		9,056
Operating lease assets		5,204
Intangible assets		418,100
Accounts payable and accrued expenses		(31,664	)
Operating lease liabilities		(5,204	)
Tax liabilities		(3,917	)
Deferred revenue		(15,219	)
Other liabilities		(5,728	)

Total identifiable net assets acquired		417,864
Goodwill		864,490

Cash consideration paid	$	1,282,354

The details of the purchase price allocated to the intangible assets ~~comprised of developed technology, trade name and customer relationships. The developed technology and customer relationships will be amortized~~

~~over~~

~~ten years~~

acquired and the ~~trade name will be amortized over~~estimated useful lives are as follows (dollars in thousands):

~~years.~~


	Amount		Weighted-Average Life
Developed technology	$	80,000		10 years
Customer relationships		330,600		10 years
Trade name		7,500		5 years

Total		$418,100

The Company allocated $

$864 million of the purchase price to goodwill which is ~~not~~primarily deductible for tax ~~purposes.~~purposes and has been allocated to the Waters Division operating segment. The ~~principal factor that resulted in recognition of~~ goodwill inarising from the acquisition ~~was~~consists largely of the value of intangible assets that ~~the purchase price was based,~~do not qualify for separate recognition such as workforce in ~~part, on~~place and cash ~~flow projections assuming~~flows from the integration of ~~any~~ acquired technology, distribution channels and products with the Company’s products, which are higher than if the acquired companies’ technology, customer access or products were utilized on a stand-alone basis. ~~The goodwill also includes value assigned to assembled workforce, which cannot be recognized as an intangible asset.~~

~~The fair values~~

During the twelve months ended December 31, 2023, the Company’s consolidated results included net sales of ~~the assets~~$

million, and ~~liabilities acquired were determined using various income-approach valuation techniques, which use Level 3 inputs. The following table presents the fair values as~~a net operating loss of $

million since the acquisition ~~date, as determined by~~closed on May 16, 2023. The Company also incurred transaction related costs of $

13 million during the ~~Company, of 100% of the assets and liabilities owned and~~twelve months ended December 31, 2023, which are recorded in ~~connection with~~selling and administrative expenses in the ~~acquisition~~consolidated statement of ~~Andrew Alliance (in thousands):~~operations.

Cash
   $ 713
Accounts receivable and current other assets
   806
Inventory
   669
Prepaid and other assets
   611
Property, plant and equipment, net
   757
Operating lease assets
   847
Intangible assets
   6,960
Goodwill
   71,632

Total assets acquired
   82,995
Accrued expenses and other liabilities
   2,093

Total consideration
   80,902

Fair value of minority investment
   3,525

Cash consideration paid
   $ 77,377

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~On December 15, 2020, the Company acquired all~~

Unaudited Pro Forma Financial Information

The following unaudited pro forma information is presented for illustrative purposes only. It is not necessarily indicative of the ~~outstanding stock~~actual results of ~~Integrated Software Solutions Pty Limited and its two~~operations that actually would have been realized had the entities been a single company as of January 1, 2022 or the future operating ~~subsidiaries Integrated Software Solutions Limited and Integrated Software Solutions USA, LLC (collectively, “ISS”), for $4 million, net~~results of ~~cash acquired. In addition,~~the combined entity. The unaudited pro forma information does not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated synergies that may be associated with the acquisition. The unaudited pro forma information also does not include any integration costs that the Company may ~~have~~incur related to the acquisition as part of combining the operations of the companies.

The following unaudited pro forma information shows the results of the Company’s operations for the twelve months ended December 31, 2023 and 2022, as if the acquisition had occurred on January 1, 2022 (in thousands):


	December 31, 2023		December 31, 2022
Revenue	$	2,995,001	$	3,086,281
Net income		658,431		651,869

To reflect the acquisition of Wyatt as if it had occurred on January 1, 2022, the unaudited pro forma information includes adjustments to reflect, among other things, the incremental intangible asset amortization to be incurred based on the preliminary values of each identifiable intangible asset of Wyatt and the interest expense from debt financings obtained to partially fund the cash consideration transferred. Pro forma adjustments were tax effected at the Company’s historical statutory rates in effect for the respective periods.

Pro forma net income for the twelve months ended December 31, 2023, was adjusted to exclude certain

non-recurring

expenses related to transaction costs incurred and the fair value adjustment of inventory. These

non-recurring

expenses were reclassified to the prior period and included in the pro forma net income for the twelve months ended December 31, 2022.

In conjunction with the Wyatt acquisition, the Company entered into retention agreements with certain employees, in which the Company agreed to pay ~~additional contingent consideration which has an estimated fair value~~a total of $1$40 million, asin two equal installments upon the first and second anniversary of the ~~close~~acquisition date. As these employees are earning their individual cash award by providing service over the

two-year

period that benefit the Company, the $40 million will be recognized within total costs and operating expenses in the consolidated statements of operations over the

two-year

service period. The ~~contingent consideration is~~Company has recorded ~~as a liability~~$19 million of expense in the consolidated statement of operations for the year ended December 31, 2023.

On January 31, 2022, the Company completed an asset acquisition in which the charge detection mass spectrometry technology (“CDMS technology”) assets of Megadalton Solutions, Inc. (“Megadalton”) were acquired for approximately $10 million in total purchase price, of which $5 million was paid at closing and

the remaining

$4 million will be paid ~~to the prior shareholders of ISS if certain revenue and customer account conditions are achieved over the next two years after the acquisition date.~~

ISS offers clinical laboratory software systems that will support and further expand product offerings within our clinical business. The net assets acquired primarily relate to ISS’ laboratory information system,

~~OMNI-Lab.~~

Our preliminary estimate of the fair value of the specifically identifiable assets acquired and liabilities assumed as of the date of acquisition of ISS is subject to the finalization of management’s analysis. The final determination of these fair values will be completed as additional information becomes available but no later than one year from the acquisition date. The Company expects the final determination of asset and liability fair values to be immaterial to our financial position.

~~The impact of the ISS acquisition on the Company’s revenues and net income during the quarter was immaterial. The~~

~~year-to-date~~

~~proforma effect on the ongoing operations of the Company as though this acquisition had occurred at the beginning of the periods covered by this report was also immaterial.~~

In July 2018, the Company acquired the sole intellectual property rights to the Desorption Electrospray Ionization (“DESI”) imaging technology for $30 million in cash and a future contractual obligation to pay a

minimum royalty of $3 million over the remaining life of the patent. DESI is a mass spectrometry imaging technique that is used to develop medical therapies. The Company accounted for this transaction as an asset acquisition as it did not meet the definition of a business. The Company allocated $33 million of fair value to a purchased intangible asset which will be amortized over the useful life of 12 years.

~~In each acquisition, the sellers provided the Company with customary representations, warranties and indemnification, which would be settled~~ in the future ifat various dates through 2029. This CDMS technology makes it possible to analyze extremely large proteins and ~~when~~protein complexes used in cell and gene therapies that would otherwise be difficult to analyze with conventional mass spectrometry. Once this technology is further developed, it will extend the capabilities of our mass spectrometry portfolio for a ~~breach~~broader set of applications, and as such, the ~~contractual representation or warranty condition occurs.~~

~~The pro forma effect~~cost of ~~the ongoing operations~~this technology asset has been accounted for ~~Waters Corporation from Andrew Alliance, ISS~~ as Acquired

In-Process Research

and ~~the DESI imaging technology, either individually or~~Development and expensed in costs and operating expenses in the ~~aggregate, as though these acquisitions had occurred at the beginning~~statement of ~~the periods covered by this report were immaterial.~~operations.

8 Goodwill and Other Intangibles

The carrying amount of goodwill was ~~$444 million~~$1.3 billion and ~~$356~~$430 million at December 31, ~~2020~~2023 and ~~2019,~~2022, respectively. The ~~acquisitions~~acquisition of ~~Andrew Alliance and ISS Solutions~~Wyatt increased goodwill by ~~$72~~$864 million, ~~and $5 million, respectively,~~ while the effect of foreign currency translation increased goodwill by ~~$11~~$10 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company’s intangible assets included in the consolidated balance sheets are detailed as follows (dollars in thousands):

December 31, 2020

December 31, 2019


Gross
Carrying
Amount

Accumulated
Amortization

Weighted-
Average
Amortization
Period

Gross
Carrying
Amount

Accumulated
Amortization

Weighted-
Average
Amortization
Period

Capitalized software
   $ 584,452    $ 409,847    5  years    $ 481,986    $ 333,255    5  years
Purchased intangibles
   205,585    160,342    11  years    200,523    151,722    11  years
Trademarks and IPR&D
   9,680    —    —    13,782    —      —
Licenses
   5,923    5,697    6  years    5,669    5,298    6  years
Patents and other intangibles
   90,699    61,808    8  years    83,035    54,517    8  years

Total
   $ 896,339    $ 637,694    7  years    $ 784,995    $ 544,792    7  years


	December 31, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Weighted- Average Amortization Period		Gross Carrying Amount		Accumulated Amortization		Weighted- Average Amortization Period
Capitalized software	$	660,273	$	495,317		5 years	$	589,604	$	441,414		5 years
Purchased intangibles		614,357		197,154		10 years		197,805		166,735		11 years
Trademarks		9,680		—		—		9,680		—		—
Licenses		14,798		8,429		7 years		14,070		6,729		6 years
Patents and other intangibles		111,962		80,983		8 years		104,139		73,021		8 years

Total	$	1,411,070	$	781,883		7 years	$	915,298	$	687,899		7 years

The Company capitalized $468 million, $54 million and $55 million of intangible assets for the years ended December 31, 2023, 2022 and 2021, respectively. The gross carrying value of intangible assets and accumulated amortization for intangible assets increased by ~~$58~~$32 million and ~~$42~~$18 million, respectively, in the year ended December 31, ~~2020~~2023 due to the effects of foreign currency translation. Amortization expense for intangible assets was ~~$57~~$81 million, ~~$51~~$58 million and ~~$50~~ $60

million for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively. In addition, in the year ended December 31, 2023, the company wrote off a $4 million intangible asset that was fully amortized. Amortization expense for intangible assets is estimated to be ~~$57~~$

million per year for each of the next five years.

~~During 2020, the Company recorded a~~

~~non-cash~~

charge of $10 million for the impairment of certain intangible assets associated with its 2014 acquisition of Medimass due to a shift in strategic priorities. As a result, the Company reduced the gross carrying amount and accumulated amortization balances of its intangible assets by $15 million and $5 million, respectively.

9 Debt

On May 16, 2023, the Company financed the Wyatt acquisition with a combination of cash on its balance sheet and borrowings under its revolving credit facility. As a result of the Wyatt transaction, the Company’s outstanding debt on December 31, 2023 was $2.4 billion.

~~In November 2017,~~

On May 11, 2023, the Company ~~entered into~~issued the following senior unsecured notes:


Senior Unsecured Notes	Term	Interest Rate	Face Value (in millions)	Maturity Date

Series P	5 years	4.91%	$50	May 2028
Series Q	7 years	4.91%	$50	May 2030

The Company used the proceeds from the issuance of these senior unsecured notes to repay other outstanding debt and for general corporate purposes. Interest on the Series P and Q Senior Notes is payable semi-annually in arrears. The Company may prepay some or all of the Senior Notes, at any time and from time to time, in an amount not less than 10% of the aggregate principal amount of the Senior Notes then outstanding, plus the applicable make-whole amount for Series P and Q Senior Notes, in each case, upon no more than 60 nor less than 20 days’ written notice to the holders of the Senior Notes. In the event of a ~~credit agreement (the “2017 Credit Agreement”) that provides~~change in control (as defined in the note purchase agreement) of the Company, the Company may be required to prepay the Senior Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest. Other provisions for these senior unsecured notes are similar to the existing senior unsecured notes, as described below.

The Company ha

a ~~$1.5~~five-year, $1.8 billion revolving facility ~~and a $300~~(the “Credit Facility”) that expires in September 2026. On March 3, 2023, the Company amended the Credit Facility to increase the borrowing capacity by $200 million ~~term loan.~~to an aggregate total borrowing capacity of $2.0 billion, which did not affect

the

maturity

date of September 17, 2026. The amendment also replaced all references in the Credit Facility to LIBOR with Term SOFR as the benchmark rate. As of December 31, ~~2020~~2023 and ~~2019,~~December 31, 2022, the ~~revolving facility and term loan~~Credit Facility had a total of ~~$400~~$

1.1

billion and $

270

million ~~and $625 million, respectively,~~ outstanding, ~~and mature on November 30, 2022 and require no scheduled prepayments before that date.~~

respectively.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The interest rates applicable tounder the ~~2017~~ Credit ~~Agreement~~Facility are, at the Company’s option, equal to either the alternate base rate (which is a rate per annum equal to the greatest of (1) the prime rate in effect on such day, (2) the Federal Reserve Bank of New York Rate on such day plus 1/2 of 1% per annum and (3) the adjusted ~~LIBO~~Term SOFR rate onfor a

one-month

interest period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a ~~business day,~~U.S. Government Securities Business Day, the immediately preceding ~~business day) for a deposit in~~ U.S. ~~dollars with a maturity of one month~~Government Securities Business Day), plus 1% ~~per~~ annum) or the applicable 1, 2, 3 or 6 month adjusted ~~LIBO rate~~Term SOFR or EURIBO rate for ~~Euro-denominated~~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~~Term SOFR or EURIBO rate loans. The facility fee on the ~~2017~~ Credit ~~Agreement~~Facility 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~~Facility requires that the Company comply with an interest coverage ratio test of not less than ~~3.50:~~

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:~~

3.50

:1 as of the end of any fiscal quarter. In addition, the ~~2017~~ Credit ~~Agreement~~Facility includes negative covenants, affirmative covenants, representations and warranties and events of default that are customary for investment grade credit facilities.

As of both December 31, ~~2020~~2023 and ~~2019,~~2022, the Company had a total of ~~$960 million and $1.1~~$1.3 billion ~~respectively,~~ of outstanding senior unsecured notes. Interest on the fixed rate senior unsecured notes is payable semi-annually

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

each year. Interest on the floating rate senior unsecured notes is payable quarterly. The Company may prepay all or some of the senior unsecured notes at any time in an amount not less than 10% of the aggregate principal amount ~~outstanding, plus the applicable make-whole amount or prepayment premium for the Series H senior unsecured note.~~outstanding. In the event of a change in control of the Company (as defined in the note purchase agreement), the Company may be required to prepay the senior unsecured notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest. These senior unsecured notes require that the Company comply with an interest coverage ratio test of not less than 3.50:1 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, these senior unsecured notes include customary negative covenants, affirmative covenants, representations and warranties and events of default.

In February 2019, certain defined terms related to the subsidiary guarantors were amended in the 2017 Credit Agreement and senior unsecured note agreements. In addition, the Company amended the senior unsecured note agreements to allow the Company to elect an increase in the permitted leverage ratio from 3.50:1 to 4.0:1, for a period of three consecutive quarters, for a material acquisition of $400 million or more. During the period of time where the leverage ratio exceeds 3.50:1, the interest payable on the senior unsecured notes shall increase by 0.50%. The debt covenants in the senior unsecured note agreements were also modified to address the change in accounting guidance for leases.

The Company had the following outstanding debt at December 31, ~~2020~~2023 and ~~2019~~2022 (in thousands):


	December 31, 2023			December 31, 2022
Senior unsecured notes - Series I - 3.13%, due May 2023	$	—		$	50,000
Senior unsecured notes - Series G - 3.92%, due June 2024		50,000			—

Total notes payable and debt, current		50,000			50,000
Senior unsecured notes - Series G - 3.92%, due June 2024		—			50,000
Senior unsecured notes - Series H - floating rate*, due June 2024		—			50,000
Senior unsecured notes - Series K - 3.44%, due May 2026		160,000			160,000
Senior unsecured notes - Series L - 3.31%, due September 2026		200,000			200,000
Senior unsecured notes - Series M - 3.53%, due September 2029		300,000			300,000
Senior unsecured notes - Series N - 1.68%, due March 2026		100,000			100,000
Senior unsecured notes - Series O - 2.25%, due March 2031		400,000			400,000
Senior unsecured notes - Series P - 4.91%, due May 2028		50,000			—
Senior unsecured notes - Series Q - 4.91%, due May 2030		50,000			—
Credit agreement		1,050,000			270,000
Unamortized debt issuance costs		(4,487	)		(5,122	)

Total long-term debt		2,305,513			1,524,878

Total debt	$	2,355,513		$	1,574,878

*	Series H senior unsecured notes bear interest at a 3-month LIBOR for that floating rate interest period plus 1.25%.

December 31,

2020

December 31,

2019

Foreign subsidiary lines of credit
   $ — $ 366
Senior unsecured notes - Series B - 5.00%, due February 2020
   — 100,000
Senior unsecured notes - Series E - 3.97%, due March 2021
   50,000 —
Senior unsecured notes - Series F - 3.40%, due June 2021
   100,000 —

Total notes payable and debt, current
   150,000 100,366
Senior unsecured notes - Series E - 3.97%, due March 2021
   — 50,000
Senior unsecured notes - Series F - 3.40%, due June 2021
   — 100,000
Senior unsecured notes - Series G - 3.92%, due June 2024
   50,000 50,000
Senior unsecured notes - Series H - floating rate*, due June 2024
   50,000 50,000
Senior unsecured notes - Series I - 3.13%, due May 2023
   50,000 50,000
Senior unsecured notes - Series K - 3.44%, due May 2026
   160,000 160,000
Senior unsecured notes - Series L - 3.31%, due September 2026
   200,000 200,000
Senior unsecured notes - Series M - 3.53%, due September 2029
   300,000 300,000
Credit agreement
   400,000 625,000
Unamortized debt issuance costs
   (3,485 ) (4,203 )

Total long-term debt
   1,206,515 1,580,797

Total debt
   $ 1,356,515 $ 1,681,163


* Series H senior unsecured notes bear interest at a
3-month
LIBOR for that floating rate interest period plus 1.25%.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of ~~both~~ December 31, ~~2020~~2023 and ~~2019,~~2022, the Company had a total amount available to borrow under the ~~2017~~ Credit ~~Agreement~~Facility of ~~$1.4~~$0.9 billion and $1.5 billion, respectively, after outstanding letters of credit. The weighted-average interest rates applicable to the senior unsecured notes and credit agreement borrowings collectively were ~~2.92%~~4.69% and ~~3.39%~~3.54% at December 31, ~~2020~~2023 and ~~2019,~~2022, respectively. As of December 31, ~~2020,~~2023, the Company was in compliance with all debt covenants.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

The Company and its foreign subsidiaries also had available short-term lines of credit totaling ~~$109~~$114 million and ~~$105~~$113 million at December 31, ~~2020~~2023 and ~~2019,~~December 31, 2022, respectively, for the purpose of short-term borrowing and issuance of commercial guarantees. ~~The weighted-average interest rate applicable to these short-term borrowings was 1.48% for December 31, 2019.~~ None of the Company’s foreign subsidiaries had outstanding short-term borrowings as of December 31, ~~2020.~~

~~As of~~2023 or December 31, 2020, the Company had entered into three-year interest rate cross-currency swap derivative agreements with an aggregate notional value of $560 million to hedge the variability in the movement of foreign currency exchange rates on a portion of its Euro-denominated net asset investments.202

Annual maturities of debt outstanding at December 31, ~~2020~~2023 are as follows (in thousands):


	Total		Total
2021	$	150,000
2022		400,000
2023		50,000
2024		100,000	$	50,000
2025		0		—
2026				1,510,000
2027				—
2028				50,000
Thereafter		660,000		750,000

Total	$	1,360,000	$	2,360,000

10 Income Taxes

Income tax data for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 is as follows (in thousands):

Year Ended December 31,


2020

2019

2018

The components of income before income taxes are as follows:

Domestic
   $ 75,193    $ 97,325    $ 57,822
Foreign
   535,721    580,914    624,324

Total
   $ 610,914    $ 678,239    $ 682,146


	Year Ended December 31,
	2023		2022		2021
The components of income before income taxes are as follows:
Domestic	$	74,119	$	133,816	$	144,410
Foreign		662,124		704,030		661,783

Total	$	736,243	$	837,846	$	806,193


	Year Ended December 31,
	2023			2022			2021
The components of the income tax provision were as follows:
Federal	$	178		$	62,153		$	16,302
State		6,427			8,025			3,691
Foreign		88,601			91,901			76,724

Total current tax provision	$	95,206		$	162,079		$	96,717

Federal	$	(2,457	)	$	(26,551	)	$	10,491
State		(3,029	)		(4,420	)		345
Foreign		4,289			(1,017	)		5,797

Total deferred tax provision		(1,197	)		(31,988	)		16,633

Total provision	$	94,009		$	130,091		$	113,350

Year Ended December 31,


2020

2019

2018

The components of the income tax provision
w
ere as follows:

Federal
   $ 28,385 $ 7,009    $ 27,277
State
   4,243 3,329    (11,964 )
Foreign
   59,408 66,083    70,634

Total current tax provision
   $ 92,036 $ 76,421    $ 85,947

Federal
   $ (8,244 ) $ 6,913    $ (3,256 )
State
   (506 ) 1,253    2,247
Foreign
   6,057 1,454    3,414

Total deferred tax provision
   (2,693 ) 9,620    2,405

Total provision
   $ 89,343 $ 86,041    $ 88,352

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The differences between income taxes computed at the United States statutory rate and the provision for income taxes are summarized as follows for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (in thousands):

Year Ended December 31,


2020

2019

2018

Federal tax computed at U.S. statutory income tax rate
   $ 128,292 $ 142,430 $ 143,251
Enactment of the 2017 Tax Cuts and Jobs Act
   — —   (6,059 )
Foreign currency exchange impact on distributed earnings
   — (3,229 ) 7,495
GILTI, net of foreign tax credits
   13,319 10,523 13,727
State income tax, net of federal income tax benefit
   2,415 3,459 2,910
Net effect of foreign operations
   (48,962 ) (52,727 ) (57,003 )
Effect of stock-based compensation
   (6,798 ) (9,211 ) (9,089 )
Other, net
   1,077 (5,204 ) (6,880 )

Provision for income taxes
   $ 89,343 $ 86,041 $ 88,352


	Year Ended December 31,
	2023			2022			2021
Federal tax computed at U.S. statutory income tax rate	$	154,611		$	175,948		$	169,300
GILTI, net of foreign tax credits		15,103			17,812			10,476
Uncertain tax positions		(16,211	)		1,051			508
State income tax, net of federal income tax benefit		2,880			3,605			4,037
Net effect of foreign operations		(48,587	)		(55,273	)		(56,214	)
Effect of stock-based compensation		(2,262	)		(7,341	)		(6,682	)
Other, net		(11,525	)		(5,711	)		(8,075	)

Provision for income taxes	$	94,009		$	130,091		$	113,350

The Company’s effective tax ~~rates were 14.6%~~rate was 12.8%, ~~12.7%~~15.5% and ~~13.0%~~14.1

% for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively. The decrease in the Company’s effective tax rate in 2023 can primarily be attributed to the recognition of a previously unrecognized tax benefit of $

18 million as a result of the completion of a tax examination, decreasing the Company’s 2023 effective tax rate by approximately 2.5%.

The Company’s effective income tax rate differs from the U.S. federal statutory rate each year due to differences in the proportionate amounts of

pre-tax

income recognized in jurisdictions with different effective tax rates and the items discussed below.

The four p

~~incipal~~principal jurisdictions in which the Company manufactures are the U.S., Ireland,

the

U.K. and Singapore, where the statutory tax rates were 21%, 12.5%, ~~19%~~25% and 17%, respectively, as of December 31, ~~2020.~~

2023.

The

Company has ~~received~~a new Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of

% on certain types of income for the period April 1, 2021 through March 31, 2026. Prior to April 1, 2021, the Company had a tax exemption on income arising from qualifying activities in Singapore ~~through March 2021,~~ based upon the achievement of certain contractual milestones, which the Company met as of December 31, 2020 and ~~expects to maintain~~maintained through March 2021. The effect of applying ~~the 0%~~these concessionary income tax ~~rate~~rates rather than the statutory tax rate to income arising from qualifying activities in Singapore increased the Company’s net income ~~during the years ended December 31, 2020, 2019 and 2018~~ by ~~$21~~$

million, ~~$24~~$

million and ~~$28~~$

million ~~respectively,~~ and increased the Company’s net income per diluted share by ~~$0.33, $0.35~~ $

0.27

, $

0.33

and ~~$0.36, respectively. In addition, the Company has a new Development and Expansion Incentive in Singapore that provides a concessionary income tax rate of 5% on certain types of income~~ $

0.32

for the ~~period April 1,~~year

ended December 31, 2023, 2022 and 2021, ~~through March 31, 2026.~~

respectively.

During ~~2020,~~2023, the Company’s effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, an $18 million recognition of a ~~$13~~previously unrecognized tax benefit as a result of the completion of a tax examination, a $15 million provision related to the GILTI tax, including the impact of capitalizing research and development expenditures pursuant to IRC Section 174, and a tax benefit of $3 million on stock-based compensation.

The 2022 effective tax rate differed from the 21% U.S. statutory tax rate primarily due to the jurisdictional mix of earnings, a $18 million provision related to the GILTI tax and a tax benefit of $7 million on stock-based compensation.

The ~~2019~~2021 effective tax rate differed from the 21% U.S. ~~federal~~ statutory tax rate primarily due to the jurisdictional mix of earnings, an ~~$11~~$10 million provision related to the GILTI tax and a tax benefit of $9$7 million on stock-based ~~compensation.~~

The 2018 effective tax rate differed from the U.S. federal statutory tax rate primarily due to the jurisdictional mix of earnings, a $14 million provision related to the GILTI tax, an $8 million provision for a change in foreign currency exchange rates related to the transition tax, a $9 million benefit related to stock-based compensation and a $6 million net benefit related to the finalization of the impact of the Tax Cuts and Jobs Act (the “2017 Act”).

compensation.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

The Company recorded a tax provision of $4 million, $4 million and $3 million ~~$3 million~~for 2023, 2022 and ~~$4 million for 2020, 2019 and 2018,~~2021, respectively, for future withholding taxes and U.S. state taxes on the repatriation of ~~2020, 2019~~2023, 2022 and ~~2018~~2021 undistributed earnings.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The tax effects of temporary differences and carryforwards which give rise to deferred tax assets and deferred tax liabilities are summarized as follows (in thousands):

December 31,


2020

2019

Deferred tax assets:

Net operating losses and credits
   $ 61,962 $ 55,939
Depreciation
   5,701 4,776
Operating leases
   24,317 19,849
Amortization
   2,377 3,738
Stock-based compensation
   7,773 9,790
Deferred compensation
   27,754 20,077
Unrealized foreign currency gain/loss
   — 7,955
Deferred revenue
   11,341 9,696
Revaluation of equity investments and licenses
   4,492 3,424
Inventory
   5,060 4,824
Accrued liabilities and reserves
   10,639 7,215
Other
   3,483 3,839

Total deferred tax assets
   164,899 151,122
Valuation allowance
   (60,101 ) (51,221 )

Deferred tax assets, net of valuation allowance
   104,798 99,901
Deferred tax liabilities:

Capitalized software
   (23,748 ) (21,025 )
Operating leases
   (24,314 ) (19,553 )
Indefinite-lived intangibles
   (14,973 ) (14,363 )
Unrealized foreign currency gain/loss
   (10,819 ) —
Deferred tax liability on foreign earnings
   (17,277 ) (18,027 )

Total deferred tax liabilities
   (91,131 ) (72,968 )

Net deferred tax assets
   $ 13,667 $ 26,933


	December 31,
	2023			2022
Deferred tax assets:
Net operating losses and credits	$	54,901		$	51,945
Depreciation		1,517			18
Operating leases		20,307			19,771
Amortization		5,905			2,713
Stock-based compensation		7,754			7,947
Deferred compensation		14,886			23,488
Deferred revenue		17,127			13,555
Revaluation of equity investments and licenses		1,884			23
Inventory		7,534			6,463
Accrued liabilities and reserves		5,720			4,815
Capitalized interest		12,586			—
Unrealized foreign currency gain/loss		700			1,858
Capitalized Section 174 Expenditures		34,487			34,234
Other		5,086			1,098

Total deferred tax assets		190,394			167,928
Valuation allowance		(57,873	)		(54,300	)

Deferred tax assets, net of valuation allowance		132,521			113,628
Deferred tax liabilities:
Capitalized software		(29,281	)		(25,429	)
Operating leases		(20,117	)		(19,543	)
Indefinite-lived intangibles		(14,824	)		(16,057	)
Deferred tax liability on foreign earnings		(20,374	)		(18,677	)

Total deferred tax liabilities		(84,596	)		(79,706	)

Net deferred tax assets	$	47,925		$	33,922

The Company has gross foreign net operating losses of ~~$249~~$231 million, of which ~~$230~~$192 million do not expire under current laws and ~~$19~~$39 million start expiring in ~~2021.~~2024. As of December 31, ~~2020,~~2023, the Company has provided a deferred tax valuation allowance of ~~$60~~$58 million, of which ~~$55~~$52 million relates to certain foreign net operating losses. The Company’s net deferred tax assets associated with net operating losses and tax credit carryforwards are approximately $7$3 million as of December 31, ~~2020,~~2023, which represent the future tax benefit of foreign net operating loss carryforwards that do not expire under current law.

The Company accounts for its uncertain tax return positions in accordance with the accounting standards for income taxes, which require financial statement reporting of the expected future tax consequences of uncertain tax reporting positions on the presumption that all concerned tax authorities possess full knowledge of those tax reporting positions, as well as all of the pertinent facts and circumstances, but prohibit any discounting of unrecognized tax benefits associated with those reporting positions for the time value of money. The Company continues to classify interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~The following is a summary of the activity of the Company’s gross unrecognized tax benefits, excluding interest and penalties, for the year ended December 31, 2020, 2019 and 2018 (in thousands):~~

2020

2019

2018

Balance at the beginning of the period
   $ 27,790 $ 26,108 $ 5,843
Net reductions for settlement of tax audits
   (399 ) —   —
Net reductions for lapse of statutes taken during the period
   (684 ) (261 ) (436 )
Net additions for tax positions taken during the prior period
   — —   17,651
Net additions for tax positions taken during the current period
   1,959 1,943 3,050

Balance at the end of the period
   $ 28,666 $ 27,790 $ 26,108


	2023			2022			2021
Balance at the beginning of the period	$	29,019		$	28,692		$	28,666
Net reductions for settlement of tax audits		(17,651	)		—			(1,300	)
Net reductions for lapse of statutes taken during the period		(512	)		(818	)		(433	)
Net additions for tax positions taken during the prior period		2,473			—			—
Net additions for tax positions taken during the current period		994			1,145			1,759

Balance at the end of the period	$	14,323		$	29,019		$	28,692

As of ~~2020,~~2023, the total amount of gross unrecognized tax benefits was ~~$29~~$14 million, all of which, if recognized, would impact the Company’s effective tax rate. This represents a decrease of $18 million resulting from the completion of a tax audit in 2023. This decrease reduced the income tax expense in the statement of operations and did not impact cash

flows. The Company is subject to various foreign audits and inquiries, and we currently do not expect any material adjustments.

With limited exceptions, the Company is no longer subject to tax audit examinations in significant jurisdictions for the years ended on or before December 31, ~~2015.~~2018. The Company continuously monitors the lapsing of statutes of limitations on potential tax assessments for related changes in the measurement of unrecognized tax benefits, related net interest and penalties and deferred tax assets and liabilities.

As of December 31, ~~2020,~~2023, the Company expects to record additional reductions in the measurement of its unrecognized tax benefits and related net interest and penalties of approximately $1$2 million within the next twelve months due to potential tax audit settlements and the lapsing of statutes of limitations on potential tax assessments. The Company does not expect to record any other material reductions in the measurement of its unrecognized tax benefits within the next twelve months.

As of December 31, 2020, the Company is currently under an income tax audit in the U.S. for its 2017 and 2018 tax years. The Company is also subject to various foreign audits and inquiries and we currently do not expect any material adjustments.

The following is a summary of the activity of the Company’s valuation allowance for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (in thousands):

Balance at
Beginning
of Period

Charged to
Provision for
Income Taxes*

Other**

Balance at
End of
Period

Valuation allowance for deferred tax assets:

2020
   $ 51,221    $ 1,137 $ 7,743 $ 60,101
2019
   $ 53,893    $ (1,242 ) $ (1,430 ) $ 51,221
2018
   $ 62,098    $ (2,128 ) $ (6,077 ) $ 53,893


	Balance at Beginning of Period		Charged to Provision for Income Taxes*			Other**			Balance at End of Period
Valuation allowance for deferred tax assets:
2023	$	54,300	$	1,467		$	2,106		$	57,873
2022	$	58,834	$	(1,647	)	$	(2,887	)	$	54,300
2021	$	60,101	$	2,919		$	(4,186	)	$	58,834

*	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~~changes in the valuation allowance during the ~~year~~years ended December 31, ~~2020 is~~2023, 2022 and 2021 are primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward and acquired historical net operating losses. The change in the valuation allowance during the year ended December 31, 2019 was 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.~~

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

In March 2020, the U.S. federal government enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act is an emergency economic stimulus package in response to the

~~COVID-19~~

~~outbreak which, among other things, contains numerous income tax provisions. The CARES Act does not have a material impact on the Company’s consolidated financial statements or related disclosures.~~

11 Litigation

From time to time, the Company and its subsidiaries are involved in various litigation matters arising in the ordinary course of business. The Company believes it has meritorious arguments in its current litigation matters and believes any outcome, either individually or in the aggregate, will not be material to the Company’s financial position, results of operations or cash flows. During the year ended December 31, ~~2017,~~2021, the Company ~~incurred $11 million~~executed a settlement agreement to resolve patent infringement litigation with Bruker Corporation and Bruker Daltronik

Table of ~~litigation provisions and related costs, primarily related to~~Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

GmbH regarding their timsTOF product line. In connection with the ~~issuance of a verdict in a patent litigation case. In the first quarter of 2018,~~settlement, the Company ~~resolved the case with a final settlement that resulted~~is entitled to receive $

million in ~~a gain of $2 million. The accrued patent litigation expense is in~~guaranteed payments, including minimum royalty payments, which was recognized within other ~~current liabilities~~income (expense), net in the consolidated ~~balance sheets at~~statement of operations for the year ended December 31, ~~2020~~2021. During the years ended December 31, 2023, 2022 and ~~2019.~~2021, the Company received $2 million, $1 million and $

million, respectively, in guaranteed payments, net of applicable withholding taxes. The Company also recorded a litigation provision of $

5 million during the year ended December 31, 2021, related to a legal settlement.

12 Leases

As of December 31, ~~2020~~2023 and ~~2019,~~2022, the Company had lease agreements that expire at various dates through 2034, with weighted-average remaining lease terms of ~~5.2~~4.5 years and ~~5.3~~4.4 years, respectively. Rental expense was $38 million, $36 million and ~~$36~~$34 million for the years ended December 31, ~~2020~~2023, 2022 and ~~2019,~~2021, respectively. As of December 31, ~~2020~~2023 and ~~2019,~~2022, the weighted-average discount rates used to determine the present value of lease liabilities were ~~3.50%~~4.15% and ~~3.80%~~3.24%, respectively. During the years ended December 31, ~~2020~~2023, 2022 and ~~2019~~2021, cash paid for amounts included in the measurement of lease liabilities in operating activities in the statement of cash flows was $38 million, ~~and~~ $36 million and $34

million, respectively. ~~The~~

he Company

recorded ~~$16~~

million

12 million and ~~$118~~ $3

million of

right-of-use

assets in exchange for new operating lease liabilities during the years ended December 31, ~~2020~~2023, 2022 and ~~2019,~~2021, respectively.

The Company’s

right-of-use

lease assets and lease liabilities included in the consolidated balance sheets are classified as follows (in thousands):

December 31,


Financial Statement Classification

2020

2019

Assets:

Property operating lease assets
   Operating lease assets    $ 62,374    $ 64,206
Automobile operating lease assets
   Operating lease assets    29,694    27,197
Equipment operating lease assets
   Operating lease assets    1,184    1,955

Total lease assets
      $ 93,252    $ 93,358

Liabilities:

Current operating lease liabilities
   Current operating lease liabilities    $ 27,764    $ 27,125
Long-term operating lease liabilities

Long-term operating lease liabilities
   68,197    66,881

Total lease liabilities
      $ 95,961    $ 94,006


		December 31,
	Financial Statement Classification	2023		2022
Assets:
Property operating lease assets	Operating lease assets	$	55,006	$	54,930
Automobile operating lease assets	Operating lease assets		28,675		30,582
Equipment operating lease assets	Operating lease assets		910		994

Total lease assets		$	84,591	$	86,506

Liabilities:
Current operating lease liabilities	Current operating lease liabilities	$	27,825	$	26,429
Long-term operating lease liabilities	Long-term operating lease liabilities		58,926		62,108
Total lease liabilities		$	86,751	$	88,537

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Undiscounted future minimum rents payable as of December 31, ~~2020~~2023 under

non-cancelable

leases with initial terms exceeding one year reconcile to lease liabilities included in the consolidated balance sheet as follows (in thousands):

2021
   $ 29,599
2022
   23,453
2023
   14,569
2024
   10,951
2025
   8,269
2026 and thereafter
   16,864

Total future minimum lease payments
   103,705
Less: amount of lease payments representing interest
   (7,744 )

Present value of future minimum lease payments
   95,961
Less: current operating lease liabilities
   (27,764 )

Long-term operating lease liabilities
   $ 68,197


2024	$	30,344
2025		24,570
2026		18,321
2027		10,752
2028		3,848
2029 and thereafter		5,215

Total future minimum lease payments		93,050
Less: amount of lease payments representing interest		(6,299	)

Present value of future minimum lease payments		86,751
Less: current operating lease liabilities		(27,825	)

Long-term operating lease liabilities	$	58,926

13 Other Commitments and Contingencies

The Company licenses certain technology and software from third parties in the course of ordinary business. Future minimum license fees payable under existing license agreements as of December 31, ~~2020~~2023 are immaterial for the years ended December 31, ~~2021~~2023 and thereafter. The Company enters into licensing arrangements with third parties that require future milestone or royalty payments contingent upon future events. Upon the achievement of certain milestones in existing agreements, the Company could make additional future payments of up to $7 million, as well as royalties on future net sales.

The Company enters into standard indemnification agreements in its ordinary course of business. Pursuant to these agreements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners or customers, in connection with patent, copyright or other intellectual property infringement claims by any third party with respect to its current products, as well as claims relating to property damage or personal injury resulting from the performance of services by the Company or its subcontractors. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. Historically, the Company’s costs to defend lawsuits or settle claims relating to such indemnity agreements have been minimal and management accordingly believes the estimated fair value of these agreements is immaterial.

14 Stock-Based Compensation

In May 2020, the Company’s shareholders approved the Company’s 2020 Equity Incentive Plan (“2020 Plan”). As of December 31, ~~2020,~~2023, the 2020 Plan has ~~7.2~~6.3 million shares available for grant in the form of incentive or

non-qualified

stock options, stock appreciation rights (“SARs”), restricted stock or other types of awards (e.g. restricted stock units and performance stock units). The Company issues new shares of common stock upon exercise of stock options, restricted stock unit conversion or performance stock unit conversion. Under the 2020 Plan, the exercise price for stock options may not be less than the fair market value of the underlying stock at the date of grant. The 2020 Plan is scheduled to terminate on May 13, 2030. Options generally will expire no later than ten years after the date on which they are granted and will become exercisable as directed by the Compensation Committee of the Board of Directors and generally vest in equal annual installments over a

five-year

period. A SAR may be granted alone or in conjunction with an option or other award. Shares of restricted stock, restricted stock units and performance stock units may be issued under the 2020 Plan for such

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

consideration as is determined by the Compensation Committee of the Board of Directors. As of December 31, ~~2020,~~2023, the Company had stock

options

, restricted stock and restricted and performance stock unit awards ~~outstanding.~~o

utstanding.

In May 2009, the Company’s shareholders approved the 2009 Employee Stock Purchase Plan, under which eligible employees may contribute up

to ~~15%~~

% of their earnings toward the quarterly purchase of the

Company’s

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

common stock.

The plan makes available ~~0.9~~

0.8

million shares of the Company’s common stock, which includes the remaining shares available under the 1996 Employee Stock Purchase Plan. As of December 31, ~~2020, 1.5~~2023,

1.7

million shares have been issued under both the 2009 and 1996 Employee Stock Purchase Plans. Each plan period lasts

three months

beginning on January

, April 1, July 1 and October 1 of each year.

The purchase price for each share of stock is the lesser of 90% of the market price on the first day of the plan period or 100% of the market price on the last day of the plan period.

Stock-based compensation expense related to this plan was $1$

million for each of the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018, respectively.~~2021.

The Company accounts for stock-based compensation costs in accordance with the accounting standards for stock-based compensation, which require that all share-based payments to employees be recognized in the statements of operations, based on their grant date fair values. The Company recognizes the expense using the straight-line attribution method. The stock-based compensation expense recognized in the consolidated statements of operations is based on awards that ultimately are expected to vest; therefore, the amount of expense has been reduced for estimated forfeitures. Forfeitures are estimated based on historical experience. If actual results differ significantly from these estimates, stock-based compensation expense and the Company’s results of operations could be materially impacted. In addition, if the Company employs different assumptions in the application of these standards, the compensation expense that the Company records in the future periods may differ significantly from what the Company has recorded in the current period.

The consolidated statements of operations for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 include the following stock-based compensation expense related to stock option awards, restricted stock awards, restricted stock unit awards, performance stock unit awards and the employee stock purchase plan (in thousands):

2020

2019

2018

Cost of sales
   $ 2,485    $ 2,271    $ 2,212
Selling and administrative expenses
   29,711    30,907    30,443
Research and development expenses
   4,669    5,399    4,886

Total stock-based compensation
   $ 36,865    $ 38,577    $ 37,541

During the years ended December 31, 2020, 2019 and 2018, the Company recognized $1 million, less than $1 million and $1 million of expense, respectively, of stock-based compensation related to the modification of certain stock awards upon the retirement of senior executives.


	2023		2022		2021
Cost of sales	$	2,014	$	3,498	$	2,500
Selling and administrative expenses		31,012		32,192		21,727
Research and development expenses		3,842		6,874		5,691

Total stock-based compensation	$	36,868	$	42,564	$	29,918

Stock Options

In determining the fair value of the stock options, the Company makes a variety of assumptions and estimates, including volatility measures, expected yields and expected stock option lives. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model. The Company uses implied volatility on its publicly-traded options as the basis for its estimate of expected volatility. The Company believes that implied volatility is the most appropriate indicator of expected volatility because it is generally reflective of historical volatility and expectations of how future volatility will differ from historical volatility. The expected life assumption for grants is based on historical experience for the population of

non-qualified

stock option exercises. The risk-free interest rate is the yield currently available on U.S. Treasury

zero-coupon

issues with a

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

remaining term approximating the expected term used as the input to the Black-Scholes model.

The relevant data used to determine the value of the stock options granted during the ~~year~~twelve months ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 are as follows:

Options Issued an
d Significant

Weighted-Average
Assumptions Used to Estimate Option Fair Values

2020

2019

2018

Options issued in thousands
   267 146 321
Risk-free interest rate
   1.2 % 2.5 % 2.7 %
Expected life in years
   6 5 6
Expected volatility
   27.8 % 24.5 % 25.3 %
Expected dividends
   0 —   —


Options Issued and Significant Weighted-Average Assumptions Used to Estimate Option Fair Values	2023			2022			2021
Options issued in thousands		132			138			160
Risk-free interest rate		3.9	%		2.0	%		0.8	%
Expected life in years		6			6			6
Expected volatility		31.1	%		30.7	%		32.4	%
Expected dividends		—			—			—

Weighted-Average Exercise Price and Fair Value of Options on the Date of Grant

2020

2019

2018

Exercise price
   $ 215.12    $ 230.37    $ 196.78
Fair value
   $ 63.14    $ 61.75    $ 59.89

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


Weighted-Average Exercise Price and Fair Value of Options on the Date of Grant	2023		2022		2021
Exercise price	$	331.76	$	321.15	$	281.33
Fair value	$	126.73	$	107.99	$	91.48

The following table summarizes stock option activity for the plans for the ~~year~~twelve months ended December 31, ~~2020~~2023 (in thousands, except per share data):

Number of Shares

Exercise Price per Share

Weighted-
Average
Exercise Price
per Share

Outstanding at December 31, 2019
   1,455 $ 61.63    to    $ 238.52    $ 158.61
Granted
   267 $ 188.63    to    $ 235.06    $ 215.12
Exercised
   (456 ) $ 61.63    to    $ 208.47    $ 128.43
Canceled
   (199 ) $ 128.93    to    $ 238.52    $ 192.08

Outstanding at December 31, 2020
   1,067 $ 75.94    to    $ 238.52    $ 179.59


	Number of Shares			Exercise Price per Share					Weighted- Average Exercise Price per Share
Outstanding at December 31, 2022		597		$	99.22	to	$	371.64	$	238.43
Granted		132		$	253.64	to	$	345.59	$	331.76
Exercised		(99	)	$	99.22	to	$	314.98	$	178.31
Canceled		(43	)	$	195.75	to	$	345.59	$	291.54

Outstanding at December 31, 2023		587		$	113.88	to	$	371.64	$	265.17

The following table details the options outstanding at December 31, ~~2020~~2023 by range of exercise prices (in thousands, except per share data):


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
$113.88 to $235.06		192	$	187.37		4.7		150	$	181.57
$235.07 to $303.64		166	$	267.95		6.8		80	$	262.92
$303.65 to $371.64		229	$	328.38		8.6		29	$	331.66

Total		587	$	265.17		6.8		259	$	223.37

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

$75.94 to $154.33
   363    $ 127.38    4.9    296    $ 123.41
$154.34 to $203.37
   410    $ 194.29    7.8    162    $ 191.60
$203.38 to $238.52
   294    $ 223.55    8.4    45    $ 221.51

Total
   1,067    $ 179.59    7.0    503    $ 154.16

During ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, the total intrinsic value of the stock options exercised (i.e., the difference between the market price at exercise and the price paid by the employee to exercise the options) was ~~$45~~$11 million,

$~~45 million~~

31 million and ~~$44~~$43 million, respectively. The total cash received from the exercise of these stock options was ~~$59~~$18 million, ~~$46~~$32 million and ~~$45~~$46 million for the ~~years~~ year

ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively.

The aggregate intrinsic value of the outstanding stock options at December 31, ~~2020~~2023 was ~~$72~~$39 million. ~~Options~~There were 0.3 million options exercisable at December 31, ~~2020, 2019~~2023, 2022 and ~~2018 were~~

~~0.5 million,~~

~~0.7~~

~~million~~

~~and~~

~~0.8 million, respectively.~~2021. The weighted-average exercise prices of options exercisable at December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 were

~~$154.16,~~

~~$134.94~~

$223.37, $188.21 and

~~$117.08,~~$162.09, respectively. The weighted-average remaining contractual life of the exercisable outstanding stock options at December 31, ~~2020~~2023 was ~~5.7~~5.1 years. The aggregate intrinsic value of stock options exercisable as of December 31, ~~2020~~2023 was ~~$48~~$28 million.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

At December 31, ~~2020,~~2023, the Company had ~~1.1~~0.6 million stock options that are vested and expected to vest. The intrinsic value, weighted-average exercise price and remaining contractual life of the vested and expected to vest stock options were ~~$76~~$39 million, ~~$179.44~~$264.78 and 76.7 years, respectively, at December 31, ~~2020.~~

2023.

The amount of compensation costs recognized for the year

ended December 31, 2023, 2022 and 2021 on the stock options expected to vest were $10 million, $8 million and $7 million, respectively. As of December 31, ~~2020,~~2023, there were ~~$20~~$25 million of total unrecognized compensation costs related to unvested stock option awards that are expected to vest. These costs are expected to be recognized over a weighted-average period of ~~3.5~~3.4 years.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Restricted Stock

During the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, the Company granted 6

three

thousand, 5

three

thousand and 5

four

thousand shares of restricted stock, respectively. The weighted-average fair value per share on the grant date of the restricted stock granted in ~~2020, 2019~~2023, 2022 and ~~2018~~2021 was ~~$229.67,~~

341.04

~~183.41~~ , $

363.44

and $

~~$194.73,~~256.28

, respectively. The Company has recorded $1$

million of compensation expense in each of the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 related to the restricted stock grants. As of December 31, ~~2020,~~2023, the Company had 5

three

thousand unvested shares of restricted stock outstanding, which have been fully expensed.

Restricted Stock Units

The following table summarizes the unvested restricted stock unit award activity for the ~~year~~twelve months ended December 31, ~~2020~~2023 (in thousands, except per share data):


	Shares			Weighted-Average Grant Date Fair Value per Share		Shares			Weighted-Average Grant Date Fair Value per Share
Unvested at December 31, 2019		260		$	184.70
Unvested at December 31, 2022							238		$	273.60
Granted		119		$	206.99		100		$	319.28
Vested		(88	)	$	162.43		(74	)	$	254.61
Forfeited		(20	)	$	180.90		(29	)	$	288.50

Unvested at December 31, 2020		271		$	202.00
Unvested at December 31, 2023							235		$	297.18

Restricted stock units are generally granted annually in February and vest in equal annual installments over a five-year period. The amount of compensation costs recognized for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 on the restricted stock units expected to vest were

~~$15~~ $19 million,

~~$14~~ $19 million

and

~~$16~~$17 million, respectively. As of December 31, ~~2020,~~2023, there were ~~$37~~$50 million of total unrecognized compensation costs related to the restricted stock unit awards that are expected to vest. These costs are expected to be recognized over a weighted-average period of ~~3.4 years.~~

3.3 years

Performance Stock Units

The Company’s

performance stock units are equity compensation awards with a market vesting condition based on the Company’s Total Shareholder Return (“TSR”) relative to the TSR of the components of the S&P Health Care Index. TSR is the change in value of a stock price over time, including the reinvestment of dividends. The vesting schedule ranges from 0% to 200% of the target shares awarded. Beginning with the grants made in 2020, the vesting conditions for performance stock units now include a performance condition based on future sales growth.

In determining the fair value of the performance stock units, the Company makes a variety of assumptions and estimates, ~~including volatility~~includ

ing vola

tility measures, expected yields and expected terms. The fair value of each performance stock unit grant was estimated on the date of grant using the Monte Carlo simulation model. The

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Company uses implied volatility on its ~~publicly-traded~~publicly traded options as the basis for its estimate of expected volatility. The Company believes that implied volatility is the most appropriate indicator of expected volatility because it is generally reflective of historical volatility and expectations of how future volatility will differ from historical volatility. The expected life assumption for grants is based on the performance period of the underlying performance stock units. The risk-free interest rate is the yield currently available on U.S. Treasury

zero-coupon

issues with a remaining term approximating the expected term used as the input to the Monte Carlo simulation model. The correlation coefficient is used to model the way in which each company in the S&P Health Care Index tends to move in relation to each other during the performance period. The relevant data used to determine

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the value of

the performance stock units granted during the ~~year~~years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 are as follows:


Performance Stock Units Issued and Significant Assumptions Used to Estimate Fair Values	2020			2019			2018			2023			2022			2021
Performance stock units issued in thousands		58			13			40			45			40			41
Risk-free interest rate		1.3	%		2.4	%		2.4	%		4.8	%		1.6	%		0.2	%
Expected life in years		2.9			2.8			3.0			2.9			2.9			2.9
Expected volatility		25.1	%		23.5	%		22.0	%		33.3	%		25.4	%		38.7	%
Average volatility of peer companies		26.1	%		26.2	%		25.9	%		32.8	%		34.5	%		34.7	%
Correlation Coefficient		36.6	%		34.2	%		35.9	%		38.2	%		43.0	%		45.8	%
Expected dividends		0			—			—			—			—			—

The following table summarizes the unvested performance stock unit award activity for the ~~year~~twelve months ended December 31, ~~2020~~2023 (in thousands, except per share data):


	Shares			Weighted-Average Fair Value per Share		Shares			Weighted-Average Fair Value per Share
Unvested at December 31, 2019		105		$	233.11

Unvested at December 31, 2022							111		$	297.55
Granted		58		$	190.45		45		$	338.02
Vested		(36	)	$	184.51		(46	)	$	208.35
Forfeited		(32	)	$	218.63		(17	)	$	307.03
Change in performance shares in the year due to exceeding performance targets							15		$	205.72

Unvested at December 31, 2020		95		$	230.36
Unvested at December 31, 2023							108		$	337.22

The amount of compensation costs recognized for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 on the performance stock units expected to vest were

$6 $5 million,

$7 $13 million

and

$5 $3 million, respectively. As of December 31, ~~2020,~~2023, there were $9$15 million of total unrecognized compensation costs related to the ~~restricted~~performance stock unit awards that are expected to vest. These costs are expected to be recognized over a weighted-average period of 1.9 years.

15 Earnings Per Share

Basic and diluted EPS calculations are detailed a

as follows (in thousands, except per share data):


	Year Ended December 31, 2023
	Net Income		Weighted-Average Shares		Per Share
	(Numerator)		(Denominator)		Amount

Net income per basic common share	$	642,234		59,076	$	10.87
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities		—		194		(0.03	)

Net income per diluted common share	$	642,234		59,270	$	10.84


	Year Ended December 31, 2022
	Net Income		Weighted-Average Shares		Per Share
	(Numerator)		(Denominator)		Amount

Net income per basic common share	$	707,755		59,985	$	11.80
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities		—		346		(0.07	)

Net income per diluted common share	$	707,755		60,331	$	11.73

Year Ended December 31, 2020


Net Income

Weighted-Average

Shares

Per
Share


(Numerator)

(Denominator)

Amount

Net income per basic common share
   $ 521,571    62,094    $ 8.40
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities
   —    320    (0.04 )

Net income per diluted common share
   $ 521,571    62,414    $ 8.36

Table of Contents

NOTES

TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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, 2021
	Net Income		Weighted-Average Shares		Per Share
	(Numerator)		(Denominator)		Amount

Net income per basic common share	$	692,843		61,575	$	11.25
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities		—		453		(0.08	)

Net income per diluted common share	$	692,843		62,028	$	11.17

For the ~~years~~ year

ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, the Company had ~~0.3 million, 0.1 million~~245 thousand, 66 thousand and ~~0.1 million~~3 thousand stock options that were antidilutive, respectively, due to having higher exercise prices than the Company’s average stock price during the period. These securities were not included in the computation of diluted EPS. The effect of dilutive securities was calculated using the treasury

stock method.

16 Accumulated Other Comprehensive

~~Income~~ Loss

The components of ~~accumul~~

~~ted~~accumulated other comprehensive loss are detailed as follows ~~(in~~

(in thousands):

Currency
Translation

Unrealized

Loss on
Retirement Plans

Unrealized Gain
(Loss) on
Investments

Accumulated
Other
Comprehensive
Loss

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 ) $ 0   $ (119,471 )
Other comprehensive loss, net of tax
   5,984 (4,456 ) 0   1,528

Balance at December 31, 2020
   $ (98,082 ) $ (19,861 ) $ 0 $ (117,943 )


	Currency Translation			Unrealized Gain (Loss) on Retirement Plans			Unrealized Gain (Loss) on Investments			Unrealized Loss on Derivative Instruments			Accumulated Other Comprehensive Loss
Balance at December 31, 2021	$	(99,985	)	$	(11,860	)	$	(20	)	$	—		$	(111,865	)
Other comprehensive (loss) income, net of tax		(46,135	)		16,408			20			—			(29,707	)

Balance at December 31, 2022	$	(146,120	)	$	4,548		$	—		$	—		$	(141,572	)
Other comprehensive (loss) income, net of tax		17,761			(8,049	)		—			(2,260	)		7,452

Balance at December 31, 2023	$	(128,359	)	$	(3,501	)	$	—		$	(2,260	)	$	(134,120	)

17 Retirement Plans

U.S. employees are eligible to participate in the Waters Employee Investment Plan, a 401(k) defined contribution plan, immediately upon hire. Employees may contribute up to 60% of eligible pay on a

pre-tax

post-tax

basis and the Company makes matching contributions of 100% for contributions up to 6% of eligible pay. The Company also sponsors a 401(k) Restoration Plan, which is a nonqualified defined contribution plan. Employees are 100% vested in employee and Company matching contributions for both plans. For the ~~years~~ year

ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, the Company’s matching contributions amounted to $

7$22 million, ~~$17~~$21 million and ~~$17~~$19 million, respectively. Due to the uncertain global business environment relating to the COVID-19 pandemic, the Company’s management temporarily suspended the employer matching contributions associated with these 401(k) plans, which was implemented from May 22, 2020 through the end of 2020.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

In May 2018, the Company’s Board of Directors approved the termination of two defined benefit pension plans in the U.S. for which the pay credit accruals have been frozen, the Waters Retirement Plan and the Waters Retirement Restoration Plan (collectively, the “U.S. Pension Plans”). In December 2018, the Company settled the Waters Retirement Plan obligation by making lump-sum cash payments and purchasing annuity contracts for participants to permanently extinguish the pension plan’s obligations. As a result, the Company

~~recorded a $46 million charge to other expense, which consisted of a $6 million cash contribution to the plan and a $40 million~~

~~non-cash~~

~~charge related to the reversal of unrecognized actuarial losses recorded in accumulated other comprehensive income in the stockholders’ equity. The $46 million~~

~~pre-tax~~

~~charge reduced net income per diluted share by $0.39. The termination of the Waters Retirement Restoration Plan was completed in 2019.~~

The Company also sponsors other employee benefit plans in the U.S., including a retiree healthcare plan, which provides reimbursement for medical expenses and is contributory. There are various employee benefit plans outside the United States (both defined benefit and defined contribution plans). Certain

non-U.S.

defined benefit plans

(“Non-U.S.

Pension Plans”) are included in the disclosures below, which are required under the accounting standards for retirement benefits.

The Company contributed ~~$14~~$18 million,

~~$15~~$16 million and ~~$13~~$17 million in the ~~years~~ year

ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018,~~2021, respectively, to the

non-U.S.

plans (primarily defined contribution plans) which are currently outside of the scope of the required disclosures. The eligibility and vesting of

non-U.S. plans

are consistent with local laws

and regulations.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL

STATEMENTS

— (Continued)

The net periodic pension cost

is made up of several components that reflect different aspects of the Company’s financial arrangements as well as the cost of benefits earned by employees. These components are determined using the projected unit credit actuarial cost method and are based on certain actuarial assumptions. The Company’s accounting policy is to reflect in the projected benefit obligation all benefit changes to which the Company is committed as of the current valuation date; use a market-related value of assets to determine pension expense; amortize increases in prior service costs on a straight-line basis over the expected future service of active participants as of the date such costs are first recognized; and amortize cumulative actuarial gains and losses in excess of 10% of the larger of the market-related value of plan assets and the projected benefit obligation over the expected future service of active participants.

Summary data for the ~~U.S. Pension Plans,~~ U.S. Retiree Healthcare Plan and

Non-U.S. Pension

Plans are presented in the following tables, using the measurement dates of December 31, ~~2020~~2023 and ~~2019,~~2022, respectively.

The reconciliation of the projected benefit obligations for the plans at December 31, ~~2020~~2023 and ~~2019~~2022 is as follows

(in thousands):


	2023						2022
	U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans			U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans

Projected benefit obligation, January 1	$	22,583		$	74,025		$	25,958		$	106,924
Service cost		275			3,073			775			4,018
Employee contributions		1,105			601			1,139			536
Interest cost		1,262			2,797			706			1,360
Actuarial losses (gains)		2,166			11,387			(4,657	)		(27,494	)
Benefits paid		(1,649	)		(2,051	)		(1,338	)		(3,567	)
Plan amendments		—			(500	)		—			—
Plan settlements		—			(488	)		—			(812	)
Currency impact		—			3,547			—			(6,940	)

Projected benefit obligation, December 31	$	25,742		$	92,391		$	22,583		$	74,025

The reconciliation of the fair value of the plan assets at December 31, 2023 and 2022 is as follows (in thousands):


	2023						2022
	U.S. Retiree			Non-U.S.			U.S. Retiree			Non-U.S.
	Healthcare			Pension			Healthcare			Pension
	Plan			Plans			Plan			Plans
Fair value of plan assets, January 1	$	15,724		$	77,697		$	18,314		$	91,169
Actual return on plan assets		2,444			4,144			(2,895	)		(6,497	)
Company contributions		529			3,224			504			2,500
Employee contributions		1,105			601			1,139			536
Plan settlements		—			(488	)		—			(812	)
Benefits paid		(1,649	)		(2,051	)		(1,338	)		(3,567	)
Currency impact		—			3,460			—			(5,632	)

Fair value of plan assets, December 31	$	18,153		$	86,587		$	15,724		$	77,697

2020

2019


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
   $ —    $ 21,186 $ 103,366 $ 972 $ 17,724 $ 93,722
Service cost
   —    665 4,519 —   499 4,339
Employee contributions
   —    1,149 514 —   1,214 499
Interest cost
   —    711 1,413 29 777 1,735
Actuarial losses (gains)
   —    2,788 2,624 (32 ) 2,081 13,385
Benefits paid
   —    (1,130 ) (1,474 ) —   (1,109 ) (3,281 )
Plan settlements
   —    — (1,449 ) (969 ) —   (7,407 )
Other plans
   —    — — —   —   1,598
Currency impact
   —    — 10,077 —   —   (1,224 )

Projected benefit obligation, December 31
   $ —    $ 25,369 $ 119,590 $ —   $ 21,186 $ 103,366

391

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~The reconciliation of the fair value of the plan assets at December 31, 2020 and 2019 is as follows (in thousands):~~

2020

2019


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
   $ —    $ 13,773 $ 83,011 $ —   $ 11,080 $ 81,587
Actual return on plan assets
   —    1,967 1,395 —   2,140 6,237
Company contributions
   —    409 3,581 969 448 6,103
Employee contributions
   —    1,149 514 —   1,214 499
Plan settlements
   —    0 (1,449 ) (969 ) —   (7,044 )
Benefits paid
   —    (1,130 ) (1,474 ) —   (1,109 ) (3,281 )
Other plans
   —    — — —   —   82
Currency impact
   —    — 8,312 —   —   (1,172 )

Fair value of plan assets, December 31
   $ —    $ 16,168 $ 93,890 $ —   $ 13,773 $ 83,011

The summary of the funded status for the plans at December 31, ~~2020~~2023 and ~~2019~~2022 is as follows (in thousands):

2020

2019


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
   $ —    $ (25,369 ) $ (119,590 ) $ —      $ (21,186 ) $ (103,366 )
Fair value of plan assets
   —    16,168 93,890 —      13,773 83,011

Funded status
   $ —    $ (9,201 ) $ (25,700 ) $ —      $ (7,413 ) $ (20,355 )


	2023						2022
	U.S. Retiree			Non-U.S.			U.S. Retiree			Non-U.S.
	Healthcare			Pension			Healthcare			Pension
	Plan			Plans			Plan			Plans
Projected benefit obligation	$	(25,742	)	$	(92,391	)	$	(22,583	)	$	(74,025	)
Fair value of plan assets		18,153			86,587			15,724			77,697

Funded status	$	(7,589	)	$	(5,804	)	$	(6,859	)	$	3,672

e change in the Company’s projected benefit obligation for the year ended December 31, 2020 was primarily due to fluctuations in foreign currency exchange rates during the year, net actuarial losses that arose during the year driven by a decline in discount rates and differences between expected and actual return on plan assets. The change in the Company’s projected benefit obligation for the year ended December 31, ~~2019~~2023 was primarily due to net actuarial losses that arose during the year driven by a ~~decline~~decrease in discount rates, ~~and~~ differences between expected and actual return on plan ~~assets.~~assets, and fluctuations in foreign currency exchange rates during the year. The change in the Company’s projected benefit obligation for the year ended December 31, 2022 was primarily due to net actuarial gains that arose during the year driven by an increase in discount rates, differences between expected and actual return on plan assets, and fluctuations in foreign currency exchange rates during the year.

The summary of the amounts recognized in the consolidated balance sheets for the plans at ~~Dec~~

~~mber~~December 31, ~~2020~~2023 and ~~2019~~2022 is as follows (in

thousands):

2020

2019


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

Long-term assets
   $ —    $ — $ 971 $ —      $ —   $ 1,466
Current liabilities
   —    (409 ) (1,999 ) —      (448 ) (4 )
Long-term liabilities
   —    (8,792 ) (24,672 ) —      (6,965 ) (21,817 )

Net amount recognized at December 31
   $ —    $ (9,201 ) $ (25,700 ) $ —      $ (7,413 ) $ (20,355 )


	2023						2022
	U.S. Retiree			Non-U.S.			U.S. Retiree			Non-U.S.
	Healthcare			Pension			Healthcare			Pension
	Plan			Plans			Plan			Plans

Long-term assets	$	—		$	5,220		$	—		$	9,554
Long-term liabilities		(7,589	)		(11,024	)		(6,859	)		(5,882	)

Net amount recognized at December 31	$	(7,589	)	$	(5,804	)	$	(6,859	)	$	3,672

The accumulated benefit obligation for all defined benefit pension plans was ~~$103~~$81 million and ~~$88~~

$64 million at December 31,

~~2020~~ 2023 and

~~2019~~

~~, respectively~~

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

2022, respectively.

The summary of the

Non-U.S.

Pension Plans that have accumulated benefit obligations in excess of plan assets at December 31, ~~2020~~2023 and ~~2019~~2022 is as follows (in thousands):

2020

2019

Accumulated benefit obligations
   $ 84,940    $ 73,644
Fair value of plan assets
   $ 68,334    $ 60,832


	2023		2022
Accumulated benefit obligations	$	60,815	$	16,962
Fair value of plan assets	$	52,894	$	13,616

The summary of the

Non-U.S.

Pension Plans that have projected benefit obligations in excess of plan assets at December 31, ~~2020~~2023 and ~~2019~~2022 is as follows (in thousands):


	2023		2022
Projected benefit obligations	$	63,918	$	19,498
Fair value of plan assets	$	52,894	$	13,616

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2020


2019

Projected benefit obligations

$
107,093


$
92,984

Fair value of plan assets

$
80,422


$
71,163

The ~~sum~~

~~ary~~summary of the components

of net periodic pension costs for the plans for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 is as follows (in thousands):

2020

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

U.S.
Pension
Plans

U.S.
Retiree
Healthcare
Plan

Non-U.S.

Pension
Plans

Service cost
   $ 0    $ 665 $ 4,519 $ —      $ 499 $ 4,339 $ 568 $ 566 $ 5,368
Interest cost
   0    711 1,413 29    777 1,735 6,491 636 1,707
Expected return on plan assets
   0    (871 ) (1,874 ) —      (706 ) (2,154 ) (6,833 ) (706 ) (1,974 )
Settlement loss
   0    0 235 27    —   1,548 45,157 —   —
Net amortization:

Prior service credit
   0    (19 ) (163 ) —      (19 ) (108 ) —   (19 ) (108 )
Net actuarial loss
   0    0 1,571 —      —   531 3,082 —   680

Net periodic pension cost
   $ 0    $ 486 $ 5,701 $ 56    $ 551 $ 5,891 $ 48,465 $ 477 $ 5,673


	2023						2022						2021
	U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans			U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans			U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans
Service cost	$	275		$	3,073		$	775		$	4,018		$	884		$	4,577
Interest cost		1,262			2,797			706			1,360			559			1,247
Expected return on plan assets		(978	)		(2,653	)		(1,138	)		(1,972	)		(1,011	)		(1,835	)
Settlement loss		—			221			—			73			—			77
Net amortization:
Prior service credit		(19	)		(105	)		(19	)		(129	)		(19	)		(87	)
Net actuarial (gain) loss		—			(195	)		—			649			10			1,186

Net periodic pension cost	$	540		$	3,138		$	324		$	3,999		$	423		$	5,165

The summary of the changes in amounts recognized in other comprehensive income (loss) for the plans for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 is as follows (in thousands):

2020

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

U.S.
Pension
Plans

U.S.
Retiree
Healthcare
Plan

Non-U.S.

Pension
Plans

Prior service cost
   $ —    $ — $ — $ —      $ —   $ —   $ —   $ 130 $ 44
Net (loss) gain arising during the year
   —    (1,692 ) (3,104 ) 32    (648 ) (8,940 ) (10,616 ) (670 ) 4,088
Amortization:

Prior service credit
   —    (19 ) (163 ) —      (19 ) (108 ) —   (19 ) (35 )
Net loss
   —    — 1,806 27    —   2,079 48,239 —   680
Other Plans
   —    — — —      —   18 —   —   (354 )
Currency impact
   —    — (2,225 ) —      —   178 —   —   583

Total recognized in other comprehensive income (loss)
   $ 0    $ (1,711 ) $ (3,686 )

$ 59    $ (667 ) $ (6,773 ) $ 37,623 $ (559 ) $ 5,006

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~


	2023						2022						2021
	U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans			U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans			U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans
Prior service credit	$	—		$	—		$	—		$	—		$	—		$	(69	)
Net (loss) gain arising during the year		(699	)		(9,396	)		623			19,025			1,524			6,708
Amortization:
Prior service credit		(19	)		(105	)		(19	)		(129	)		(19	)		(87	)
Net loss		—			26			—			722			10			1,263
Currency impact		—			(58	)		—			1,305			—			1,179

Total recognized in other comprehensive (loss) income	$	(718	)	$	(9,533	)	$	604		$	20,923		$	1,515		$	8,994

The components of net periodic benefit cost other than the service cost component are included in other ~~expense~~income, net in the consolidated statements of operations.

The summary of the amounts included in accumulated other comprehensive loss in stockholders’ equity ~~(deficit)~~ for the plans at December 31, ~~2020~~2023 and ~~2019~~2022 is as follows (in thousands):


	2023						2022
	U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans			U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans
Net actuarial (loss) gain	$	(964	)	$	(3,241	)	$	(266	)	$	6,157
Prior service credit (cost)		17			(156	)		36			(20	)

Total	$	(947	)	$	(3,397	)	$	(230	)	$	6,137

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2020

2019


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
   $ 0    $ (2,423 ) $ (24,138 )

$ —      $ (731 ) $ (20,600 )
Prior service credit
   0    74 358 —      93 506

Total
   $ 0    $ (2,349 ) $ (23,780 )

$ —      $ (638 ) $ (20,094 )

The plans’ investment asset mix is as follows at December 31, ~~2020~~2023 and ~~2019:~~2022:


	2023						2022
	U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans			U.S. Retiree Healthcare Plan			Non-U.S. Pension Plans
Equity securities		70	%		4	%		77	%		5	%
Debt securities		30	%		18	%		23	%		18	%
Cash and cash equivalents		0	%		2	%		0	%		2	%
Insurance contracts and other		0	%		76	%		0	%		75	%

Total		100	%		100	%		100	%		100	%

2020

2019


U.S.
Retiree
Healthcare
Plan

Non-U.S.

Pension
Plans

U.S.
Retiree
Healthcare
Plan

Non-U.S.

Pension
Plans

Equity securities
   67 % 5 % 64 % 6 %
Debt securities
   33 % 20 % 36 % 21 %
Cash and cash equivalents
   0 % 1 % 0 % 1 %
Insurance contracts and other
   0 % 74 % 0 % 72 %

Total
   100 % 100 % 100 % 100 %

The plans’ investment policies include the following asset allocation guidelines:

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% - 50%    20 %
Cash and cash equivalents
   0 % 0% - 10%    10 %
Insurance contracts and other
   5 % 0% - 10%    65 %


	U.S. Retiree Healthcare Plan					Non-U.S. Pension Plans Policy Target
	Policy Target			Range		Non-U.S. Pension Plans Policy Target
Equity securities		60	%		30% - 90%		13	%
Debt securities		35	%		20% - 50%		19	%
Cash and cash equivalents		0	%		0% - 10%		8	%
Insurance contracts and other		5	%		0% - 10%		60	%

The asset allocation policy for the U.S. Retiree Healthcare Plan was developed in consideration of the following long-term investment objectives: achieving a return on assets consistent with the investment policy, achieving portfolio returns which compare favorably with those of other similar plans, professionally managed portfolios and of appropriate market indexes and maintaining sufficient liquidity to meet the obligations of the plan. Within the equity portfolio of the U.S. Retiree

Healthcare Plan, investments are diversified among market capitalization and investment strategy, and targets a 45% allocation of the equity portfolio to be invested in financial markets outside of the United States. The Company does not invest in its own stock within the U.S. Retiree Healthcare Plan’s assets.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Plan assets are measured at fair value using the following valuation techniques and inputs:


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.

There have been no changes in the above valuation techniques associated with determining the value of the plans’ assets during the years ended December 31, ~~2020~~2023 and ~~2019.~~2022.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value of the Company’s retirement plan assets are as follows at December 31, ~~2020~~2023 (in thousands):

Total at
December 31,
2020

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)
   16,168    16,168    0    —

Total U.S. Retiree Healthcare Plan
   16,168    16,168    0    —
Non-U.S.
Pension Plans:

Cash equivalents
(b)
   1,188    1,188    0    —
Mutual funds
(c)
   23,582    23,582    0    —
Bank and insurance investment contracts
(d)
   69,120    —    0    69,120

Total
Non-U.S.
Pension Plans
   93,890    24,770    0    69,120

Total fair value of retirement plan assets
   $ 110,058    $ 40,938    $ 0    $ 69,120


	Total at December 31, 2023		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)		18,153		18,153		—		—

Total U.S. Retiree Healthcare Plan		18,153		18,153		—		—
Non-U.S. Pension Plans:
Cash equivalents (b)		1,611		1,611		—		—
Mutual funds (c)		18,785		18,785		—		—
Bank and insurance investment contracts (d)		66,191		—		—		66,191

Total Non-U.S. Pension Plans		86,587		20,396		—		66,191

Total fair value of retirement plan assets	$	104,740	$	38,549	$	—	$	66,191

The fair value of the Company’s retirement plan assets are as follows at December 31, ~~2019~~2022 (in thousands):

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
(e)
   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
(f)
   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, 2022		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 (e)		15,724		15,724		—		—

Total U.S. Retiree Healthcare Plan		15,724		15,724		—		—
Non-U.S. Pension Plans:
Cash equivalents (b)		1,527		1,527		—		—
Mutual funds (f)		18,176		18,176		—		—
Bank and insurance investment contracts (d)		57,994		—		—		57,994

Total Non-U.S. Pension Plans		77,697		19,703		—		57,994

Total fair value of retirement plan assets	$	93,421	$	35,427	$	—	$	57,994

~~(a)~~

The mutual fund balance in the U.S. Retiree Healthcare Plan is invested in the following categories: ~~36%~~41% in the common stock of

large-cap

U.S. companies, ~~31%~~29% in the common stock of international growth companies and ~~33%~~30% in fixed income bonds of U.S. companies and the U.S. ~~government~~

government.

~~(b)~~b)

Primarily represents deposit account funds held with various financial institutions.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(c)~~c)

The mutual fund balance in the

Non-U.S.

Pension Plans is primarily invested in the following categories: ~~64%~~76% in international bonds, ~~19%~~18% in the common stock of international companies and ~~17%~~7% in various other global investments.

~~(d)~~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: ~~35%~~49% in the common stock of

large-cap

U.S. companies, ~~29%~~28% in the common stock of international growth companies and ~~36%~~23% 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: ~~57%~~59% in international bonds, ~~23%~~22% in the common stock of international companies and ~~20%~~19% in various other global investments.

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the changes in fair value of the Level 3 retirement plan assets for the years ended December 31, ~~2020~~2023 and ~~2019~~2022 (in thousands):

Insurance
Guaranteed
Investment
Contracts

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
Net purchases (sales) and appreciation (depreciation)
   9,001

Fair value of assets, December 31, 2020
   $ 69,120


	Insurance Guaranteed Investment Contracts
Fair value of assets, December 31, 2021	$	65,945
Net purchases (sales) and appreciation (depreciation)		(7,951	)

Fair value of assets, December 31, 2022		57,994
Net purchases (sales) and appreciation (depreciation)		8,197

Fair value of assets, December 31, 2023	$	66,191

The weighted-average assumptions used to determine the benefit obligation in the consolidated balance sheets at December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 are as follows:


	2020						2019						2018						2023						2022						2021
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
Discount rate		2.25	%		1.12	%		3.42	%		1.38	%		4.40	%		1.95	%		5.18	%		2.97	%		5.42	%		3.82	%		2.70	%		1.40	%
Increases in compensation levels		*	*		2.69	%		*	*		2.83	%		*	*		2.66	%		*	*		2.90	%		*	*		3.14	%		*	*		2.74	%
Interest crediting rat e		5.25	%		0.85	%		5.25 %			0.79	%		5.25	%		0.81	%
Interest crediting rate																				5.25	%		2.05	%		5.25	%		1.57	%		5.25	%		0.99	%

**	Not applicable

The weighted-average assumptions used to determine the net periodic pension cost for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 are as follows:


	2020							2019						2018						2023						2022						2021
	U.S.				Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
Discount rate		3.42		%		1.98	%		4.41	%		2.25	%		3.96	%		1.93	%		5.42	%		4.70	%		2.70	%		2.09	%		2.25	%		1.40	%
Return on plan assets		6.25		%		2.99	%		6.25	%		3.11	%		4.35	%		2.75	%		6.25	%		3.95	%		6.25	%		3.07	%		6.25	%		2.58	%
Increases in compensation levels		*	*		3.62	%		*	*		3.20	%		*	*		2.70	%		*	*		4.32	%		*	*		3.58	%		*	*		3.11	%
Interest crediting rat e		5.25		%		0.63	%		5.25	%	0.58	%			5.25	%	0.6 0	%
Interest crediting rate																					5.25	%		1.47	%		5.25	%		1.55	%		5.25	%		0.77	%

**	Not applicable

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

To develop the expected long-term rate of return on assets assumption, the Company considered historical returns and future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio and historical expenses paid by the plan. A

one-quarter

percentage point increase in the assumed long-term rate of return on assets would decrease the Company’s net periodic benefit cost by less than $1 million. A

one-quarter

percentage point increase in the discount rate would decrease the Company’s net periodic benefit cost by less than $1 ~~million.~~million

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During

fiscal year ~~2021,~~2024, the Company expects to contribute a total of approximately $3 million to $6 million to the Company’s defined benefit plans. Estimated future benefit payments from the plans as of December 31, ~~2020~~2023 are as follows (in thousands):


	U.S. Retiree Healthcare Plans		Non-U.S. Pension Plans		Total

2024	$	1,959	$	4,018	$	5,977
2025		2,068		4,062		6,130
2026		2,153		3,376		5,529
2027		2,251		4,192		6,443
2028		2,444		5,420		7,864
2029 - 2033		13,807		26,732		40,539

U.S.
Retiree Healthcare
Plans

Non-U.S.

Pension
Plans

Total

2021
   $ 1,279    $ 5,177    $ 6,456
2022
   1,338    3,539    4,877
2023
   1,460    3,086    4,546
2024
   1,534    3,204    4,738
2025
   1,549    4,436    5,985
2026 - 2030
   7,790    23,898    31,688

18 Business Segment Information

The accounting standards for segment reporting establish standards for reporting information about operating segments in annual

financial

statements and require selected information for those segments to be presented in interim financial reports of public business enterprises. They also establish standards for related disclosures about products and services, geographic areas and major customers. The Company’s business activities, for which discrete financial information is available, are regularly reviewed and evaluated by the chief operating decision maker. As a result of this evaluation, the Company determined that it has 2two operating segments: Waters

and TATA.

The Waters operating segment is primarily in the business of designing, manufacturing, selling and servicing LC and MS instruments, columns and other precision chemistry consumables that can be integrated and used along with other analytical instruments. The TA operating segment is primarily in the business of designing, manufacturing, selling and servicing thermal analysis, rheometry and calorimetry instruments. The Company’s two operating segments have similar economic characteristics; product processes; products and services; types and classes of customers; methods of distribution; and regulatory environments. Because of these similarities, the two segments have been aggregated into 1one reporting segment for financial statement purposes. Please refer to the consolidated financial statements for financial information regarding the one reportable segment of the Company.

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Net sales for the Company’s products and services are as follows for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (in ~~thousands)~~thousa

s):


	2023		2022		2021
Product net sales:
Waters instrument systems	$	1,108,702	$	1,210,456	$	1,089,248
Chemistry consumables		541,469		525,399		507,209
TA instrument systems		252,879		252,314		225,613

Total product sales		1,903,050		1,988,169		1,822,070
Service net sales:
Waters service		951,419		890,607		876,626
TA service		101,947		93,180		87,178

Total service sales		1,053,366		983,787		963,804

Total net sales	$	2,956,416	$	2,971,956	$	2,785,874

Table of Contents

2020

2019

2018

Product net sales:

Waters instrument systems
   $ 890,855    $ 963,871    $ 1,000,625
Chemistry consumables
   432,080    412,018    400,287
TA instrument systems
   174,398    191,300    204,081

Total product sales
   1,497,333    1,567,189    1,604,993
Service net sales:

Waters service
   794,189    761,594    738,433
TA service
   73,843    77,813    76,503

Total service sales
   868,032    839,407    814,936

Total net sales
   $ 2,365,365    $ 2,406,596    $ 2,419,929

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net sales are attributable to geographic areas

based

on the region of destination. Geographic sales information is presented below for the ~~years~~ye

rs ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (in thousands):


	2020		2019		2018		2023		2022		2021
Net Sales:
Asia:
China	$	404,352	$	439,557	$	443,321	$	440,707	$	565,143	$	521,128
Japan		179,815		180,707		173,357		167,202		167,220		182,597
Asia Other		315,010		318,848		305,613		399,916		399,380		372,040

Total Asia		899,177		939,112		922,291		1,007,825		1,131,743		1,075,765
Americas:
United States		678,313		692,277		683,596		927,982		886,140		774,014
Americas Other		119,529		137,964		151,581		180,591		169,495		151,206

Total Americas		797,842		830,241		835,177		1,108,573		1,055,635		925,220
Europe		668,346		637,243		662,461		840,018		784,578		784,889

Total net sales	$	2,365,365	$	2,406,596	$	2,419,929	$	2,956,416	$	2,971,956	$	2,785,874

None of the Company’s individual customers accounts for more than 2% of annual Company sales. Net sales by customer class are as follows for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (in thousands):

2020

2019

2018

Pharmaceutical
   $ 1,386,966    $ 1,365,275    $ 1,365,731
Industrial
   707,772    719,377    737,144
Academic and governmental
   270,627    321,944    317,054

Total net sales
   $ 2,365,365    $ 2,406,596    $ 2,419,929

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~


	2023		2022		2021
Pharmaceutical	$	1,696,875	$	1,751,665	$	1,667,061
Industrial		909,003		909,805		829,204
Academic and government		350,538		310,486		289,609

Total net sales	$	2,956,416	$	2,971,956	$	2,785,874

Net sales for the Company recognized at a point in time versus over time are as follows for the years ended December 31, ~~2020, 2019~~2023, 2022 and ~~2018~~2021 (in thousands):


	2020		2019		2018		2023		2022		2021
Net sales recognized at a point in time:
Instrument systems	$	1,065,253	$	1,155,171	$	1,204,706	$	1,361,581	$	1,462,770	$	1,314,861
Chemistry consumables		432,080		412,018		400,287		541,469		525,399		507,209
Service sales recognized at a point in time (time & materials)		365,776		323,247		317,549		372,530		367,501		354,666

Total net sales recognized at a point in time		1,863,109		1,890,436		1,922,542		2,275,580		2,355,670		2,176,736
Net sales recognized over time:
Service and software sales recognized over time (contracts)		502,256		516,160		497,387
Service and software maintenance sales recognized over time (contracts)								680,836		616,286		609,138

Total net sales	$	2,365,365	$	2,406,596	$	2,419,929	$	2,956,416	$	2,971,956	$	2,785,874

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Long-lived assets information at December 31, ~~2020~~2023, 2022 and ~~2019~~2021 is presented below (in thousands):


							December 31,
	2020		2019		2018		2023		2022		2021
Long-lived assets:
United States	$	350,615	$	276,891	$	203,664	$	440,993	$	429,469	$	395,446
Americas Other		1,179		1,929		1,680		2,632		1,663		1,662

Total Americas		351,794		278,820		205,344		443,625		431,132		397,108
Europe		119,978		116,734		118,513		167,948		133,465		130,806
Asia		22,231		21,788		19,226		27,500		17,620		19,999

Total long-lived assets	$	494,003	$	417,342	$	343,083	$	639,073	$	582,217	$	547,913

The Americas Other category includes Canada, Latin America and Puerto Rico. Long-lived assets exclude goodwill, other intangible assets and other assets.

~~101~~

~~Table of Contents~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

19 Unaudited Quarterly Results

The Company’s unaudited quarterly results are summarized below (in thousands, except per share data):


	First			Second			Third			Fourth
2023	Quarter			Quarter			Quarter			Quarter			Total
Net sales	$	684,674		$	740,576		$	711,692		$	819,474		$	2,956,416
Costs and operating expenses:
Cost of sales		284,380			301,076			291,407			318,360			1,195,223
Selling and administrative expenses		181,956			186,953			186,748			180,357			736,014
Research and development expenses		42,691			45,873			41,995			44,386			174,945
Purchased intangibles amortization		1,479			6,815			12,116			12,148			32,558

Total costs and operating expenses		510,506			540,717			532,266			555,251			2,138,740

Operating income		174,168			199,859			179,426			264,223			817,676
Other income (expense), net		1,388			(352	)		328			(557	)		807
Interest expense		(14,444	)		(23,272	)		(30,442	)		(30,703	)		(98,861	)
Interest income		4,061			4,040			3,883			4,637			16,621

Income before income taxes		165,173			180,275			153,195			237,600			736,243
Provision for income taxes		24,250			29,721			18,643			21,395			94,009

Net income	$	140,923		$	150,554		$	134,552		$	216,205		$	642,234

Net income per basic common share		2.39			2.56			2.28			3.66			10.87
Weighted-average number of basic common shares		59,023			58,857			59,093			59,142			59,076
Net income per diluted common share		2.38			2.55			2.27			3.65			10.84
Weighted-average number of diluted common shares and equivalents		59,317			59,010			59,225			59,311			59,270

First

Second

Third

Fourth

2020

Quarter

Quarter

Quarter

Quarter

Total

Net sales
   $ 464,939 $ 519,984 $ 593,784 $ 786,658 $ 2,365,365
Costs and operating expenses:

Cost of sales
   210,644 213,134 262,342 320,569 1,006,689
Selling and administrative expenses
   147,735 117,449 135,430 153,084 553,698
Research and development expenses
   34,989 31,155 34,971 39,662 140,777
Purchased intangibles amortization
   2,625 2,618 2,657 2,687 10,587
Asset impairments
   0 0 0 6,945 6,945
Litigation provisions
   666 514 0 0 1,180

Total costs and operating expenses
   396,659 364,870 435,400 522,947 1,719,876

Operating income
   68,280 155,114 158,384 263,711 645,489
Other (expense) income
   (374 ) (736 ) (1,039 ) 374 (1,775 )
Interest expense
   (14,079 ) (13,018 ) (10,915 ) (11,058 ) (49,070 )
Interest income
   4,036 4,003 4,007 4,224 16,270

Income before income taxes
   57,863 145,363 150,437 257,251 610,914
Provision for income taxes
   4,301 22,434 23,668 38,940 89,343

Net income
   $ 53,562 $ 122,929 $ 126,769 $ 218,311 $ 521,571

Net income per basic common share
   0.86 1.98 2.04 3.51 8.40
Weighted-average number of basic common shares
   62,232 61,944 62,002 62,170 62,094
Net income per diluted common share
   0.86 1.98 2.03 3.49 8.36
Weighted-average number of diluted common shares and equivalents
   62,626 62,184 62,303 62,501 62,414

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	First			Second			Third			Fourth						First			Second			Third			Fourth
2019	Quarter			Quarter			Quarter			Quarter			Total
2022																Quarter			Quarter			Quarter			Quarter			Total
Net sales	$	513,862		$	599,162		$	577,278		$	716,294		$	2,406,596		$	690,572		$	714,319		$	708,555		$	858,510		$	2,971,956
Costs and operating expenses:
Cost of sales		221,031			249,546			241,055			299,068			1,010,700			285,685			307,206			307,101			348,190			1,248,182
Selling and administrative expenses		134,339			133,208			126,036			141,208			534,791			157,475			161,877			164,417			174,257			658,026
Research and development expenses		35,060			36,490			34,333			37,072			142,955			40,472			44,006			43,435			48,277			176,190
Purchased intangibles amortization		2,281			2,264			2,619			2,529			9,693			1,673			1,598			1,592			1,503			6,366
Acquired in-process research and development																	9,797			—			—			—			9,797

Total costs and operating expenses		392,711			421,508			404,043			479,877			1,698,139			495,102			514,687			516,545			572,227			2,098,561

Operating income		121,151			177,654			173,235			236,417			708,457			195,470			199,632			192,010			286,283			873,395
Other expense		(525	)		(342	)		(496	)		(2,223	)		(3,586	)
Other income (expense), net																	170			1,535			895			(372	)		2,228
Interest expense		(11,563	)		(11,448	)		(11,456	)		(14,223	)		(48,690	)		(11,059	)		(11,419	)		(12,420	)		(13,899	)		(48,797	)
Interest income		8,315			5,871			3,455			4,417			22,058			2,114			2,526			2,896			3,484			11,020

Income before income taxes		117,378			171,735			164,738			224,388			678,239			186,695			192,274			183,381			275,496			837,846
Provision for income taxes		8,392			27,325			26,605			23,719			86,041			26,864			27,410			27,383			48,434			130,091

Net income	$	108,986		$	144,410		$	138,133		$	200,669		$	592,198		$	159,831		$	164,864		$	155,998		$	227,062		$	707,755

Net income per basic common share		1.52			2.09			2.09			3.15			8.76			2.64			2.74			2.61			3.83			11.80
Weighted-average number of basic common shares		71,704			68,989			66,226			63,795			67,627			60,580			60,206			59,801			59,329			59,985
Net income per diluted common share		1.51			2.08			2.07			3.12			8.69			2.62			2.72			2.60			3.81			11.73
Weighted-average number of diluted common shares and equivalents		72,415			69,494			66,768			64,348			68,166			60,952			60,510			60,081			59,644			60,331

The Company typically experiences an increase in sales in the fourth quarter, as a result of purchasing habits for capital goods of customers that tend to exhaust their spending budgets by calendar ~~year end.~~year-end. Selling and administrative expenses are typically higher after the first quarter in each year as the Company’s annual payroll merit increases take effect. ~~Selling and administrative expenses will vary in the fourth quarter in relation to performance in the quarter and for the year.~~

~~During the fourth quarter~~

The

ompany experienced significant increases in purchased intangibles amortization and interest expense beginning in Q2 of ~~2020, the Company recorded~~2023 as a

~~non-cash~~

charge of $10 million for the impairment of certain intangible assets associated with its 2014 acquisition of Medimass. The impairment charge was due to a shift in strategic priorities. In conjunction with the intangible asset impairment the Company also reduced its liability for contingent consideration of $3 million during 2020 as the carrying value of this liability is based on the future sales result of the ~~Medimass intangible assets that were impaired. The net impact of $7 million is reported separately within the~~

~~consolidated statements of operations~~Wyatt acquisition.

Table of Contents

Item 9

9: Changes in and Disagreements with Accountants on Accounting and

Financial Disclosure

None.

~~Item 9A:~~

~~Controls and Procedures~~

Item 9A: Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s chief executive officer and chief financial officer (principal executive officer and principal financial officer), with the participation of management, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in

Rules 13a-15(e)

and

15d-15(e)

under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”))~~Act) as of the end of the period covered by this annual report on Form

10-K.

Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, ~~2020~~2023 (1) to ensure that information required to be disclosed by the Company, including its consolidated subsidiaries, in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its chief executive officer and chief financial officer, to allow timely decisions regarding the required disclosure and (2) to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Management’s Annual Report on Internal Control Over Financial Reporting

See Management’s Report on Internal Control Over Financial Reporting in Item 8 on page

50 of this ~~Form~~

~~10-K.~~

Annual Report.

Report of the Independent Registered Public Accounting Firm

See the report of PricewaterhouseCoopers LLP in Item 8 beginning on page

51 of this ~~Form~~

~~10-K.~~

Annual Report.

Changes in Internal Control Over Financial Reporting

No change was identified in the Company’s internal control over financial reporting (as defined in

Rules 13a-15(f)

and

15d-15(f)

under the Exchange Act) during the quarter ended December 31, ~~2020~~2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B:

Other Information

Insider Trading Arrangements and Related Disclosures

None.

Amendment and Restatement of Bylaws

On February 23, 2024, the Board of Directors of the Company approved an amendment and restatement of the bylaws of the Company (the “Amended Bylaws”), effective as of such date.

Among other matters, the Amended Bylaws:

(1)

revise procedures and disclosure requirements for the nomination of directors and the submission of proposals for consideration at meetings of the stockholders of the Company, including, among other things, limiting the scope of persons to whom such disclosure requirements apply and adding a requirement that a stockholder seeking to nominate director(s) at an annual meeting deliver to the Company reasonable evidence that it has complied with the requirements of Rule 14a-19 of the Exchange Act, no less than seven business days prior to the meeting;

101

~~None.~~

~~Table~~

(2)	clarify the applicability of the majority voting standard for contested elections of directors;

(3)	clarify the position, duties and powers of the Chairman and Vice Chairman within the Company structure;

(4)	make certain administrative, modernizing, clarifying and conforming changes, including making updates to reflect recent amendments to the General Corporation Law of the State of Delaware; and

(5)	adopt gender-neutral terms when referring to particular positions, offices or title holders, including the adoption of the title Chair in place of Chairman.

The foregoing description of ~~Contents~~

the Amended Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended Bylaws, a copy of which is attached hereto as Exhibit 3.5 and incorporated herein by reference.

Item 9C: Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

PART III

Item 10:

Directors, Executive Officers and Corporate Governance

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

Officers of the Company are elected annually by the Board of Directors and hold office at the discretion of the Board of Directors. The following persons serve as executive officers of the Company:

Dr. Udit Batra, 53, was appointed a Director of the Company as well as President and CEO on September 1, 2020. He most recently served as Chief Executive Officer of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates as MilliporeSigma in the United States and Canada, and as a member of its Executive Board, roles he held from 2014 and 2016, respectively, through July 2020. Prior to that, Dr. Batra served as President and Chief Executive Officer of Merck KGaA, Darmstadt, Germany’s Consumer Health business. Dr. Batra oversaw the company’s Bioethics Advisory Panel and had Board responsibility for the global Information Technology function. Before joining Merck KGaA, Darmstadt, Germany, Dr. Batra held several positions of increasing responsibility at Novartis, including Global Head of Corporate Strategy in Switzerland, Country President for the Pharma Business of Novartis in Australia and New Zealand and the Global Head of Public Health and Market Access in Cambridge, Massachusetts. Dr. Batra also served at the global consultancy McKinsey & Company across the healthcare, consumer and non-profit sectors. Dr. Batra started his career at Merck Research Labs in West Point, Pennsylvania as a research engineer.

Jianqing Bennett, 54, was appointed Senior Vice President of TA Instruments Division on May 1, 2021. Previously, Ms. Bennett served as Senior Vice President, High Growth Markets at Beckman Coulter Diagnostics from November 2017 to March 2021. Prior to that, from 2007-2017, she held various senior management positions at Carestream Health Inc, including serving as President, Medical Digital Solutions from August 2015 to November 2017.

Amol Chaubal, 48, was appointed Chief Financial Officer of Waters Corporation on May 12, 2021. Previously, Mr. Chaubal was Chief Financial Officer of Quanterix Corporation, a life sciences company, where he served as Chief Financial Officer since April 2019. Before Quanterix, Mr. Chaubal served as Chief Financial Officer, Global Operations at Smith & Nephew, a global medical devices company, from October 2017 to April 2019. Prior to his time at Smith & Nephew, he served as Corporate Vice President and Head of Finance for the Clinical Research Services and Access business at Parexel from July 2015 to October 2017.

102

Information regarding the Company’s directors, ~~and~~ any material changes to the process by which security holders may recommend nominees to the Board of Directors isand the information required by the Item will be contained in ~~the~~our definitive proxy statement for the ~~2021~~2024 Annual Meeting of Stockholders, to be filed with the SEC not later than 120 days after the close of business of the fiscal year and is incorporated in this report by reference (the “2024 Proxy Statement”), under the headings “Election of Directors”, “Directors Meetings and Board Committees”, “Corporate Governance”, “Report of the Audit and Finance Committee of the Board of Directors” and “Compensation of Directors and Executive Officers”. Information regarding compliance with Section 16(a) of the Exchange Act iswill be contained in the ~~Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders~~2024 Proxy Statement, under the heading “Delinquent Section 16(a) Reports”. Information regarding the Company’s Audit and Finance Committee and Audit and Finance Committee Financial Expert iswill be contained in the ~~definitive proxy statement for the 2021 Annual Meeting of Stockholders~~2024 Proxy Statement, under the headings “Report of the Audit and Finance Committee of the Board of Directors” and “Directors Meetings and Board Committees”. Such information is incorporated herein by reference. ~~Information regarding the Company’s executive officers is contained in Part I of this~~

~~Form 10-K.~~

The Company has adopted a Global Code of Business Conduct & Ethics (the “Code”) that applies to all of the Company’s employees (including its executive officers) and directors and that is in compliance with Item 406 of Regulation

S-K.

The Code has been distributed to all employees of the Company. In addition, the Code is available on the Company’s website,

https://www.waters.com,

, under the caption “Corporate Governance”. The Company intends to satisfy the disclosure requirement regarding any amendment to, or waiver of a provision of, the Code applicable to any executive officer or director by posting such information on its website. The Company shall also provide to any person without charge, upon request, a copy of the Code. Any such request must be made in writing to the Secretary of the Company, c/o Waters Corporation, 34 Maple Street, Milford, MA 01757.

The Company’s corporate governance guidelines and the charters of the audit committee, compensation ~~committee, finance~~ committee and nominating and corporate governance committee of the Board of Directors are available on the Company’s website,

https://www.waters.com,

, under the caption “Corporate Governance”. The Company shall provide to any person without charge, upon request, a copy of any of the foregoing materials. Any such request must be made in writing to the Secretary of the Company, c/o Waters Corporation, 34 Maple Street, Milford, MA 01757.

Item 11:

Executive Compensation

This information iswill be contained in the ~~Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders~~2024 Proxy Statement, under the headings “Compensation of Directors and Executive Officers”, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report”. Such information is incorporated herein by reference.

~~Item 12:~~

~~Security Ownership of Certain Beneficial Owners and Management~~

~~and Related Stockholder Matters~~

Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Except for the Equity Compensation Plan information set forth below, this information iswill be contained in the ~~Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders~~2024 Proxy Statement, under the heading “Security Ownership of Certain Beneficial Owners and Management”. Such information is incorporated herein by reference.

103

~~105~~

~~Table of Contents~~

Equity Compensation Plan Information

The following table provides information as of December 31, ~~2020~~2023 about the Company’s common stock that may be issued upon the exercise of options, warrants and rights under its existing equity compensation plans (in thousands):

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
   1,476    $ 179.59    7,195
Equity compensation plans not approved by security holders
   —      —      —






Total
   1,476    $ 179.59    7,195


	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		939	$	265.17		6,680
Equity compensation plans not approved by security holders		—		—		—

Total		939	$	265.17		6,680

(1)

Column (a) includes an aggregate of ~~408~~352 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.

See Note 14, Stock-Based Compensation, in the Notes to Consolidated Financial Statements for a description of the material features of the Company’s equity compensation plans.

Item 13:

Certain Relationships and Related Transactions and Director

Independence

This information is contained in the ~~Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders~~2024 Proxy Statement, under the headings “Directors Meetings and Board Committees”, “Corporate Governance” and “Compensation of Directors and Executive Officers”. Such information is incorporated herein by reference.

Item 14:

Principal Accountant Fees and Services

This information is contained in the ~~Company’s definitive proxy statement for the 2021 Annual Meeting of Stockholders~~2024 Proxy Statement, under the headings “Ratification of Selection of Independent Registered Public Accounting Firm” and “Report of the Audit and Finance Committee of the Board of Directors”. Such information is incorporated herein by reference.

104

~~106~~

~~Table of Contents~~

PART IV

Item 15:

Exhibits, Financial Statement Schedules

(a) Documents filed as part of this report:

(1)

Financial Statements:

The consolidated financial statements of the Company and its subsidiaries are filed as part of this

~~Form 10-K~~

Annual Report and are set forth on pages 5654 to ~~103.~~100. The report of PricewaterhouseCoopers LLP (PCAOB ID: 238), an independent registered public

accounting

firm, dated February ~~24, 2021,~~27, 2024, is set forth beginning on page 5351 of this

~~Form 10-K.~~

Annual Report.

(2)

Exhibits:


Exhibit Number		Description of Document

2.1		Share Purchase Agreement, dated as of February 14, 2023, by and among Wyatt Technology Corporation, Waters Technologies Corporation, the shareholders named therein and Geofrey Wyatt in his capacity as representative of the shareholders (Incorporated by reference to the Registrant’s Report on Form 8-K dated February 15, 2023 (File No. 001-14010)).

3.1		Second Amended and Restated Certificate of Incorporation of Waters ~~Corporation.(1)(P)~~Corporation (Incorporated by reference to the Registrant’s Report on Form 10-K dated March 29, 1996 (File No. 001-14010)).+

3.2		Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Waters Corporation, dated as of May 12, ~~1999.(3)~~1999 (Incorporated by reference to the Registrant’s Report on Form 10-Q dated August 11, 1999 (File No. 001-14010)).

3.3		Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Waters Corporation, dated as of July 27, ~~2000.(4)~~2000 (Incorporated by reference to the Registrant’s Report on Form 10-Q dated August 8, 2000 (File No. 001-14010)).

3.4		Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Waters Corporation, dated as of May 25, ~~2001.(5)~~2001 (Incorporated by reference to the Registrant’s Report on Form 10-K dated March 28, 2002 (File No. 001-14010)).

3.5		Amended and Restated Bylaws of Waters Corporation, dated as of ~~October 8, 2020.(33)~~February 23, 2024.

4.1		Description of Registrant’s ~~Securities~~Securities. (Incorporated by reference to Exhibit 4.1 of the Registrant’s Report on Form 10-K dated February 24, 2021 (File No. 001-14010)).

10.1		Waters Corporation Retirement Plan.(2)(P)(* (Incorporated by reference to the Registrant’s Registration Statement on Form S-1 dated October 24, 1996 (File No. 333-96934)).*+

10.2		~~Waters Corporation 2003 Equity Incentive Plan.(6)(*)~~

~~10.3~~		~~First Amendment to the Waters Corporation 2003 Equity Incentive Plan.(7)(*)~~

~~10.4~~		~~Form of Director Stock Option Agreement under the Waters Corporation 2003 Equity Incentive Plan, as amended.(8)(*)~~

~~10.5~~		~~Form of Director Restricted Stock Agreement under the Waters Corporation 2003 Equity Incentive Plan, as amended.(8)(*)~~

~~10.6~~		~~Form of Executive Officer Stock Option Agreement under the Waters Corporation 2003 Equity Incentive Plan, as amended.(8)(*)~~

~~10.7~~		~~Second Amendment to the Waters Corporation 2003 Equity Incentive Plan.(9)(*)~~

~~10.8~~		~~Third Amendment to the Waters Corporation 2003 Equity Incentive Plan.(10)(*)~~

~~10.9~~		Amended and Restated Waters 401(k) Restoration Plan, effective January 1, 2008.(11)(* (Incorporated by reference to the Registrant’s Report on Form 10-Q dated November 2, 2007 (File No. 001-14010)).*

~~10.10~~ 10.3		~~Change of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and Mark T. Beaudouin.(12)(*)~~

~~10.11~~		~~Change of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and Elizabeth B. Rae.(12)(*)~~

~~10.12~~		~~Change of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and Eugene G. Cassis.(21)(*)~~

~~10.13~~		Amended and Restated Waters Retirement Restoration Plan, effective January 1, 2008.(13)(2008 (Incorporated by reference to the Registrant’s Report on Form 10-Q dated February 27, 2009 (File No. 001-14010)).

~~107~~

~~Table of Contents~~


Exhibit Number
10.4		~~Description of Document~~

~~10.14~~		Amended and Restated Waters Corporation 1996 Non-Employee Director Deferred Compensation Plan, Effective January 1, 2008.(13)(* (Incorporated by reference to the Registrant’s Report on Form 10-Q dated February 27, 2009 (File No. 001-14010)).*

~~10.15~~ 10.5		2014 Waters Corporation Management Incentive Plan.(21)(* (Incorporated by reference to the Registrant’s Report on Form 10-Q dated February 27, 2015 (File No. 001-14010)).*

~~10.16~~ 10.6		Waters Corporation 2009 Employee Stock Purchase Plan.(14)(Plan (Incorporated by reference to the Registrant’s Report on Form S-8 dated July 10, 2009 (File No. 333-160507)).

105

Table of Contents



~~10.17~~ Exhibit Number		~~Note Purchase Agreement, dated as~~ Description of ~~February 1, 2010, between Waters Corporation and the purchases named therein.(15)~~Document

~~10.18~~ 10.7		~~First Amendment to the Note Purchase Agreement, dated as of February 1, 2010.(16)~~

~~10.19~~		~~Note Purchase Agreement, dated March 15, 2011, between Waters Corporation and the purchases named therein.(16)~~

~~10.20~~		Waters Corporation 2012 Equity Incentive Plan.(17)(* (Incorporated by reference to the Registrant’s Report on Form S-8 dated September 5, 2012 (File No. 333-183721)).*

~~10.21~~ 10.8		Form of Waters 2012 Stock Option Agreement - Executive Officers.(18)(Officers (Incorporated by reference to the Registrant’s Report on Form 8-K dated December 11, 2012 (File No. 001-14010)).

~~10.22~~ 10.9		Form of Waters 2012 Stock Option Agreement - Directors.(18)(Directors (Incorporated by reference to the Registrant’s Report on Form 8-K dated December 11, 2012 (File No. 001-14010)).

~~10.23~~ 10.10		Form of Waters 2012 Restricted Stock Agreement - Directors.(18)(Directors (Incorporated by reference to the Registrant’s Report on Form 8-K dated December 11, 2012 (File No. 001-14010)).

~~10.24~~ 10.11		Form of Waters 2012 Restricted Stock Unit Agreement for Executive Officers - Five Year Vesting.(19)(* (Incorporated by reference to the Registrant’s Report on Form 8-K dated December 11, 2013 (File No. 001-14010)).*

~~10.25~~ 10.12		Form of Waters 2012 Restricted Stock Unit Agreement for Executive Officers - One Year Vesting.(19)(Vesting (Incorporated by reference to the Registrant’s Report on Form 8-K dated December 11, 2013 (File No. 001-14010)).

~~10.26~~ 10.13		Note Purchase Agreement, dated June 30, 2014, between Waters Corporation and the purchases named ~~therein.(20)~~therein (Incorporated by reference to the Registrant’s Report on Form 10-Q dated August 1, 2014 (File No. 001-14010)).

~~10.27~~ 10.14		~~Change of Control/Severance~~First Amendment to the Note Purchase Agreement, dated as of ~~April~~June 30, 2014 (Incorporated by reference to the Registrant’s Report on Form 10-K/A dated March 1, 2015, between Waters Corporation and Michael F. Silveira.(22)(*2019 (File No. 001-14010)).

~~10.28~~ 10.15		~~President and Chief Executive Employment Agreement.(23)(*)~~

~~10.29~~		~~Change of Control/Severance Agreement, dated as of September 8, 2015, between Waters Corporation and Christopher J. O’Connell.(23)(*)~~

~~10.30~~		Note Purchase Agreement, dated as of May 12, 2016, between Waters Corporation and the purchasers named ~~therein.(24)~~therein (Incorporated by reference to the Registrant’s Report on Form 10-Q dated August 5, 2016 (File No. 001-14010)).

~~10.31~~ 10.16		First Amendment to the Note Purchase Agreement, dated as of May 12, 2016 (Incorporated by reference to the Registrant’s Report on Form 10-K/A dated March 1, 2019 (File No. 001-14010)).

10.17		Form of Waters 2012 Performance Stock Unit Award Agreement.(25)(Agreement (Incorporated by reference to the Registrant’s Report on Form 8-K dated December 15, 2016 (File No. 001-14010)).

~~10.32~~ 10.18		~~Senior Vice President and Chief Financial Officer Employment Agreement.(26)(*)~~

~~10.33~~		~~Change of Control/Severance Agreement, dated as of January 9, 2017, between Waters Corporation and Sherry L. Buck.(26)(*)~~

~~10.34~~		Form of Change of Control/Severance Agreement.(27)(Agreement (Incorporated by reference to the Registrant’s Report on Form 8-K dated March 27, 2017 (File No. 001-14010)).

~~10.35~~ 10.19		~~Employment Agreement, dated July 21, 2017, between Waters Corporation and Dr. Rohit Khanna.(28)(*)~~

~~10.36~~		Credit Agreement, dated as of November 30, 2017, among Waters Corporation, JPMorgan Chase Bank, N.A., JP Morgan Europe Limited and other Lenders party ~~thereto.(30)~~thereto (Incorporated by reference to the Registrant’s Report on Form 10-K dated February 27, 2018 (File No. 001-14010)).

~~10.37~~ 10.20		First Amendment to the Credit Agreement, dated as of November 30, 2017, among Waters Corporation, JPMorgan Chase Bank, N.A., JP Morgan Europe Limited and other Lenders party ~~thereto.(31)~~thereto (Incorporated by reference to the Registrant’s Report on Form 10-K/A dated March 1, 2019 (File No. 001-14010)).

~~10.38~~ 10.21		~~Second~~ Amendment and Restatement Agreement to the ~~Note Purchase~~Credit Agreement, dated as of ~~February 1, 2010.(31)~~September 17, 2021, by and among the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to the Registrant’s Report on Form 8-K dated September 20, 2021 (File No. 001-14010)).

~~10.39~~ 10.22		~~First~~ Amendment ~~to the Note Purchase~~and Incremental Commitment Agreement, dated as of March ~~15, 2011.(31)~~3, 2023, by and among the Company, Waters Technologies Corporation, TA Instruments - Waters L.L.C., Waters Asia Limited, Environmental Resource Associates, Inc., the lenders party thereto, the issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (Incorporated by reference to the Registrant’s Report on Form 8-K dated March 7, 2023 (File No. 001-14010)).

~~108~~

106

Table of Contents


Exhibit Number		Description of Document

~~10.40~~ 10.23		~~First Amendment to the Note Purchase Agreement, dated as of June 30, 2014.(31)~~

~~10.41~~		~~First Amendment to the Note Purchase Agreement, dated as of May 12, 2016.(31)~~

~~10.42~~		Note Purchase Agreement, dated as of September 12, 2019, between Waters Corporation and the purchasers named ~~therein.(32)~~therein (Incorporated by reference to the Registrant’s Report on Form 8-K dated September 16, 2019 (File No. 001-14010)).

~~10.43~~ 10.24		Form of Performance Stock Unit Award Agreement under the Waters Corporation 2012 Equity Incentive Plan.(36)(* (Incorporated by reference to the Registrant’s Report on Form 10-K dated February 25, 2020 (File No. 001-14010)).*

~~10.44~~ 10.25		~~Chief Executive Officer Transition and Separation Agreement, dated June 17, 2020, between Waters Corporation and Christopher J. O’Connell.(34)(*)~~

~~10.45~~		President and Chief Executive Employment Agreement, dated July 14, 2020, between Waters Corporation and Udit Batra.(34)(Batra (Incorporated by reference to the Registrant’s Report on Form 10-Q dated July 29, 2020 (File No. 001-14010)).

~~10.46~~ 10.26		Change of Control/Severance Agreement, dated as of July 14, 2020, between Waters Corporation and Udit Batra.(34)(Batra (Incorporated by reference to the Registrant’s Report on Form 10-Q dated July 29, 2020 (File No. 001-14010)).

~~10.47~~ 10.27		Waters Corporation 2020 Equity Incentive Plan.(35)(Plan (Incorporated by reference to Exhibit 4.2 of the Registration Statement filed on Form S-8 dated June 8, 2020 (File No. 333-239020)).

~~10.48~~ 10.28		Employee Form of Stock Option Award Agreement under the Waters Corporation 2020 Equity Incentive Plan.(34)(Plan (Incorporated by reference to the Registrant’s Report on Form 10-Q dated July 29, 2020 (File No. 001-14010)).

~~10.49~~ 10.29		Director Form of Stock Option Award Agreement under the Waters Corporation 2020 Equity Incentive Plan.(34)(* (Incorporated by reference to the Registrant’s Report on Form 10-Q dated July 29, 2020 (File No. 001-14010)).*

~~10.50~~ 10.30		Form of RSU Agreement under the Waters Corporation 2020 Equity Incentive Plan.(34)(* (Incorporated by reference to the Registrant’s Report on Form 10-Q dated July 29, 2020 (File No. 001-14010)).*

~~10.51~~ 10.31		CEO Form of PSU Agreement under the Waters Corporation 2020 Equity Incentive Plan.(34)(Plan (Incorporated by reference to the Registrant’s Report on Form 10-Q dated July 29, 2020 (File No. 001-14010)).

~~10.52~~ 10.32		Employee (Non-CEO) PSU Agreement under the Waters Corporation 2020 Equity Incentive Plan.(34)(Plan (Incorporated by reference to the Registrant’s Report on Form 10-Q dated July 29, 2020 (File No. 001-14010)).

~~10.53~~ 10.33		Director Form of RSA Agreement under the Waters Corporation 2020 Equity Incentive Plan.(34)(Plan (Incorporated by reference to the Registrant’s Report on Form 10-Q dated July 29, 2020 (File No. 001-14010)).

10.34		Note Purchase Agreement, dated as of March 2, 2021, by and among the Company and the purchasers signatory thereto, including the forms of notes (Incorporated by reference to the Registrant’s Report on Form 8-K dated March 4, 2021 (File No. 001-14010)).

10.35		Employment Offer Letter, dated April 16, 2021, between Waters Corporation and Amol Chaubal (Incorporated by reference to the Registrant’s Report on Form 10-Q dated May 6, 2021 (File No. 001-14010)).*

10.36		Change of Control and Severance Agreement, dated April 16, 2021, between Waters Corporation and Amol Chaubal (Incorporated by reference to the Registrant’s Report on Form 10-Q dated May 6, 2021 (File No. 001-14010)).*

10.37		Multi-Currency Note Purchase and Private Shelf Agreement, dated as of May 11, 2023, between Waters Corporation, PGIM, Inc. and each of the purchasers listed on Schedules A-1 and A-2 attached thereto (Incorporated by reference to the Registrant’s Report on Form 8-K dated May 11, 2023 (File No. 001-14010)).

107

Table of Contents


Exhibit Number		Description of Document

21.1		Subsidiaries of Waters Corporation.

23.1		Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm.

31.1		Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*)

32.2		Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*)

97		Waters Mandatory Clawback Policy

101		The following materials from Waters Corporation’s Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2023, 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).~~

Paper Filing

~~(2)~~*

~~Incorporated by reference to the Registrant’s Registration Statement on~~

~~Form S-1~~

~~(File~~

~~No. 333-96934).~~

~~109~~

~~Table of Contents~~

~~(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).~~

~~110~~

~~Table of Contents~~

~~(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).~~

~~(33)~~

~~Incorporated by reference to the Registrant’s Report on Form~~

~~8-K~~

~~dated October 8, 2020 (File~~

~~No. 001-14010).~~

~~(34)~~

~~Incorporated by reference to the Registrant’s Report on Form~~

~~10-Q~~

~~dated July 29, 2020 (File~~

~~No. 001-14010).~~

~~(35)~~

~~Incorporated by reference to Exhibit 4.2 of the Registration Statement filed on Form~~

~~S-8~~

~~dated June 8, 2020 (File~~

~~No. 333-239020).~~

~~(36)~~

~~Incorporated by reference to the Registrant’ Report on Form 10-K dated February 25, 2020 (File~~

~~No. 001-14010).~~

~~(P)~~

~~Paper Filing~~

~~(*)~~

Management contract or compensatory plan required to be filed as an Exhibit to this

~~Form 10-K.~~

Annual Report.

(**)*

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) (2) above.

Item 16:

Form

10-K

Summary

The optional summary in Item 16 has not been included in this ~~Form~~

~~10-K.~~Annual Report.

~~111~~108

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

WATERS CORPORATION

/s/ ~~Michael F. Silveira~~Amol Chaubal

~~Michael F. Silveira~~Amol Chaubal

~~Interim~~Senior Vice President and Chief Financial Officer

(~~principal financial officer)~~

Principal Financial Officer)

(~~principal accounting officer)~~

Principal Accounting Officer)

Date: February ~~24, 2021~~

27, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on February ~~24, 2021.~~

27, 2024.



/s/ Dr. Flemming Ornskov, M.D., M.P.H.		Chairman of the Board of Directors
Dr. Flemming Ornskov, M.D., M.P.H.

/s/ ~~Dr.~~ Udit Batra, Ph.D.		President and Chief Executive Officer
~~Dr.~~ Udit Batra, Ph.D.		Director ~~(principal executive officer)~~(Principal Executive Officer)

/s/ ~~Michael F. Silveira~~ Amol Chaubal	~~Interim~~	Senior Vice President and Chief Financial Officer
~~Michael F. Silveira~~Amol Chaubal		(~~principal financial officer)~~ ~~(principal accounting officer)~~ Principal Financial Officer)
		(Principal Accounting Officer)

/s/ Linda Baddour		Director
Linda Baddour

/s/ ~~Dr. Michael J. Berendt~~ Dan Brennan		Director
~~Dr. Michael J. Berendt~~Dan Brennan

/s/ ~~Edward Conard~~ Richard Fearon		Director
~~Edward Conard~~Richard Fearon

/s/ ~~Dr.~~ Pearl S. Huang, Ph.D.		Director
~~Dr.~~ Pearl S. Huang, Ph.D.

/s/ ~~Gary Hendrickson~~ Wei Jiang		Director
~~Gary Hendrickson~~Wei Jiang

/s/ Christopher A. Kuebler		Director
Christopher A. Kuebler

/s/ ~~JoAnn A. Reed~~ Mark Vergnano		Director
~~JoAnn A. Reed~~Mark Vergnano

~~/s/ Thomas P. Salice~~	~~Director~~
~~Thomas P. Salice~~

109

~~112~~


Item No.			Page

		PART I
	1.	Business		1
	1A.	Risk Factors		16
	1B.	Unresolved Staff Comments		27
	1C.	Cybersecurity		27
	2.	Properties		29
	3.	Legal Proceedings		30
	4.	Mine Safety Disclosures		30

		PART II
	5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		31
	6.	Reserved		34
	7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		34
	7A.	Quantitative and Qualitative Disclosures About Market Risk		47
	8.	Financial Statements and Supplementary Data		50
		Report of Independent Registered Public Accounting Firm (PCAOB ID 238)		51
	9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		101
	9A.	Controls and Procedures		101
	9B.	Other Information		101
	9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections		102

		PART III
	10.	Directors, Executive Officers and Corporate Governance		102
	11.	Executive Compensation		103
	12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		103
	13.	Certain Relationships and Related Transactions and Director Independence		104
	14.	Principal Accountant Fees and Services		104

		PART IV
	15.	Exhibits and Financial Statement Schedules		105
	16.	Form 10-K Summary		108
		Signatures		109


	2015		2016		2017		2018		2019		2020
WATERS CORPORATION		100.00		99.86		143.55		140.18		173.61		183.85
NYSE MARKET INDEX		100.00		111.94		132.90		121.01		151.87		162.49
SIC CODE INDEX		100.00		111.96		136.40		130.42		171.49		203.04
S&P 500 INDEX		100.00		92.16		141.00		148.46		185.11		229.68


	Payments Due by Year (1)
	Total		2021		2022		2023		2024		2025		2026		After 2026
Notes payable and debt	$	150,000	$	150,000	$	—	$	—	$	—	$	—	$	—	$	—
Interest on senior unsecured notes		180,198		30,273		28,160		27,182		24,654		22,714		17,801		29,414
Long-term debt (2)		1,210,000		—		400,000		50,000		100,000		—		360,000		300,000
2017 Tax Act liability		365,314		38,454		38,454		72,101		96,135		120,170		—		—
Long-term software subscriptions		41,593		13,075		12,636		10,309		5,573		—		—		—
Operating leases		103,705		29,599		23,453		14,569		10,951		8,269		5,682		11,182

Total	$	2,050,810	$	261,401	$	502,703	$	174,161	$	237,313	$	151,153	$	383,483	$	340,596


	Unrecognized Compensation Costs		Weighted-Average Life in Years
Stock options	$	22		3.3
Restricted stock units		42		3.3
Performance stock units		9		1.9
Restricted stock		—		—

Total	$	73		3.1


	December 31, 2020					December 31, 2019
	Notional Value		Fair Value			Notional Value		Fair Value
Foreign currency exchange contracts:
Other current assets	$	66,690	$	836		$	119,576	$	16
Other current liabilities	$	20,000	$	185		$	29,495	$	1,028
Interest rate cross-currency swap agreements:
Other (liabilities) assets	$	560,000	$	(44,996	)	$	560,000	$	4,485
Accumulated other comprehensive loss (income)			$	44,996				$	(4,485	)


	Balance at Beginning of Period		Impact of CECL Adoption		Additions		Deduction s			Balance at End of Period
Allowance for Doubtful Accounts
December 31, 2020	$	9,560	$	985	$	9,051	$	(5,215	)	$	14,381
December 31, 2019	$	7,663	$	—	$	4,701	$	(2,804	)	$	9,560
December 31, 2018	$	6,109	$	—	$	6,333	$	(4,779	)	$	7,663


	Total at December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Time deposits	$	6,451	$	—	$	6,451	$	—
Waters 401(k) Restoration Plan assets		38,988		38,988		0		—
Foreign currency exchange contracts		836		—		836		—

Total	$	46,275	$	38,988	$	7,287	$	0

Liabilities:
Contingent consideration	$	1,185	$	—	$	—	$	1,185
Foreign currency exchange contracts		185		—		185		—
Interest rate cross-currency swap agreements		44,996		—		44,996		—

Total	$	46,366	$	0	$	45,181	$	1,185


	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


	December 31, 2020
	Amortized		Unrealized		Unrealized		Fair
		C ost		Gain		Loss		Value
Time deposits		6,451		—		—		6,451

Total	$	6,451	$	—	$	—	$	6,451

Amounts included in:
Investments		6,451		—		—		6,451

Total	$	6,451	$	—	$	—	$	6,451


	December 31, 2020		December 31, 2019
Due in one year or less	$	6,451	$	1,642

Total	$	6,451	$	1,642


Cash	$	713
Accounts receivable and current other assets		806
Inventory		669
Prepaid and other assets		611
Property, plant and equipment, net		757
Operating lease assets		847
Intangible assets		6,960
Goodwill		71,632

Total assets acquired		82,995
Accrued expenses and other liabilities		2,093

Total consideration		80,902

Fair value of minority investment		3,525

Cash consideration paid	$	77,377


	December 31, 2020			December 31, 2019
Foreign subsidiary lines of credit	$	—		$	366
Senior unsecured notes - Series B - 5.00%, due February 2020		—			100,000
Senior unsecured notes - Series E - 3.97%, due March 2021		50,000			—
Senior unsecured notes - Series F - 3.40%, due June 2021		100,000			—

Total notes payable and debt, current		150,000			100,366
Senior unsecured notes - Series E - 3.97%, due March 2021		—			50,000
Senior unsecured notes - Series F - 3.40%, due June 2021		—			100,000
Senior unsecured notes - Series G - 3.92%, due June 2024		50,000			50,000
Senior unsecured notes - Series H - floating rate*, due June 2024		50,000			50,000
Senior unsecured notes - Series I - 3.13%, due May 2023		50,000			50,000
Senior unsecured notes - Series K - 3.44%, due May 2026		160,000			160,000
Senior unsecured notes - Series L - 3.31%, due September 2026		200,000			200,000
Senior unsecured notes - Series M - 3.53%, due September 2029		300,000			300,000
Credit agreement		400,000			625,000
Unamortized debt issuance costs		(3,485	)		(4,203	)

Total long-term debt		1,206,515			1,580,797

Total debt	$	1,356,515		$	1,681,163

* Series H senior unsecured notes bear interest at a 3-month LIBOR for that floating rate interest period plus 1.25%.


	Year Ended December 31, 2020
	Net Income		Weighted-Average Shares		Per Share
	(Numerator)		(Denominator)		Amount
Net income per basic common share	$	521,571		62,094	$	8.40
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities		—		320		(0.04	)

Net income per diluted common share	$	521,571		62,414	$	8.36


	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


	Currency Translation			Unrealized Loss on Retirement Plans			Unrealized Gain (Loss) on Investments			Accumulated Other Comprehensive Loss
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	)	$	0		$	(119,471	)
Other comprehensive loss, net of tax		5,984			(4,456	)		0			1,528

Balance at December 31, 2020	$	(98,082	)	$	(19,861	)	$	0		$	(117,943	)


	2020								2019
	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	$	—	$	21,186		$	103,366		$	972		$	17,724		$	93,722
Service cost		—		665			4,519			—			499			4,339
Employee contributions		—		1,149			514			—			1,214			499
Interest cost		—		711			1,413			29			777			1,735
Actuarial losses (gains)		—		2,788			2,624			(32	)		2,081			13,385
Benefits paid		—		(1,130	)		(1,474	)		—			(1,109	)		(3,281	)
Plan settlements		—		—			(1,449	)		(969	)		—			(7,407	)
Other plans		—		—			—			—			—			1,598
Currency impact		—		—			10,077			—			—			(1,224	)

Projected benefit obligation, December 31	$	—	$	25,369		$	119,590		$	—		$	21,186		$	103,366


	Insurance Guaranteed Investment Contracts
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
Net purchases (sales) and appreciation (depreciation)		9,001

Fair value of assets, December 31, 2020	$	69,120


	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		1,476	$	179.59		7,195
Equity compensation plans not approved by security holders		—		—		—

Total		1,476	$	179.59		7,195