UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 30, ~~2023~~2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

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)~~

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.

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

~~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 an 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.


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 is a shell company (as defined in

Rule 12b-2

of the Act).

Yes

☐

☒ ☑

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

May 3 ~~2023: 59,126,977~~

, 2024: 59,319,699

WATERS CORPORATION AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

INDEX


PART I	FINANCIAL INFORMATION		Page
~~PART I~~		~~FINANCIAL INFORMATION~~
Item 1.	Financial Statements

	Consolidated Balance Sheets (unaudited) as of ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022~~2023			3

	Consolidated Statements of Operations (unaudited) for the three months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023			4
		~~Consolidated Statements of Operations (unaudited) for the nine months ended September 30, 2023 and October 1, 2022~~			5
	Consolidated Statements of Comprehensive Income (unaudited) for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023			65

	Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~three months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023			76

	Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023			7

	Condensed Notes to Consolidated Financial Statements (unaudited)			8
		~~Consolidated Statements of Stockholders’ Equity (unaudited) for the nine months ended September 30, 2023 and October 1, 2022~~			9
	~~Condensed Notes to Consolidated Financial Statements (unaudited)~~			10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations			2823

Item 3.	Quantitative and Qualitative Disclosures About Market Risk			3931

Item 4.	Controls and Procedures			4032

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings			4032

Item 1A.	Risk Factors			4032

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			4032

Item 5.	Other Information			33

Item 6.	Exhibits			4134

	Signature			4235

Item 1: Financial Statements

WATERS CORPORATION AND ~~SUBSIDIARIES~~

BSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)


	September 30, 2023			December 31, 2022			March 30, 2024			December 31, 2023

	(In thousands, except per share data)						(In thousands, except per share data)
ASSETS
Current assets:
Current assets:
Current assets:
Current assets:
Current assets:
Cash and cash equivalents	$	336,414		$	480,529		$	337,290		$	395,076
Investments		898			862			923			898
Accounts receivable, net		631,284			722,892			626,329			702,168
Inventories		544,402			455,710			538,634			516,236
Other current assets		121,528			103,910			139,782			138,489

Total current assets		1,634,526			1,763,903			1,642,958			1,752,867
Property, plant and equipment, net		616,846			582,217			633,594			639,073
Intangible assets, net		631,209			227,399			611,147			629,187
Goodwill		1,308,027			430,328			1,297,826			1,305,446
Operating lease assets		84,726			86,506			81,065			84,591
Other assets		221,846			191,100			242,374			215,690

Total assets	$	4,497,180		$	3,281,453		$	4,508,964		$	4,626,854

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable and debt	$	50,000		$	50,000		$	50,000		$	50,000
Accounts payable		79,834			93,302			86,219			84,705
Accrued employee compensation		43,481			103,300			65,098			69,391
Deferred revenue and customer advances		275,941			227,908			336,718			256,675
Current operating lease liabilities		26,527			26,429			26,879			27,825
Accrued income taxes		112,681			132,545			120,520			120,257
Accrued warranty		11,120			11,949			10,853			12,050
Other current liabilities		145,445			140,304			152,172			168,677

Total current liabilities		745,029			785,737			848,459			789,580
Long-term liabilities:
Long-term debt		2,455,265			1,524,878			2,005,761			2,305,513
Long-term portion of retirement benefits		41,529			38,203			48,977			47,559
Long-term income tax liabilities		155,743			248,496			137,439			137,123
Long-term operating lease liabilities		60,169			62,108			55,927			58,926
Other long-term liabilities		133,923			117,543			155,876			137,812

Total long-term liabilities		2,846,629			1,991,228			2,403,980			2,686,933

Total liabilities		3,591,658			2,776,965			3,252,439			3,476,513
Commitments and contingencies (Notes 7, 8 and 9)
Commitments and contingencies (Notes 6, 7 and 9)
Stockholders’ equity:
Preferred stock, par value $0.01 per share, 5,000 shares authorized, none issued at September 30, 2023 and December 31, 2022		—			—
Common stock, par value $0.01 per share, 400,000 shares authorized, 162,649 and 162,425 shares issued, 59,116 and 59,104 shares outstanding at September 30, 2023 and December 31, 2022, respectively		1,627			1,624
Preferred stock, par value $0.01 per share, 5,000 shares authorized, none issued at March 30, 2024 and December 31, 2023								—			—
Common stock, par value $0.01 per share, 400,000 shares authorized, 162,882 and 162,709 shares issued, 59,310 and 59,176 shares outstanding at March 30, 2024 and December 31, 2023, respectively								1,629			1,627
Additional paid-in capital		2,249,984			2,199,824			2,291,103			2,266,265
Retained earnings		8,934,616			8,508,587			9,253,017			9,150,821
Treasury stock, at cost, 103,533 and 103,321 shares at September 30, 2023 and December 31, 2022, respectively		(10,134,408	)		(10,063,975	)
Treasury stock, at cost, 103,572 and 103,533 shares at March 30, 2024 and December 31, 2023, respectively								(10,147,341	)		(10,134,252	)
Accumulated other comprehensive loss		(146,297	)		(141,572	)		(141,883	)		(134,120	)

Total stockholders’ equity		905,522			504,488			1,256,525			1,150,341

Total liabilities and stockholders’ equity	$	4,497,180		$	3,281,453		$	4,508,964		$	4,626,854

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

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)


	Three Months Ended						Three Months Ended
	September 30, 2023			October 1, 2022			March 30, 2024			April 1, 2023

	(In thousands, except per share data)						(In thousands, except per share data)
Revenues:
Product sales	$	448,081		$	464,923		$	376,151		$	436,457
Service sales		263,611			243,632			260,688			248,217

Total net sales		711,692			708,555			636,839			684,674
Costs and operating expenses:
Cost of product sales		184,332			199,918			153,182			180,354
Cost of service sales		107,075			107,183			108,604			104,026
Selling and administrative expenses		186,748			164,417			174,536			181,956
Research and development expenses		41,995			43,435			44,595			42,691
Purchased intangibles amortization		12,116			1,592			11,834			1,479
Litigation provision								10,242			—

Total costs and operating expenses		532,266			516,545			502,993			510,506

Operating income		179,426			192,010			133,846			174,168
Other income, net		328			895			2,259			1,388
Interest expense		(30,442	)		(12,420	)		(25,520	)		(14,444	)
Interest income		3,883			2,896			4,271			4,061

Income before income taxes		153,195			183,381			114,856			165,173
Provision for income taxes		18,643			27,383			12,660			24,250

Net income	$	134,552		$	155,998		$	102,196		$	140,923

Net income per basic common share	$	2.28		$	2.61		$	1.73		$	2.39
Weighted-average number of basic common shares		59,093			59,801			59,232			59,023
Net income per diluted common share	$	2.27		$	2.60		$	1.72		$	2.38
Weighted-average number of diluted common shares and equivalents		59,255			60,081			59,431			59,317

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

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~

COMPREHENSIVE INCOME

(unaudited)

Nine Months Ended


September 30, 2023

October 1, 2022



(In thousands, except per share data)

Revenues:
Product sales    $ 1,362,464 $ 1,385,393
Service sales    774,478 728,053

Total net sales    2,136,942 2,113,446
Costs and operating expenses:
Cost of product sales    559,040 593,884
Cost of service sales    317,823 306,108
Selling and administrative expenses    555,657 483,769
Research and development expenses    130,559 127,913
Purchased intangibles amortization    20,410 4,863
Acquired
in-process
research and development
   — 9,797

Total costs and operating expenses    1,583,489 1,526,334

Operating income    553,453 587,112
Other income, net    1,364 2,600
Interest expense    (68,158 ) (34,898 )
Interest income    11,984 7,536

Income before income taxes    498,643 562,350
Provision for income taxes    72,614 81,657

Net income    $ 426,029 $ 480,693

Net income per basic common share    $ 7.21 $ 7.98
Weighted-average number of basic common shares    59,061 60,200
Net income per diluted common share    $ 7.19 $ 7.94
Weighted-average number of diluted common shares and equivalents    59,262 60,521


	Three Months Ended
	March 30, 2024			April 1, 2023
	(In thousands)
Net income	$	102,196		$	140,923
Other comprehensive (loss) income:
Foreign currency translation		(9,540	)		8,783
Unrealized gains on derivative instruments before reclassifications		2,405			—
Amounts reclassified to interest income		(297	)		—

Unrealized gains on derivative instruments before income taxes		2,108			—
Income tax expense		(506	)		—

Unrealized gains on derivative instruments, net of tax		1,602			—
Retirement liability adjustment before reclassifications		332			80
Amounts reclassified to other income		(117	)		(83	)

Retirement liability adjustment before income taxes		215			(3	)
Income tax expense		(40	)		(4	)

Retirement liability adjustment, net of tax		175			(7	)
Other comprehensive (loss) income		(7,763	)		8,776

Comprehensive income	$	94,433		$	149,699

The accompanying notes are an integral part of the

interim

consolidated financial statements.

~~Table of Contents~~

~~WATERS CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~(unaudited)~~

Three Months Ended

Nine Months Ended


September
30, 2023

October 1,
2022

September
30, 2023

October 1,
2022


(In thousands)

(In thousands)

Net income    $ 134,552 $ 155,998 $ 426,029 $ 480,693
Other comprehensive loss:
Foreign currency translation    (17,676 ) (23,779 ) (4,909 ) (54,255 )
Unrealized gains on derivative instruments before reclassifications    603 — 603 —
Amounts reclassified to other income, net    (93 ) — (93 ) —

Unrealized gains on derivative instruments before income taxes    510 — 510 —
Income tax expense    (122 ) — (122 ) —

Unrealized gains on derivative instruments, net of tax    388 — 388 —
Unrealized gains on investments before income taxes    — — — 26
Income tax expense    — — — (6 )

Unrealized gains on investments, net of tax    — — — 20
Retirement liability adjustment before reclassifications    (200 ) 767 (29 ) 1,755
Amounts reclassified to other income, net    (75 ) 254 (242 ) 501

Retirement liability adjustment before income taxes    (275 ) 1,021 (271 ) 2,256
Income tax benefit (expense)    66 (243 ) 67 (546 )

Retirement liability adjustment, net of tax    (209 ) 778 (204 ) 1,710
Other comprehensive loss    (17,497 ) (23,001 ) (4,725 ) (52,525 )


Comprehensive income    $ 117,055 $ 132,997 $ 421,304 $ 428,168

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

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended
	September 30, 2023			October 1, 2022
							Three Months Ended
	(In thousands)						March 30, 2024			April 1, 2023
Cash flows from operating activities:
Net income	$	426,029		$	480,693		$	102,196		$	140,923
Adjustments to reconcile net income to net cash provided by
operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation		32,224			30,929			10,913			12,805
Deferred income taxes		267			(20,836	)		4,453			(5,078	)
Depreciation		62,235			54,306			22,129			19,411
Amortization of intangibles		55,610			44,799			26,385			11,743
R ealized gain on sale of investment		(651	)		—
Acquired in-process research and development and other non-cash items		—			10,003
Change in operating assets and liabilities:
Decrease (increase) in accounts receivable		100,327			(39,098	)
Decrease in accounts receivable								62,592			44,047
Increase in inventories		(81,415	)		(113,211	)		(28,309	)		(42,621	)
Increase in other current assets		(24,066	)		(6,861	)		(4,707	)		(2,123	)
Increase in other assets		(23,432	)		(3,881	)
D ecrease in other assets								7,369			6,662
Decrease in accounts payable and other current liabilities		(130,065	)		(4,952	)		(18,418	)		(71,257	)
Increase in deferred revenue and customer advances		38,959			47,060			85,901			77,206
Decrease in other liabilities		(83,335	)		(65,999	)
(Decrease) i ncrease in other liabilities								(7,634	)		5,033

Net cash provided by operating activities		372,687			412,952			262,870			196,751
Cash flows from investing activities:
Additions to property, plant, equipment and software
capitalization		(119,044	)		(113,737	)
Business acquisitions, net of cash acquired		(1,285,907	)		—
Proceeds from equity investments, net		651			8,903
Payments for intellectual property licenses		—			(7,535	)
Additions to property, plant, equipment and software capitalization								(28,655	)		(34,390	)
Investments in unaffiliated companies								(1,064	)		—
Purchases of investments		(1,791	)		(11,407	)		(923	)		(893	)
Maturities and sales of investments		1,770			77,993			898			877

Net cash used in investing activities		(1,404,321	)		(45,783	)		(29,744	)		(34,406	)
Cash flows from financing activities:
Proceeds from debt issuances		1,450,041			165,000			—			50,040
Payments on debt		(520,040	)		(135,000	)		(300,000	)		(145,000	)
Payments of debt issuance costs		(400	)		—
Proceeds from stock plans		18,092			36,136			13,932			2,378
Purchases of treasury shares		(70,433	)		(477,167	)		(13,089	)		(69,505	)
Proceeds from derivative contracts		8,178			12,844			6,981			2,876

Net cash provided by (used in) financing activities		885,438			(398,187	)
Net cash used in financing activities								(292,176	)		(159,211	)
Effect of exchange rate changes on cash and cash equivalents		2,081			(26,579	)		1,264			2,407

Decrease in cash and cash equivalents		(144,115	)		(57,597	)
(Decrease) increase in cash and cash equivalents								(57,786	)		5,541
Cash and cash equivalents at beginning of period		480,529			501,234			395,076			480,529

Cash and cash equivalents at end of period	$	336,414		$	443,637		$	337,290		$	486,070

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

~~Table of Contents~~

~~WATERS CORPORATION AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~(unaudited, in thousands)~~

Number
of
Common
Shares

Common
Stock

Additional
Paid-In

Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Loss

Total
Stockholders’
Equity

Balance July 2, 2022    162,348    $ 1,623    $ 2,166,221    $ 8,125,527    $ (9,759,858 ) $ (141,389 ) $ 392,124
Net income    —    —    —    155,998    — — 155,998
Other comprehensive loss    —    —    —    —    — (23,001 ) (23,001 )
Issuance of common stock for employees:
Employee Stock Purchase Plan    9    —    2,488    —    — — 2,488
Stock options exercised    17    —    2,506    —    — — 2,506
Treasury stock    —    —    —    —    (155,223 ) — (155,223 )
Stock-based compensation    5    1    10,343    —    — — 10,344

Balance October 1, 2022    162,379    $ 1,624    $ 2,181,558    $ 8,281,525    $ (9,915,081 ) $ (164,390 ) $ 385,236

Number
of
Common
Shares

Common
Stock

Additional
Paid-In

Capital

Retained
Earnings

Treasury

Stock

Accumulated
Other
Comprehensive
Loss

Total
Stockholders’
Equity

Balance July 1, 2023    162,576    $ 1,626    $ 2,232,055    $ 8,800,064    $ (10,133,716 ) $ (128,800 ) $ 771,229
Net income    —    —    —    134,552    — — 134,552
Other comprehensive loss    —    —    —    —    — (17,497 ) (17,497 )
Issuance of common stock for employees:
Employee Stock Purchase Plan    10    —    2,758    —    — — 2,758
Stock options exercised    35    —    5,084    —    — — 5,084
Treasury stock    —    —    —    —    (692 ) — (692 )
Stock-based compensation    28    1    10,087    —    — — 10,088

Balance September 30, 2023    162,649    $ 1,627    $ 2,249,984    $ 8,934,616    $ (10,134,408 ) $ (146,297 ) $ 905,522

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

Table of Contents

WATERS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(unaudited, in thousands)

Number
of
Common
Shares

Common
Stock

Additional
Paid-In

Capital

Retained
Earnings

Treasury
Stock

Accumulated
Other
Comprehensive
Loss

Total
Stockholders’
Equity

Balance December 31, 2021    162,084    $ 1,621    $ 2,114,880    $ 7,800,832    $ (9,437,914 ) $ (111,865 ) $ 367,554
Net income    —    —    —    480,693    — — 480,693
Other comprehensive loss    —    —    —    —    — (52,525 ) (52,525 )
Issuance of common stock for employees:
Employee Stock Purchase Plan    28    —    8,374    —    — — 8,374
Stock options exercised    167    2    28,121    —    — — 28,123
Treasury stock    —    —    —    —    (477,167 ) — (477,167 )
Stock-based compensation    100    1    30,183    —    — — 30,184

Balance October 1, 2022    162,379    $ 1,624    $ 2,181,558    $ 8,281,525    $ (9,915,081 ) $ (164,390 ) $ 385,236


	Number of Common Shares		Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity			Number of Common Shares		Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance December 31, 2022		162,425	$	1,624	$	2,199,824	$	8,508,587	$	(10,063,975	)	$	(141,572	)	$	504,488			162,425	$	1,624	$	2,199,824	$	8,508,587	$	(10,063,975	)	$	(141,572	)	$	504,488
Net income																			—		—		—		140,923		—			—			140,923
Other comprehensive income																			—		—		—		—		—			8,776			8,776
Issuance of common stock for employees:
Employee Stock Purchase Plan																			8		—		2,000		—		—			—			2,000
Stock options exercised																			6		—		969		—		—			—			969
Treasury stock																			—		—		—		—		(69,505	)		—			(69,505	)
Stock-based compensation																			111		2		12,170		—		—			—			12,172

Balance April 1, 2023																			162,550	$	1,626	$	2,214,963	$	8,649,510	$	(10,133,480	)	$	(132,796	)	$	599,823





																		Number of Common Shares		Common Stock		Additional Paid-In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance December 31, 2023																			162,709	$	1,627	$	2,266,265	$	9,150,821	$	(10,134,252	)	$	(134,120	)	$	1,150,341
Net income		—		—		—		426,029		—			—			426,029			—		—		—		102,196		—			—			102,196
Other comprehensive loss		—		—		—		—		—			(4,725	)		(4,725	)		—		—		—		—		—			(7,763	)		(7,763	)
Issuance of common stock for employees:
Employee Stock Purchase Plan		31		—		8,691		—		—			—			8,691			8		—		1,996		—		—			—			1,996
Stock options exercised		51		1		8,369		—		—			—			8,370			51		1		12,551		—		—			—			12,552
Treasury stock		—		—		—		—		(70,433	)		—			(70,433	)		—		—		—		—		(13,089	)		—			(13,089	)
Stock-based compensation		142		2		33,100		—		—			—			33,102			114		1		10,291		—		—			—			10,292

Balance September 30, 2023		162,649	$	1,627	$	2,249,984	$	8,934,616	$	(10,134,408	)	$	(146,297	)	$	905,522
Balance March 30, 2024																			162,882	$	1,629	$	2,291,103	$	9,253,017	$	(10,147,341	)	$	(141,883	)	$	1,256,525

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

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1 Basis of Presentation and Summary of Significant Accounting Policies

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 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. 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.

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.~~Credit Facility (as defined below). The Company’s financial results for the three months ended March 30, 2024 include the financial results of Wyatt. The Company’s financial results for the three months ended April 1, 2023 do not include any of the financial results of Wyatt since the closing of the Wyatt acquisition occurred in the second fiscal quarter of 2023. In addition, the Company has completed the purchase price allocation for the Wyatt acquisition and there were no material changes as compared to the Company’s preliminary purchase price allocation for the Wyatt acquisition.

The Company’s interim fiscal quarter typically ends on the thirteenth Saturday of each quarter. Since the Company’s fiscal year end is December 31, the first and fourth fiscal quarters may have more or less than thirteen complete weeks. The Company’s ~~third~~first fiscal quarters for ~~2023~~2024 and ~~2022~~2023 ended on ~~September~~March 30, 2024 and April 1, 2023, ~~and October 1, 2022,~~ respectively.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions ~~to the Quarterly Report on~~in Form

10-Q

and do not include all of the information and footnote disclosures required for annual financial statements prepared in accordance with generally accepted accounting principles (“U.S. GAAP”) in the United States of America. The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All inter-company balances and transactions have been eliminated.

The preparation of consolidated financial statements in conformity with U.S. 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. Actual amounts may differ from these estimates under different assumptions or conditions.

It is management’s opinion that the accompanying interim consolidated financial statements reflect all adjustments (which are normal and recurring) that are necessary for a fair statement of the results for the interim periods. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2022,~~2023, as filed with the U.S. Securities and Exchange Commission (“SEC”) on February 27, ~~2023.~~2024.

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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.

~~Table of Contents~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)~~

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.

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 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 loss in the consolidated balance sheets.

Cash, Cash Equivalents and Investments

Cash equivalents represent highly liquid investments, with original maturities of 90 days or less, while investments with longer maturities are classified as investments. 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 ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022, $307~~2023, $305 million out of ~~$337~~$338 million and ~~$472~~$321 million out of ~~$481~~$396 million, respectively, of the Company’s total cash, cash equivalents and investments were held by foreign subsidiaries. In addition, ~~$196~~$239 million out of ~~$337~~$338 million and ~~$336~~$233 million out of ~~$481~~$396 million of cash, cash equivalents and investments were held in currencies

other

than the U.S. dollar at ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

Accounts Receivable and Allowance for Credit Losses

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.

119

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – ~~(Continued)~~(

Continued

)

The following is a summary of the activity of the Company’s allowance for credit losses for the ~~nine~~three months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (in thousands):

Balance at
Beginning
of Period

Additions

Deductions

Balance at
End of
Period

Allowance for Credit Losses
September 30, 2023    $ 14,311    $ 3,727    $ (3,434 )    $ 14,604
October 1, 2022    $ 13,228    $ 4,980    $ (4,973 )    $ 13,235

~~Other Investments~~

During the nine months ended September 30, 2023, the Company recorded realized gains of approximately $0.7 million. During the nine months ended October 1, 2022, the Company recorded realized gains of approximately $7 million and incurred approximately $6 million in losses. Realized gains and losses on equity investments are recorded within other income, net on the statement of operations.

~~Business Combinations~~

The Company accounts for business combinations under the acquisition method of accounting. Accordingly, at the date of each acquisition, the Company measures the fair value of all identifiable assets acquired (including intangible assets) and liabilities assumed and allocates the amounts paid to all items measured. The fair value of identifiable intangible assets acquired is based on valuations that use information and assumptions determined by management and which consider management’s best estimates of inputs and assumptions that a market participant would use. Any excess of the fair value consideration transferred over the estimated fair values of the net assets acquired is recognized as goodwill.

~~Goodwill and Other Intangible Assets~~

The Company evaluates goodwill 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. Goodwill is tested for impairment at the reporting unit level, which is the operating segment or one level below an operating segment. The Company has 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 the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test will be required. Otherwise, no further testing will be required. If a quantitative impairment test is performed, the Company compares the fair values of the applicable reporting units with their aggregate carrying values, including goodwill. The fair value of reporting units is estimated using a discounted cash flows technique, which includes certain management assumptions, such as estimated future cash flows, estimated growth rates and discount rates. 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 Company has two reporting units: Waters

~~and TA~~

~~. Goodwill is allocated to the reporting units at the time 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 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 and indefinite-lived intangibles are tested annually for impairment.~~


	Balance at Beginning of Period		Additions		Deductions and Other			Balance at End of Period
Allowance for Credit Losses
March 30, 2024	$	19,335	$	991	$	(5,461	)	$	14,865
April 1, 2023	$	14,311	$	1,572	$	(1,028	)	$	14,855

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 ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022.~~2023. 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.

~~Table of Contents~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis at ~~September~~March 30, ~~2023~~2024 (in thousands):

Total at
September 30,
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    26,460    26,460    —    —
Foreign currency exchange contracts    129    —    129    —
Interest rate cross-currency swap agreements    25,679    —    25,679    —
Interest rate swap cash flow hedge    778    —    778    —

Total    $ 53,944    $ 26,460    $ 27,484    $ —

Liabilities:
Foreign currency exchange contracts    $ 119    $ —    $ 119    $ —
Interest rate cross-currency swap agreements    1,018    —    1,018    —
Interest rate swap cash flow hedge    175    —    175    —

Total    $ 1,312    $ —    $ 1,312    $ —


	Total at March 30, 2024		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Time deposits	$	923	$	—	$	923	$	—
Waters 401(k) Restoration Plan assets		30,791		30,791		—		—
Interest rate cross-currency swap agreements		7,642		—		7,642		—

Total	$	39,356	$	30,791	$	8,565	$	—

Liabilities:
Foreign currency exchange contracts	$	75	$	—	$	75	$	—
Interest rate cross-currency swap agreements		5,510		—		5,510		—
Interest rate swap cash flow hedge		865		—		865		—

Total	$	6,450	$	—	$	6,450	$	—

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (

Continued

)

The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, ~~2022~~2023 (in thousands):

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


	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	$	—

~~Table of Contents~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

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.

Fair Value of Cash Equivalents, Investments, Foreign Currency Exchange Contracts, Interest Rate Cross-Currency Swap Agreements and Interest Rate Swap Cash Flow Hedges

The fair values of the Company’s cash equivalents, investments, 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 Other Financial Instruments

The Company’s accounts receivable and accounts payable 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 $1.3 billion at both ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022.~~2023. 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 ~~$1.1~~$1.2 billion at both ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022,~~2023, using Level 2 inputs.

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.

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

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 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 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, Japanese yen, British pound, Mexican peso and Brazilian real.

~~Table of Contents~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

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~~income in the period that the underlying transaction impacts consolidated ~~earnings.~~income. 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~~income in the current period. Interest settlements due to benchmark interest rate changes are recorded in interest income or interest expense. For the three ~~and nine~~ months ended

~~September~~

March 30, ~~2023,~~2024, the Company did not have any cash flow hedges that were deemed ineffective.

Interest Rate Cross-Currency Swap Agreements

As of ~~September~~March 30, ~~2023,~~2024, the Company had

entered into

interest rate cross-currency swap derivative agreements

with durations up to three years

with an aggregate notional value of $625 million to hedge the variability in the movement of foreign currency exchange rates on a portion of its 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 loss in stockholders’ equity 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.

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

The Company’s foreign currency exchange contracts, 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):

September 30, 2023

December 31, 2022


Notional

Fair Value

Notional

Fair Value

Foreign currency exchange contracts:
Other current assets    $ 16,000    $ 129    $ 42,047    $ 231
Other current liabilities    $ 24,790    $ 119    $ 13,450    $ 98
Interest rate cross-currency swap agreements:
Other assets    $ 505,000    $ 25,679    $ 400,000    $ 19,163
Other liabilities    $ 120,000    $ 1,018    $ 185,000    $ 4,783
Accumulated other comprehensive income       $ 20,306       $ 10,026
Interest rate swap cash flow hedges:
Other assets    $ 50,000    $ 778    $ —    $ —
Other liabilities    $ 50,000    $ 175    $ —    $ —
Accumulated other comprehensive income       $ 510       $ —

~~Table of Contents~~


	March 30, 2024					December 31, 2023
	Notional		Fair Value			Notional		Fair Value
Foreign currency exchange contracts:
Other current assets	$	5,000	$	—		$	24,155	$	183
Other current liabilities	$	35,314	$	75		$	16,000	$	207
Interest rate cross-currency swap agreements:
Other assets	$	285,000	$	7,642		$	220,000	$	4,835
Other liabilities	$	340,000	$	5,510		$	405,000	$	13,384
Accumulated other comprehensive income (loss)			$	6,942				$	(7,975	)
Interest rate swap cash flow hedges:
Other liabilities	$	100,000	$	865		$	100,000	$	2,974
Accumulated other comprehensive loss			$	(865	)			$	(2,974	)

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

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	Three Months Ended
	Financial Statement Classification	March 30, 2024			April 1, 2023
Foreign currency exchange contracts:
Realized gains on closed contracts	Cost of sales	$	257		$	30
Unrealized losses on open contracts	Cost of sales		(51	)		(78	)

Cumulative net pre-tax gains (losses)	Cost of sales	$	206		$	(48	)

Interest rate cross-currency swap agreements:
Interest earned	Interest income	$	2,537		$	2,655
Unrealized gains (losses) on contracts, net	Accumulated other comprehensive loss	$	14,917		$	(7,256	)
Interest rate swap cash flow hedges:
Interest earned	Interest income	$	296		$	—
Unrealized gains on	Accumulated other
open contracts	comprehensive loss	$	2,109		$	—

Financial

Statement

Classification

Three Months Ended

Nine Months Ended


September

30, 2023

October 1,
2022

September

30, 2023

October 1,
2022

Foreign currency exchange contracts:
Realized losses
on closed contracts    Cost of sales    $ (755 ) $ (3,811 ) $ (50 ) $ (6,603 )
Unrealized gains (losses)
on open contracts    Cost of sales    168 461 (123 ) (93 )
Cumulative net
pre-tax


losses    Cost of sales    $ (587 ) $ (3,350 ) $ (173 ) $ (6,696 )

Interest rate cross-currency swap agreements:
Interest earned    Interest income    $ 2,720 $ 2,362 $ 8,048 $ 6,214
Unrealized gains    Other comprehensive
on open contracts    income    $ 18,936 $ 31,108 $ 10,280 $ 73,812
Interest rate swap cash flow hedges:
Interest earned    Interest income    $ 93 $ — $ 93 $ —
Unrealized gains    Other comprehensive
on open contracts    income    $ 510 $ — $ 510 $ —

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

Stockholders’ Equity

~~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. This program replaced the remaining amounts available from the~~

~~pre-existing~~

~~program.~~ In December ~~2020,~~2023, the Company’s Board of Directors authorized the extension of ~~the~~its existing share repurchase program through January 21, ~~2023. In December 2022, the~~2025. The 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~~remaining authorization ~~level to $4.8 billion, an increase of $750 million.~~is $1.0 billion. During the ~~nine~~three months ended ~~September 30,~~April 1, 2023, ~~and October 1, 2022,~~ the Company

repurchased 0.2 ~~million and 1.5~~

million shares of the Company’s outstanding common stock at a cost of ~~$58~~

$58

million ~~and $467 million, respectively,~~ under the ~~January 2019 authorization and other previously announced programs.~~Company’s share repurchase program. The Company did not make any open market share repurchases in 2024. In addition, the Company repurchased ~~$12~~

$13 million and $11 million of common stock related to the vesting of restricted stock units during the ~~nine~~three months ended ~~September~~March 30, 2024 and April 1, 2023, ~~and October 1, 2022,~~ respectively. As

Table of September 30, 2023, the Company had repurchased an aggregate of 15.2 million shares at a cost of $3.8 billion under the January 2019 repurchase program and had a total of $1.0 billion authorized for future repurchases.Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

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.

~~Table of Contents~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

The following is a summary of the activity of the Company’s accrued warranty liability for the ~~nine~~three months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (in thousands):

Balance at
Beginning
of Period

Accruals for
Warranties

Settlements
Made

Balance at
End of
Period

Accrued warranty liability:
September 30, 2023    $ 11,949    $ 4,813    $ (5,642 )    $ 11,120
October 1, 2022    $ 10,718    $ 6,606    $ (6,663 )    $ 10,661


	Balance at Beginning of Period		Accruals for Warranties		Settlements Made			Balance at End of Period
Accrued warranty liability:
March 30, 2024	$	12,050	$	480	$	(1,677	)	$	10,853
April 1, 2023	$	11,949	$	2,177	$	(1,815	)	$	12,311

Restructuring

In ~~July 2023,~~March 2024, the Company ~~made organizational changes to better align its resources with its growth and innovation strategies, resulting~~had a reduction in ~~a worldwide~~ workforce ~~reduction,~~

that ~~has~~ impacted approximately

5% 2% of the ~~Company’s employees.~~employees, primarily in China due to the significant decline in sales resulting from lower customer demand, which resulted in the Company incurring approximately $8 million of severance-related costs. During the ~~three and nine months ended September 30, 2023, the Company incurred $23 million and $27 million~~

~~, respectively,~~

first quarter of ~~severance-related costs~~

~~connection~~

~~with this reduction.~~

~~During the three and nine months ended September 30, 2023,~~2024, the Company paid ~~$12~~ $8

million of severance-related costs in connection with the workforce reductions that occurred in March 2024 and ~~$14 million, respectively~~

~~of these costs~~

July 2023, with the majority of the remaining costs to be paid in the ~~fourth~~second quarter of 2024. The accrued restructuring expense was $8 million at both March 30, 2024 and December 31, 2023 and were included in other current liabilities on the ~~first half of 2024.~~consolidated balance sheets.

2 Revenue Recognition

The Company’s deferred revenue liabilities in 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.

The following is a summary of the activity of the Company’s deferred revenue and customer advances for the ~~nine~~three months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (in thousands):


	September 30, 2023			October 1, 2022			March 30, 2024			April 1, 2023
Balance at the beginning of the period	$	285,175		$	273,598		$	323,516		$	285,175
Recognition of revenue included in balance at beginning of the period		(222,001	)		(213,527	)		(103,996	)		(105,222	)
Revenue deferred during the period, net of revenue recognized		276,277			243,853			187,525			193,286

Balance at the end of the period	$	339,451		$	303,924		$	407,045		$	373,239

The Company classified ~~$64~~$70 million and ~~$57~~$67 million of deferred revenue and customer advances in other long-term liabilities at ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

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):


	September 30, 2023		March 30, 2024
Deferred revenue and customer advances expected to be recognized in:
One year or less	$	275,941	$	336,718
13-24 months		37,373		42,162
25 months and beyond		26,137		28,165

Total	$	339,451	$	407,045

3 Marketable Securities

The Company’s marketable securities within cash equivalents and investments included in the consolidated balance sheets 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 ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022.~~

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~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

2023.

4 Inventories

Inventories are classified as follows (in thousands):


	September 30, 2023		December 31, 2022		March 30, 2024		December 31, 2023
Raw materials	$	241,012	$	205,760	$	241,744	$	233,952
Work in progress		25,689		19,899		23,825		20,198
Finished goods		277,701		230,051		273,065		262,086

Total inventories	$	544,402	$	455,710	$	538,634	$	516,236

5 ~~Acquisitions~~

On May 16, 2023, the Company acquired all of the issued and outstanding equity interests of Wyatt for $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 acquisition will expand Waters’ portfolio and increase exposure to large molecule applications. As a result of the acquisition, the results of Wyatt are included in the Company’s consolidated financial statements from the acquisition date.

The Company preliminarily allocated 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 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    $ 1,311,531
Less: cash acquired    (25,624 )

Net cash consideration    1,285,907

Identifiable Net Assets (Liabilities) Acquired

Accounts receivable    20,099
Inventory    14,706
Prepaid and other assets    1,327
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    (3,871 )
Deferred revenue    (15,219 )
Other liabilities    (5,728 )

Total identifiable net assets acquired    406,806
Goodwill    879,101

Net cash consideration    $ 1,285,907

~~The details of the purchase price allocated to the intangible assets acquired and the estimated useful lives are as follows (dollars in thousands~~

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~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

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 $879 million of the purchase price to goodwill which is~~

deductible for tax purposes and has been allocated to the Waters Division operating segment. The goodwill arising from the acquisition consists largely of the value of intangible assets that do not qualify for separate recognition such as workforce in place and cash flows from the integration of 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.

~~During the three and nine months ended September 30, 2023, the Company’s consolidated results included net sales of $~~

~~29 million and $~~

~~45 million~~

~~, respectively,~~

~~and a net operating loss of $~~

~~6 million and $~~

~~9 million~~

~~, respectively,~~

~~since the acquisition closed on May 16, 2023. The Company also incurred transaction related costs of $13 million during the nine months~~

~~ended~~

~~September 30, 2023~~

~~, which are recorded in selling and administrative expenses in the consolidated statement of operations.~~

~~Unaudited Pro Forma Financial Information~~

The following unaudited pro forma information is presented for illustrative purposes only. It is not necessarily indicative of the actual results of operations that actually would have been realized had the entities been a single company as of January 1, 2022 or the future operating results of 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 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 nine months ended September 30, 2023 and October 1, 2022, as if the acquisition had occurred on January 1, 2022 (in thousands):

September 30,
2023

October 1,
2022

Revenue    $ 2,174,209    $ 2,197,028
Net income    426,238    448,102

~~The impact of the unaudited pro forma information for the three months ended September 30, 2023 and October 1, 2022 was immaterial to the consolidated financial statements.~~

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 nine months ended September 30, 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 nine months ended October 1, 2022.~~

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, in two equal installments upon the first and second anniversary of the 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 Company has recorded $8 million and $11 million of expense in the consolidated statement of operations for the three and nine months ended September 30, 2023~~

~~, respectively.~~

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~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

6 Goodwill and Other Intangibles

The carrying amount of goodwill was $1.3 billion ~~and $430 million~~ at ~~September~~both March 30, ~~2023~~2024 and December 31, ~~2022, respectively. The acquisition of Wyatt increased goodwill by $879 million, while the effect of foreign currency translation decreased goodwill by $1 million.~~2023.

The Company’s intangible assets included in the consolidated balance sheets are detailed as follows (dollars in thousands):


	September 30, 2023							December 31, 2022
					Weighted-							Weighted-
	Gross				Average			Gross				Average			March 30, 2024						December 31, 2023
	Carrying		Accumulated		Amortization			Carrying		Accumulated		Amortization			Gross Carrying Amount		Accumulated Amortization		Weighted- Average Amortization Period		Gross Carrying Amount		Accumulated Amortization		Weighted- Average Amortization Period
	Amount		Amortization		Period			Amount		Amortization		Period
Capitalized software	$	616,406	$	460,730		5	years	$	589,604	$	441,414		5	years	$	655,433	$	495,177		5 years	$	660,273	$	495,317		5 years
Purchased intangibles		610,513		182,214		10	years		197,805		166,735		11	years		612,382		207,620		10 years		614,357		197,154		10 years
Trademarks		9,680		—		—			9,680		—		—			9,680		—		—		9,680		—		—
Licenses		14,142		7,753		7	years		14,070		6,729		6	years		14,673		8,698		7 years		14,798		8,429		7 years
Patents and other intangibles		109,371		78,206		8	years		104,139		73,021		8	years		113,028		82,554		8 years		111,962		80,983		8 years

Total	$	1,360,112	$	728,903		7	years	$	915,298	$	687,899		7	years	$	1,405,196	$	794,049		7 years	$	1,411,070	$	781,883		7 years

The Company capitalized ~~intangible assets in the amounts of~~ $10 million and $14 million of intangible assets in the three months ended ~~September~~March 30, 2024 and April 1, 2023, ~~and October 1, 2022, respectively, and $455 million and $38 million in the nine months ended September 30, 2023 and October 1, 2022,~~ respectively. ~~The increases in intangible assets are a result of the Wyatt acquisition.~~

The gross carrying value of intangible assets and accumulated amortization for intangible assets decreased by $6$16 million and ~~$10~~$14 million, respectively, in the ~~nine~~three months ended ~~September~~March 30, ~~2023~~2024 due to the effects of foreign currency translation.

Amortization expense for intangible assets was $26 million and ~~$15~~$12 million for the three months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022. Amortization expense for intangible assets was $56 million and $45 million for the nine months ended September 30,~~ 2023, ~~and October 1, 2022,~~ respectively. Amortization expense for intangible assets is estimated to be ~~$97~~$108 million per year for each of the next five years.

~~7 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 September 30,

~~2023~~

~~was $2.5 billion, a change of $1.0 billion from the end of the first quarter of 2023.~~

~~On May 11, 2023, the Company 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

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CONDENSED

NOTES

TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

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 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.

6 Debt

The Company has a five-year, ~~$1.8~~ $2.0

billion revolving credit facility (the “Credit Facility”) that ~~expires~~matures in September 2026. On March 3, 2023, the Company amended the Credit Facility to increase the borrowing capacity by $200 million 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 ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022,~~2023, the Credit Facility had a total

of ~~$1.2~~$0.8 billion and ~~$270 million~~$1.1 billion outstanding, respectively.

The interest rates applicable under the Credit 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 1/1⁄2 of 1% per annum and (3) the adjusted Term SOFR rate for 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 U.S. Government Securities Business Day, the immediately preceding U.S. Government Securities Business Day), plus 1% annum) or the applicable 1, 3 or 6 month adjusted Term SOFR 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 Term SOFR or EURIBO rate loans. The facility fee on the Credit 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 Credit Facility 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 Credit Facility includes negative covenants, affirmative covenants, representations and warranties and events of default that are customary for investment grade credit facilities.

As of both ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022,~~2023, the Company had a total of $1.3 billion of outstanding senior unsecured notes. Interest on the 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. 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.

~~Table of Contents~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

The Company had the following outstanding debt at ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022~~2023 (in thousands):

September 30, 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    1,200,000    270,000
Unamortized debt issuance costs    (4,735 )    (5,122 )

Total long-term debt    2,455,265    1,524,878

Total debt    $ 2,505,265    $ 1,574,878

*	~~Series H senior unsecured notes bear interest at a~~ ~~3-month~~ ~~LIBOR for that floating rate interest period plus 1.25%.~~


	March 30, 2024			December 31, 2023
Senior unsecured notes - Series G - 3.92 %, due June 2024		50,000			50,000

Total notes payable and debt, current		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
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			50,000
Senior unsecured notes - Series Q - 4.91%, due May 2030		50,000			50,000
Credit agreement		750,000			1,050,000
Unamortized debt issuance costs		(4,239	)		(4,487	)

Total long-term debt		2,005,761			2,305,513

Total debt	$	2,055,761		$	2,355,513

As of ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022,~~2023, the Company had a total amount available to borrow under the Credit Facility of ~~$0.8~~$1.2 billion and ~~$1.5~~$0.9 billion, respectively, after outstanding letters of credit. The weighted-average interest rates applicable to the senior unsecured notes and credit agreement borrowings collectively were ~~4.97%~~4.42% and ~~3.54%~~4.69% at ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively. As of ~~September~~March 30, ~~2023,~~2024, the Company was in compliance with all debt

covenants.

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

The Company and its foreign subsidiaries also had available short-term lines of credit totaling $112 million and ~~$113~~$114 million at ~~September~~March 30, ~~2023~~ 2024

and

December 31, ~~2022,~~2023, respectively, for the purpose of short-term borrowing and issuance of commercial guarantees. None of the Company’s foreign subsidiaries had outstanding short-term borrowings as of ~~September~~March 30, ~~2023~~2024 or December 31, ~~2022.~~

~~As of September 30, 2023, the Company had entered into interest rate cross-currency swap derivative agreements~~

~~with durations up to three-years~~

~~with an aggregate notional value of $625 million to hedge the variability in the movement of foreign currency exchange rates on a portion of its euro-denominated and~~

~~yen-denominated~~

~~net asset investments.~~2023.

87 Income Taxes

on certain types of income for the period April 1, 2021 through March 31, 2026. The effect of applying the concessionary income tax

rate

rather than the statutory tax rate to income arising from qualifying activities in Singapore increased the Company’s net income for the ~~nine~~three months ended ~~September~~March 30, 2024 and April 1, 2023 by $2 million

and ~~October 1, 2022 by $11 million and $15~~ $

million, respectively, and increased the Company’s net income per diluted

share by ~~$0.18~~$0.03 and ~~$0.25,~~$0.05, respectively.

The Company’s effective tax rate for the three months ended ~~September~~March 30, 2024 and April 1, 2023 was 11.0% and ~~October 1, 2022 was 12.2% and 14.9%~~14.7%, respectively. The income tax provision includes a $1 million and a $2

~~decrease~~

inmillion income tax benefit related to stock-based compensation for the three months ended March 30, 2024 and April 1, 2023, respectively. The remaining differences between the effective ~~income~~ tax ~~rate~~rates can primarily be ~~primarily~~ attributed to the impact of discrete tax benefits in the

current

year and differences in the proportionate amounts of

pre-tax

income recognized in jurisdictions with different effective tax rates.

~~Table of Contents~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~

The Company’s effective tax rate for the nine months ended September 30, 2023 and October 1, 2022 was 14.6% and 14.5%, respectively. The differences between the effective tax rates can primarily be attributed to differences in the proportionate amounts of

~~pre-tax~~

~~income recognized in jurisdictions with different effective tax rates.~~

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.

The Company’s gross unrecognized tax benefits, excluding interest and penalties, at ~~September~~March 30, 2024 and April 1, 2023 ~~and October 1, 2022~~ were ~~$32~~$15 million and ~~$29~~ $30

million, respectively. 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, ~~2017.~~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

Effective in 2024, various foreign jurisdictions began implementing aspects of ~~September 30, 2023,~~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 changes in tax law did not have a material impact on the Company’s financial position, results of operations and cash flows for the first quarter of 2024. The Company continues to monitor the adoption of the Pillar Two rules in additional jurisdictions.

8 Litigation

From time to time, the Company ~~expects to record reductions~~and its subsidiaries are involved in various litigation matters arising in the ~~measurement~~ordinary course of business. The Company believes it has meritorious arguments in its ~~unrecognized tax benefits~~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 three months ended March 30, 2024, the Company recorded

$10

million of patent litigation settlement provisions and related ~~net interest and penalties of $18 million within the next twelve months due to potential tax audit settlements and the lapsing of statutes of limitations on potential tax assessments.~~costs. The ~~Company does not expect to record any~~accrued patent litigation expense is in other ~~material reductions~~current liabilities in the ~~measurement of its unrecognized tax benefits within the next twelve months.~~consolidated balance sheet at March 30, 2024.

9 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 ~~September~~March 30, ~~2023~~2024 are immaterial for the years ended December 31, ~~2023~~2024 and thereafter.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

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.

10 Earnings Per Share

Basic and diluted EPS calculations are detailed as follows (in thousands, except per share data):

Three Months Ended September 30, 2023


Net Income
(Numerator)

Weighted-
Average Shares
(Denominator)

Per Share
Amount

Net income per basic common share    $ 134,552    59,093    $ 2.28
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities    —    162    (0.01 )

Net income per diluted common share    $ 134,552    59,255    $ 2.27

~~Table of Contents~~


	Three Months Ended March 30, 2024
	Net Income (Numerator)		Weighted- Average Shares (Denominator)		Per Share Amount

Net income per basic common share	$	102,196		59,232	$	1.73
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities		—		199		(0.01	)

Net income per diluted common share	$	102,196		59,431	$	1.72

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)~~


								Three Months Ended April 1, 2023
	Three Months Ended October 1, 2022							Net Income (Numerator)		Weighted- Average Shares (Denominator)		Per Share Amount
	Net Income (Numerator)		Weighted- Average Shares (Denominator)		Per Share Amount
Net income per basic common share	$	155,998		59,801	$	2.61		$	140,923		59,023	$	2.39
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities		—		280		(0.01	)		—		294		(0.01	)

Net income per diluted common share	$	155,998		60,081	$	2.60		$	140,923		59,317	$	2.38

Nine Months Ended September 30, 2023


Net Income
(Numerator)

Weighted-
Average Shares
(Denominator)

Per Share
Amount

Net income per basic common share    $ 426,029    59,061    $ 7.21
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities    —    201    (0.02 )

Net income per diluted common share    $ 426,029    59,262    $ 7.19

Nine Months Ended October 1, 2022


Net Income
(Numerator)

Weighted-
Average Shares
(Denominator)

Per Share
Amount

Net income per basic common share    $ 480,693    60,200    $ 7.98
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities    —    321    (0.04 )

Net income per diluted common share    $ 480,693    60,521    $ 7.94

For the three ~~and nine~~ months ended ~~September~~March 30, 2024 and April 1, 2023, ~~and October 1, 2022,~~ the

Company had ~~fewer than one million~~ approximately

326,000

and approximately

140,000

stock options that were antidilutive, respectively, due to having higher exercise prices than the Company’s average stock price during the applicable period. These securities were not included in the computation of diluted EPS. The effect of dilutive securities was calculated using the treasury stock method.

~~11 Accumulated Other Comprehensive Income (Loss)~~

~~The components of accumulated other comprehensive income (loss) are detailed as follows (in thousands):~~

Currency
Translation

Unrealized
Gain (Loss) on
Retirement
Plans

Unrealized
Gain (Loss)
on Derivative
Instruments

Accumulated
Other
Comprehensive
Loss

Balance at December 31, 2022    $ (146,120 ) $ 4,548    $ —    $ (141,572 )
Other comprehensive (loss) income, net of tax    (4,909 ) (204 )    388    (4,725 )

Balance at September 30, 2023    $ (151,029 ) $ 4,344    $ 388    $ (146,297 )

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

11 Accumulated Other Comprehensive Loss

The components of accumulated other comprehensive loss are detailed as follows (in thousands):


	Currency Translation			Unrealized Loss on Retirement Plans			Unrealized Loss on Derivative Instruments			Accumulated Other Comprehensive Loss
Balance at December 31, 2023	$	(128,359	)	$	(3,501	)	$	(2,260	)	$	(134,120	)
Other comprehensive income (loss), net of tax		(9,540	)		175			1,602			(7,763	)

Balance at March 30, 2024	$	(137,899	)	$	(3,326	)	$	(658	)	$	(141,883	)

12 Business Segment Information

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 instruments, columns and other precision chemistry consumables that can be integrated and used along with other analytical instruments. Operations of the Wyatt business are part of the Waters operating segment. 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.

Net sales for the Company’s products and services are as follows for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022		March 30, 2024		April 1, 2023
Product net sales:
Waters instrument systems	$	262,142	$	274,869	$	786,293	$	825,677	$	191,259	$	244,211
Chemistry consumables		128,650		128,096		398,084		385,661		134,207		133,515
TA instrument systems		57,289		61,958		178,087		174,055		50,685		58,731

Total product sales		448,081		464,923		1,362,464		1,385,393		376,151		436,457
Service net sales:
Waters service		238,556		220,436		700,281		660,371		236,433		224,349
TA service		25,055		23,196		74,197		67,682		24,255		23,868

Total service sales		263,611		243,632		774,478		728,053		260,688		248,217

Total net sales	$	711,692	$	708,555	$	2,136,942	$	2,113,446	$	636,839	$	684,674

Table of Contents

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

Net sales are attributable to geographic areas based on the region of destination. Geographic sales information is presented below for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022		March 30, 2024		April 1, 2023
Net Sales:
Asia:
China	$	102,081	$	140,080	$	333,127	$	399,852	$	85,745	$	116,065
Japan		40,069		37,095		123,943		123,222		35,547		46,494
Asia Other		96,078		102,759		288,862		289,204		86,267		90,522

Total Asia		238,228		279,934		745,932		812,278		207,559		253,081
Americas:
United States		231,773		216,380		673,033		638,908		202,839		202,305
Americas Other		43,706		40,029		131,794		123,609		38,332		44,116

Total Americas		275,479		256,409		804,827		762,517		241,171		246,421
Europe		197,985		172,212		586,183		538,651		188,109		185,172

Total net sales	$	711,692	$	708,555	$	2,136,942	$	2,113,446	$	636,839	$	684,674

Net sales by customer class are as follows for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022		March 30, 2024		April 1, 2023
Pharmaceutical	$	421,535	$	405,959	$	1,233,177	$	1,258,902	$	374,207	$	384,898
Industrial		209,449		223,968		648,754		641,882		195,334		209,650
Academic and government		80,708		78,628		255,011		212,662		67,298		90,126

Total net sales	$	711,692	$	708,555	$	2,136,942	$	2,113,446	$	636,839	$	684,674

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) – (Continued)

Net sales for the Company recognized at a point in time versus over time are as follows for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022		March 30, 2024		April 1, 2023
Net sales recognized at a point in time:
Instrument systems	$	319,431	$	336,827	$	964,380	$	999,732	$	241,944	$	302,942
Chemistry consumables		128,650		128,096		398,084		385,661		134,207		133,515
Service sales recognized at a point in time (time & materials)		88,545		89,724		269,464		267,074		83,325		88,207

Total net sales recognized at a point in time		536,626		554,647		1,631,928		1,652,467		459,476		524,664
Net sales recognized over time:
Service and software maintenance sales recognized over time (contracts)		175,066		153,908		505,014		460,979		177,363		160,010

Total net sales	$	711,692	$	708,555	$	2,136,942	$	2,113,446	$	636,839	$	684,674

13 Recent Accounting Standard Changes and Developments

Recently ~~Adopted~~Issued Accounting Standards

~~In October 2021,~~There were no additions to the new accounting ~~guidance was issued that requires acquirers~~pronouncements not yet adopted as described in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The new guidance requires that at the acquisition date, the acquirer should account our Annual Report on Form

10-K

for the ~~related revenue contracts in accordance with 606 as if it had originated~~year ended December 31, 2023. Other amendments to U.S. GAAP that have been issued by the ~~contracts. This guidance differs from current GAAP which requires an acquirer~~FASB or other standards-setting bodies that do not require adoption until a future date are not expected 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 in accordance with 606, at fair value on the acquisition date. This guidance is effective for public business entities for fiscal years beginning after December 15, 2022, including interim periods within those years. The Company adopted this standard on January 1, 2023. The adoption of this standard did not have a material impact on ~~the Company’s~~our condensed consolidated financial ~~position, results of operations and cash flows.~~statements upon adoption.

~~Recently Issued Accounting Standards~~

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 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.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

The Company has two operating segments: Waters^TM and TA^TM. Waters products and services primarily consist of high-performance liquid chromatography (“HPLC”), ultra-performance liquid chromatography (“UPLC^TM” and, together with HPLC, referred to as “LC”), mass spectrometry (“MS”), light scattering and field-flow fractionation instruments (Wyatt), 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 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.

Wyatt Acquisition

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. The Company’s financial results for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 include the financial results of Wyatt. The Company’s financial results for the three months ended April 1, 2023 do not include any of the financial results of Wyatt since the closing of the Wyatt acquisition ~~from~~occurred in the ~~acquisition date.~~second fiscal quarter of 2023.

Financial Overview

The Company’s operating results are as follows for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (dollars in thousands, except per share data):


	Three Months Ended									Nine Months Ended									Three Months Ended
	September 30, 2023			October 1, 2022			% change			September 30, 2023			October 1, 2022			% change			March 30, 2024			April 1, 2023			% change
Revenues:
Product sales	$	448,081		$	464,923			(4	%)	$	1,362,464		$	1,385,393			(2	%)	$	376,151		$	436,457			(14	%)
Service sales		263,611			243,632			8	%		774,478			728,053			6	%		260,688			248,217			5	%

Total net sales		711,692			708,555			—			2,136,942			2,113,446			1	%		636,839			684,674			(7	%)
Costs and operating expenses:
Cost of sales		291,407			307,101			(5	%)		876,863			899,992			(3	%)		261,786			284,380			(8	%)
Selling and administrative expenses		186,748			164,417			14	%		555,657			483,769			15	%		174,536			181,956			(4	%)
Research and development expenses		41,995			43,435			(3	%)		130,559			127,913			2	%		44,595			42,691			4	%
Purchased intangibles amortization		12,116			1,592			661	%		20,410			4,863			320	%		11,834			1,479			700	%
Acquired in-process research and development		—			—			—			—			9,797			(100	%)
Litigation provision																				10,242			—			*	*

Operating income		179,426			192,010			(7	%)		553,453			587,112			(6	%)		133,846			174,168			(23	%)
Operating income as a % of sales		25.2	%		27.1	%					25.9	%		27.8	%
Other income, net		328			895			(63	%)		1,364			2,600			(48	%)		2,259			1,388			*	*
Interest expense, net		(26,559	)		(9,524	)		179	%		(56,174	)		(27,362	)		105	%		(21,249	)		(10,383	)		105	%

Income before income taxes		153,195			183,381			(16	%)		498,643			562,350			(11	%)		114,856			165,173			(30	%)
Provision for income taxes		18,643			27,383			(32	%)		72,614			81,657			(11	%)		12,660			24,250			(48	%)

Net income	$	134,552		$	155,998			(14	%)	$	426,029		$	480,693			(11	%)	$	102,196		$	140,923			(27	%)

Net income per diluted common share	$	2.27		$	2.60			(13	%)	$	7.19		$	7.94			(9	%)	$	1.72		$	2.38			(28	%)

**	Percentage not meaningful

The Company’s net sales ~~increased less than one percent~~decreased 7% in the ~~third~~first quarter of 2023, as compared to the third quarter of 2022, with foreign currency translation having an insignificant impact on sales growth. For the first nine months of 2023, the Company’s net sales increased 1% with the effect of foreign currency translation decreasing sales growth by 2%2024, as compared to the first ~~nine months of 2022. In both the third~~ quarter ~~and first nine months~~ of 2023, ~~the Company’s net~~with foreign currency translation decreasing total sales ~~were negatively impacted~~growth by ~~a significant reduction~~1%. The decrease in first quarter sales ~~in China due to~~was driven by lower customer demand for our ~~products. Excluding China,~~products across most major regions, except for sales in Europe, which increased 2%, and the ~~Company’s net~~U.S., which were flat and benefited from Wyatt sales ~~increased 7% and 5% for~~contributions. The decline in customer demand can be attributed to our customers delaying the ~~third quarter and first nine months~~purchase of ~~2023, respectively.~~our instrument systems as they remained cautious with their capital spending entering 2024. The Wyatt acquisition increased sales growth by ~~4% and 2%~~3% for the ~~third~~first quarter ~~and~~of 2024. In addition, the Company’s first ~~nine months~~quarter of ~~2023, respectively.~~

~~For~~2024 had one less calendar day than the first nine months of 2023, the Company had the same amount of calendar days when compared to the first nine months of 2022. At current foreign currency exchange rates, the Company expects that foreign currency translation will be negative to sales for the remainderquarter of 2023.

Instrument system sales decreased ~~5% and 4% for the third quarter and first nine months of 2023, respectively, as sales growth~~20% in the ~~U.S., Latin America and Europe was offset~~first quarter of 2024 primarily driven by weaker customer demand in ~~Asia (primarily in China). Instrument system sales in China declined 32% and 23% in~~all regions of the ~~third quarter and first nine months of 2023, respectively, due to lower customer demand for our products. Excluding China, the Company’s~~world. The instrument system sales ~~increased 4% and 3% in the third quarter and first nine months~~decline was broad-based across all of ~~2023, respectively. The decline in China’s~~our instrument ~~sales can be attributed to~~systems but especially for our mass spectrometry instrument systems, where the decline ~~in customer demand. The~~was significantly greater. Our mass spectrometry system sales are higher priced instrument systems that are significantly impacted by the timing and level of funding our academic and government customers receive. In addition, the Wyatt acquisition increased instrument system sales growth by ~~7% and 3%, for~~5% in the ~~third~~first quarter ~~and first nine months~~ of ~~2023, respectively.~~2024. Foreign currency translation ~~increased~~did not impact instrument system sales growth ~~by 1% in the third quarter of 2023 and decreased instrument system sales growth by 1%~~ in the first ~~nine months~~quarter of ~~2023.~~2024.

Recurring revenues (combined sales of precision chemistry consumables and services) increased ~~6% and 5% for~~3% in the ~~third~~first quarter ~~and first nine months~~ of ~~2023, respectively,~~2024, with foreign currency translation ~~having a minimal impact on sales growth in the third quarter and~~ decreasing sales growth by ~~2% for~~1%. Service revenues increased 5% in the first ~~nine months~~quarter of ~~2023. Service revenues grew 8% and 6% for the third quarter and first nine months of 2023, respectively. Wyatt’s service revenues added 3% and 1%~~2024, with Wyatt contributing 2% to service revenue growth ~~for~~in the ~~third quarter and first nine months of 2023, respectively.~~quarter. Chemistry sales ~~growth was flat~~increased 1% in the first quarter of 2024 and ~~increased 3% for the third quarter and first nine months of 2023, respectively. Chemistry sales~~ were ~~significantly~~ impacted by the lower customer demand in China for our products. Excluding the impact of China, the Company’s chemistry sales ~~grew 9% and 6%, for~~increased 3% in the ~~third~~first quarter ~~and first nine months~~ of ~~2023, respectively.~~2024.

Operating income ~~decreased 7% and 6% for~~was $134 million in the ~~third~~first quarter ~~and~~of 2024, a decrease of 23% as compared to $174 million in the first ~~nine months~~quarter of ~~2023, respectively,~~2023. The decrease in operating income was primarily due to ~~higher salary expenses related to merit compensation~~lower sales volume and anthe increase in the following expenses: Wyatt acquisition-related retention expense and purchased intangible amortization, which added 10%; severance-related costs associated with a workforce reduction primarily in China, which added 5%; and litigation settlement provisions and related costs, which added 6%. These costs were partially offset by ~~lower incentive compensation costs. 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. The Company incurred approximately $23 million and $27 million of severance-related costs in the third quarter and first nine months of 2023, respectively. The Company paid $12 million and $14 million of severance-related costs in the third quarter and first nine months of 2023, respectively, with the majority of the remaining costs to be paid in the fourth quarter of 2023 and 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. In addition, the Company’s operating income was impacted by~~costs related to the Wyatt acquisition ~~due~~ diligence ~~and integration costs~~incurred in the first quarter of $1 million and $13 million for the third quarter and first nine months of 2023, respectively, and the Wyatt acquisition related bonus expense of $8 million and $11 million for the third quarter and first nine months of 2023, respectively. The negative effect of foreign currency translation lowered operating income by approximately $2 million and $18 million for the third quarter and first nine months of 2023, respectively.2023.

The Company generated ~~$373~~$263 million and ~~$413~~$197 million of net cash from operating activities in the first ~~nine~~three months of 2024 and 2023, respectively, with the $66 million increase being attributable to lower annual incentive bonus payments and ~~2022, respectively.~~an improvement in working capital in the current year. Net cash used in investing activities included ~~$1.3 billion for the Wyatt acquisition in the first nine months of 2023 and~~ capital expenditures related to property, plant, equipment and software capitalization of ~~$119~~$29 million and ~~$114~~$34 million in the first ~~nine months of 2023 and 2022, respectively.~~

The Company funded the Wyatt acquisition with a combination of cash on hand and borrowings under our revolving credit facility. The Company’s outstanding debt on September 30, 2023 was $2.5 billion, a change of $1.0 billion from the end of the first quarter of ~~2023. The Company estimates that its interest expense for the full year~~2024 and 2023, ~~will be approximately $80 million. As a result of the Wyatt acquisition, the Company temporarily suspended its share buyback program in the first quarter 2023.~~respectively.

Results of Operations

Sales by Geography

Geographic sales information is presented below for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (dollars in thousands):


	Three Months Ended							Nine Months Ended							Three Months Ended
	September 30, 2023		October 1, 2022		% change			September 30, 2023		October 1, 2022		% change			March 30, 2024		April 1, 2023		% change
Net Sales:
Asia:
China	$	102,081	$	140,080		(27	%)	$	333,127	$	399,852		(17	%)	$	85,745	$	116,065		(26	%)
Japan		40,069		37,095		8	%		123,943		123,222		1	%		35,547		46,494		(24	%)
Asia Other		96,078		102,759		(7	%)		288,862		289,204		—			86,267		90,522		(5	%)

Total Asia		238,228		279,934		(15	%)		745,932		812,278		(8	%)		207,559		253,081		(18	%)
Americas:
United States		231,773		216,380		7	%		673,033		638,908		5	%		202,839		202,305		—
Americas Other		43,706		40,029		9	%		131,794		123,609		7	%		38,332		44,116		(13	%)

Total Americas		275,479		256,409		7	%		804,827		762,517		6	%		241,171		246,421		(2	%)
Europe		197,985		172,212		15	%		586,183		538,651		9	%		188,109		185,172		2	%

Total net sales	$	711,692	$	708,555		—		$	2,136,942	$	2,113,446		1	%	$	636,839	$	684,674		(7	%)

Geographically, the Company’s sales ~~growth~~decline in the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 was broad-based across most major regions ~~with~~except for Europe, which increased 2%, and the ~~exception of China,~~U.S., which ~~declined 27%~~was flat and ~~17%, respectively.~~benefited from Wyatt sales contributions. The decline in ~~China was primarily driven by~~sales can be attributed to the lower demand for our instrument systems and chemistry ~~products. Excluding China,~~products as customers delayed the ~~Company’s net sales increased 7% and 5% for the third quarter and first nine months~~purchase of ~~2023, respectively.~~these products. Foreign currency translation ~~had minimal impact on~~decreased sales growth by 3% in ~~the third quarter~~Asia and ~~decreased~~increased sales growth by 2% in ~~the first nine months of 2023.~~

During the third quarter of 2023, sales increased 7% in the U.S. and 15% in Europe, while decreasing 15% in Asia driven by weakness in China and the negative effect of currency translation on sales in Japan. In the third quarter of 2023, foreign currency translation increased sales growth in Europe by 7% and decreased sales growth in Asia by 4%. This decline in Asia was primarily driven by the 8% decline in sales in Japan due to foreign currency translation. Wyatt’s sales contributed 9% of sales growth in the U.S. and 5% of sales growth in Europe in the ~~third~~first quarter of 2023. During the first nine months of 2023, sales increased 5% in the U.S. and 9% in Europe, while decreasing 8% in Asia driven by weakness in China, with the effect of foreign currency translation increasing sales growth in Europe by 1% and decreasing sales growth in Asia by 4%, which includes a 9% decrease in sales in Japan resulting from foreign currency translation.2024.

Sales by Trade Class

Net sales by customer class are presented below for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (dollars in thousands):


	Three Months Ended							Nine Months Ended							Three Months Ended
	September 30, 2023		October 1, 2022		% change			September 30, 2023		October 1, 2022		% change			March 30, 2024		April 1, 2023		% change
Pharmaceutical	$	421,535	$	405,959		4	%	$	1,233,177	$	1,258,902		(2	%)	$	374,207	$	384,898		(3	%)
Industrial		209,449		223,968		(6	%)		648,754		641,882		1	%		195,334		209,650		(7	%)
Academic and government		80,708		78,628		3	%		255,011		212,662		20	%		67,298		90,126		(25	%)

Total net sales	$	711,692	$	708,555		—		$	2,136,942	$	2,113,446		1	%	$	636,839	$	684,674		(7	%)

During the ~~third~~first quarter of ~~2023,~~2024, sales to pharmaceutical customers ~~increased 4%~~decreased 3%, as growth in ~~the U.S.~~Europe and ~~Europe~~India was offset by weakness ~~in China,~~across most major regions, with foreign currency translation ~~increasing~~decreasing pharmaceutical sales growth by 1% and Wyatt contributing 6%4% to the Company’s pharmaceutical sales growth. Combined sales to industrial customers, which include material characterization, food, environmental and fine chemical markets, decreased 6%7% in the ~~third~~first quarter of ~~2023,~~2024, with foreign currency translation ~~having minimal impact on~~decreasing sales growth by 1% and Wyatt contributing 1% to industrial sales growth. Combined sales to academic and government customers increased 3% in the third quarter of 2023, with foreign currency translation having minimal impact on sales growth and Wyatt contributing 5% to the Company’s academic and government sales growth.

Sales to our academic and 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.

During the first nine months of 2023, sales to pharmaceutical customers decreased 2%, primarily driven by weakness in customer demand in China, with foreign currency translation decreasing pharmaceutical sales growth by 2%. Combined sales to industrial customers increased 1%, with foreign currency translation decreasing sales growth by 1%. Combined Our combined sales to academic and government customers ~~increased 20%,~~decreased 25% in the first quarter of 2024, with foreign currency translation ~~decreasing~~increasing sales ~~growth~~ by 2% and Wyatt contributing 3% to the Company’s academic and government sales growth. This overall decline in sales of 25% to our academic and government customers in the first quarter of 2024 compares to a 38% increase in academic and government sales in the first quarter of 2023, which represents a two-year compound annual growth rate of 1%.

Waters Products and Services Net Sales

Net sales for Waters products and services were as follows for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (dollars in thousands):


	Three Months Ended
	September 30, 2023		% of Total			October 1, 2022		% of Total			% change			Three Months Ended
	September 30, 2023		% of Total			October 1, 2022		% of Total			% change			March 30, 2024		% of Total			April 1, 2023		% of Total			% change
Waters instrument systems	$	262,142		42	%	$	274,869		44	%		(5	%)	$	191,259		34	%	$	244,211		41	%		(22	%)
Chemistry consumables		128,650		20	%		128,096		21	%		—			134,207		24	%		133,515		22	%		1	%

Total Waters product sales		390,792		62	%		402,965		65	%		(3	%)		325,466		58	%		377,726		63	%		(14	%)
Waters service		238,556		38	%		220,436		35	%		8	%		236,433		42	%		224,349		37	%		5	%

Total Waters net sales	$	629,348		100	%	$	623,401		100	%		1	%	$	561,899		100	%	$	602,075		100	%		(7	%)

	Nine Months Ended
	September 30, 2023		% of Total			October 1, 2022		% of Total			% change
	September 30, 2023		% of Total			October 1, 2022		% of Total			% change
Waters instrument systems	$	786,293		42	%	$	825,677		44	%		(5	%)
Chemistry consumables		398,084		21	%		385,661		21	%		3	%

Total Waters product sales		1,184,377		63	%		1,211,338		65	%		(2	%)
Waters service		700,281		37	%		660,371		35	%		6	%

Total Waters net sales	$	1,884,658		100	%	$	1,871,709		100	%		1	%

Waters products and service sales ~~increased 1% for both~~decreased 7% in the ~~third~~first quarter ~~and first nine months~~ of ~~2023,~~2024, with the effect of foreign currency translation ~~having minimal impact on sales growth in the third quarter, while~~ decreasing ~~Waters~~ sales growth by 1% ~~in the first nine months of 2023.~~. The Wyatt acquisition increased Waters products and service sales growth by approximately ~~5% and 2% for~~4% in the ~~third quarter and first nine months of 2023, respectively.~~quarter. Waters instrument system sales decreased ~~by 5% for both~~22% in the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 due to weaker customer demand in China. Waters instrument system sales in China declined 35% and 25% for the third quarter and first nine months of 2023, respectively. Foreign currency translation had minimal impact on Waters instrument system sales growth in the third quarter while decreasing sales growth by 1% for the first nine months of 2023. Wyatt’s instrument system sales contributed 8% and 4% to Waters instrument system sales growth for the third quarter and first nine months of 2023, respectively.

Waters chemistry consumables sales were significantly impacted by the lower customer demand in China for our products. Excluding the impact of China, the Company’s chemistry sales grew 9% and 6% for the third quarter and first nine months of 2023, respectively. This sales growth was primarily due to the continued strong demand in most major geographies, driven by the uptake in columns and application-specific testing kits to pharmaceutical customers, partially offset by the negative impact from foreign currency translation, which decreased chemistry sales growth by 1% and 2% in the third quarter and first nine months of 2023, respectively.

demand. Waters service sales increased 5% in the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 due to higher service demand billing in all regions except for China, partially offset by the negative impact from foreign currency translation which decreased service sales growth by ~~2% in the first nine months of 2023. Wyatt service revenues added 3% and 2% to Waters service revenue growth for the third quarter and first nine months of 2023, respectively.~~1%.

TA Product and Services Net Sales

Net sales for TA products and services were as follows for the three ~~and nine~~ months ended ~~September~~March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022~~2023 (dollars in thousands):


	Three Months Ended
	September 30, 2023		% of Total			October 1, 2022		% of Total			% change			Three Months Ended
	September 30, 2023		% of Total			October 1, 2022		% of Total			% change			March 30, 2024		% of Total			April 1, 2023		% of Total			% change
TA instrument systems	$	57,289		70	%	$	61,958		73	%		(8	%)	$	50,685		68	%	$	58,731		71	%		(14	%)
TA service		25,055		30	%		23,196		27	%		8	%		24,255		32	%		23,868		29	%		2	%

Total TA net sales	$	82,344		100	%	$	85,154		100	%		(3	%)	$	74,940		100	%	$	82,599		100	%		(9	%)

	Nine Months Ended
	September 30, 2023		% of Total			October 1, 2022		% of Total			% change
	September 30, 2023		% of Total			October 1, 2022		% of Total			% change
TA instrument systems	$	178,087		71	%	$	174,055		72	%		2	%
TA service		74,197		29	%		67,682		28	%		10	%

Total TA net sales	$	252,284		100	%	$	241,737		100	%		4	%

TA sales declined ~~3% for~~9% in the ~~third~~first quarter of ~~2023~~2024 due to lower customer demand for TA products in all regions except for Latin America and services while TA sales grew 4% for the first nine months of 2023. For the third quarter, TA’s sales geographically were weak in the U.S., China and Asia Other, declining 8%, 5% and 13%, respectively, but were strong in Europe and Japan, which grew 7% and 19%, respectively.India. Foreign currency translation ~~increased~~decreased TA sales ~~by 3% in Asia Other and 9% in Europe, while decreasing sales~~growth by 1% in ~~China and 11% in Japan. For~~ the first nine months of 2023, TA sales growth was broad-based across most major geographies, except for China and Asia Other, which declined 11% and 15%, respectively. The sales growth for the first nine months of 2023 was primarily driven by strong customer demand for our thermal analysis instruments and service, particularly in the U.S. and Europe. Foreign currency translation increased sales by 1% for the third quarter and decreased sales by 1% for the first nine months of 2023.quarter.

Cost of Sales

Cost of sales decreased by ~~5% and 3%~~8% in the ~~third~~first quarter ~~and first nine months of 2023, respectively. The decrease in cost of sales in these periods is~~2024, primarily due to ~~the change~~lower sales volume, changes in sales mix and ~~the~~ lower ~~material and~~ freight ~~costs for both the third quarter and first nine months of 2023.~~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 ~~be neutral to~~decrease gross profit during ~~2023.~~2024.

Selling and Administrative Expenses

Selling and administrative expenses ~~increased 14% and 15%~~decreased 4% in the ~~third~~first quarter ~~and~~of 2024 primarily due to the $8 million decline in costs related to the Wyatt acquisition diligence incurred in the first ~~nine months~~quarter of 2023 ~~respectively. The~~and the decrease in salary expense resulting from lower headcount from the reductions in workforce that occurred in March 2024. These decreases were partially offset by the increase of $6 million in ~~these periods is primarily driven by~~Wyatt acquisition-related retention expense and the $8 million increase in severance-related costs in connection with a reduction in workforce. In the first quarter of 2024, the Company had a reduction in workforce, ~~which increased expenses by 14% and 5%;~~primarily impacting China employees, as result of the ~~Wyatt acquisition due diligence and integration costs, which increased expenses by 1% and 3%; and~~significant sales volume decline in China’s sales over the ~~Wyatt acquisition-related bonus expense, which increased expenses by 5% and~~last year. This workforce reduction impacted approximately 2%~~, in each case, for~~ of the ~~third quarter and first nine months of 2023, respectively. These increases were partially offset by lower incentive compensation costs.~~Company’s employees worldwide. The effect of foreign currency translation ~~increased~~did not have a significant impact on selling and administrative expenses ~~by 2% for the third quarter and decreased expenses by 1% for~~in the first ~~nine months~~quarter of ~~2023.~~2024.

As a percentage of net sales, selling and administrative expenses were ~~26.2%~~27.4% and ~~26.0%~~26.6% for the ~~third~~first quarter of 2024 and ~~first nine months of~~ 2023, ~~respectively, and 23.2% and 22.9% for the third quarter and first nine months of 2022,~~ respectively.

Research and Development Expenses

Research and development expenses ~~decreased 3% in the third quarter and~~ increased 2%4% in the first ~~nine months~~quarter of ~~2023. The decrease in third quarter research and development expenses was~~2024, primarily driven by ~~lower incentive compensation costs, which were offset by annual merit increases and~~ costs associated with the development of new product and technology ~~initiatives.~~initiatives as well as $2 million in Wyatt acquisition-related retention expense. The impact of foreign currency exchange increased expenses by ~~1% for the third quarter and decreased expenses by 2% for~~3% in the first ~~nine months~~quarter of ~~2023.~~2024.

Purchased Intangibles Amortization

The increase in purchased intangible amortization of ~~$11 million and $16~~$10 million in the ~~third~~first quarter ~~and first nine months~~ of ~~2023, respectively,~~2024 can be attributed to the Wyatt acquisition intangible assets.

~~Acquired~~ ~~In-Process~~ ~~Research & Development~~Litigation Provisions

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

~~Other Income, net~~

~~During the~~ first ~~nine months~~quarter of 2022, the Company sold 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 within other income, net on the statement of operations.2024.

Interest Expense, net

~~The increase in~~Net interest expense ~~for both~~in the ~~third~~first quarter ~~and first nine months~~ of ~~2023~~2024 increased $11 million, which can be primarily attributed to the additional borrowings by the Company to fund the Wyatt acquisition. ~~The Company estimates that its interest expense for the full year 2023 will be approximately $80 million.~~

Provision for Income Taxes

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%, 25% and 17%, respectively, as of ~~September~~March 30, ~~2023.~~2024. The Company has a 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. The effect of applying the concessionary income tax rate rather than the statutory tax rate to income from qualifying activities in Singapore increased the Company’s net income by ~~$11~~$2 million and ~~$15~~$3 million and increased the Company’s net income per diluted share by ~~$0.18~~$0.03 and ~~$0.25~~$0.05 for the ~~third~~first quarter of ~~2023~~2024 and ~~2022,~~2023, respectively.

The Company’s effective tax rate for the ~~third~~first quarter of 2024 and 2023 was 11.0% and ~~2022 was 12.2% and 14.9%~~14.7%, respectively. The ~~decrease in~~income tax provision includes a $1 million and a $2 million income tax benefit related to stock-based compensation for the first quarter of 2024 and 2023, respectively. The remaining differences between the effective tax ~~rate~~rates can primarily be ~~primarily~~ attributed to the impact of discrete tax benefits in the current year and ~~differences in the proportionate amounts of~~ ~~pre-tax~~ ~~income recognized in jurisdictions with different effective tax rates.~~

~~The Company’s effective tax rate for the first nine months of 2023 and 2022 was 14.6% and 14.5%, respectively. The differences between the effective tax rates can primarily be attributed~~ to differences in the proportionate amounts of pre-tax income recognized in jurisdictions with different effective tax rates.

Effective in 2024, various foreign jurisdictions began implementing 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 changes in tax law did not have a material impact on the Company’s financial position, results of operations and cash flows for the first quarter of 2024. The Company continues to monitor the adoption of the Pillar Two rules in additional jurisdictions.

Liquidity and Capital Resources

Condensed Consolidated Statements of Cash Flows (in thousands):


	Nine Months Ended						Three Months Ended
	September 30, 2023			October 1, 2022			March 30, 2024			April 1, 2023
Net income	$	426,029		$	480,693		$	102,196		$	140,923
Depreciation and amortization		117,845			99,105			48,514			31,154
Stock-based compensation		32,224			30,929			10,913			12,805
Deferred income taxes		267			(20,836	)		4,453			(5,078	)
Acquired in-process research and development and other non-cash items		—			10,003
Change in accounts receivable		100,327			(39,098	)		62,592			44,047
Change in inventories		(81,415	)		(113,211	)		(28,309	)		(42,621	)
Change in accounts payable and other current liabilities		(130,065	)		(4,952	)		(18,418	)		(71,257	)
Change in deferred revenue and customer advances		38,959			47,060			85,901			77,206
Other changes		(131,484	)		(76,741	)		(4,972	)		9,572

Net cash provided by operating activities		372,687			412,952			262,870			196,751
Net cash used in investing activities		(1,404,321	)		(45,783	)		(29,744	)		(34,406	)
Net cash provided by (used in) financing activities		885,438			(398,187	)
Net cash used in financing activities								(292,176	)		(159,211	)
Effect of exchange rate changes on cash and cash equivalents		2,081			(26,579	)		1,264			2,407

Decrease in cash and cash equivalents	$	(144,115	)	$	(57,597	)
(Decrease) increase in cash and cash equivalents							$	(57,786	)	$	5,541

Cash Flow from Operating Activities

Net cash provided by operating activities was ~~$373~~$263 million and ~~$413~~$197 million during the first ~~nine months~~quarter of ~~2023~~2024 and ~~2022,~~2023, respectively. The decrease in ~~2023~~2024 operating cash flow was primarily a result of lower net income and higher inventory levels, ~~higher income tax payments and the payment of acquired Wyatt liabilities,~~ offset by higher cash collections and lower annual incentive bonus payments in ~~2023~~2024 compared to ~~2022.~~2023. 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 the changes in net income:

The changes in accounts receivable were primarily attributable to ~~the~~ timing of payments made by customers and timing of sales. Days sales outstanding was 8189 days at ~~September~~March 30, ~~2023~~2024 and 7791 days at ~~October~~April 1, ~~2022.~~2023.

The increase in inventory can primarily be attributed to higher material ~~costs as well as an increase in safety stock levels to help mitigate any future supply chain issues.~~costs.

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.

~~An increase in income tax payments of $79 million as compared to the prior year and the payment of $26 million in Wyatt acquired liabilities.~~

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.

Cash Flow from Investing Activities

Net cash used in investing activities totaled ~~$1.4 billion~~$30 million and ~~$46~~$34 million in the first ~~nine months~~quarter of ~~2023~~2024 and ~~2022,~~2023, respectively. Additions to fixed assets and capitalized software were ~~$119~~$29 million and ~~$114~~$34 million in the first ~~nine~~three months of 2024 and 2023, ~~and 2022,~~ respectively. The cash flows from investing activities in 2023 and 2022 include $12 million and $24 million, respectively, of capital expenditures related to the major expansion of the Company’s precision chemistry consumable operations in the United States. The Company has incurred costs of $245 million on this facility inception-to-date through the end of the first nine months of 2023 and anticipates completing this new ~~state-of-the-art~~ ~~facility in 2023.~~

During the first ~~nine~~three months of ~~2023~~2024 and ~~2022,~~2023, the Company purchased ~~$2 million and $11~~$1 million of investments, ~~respectively,~~ while ~~$2 million and $78~~$1 million of investments matured, ~~respectively,~~ and were used for financing activities described below.

During the first nine months of 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 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 the statement of operations in 2022.~~

~~During the first nine months of 2022, the Company received $10 million in proceeds from equity investments and made $1 million of investments in equity investments.~~

On May 16, 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 acquisition will expand Waters’ portfolio and increase exposure to large molecule applications.

Cash Flow from Financing Activities

The Company ~~had~~ entered into a credit agreement in September 2021 governing the Company’s five-year, $1.8 billion revolving credit facility that matures in September 2026. On March 3, 2023, ~~in anticipation of closing of the Wyatt acquisition,~~ the Company entered into an agreement to amend ~~the~~such credit ~~agreement governing its revolving credit facility (the “2023 Amendment”).~~agreement. The 2023 Amendment ~~increases~~increased the borrowing capacity by $200 million to an aggregate ~~total~~ borrowing capacity of $2.0 billion. As of ~~September~~March 30, ~~2023,~~2024, the Company had a total of ~~$2.5~~$2.1 billion in outstanding debt, which consisted of $1.3 billion in outstanding senior unsecured notes and ~~$1.2 billion~~$750 million borrowed under its credit agreement. The Company’s net debt borrowings ~~increased~~decreased by ~~$0.9 billion~~$300 million and ~~$30~~$95 million during the ~~first nine~~three months ofended March 30, 2024 and April 1, 2023, ~~and 2022, respectively, primarily to fund the Wyatt acquisition.~~respectively.

As of ~~September~~March 30, ~~2023,~~2024, the Company ~~had~~has entered into interest rate cross-currency swap derivative agreements with durations up to three years with ~~an aggregate~~a notional value of $625 million to hedge the variability in the movement of foreign currency exchange rates on a portion of its euro-denominated and yen-denominated net asset investments. As a result of entering into these agreements, the Company lowered net interest expense by approximately $8$3 million ~~and $6 million during~~in the first ~~nine months~~quarter of ~~2023~~2024 and ~~2022, respectively.~~2023. The Company anticipates that these swap agreements will lower net interest expense by approximately ~~$10~~$8 million in ~~2023.~~2024.

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. This new program replaced the remaining amounts available from the~~ ~~pre-existing~~ ~~program. In~~ December ~~2020,~~2023, the Company’s Board of Directors authorized the extension of ~~the~~its existing share repurchase program through January 21, ~~2023. In December 2022, the~~2025. The 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~~remaining authorization ~~level to $4.8 billion, an increase of $750 million.~~is $1.0 billion. During the ~~first nine~~three months ~~of September 30,~~ended April 1, 2023, ~~and October 1, 2022,~~ the Company repurchased ~~$58~~0.2 million ~~and $467 million~~shares of the Company’s outstanding common stock ~~respectively,~~at a cost of $58 million under the Company’s share repurchase program. The Company did not make any open market share repurchases in 2024. In addition, the Company repurchased ~~$12~~$13 million and $11 million of common stock related to the vesting of restricted stock units during the ~~first nine~~three months ~~of September~~ended March 30, ~~2023~~2024 and ~~October~~April 1, ~~2022,~~2023, respectively. 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 recent acquisition of Wyatt.

The Company received ~~$18~~$14 million and ~~$36~~$2 million of proceeds from the exercise of stock options and the purchase of shares pursuant to the Company’s employee stock purchase plan during the first ~~nine~~three months of ~~2023~~2024 and ~~2022,~~2023, respectively.

The Company had cash, cash equivalents and investments of ~~$337~~$338 million as of ~~September~~March 30, ~~2023.~~2024. The majority of the Company’s cash and cash equivalents are generated from foreign operations, with ~~$307~~$305 million held by foreign subsidiaries at ~~September~~March 30, ~~2023,~~2024, of which ~~$196~~$239 million was held in currencies other than U.S. dollars.

Contractual Obligations, Commercial Commitments, Contingent Liabilities and Dividends

A summary of the Company’s contractual obligations and commercial commitments is included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, as filed with the SEC on February 27, ~~2023.~~2024. The Company reviewed its contractual obligations and commercial commitments as of ~~September~~March 30, ~~2023~~2024 and determined that there were no material changes outside the ordinary course of business from the information set forth in the Annual Report on Form 10-K.

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 that it has meritorious arguments in its current litigation matters and that any outcome, either individually or in the aggregate, will not be material to the Company’s financial position or results of operations.

During fiscal year ~~2023,~~2024, the Company expects to contribute a total of approximately $3 million to $6 million to its defined benefit plans.

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.

Critical Accounting Policies and Estimates

In the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, as filed with the SEC on February 27, ~~2023,~~2024, the Company’s most critical accounting policies and estimates upon which its financial status depends were identified as those relating to revenue recognition, valuation of long-lived assets, intangible assets and goodwill, income taxes, uncertain tax positions ~~litigation~~ and business combinations and asset acquisitions. The Company reviewed its policies and determined that those policies remain the Company’s most critical accounting policies for the ~~nine~~three months ended ~~September~~March 30, ~~2023.~~2024. The Company did not make any changes in those policies during the ~~nine~~three months ended ~~September~~March 30, ~~2023.~~2024.

New Accounting Pronouncements

Please refer to Note 13, Recent Accounting Standard Changes and Developments, in the Condensed Notes to Consolidated Financial Statements.

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, including the information incorporated by reference herein, ~~may contain~~contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 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;

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

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

•

~~risks related to the effects of the ongoing~~ ~~COVID-19~~ ~~pandemic on our business, financial condition, results of operations and prospects;~~

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

the ~~cases of academic, governmental~~ability to realize the expected benefits related to the Company’s various cost-saving initiatives, including workforce reductions and ~~research institutions;~~organizational restructurings;

the introduction of competing products by other companies and loss of market share, as well as pressures on prices from ~~customers~~competitors and/or ~~competitors;~~customers;

changes in the competitive landscape as a result of changes in ownership, mergers and continued consolidation among the Company’s competitors;

regulatory, economic and competitive obstacles to new product introductions, lack of acceptance of new 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~~payments; and expansion of our business into new or developing 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 acquire adequate sources of supply and its reliance on outside contractors for certain components and modules, as well as disruptions to its supply chain;

risks associated with third-party sales intermediaries and resellers;

the impact and costs of changes in ~~connection with~~statutory or contractual tax rates in jurisdictions in which the Company operates as well as shifts in taxable income inamong jurisdictions with different effective tax rates, the outcome of 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;

~~the ability to realize the expected benefits related to the Company’s various cost-saving initiatives;~~

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; the impact and costs of changes in statutory or contractual tax rates in jurisdictions in which the Company operates, specifically as it relates to the Tax Cuts and Jobs Act in the U.S.; and shifts in taxable income among jurisdictions with different effective tax rates.practices.

Certain of these and other factors are discussed under the heading “Risk Factors” under Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, as filed with the SEC on February 27, ~~2023.~~2024. 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 Quarterly Report on Form 10-Q and 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 3: Quantitative and Qualitative Disclosures About Market Risk

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 ~~September~~March 30, ~~2023,~~2024, 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 ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022, $307~~2023, $305 million out of ~~$337~~$338 million and ~~$472~~$321 million out of ~~$481~~$396 million, respectively, of the Company’s total cash, cash equivalents and investments were held by foreign subsidiaries. In addition, ~~$196~~$239 million out of ~~$337~~$338 million and ~~$336~~$233 million out of ~~$481~~$396 million of cash, cash equivalents and investments were held in currencies other than the U.S. dollar at ~~September~~March 30, ~~2023~~2024 and December 31, ~~2022,~~2023, respectively. As of ~~September~~March 30, ~~2023,~~2024, 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 ~~September~~March 30, ~~2023~~2024 would decrease by approximately ~~$19~~$24 million, of which the majority would be recorded to foreign currency translation in other comprehensive income within stockholders’ equity.

There have been no other material changes in the Company’s market risk during the ~~nine~~three months ended ~~September~~March 30, ~~2023.~~2024. For information regarding the Company’s market risk, refer to Item 7A of Part II of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, as filed with the SEC on February 27, ~~2023.~~2024.

3931

Item 4: 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 Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. 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 ~~September~~March 30, ~~2023~~2024 (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.

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 ~~September~~March 30, ~~2023~~2024 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II: Other Information

Item 1: Legal Proceedings

There have been no material changes in the Company’s legal proceedings during the ~~nine~~three months ended ~~September~~March 30, ~~2023~~2024 as described in Item 3 of Part I of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, as filed with the SEC on February 27, ~~2023.~~2024, other than the $10 million patent litigation settlement provisions and related costs recorded in the three months ended March 30, 2024.

Item 1A: Risk Factors

Information regarding risk factors of the Company is set forth under the heading “Risk Factors” under Part I, Item 1A in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2022,~~2023, as filed with the SEC on February 27, ~~2023.~~2024. The Company reviewed its risk factors as of ~~September~~March 30, ~~2023~~2024 and determined that there were no material changes from the ones set forth in the Form 10-K. Note, however, the discussion of certain factors under the subheading “Special Note Regarding Forward-Looking Statements” in Part I, Item 2 of this Quarterly Report on Form 10-Q. These risks are not the only ones facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial may have a material adverse effect on the Company’s business, financial condition and operating results.

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities by the Issuer

During the three months ended September 30, 2023, the Company purchased 205 and 2,269 shares at a cost of $57 thousand and $634 thousand with average prices paid of $280.25 and $279.44 during fiscal July and September, respectively, of equity securities registered by the Company under the Exchange Act.

In January 2019, the Company’s Board of Directors authorized the Company to repurchase up to $4 billion of its outstanding common stock in open market or private transactions over a two-year period. This program replaced the remaining amounts available under the pre-existing authorization. In December 2020, the Company’s Board of Directors authorized the extension of the share repurchase program through January 21, 2023. In December 2022, the Company’s Board of Directors amended and extended this repurchase program’s term by one year such that it ~~shall now expire~~expired on January 21, 2024 and increased the total authorization level to $4.8 billion, an increase of $750 million. In December 2023, the Company’s Board of Directors authorized the extension of the share repurchase program through January 21, 2025. As of ~~September~~March 30, ~~2023,~~2024, the Company had repurchased an aggregate of 15.2 million shares at a cost of $3.8 billion under the January 2019 repurchase program and had a total of $1.0 billion authorized for future repurchases. The size and timing of these purchases, if any, will depend on our stock price and market and business conditions, as well as other factors.

4032


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
January 1, 2024 to January 27, 2024		—	$	—		—	$	961,207
January 28, 2024 to February 24, 2024		9	$	329.26		—	$	961,207
February 25, 2024 to March 30, 2024		30	$	335.87		—	$	961,207

Total		39	$	334.34		—	$	961,207

(1)	The Company repurchased approximately 39,000 shares of common stock at a cost of $13 million related to the vesting of restricted stock during the three months ended March 30, 2024.

Item 5:

Other Information

Insider Trading Arrangements and Related Disclosures

None.

Item 6: Exhibits


Exhibit Number		Description of Document

31.1		Chief Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Chief Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*)

32.2		Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.(*)

101		The following materials from Waters Corporation’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~March 30, ~~2023,~~2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets (unaudited), (ii) the Consolidated Statements of Operations (unaudited), (iii) the Consolidated Statements of Comprehensive Income (unaudited), (iv) the Consolidated Statements of Cash Flows (unaudited) and (vi) Condensed Notes to Consolidated Financial Statements (unaudited).

104		Cover Page Interactive Date File (formatted in iXBRL and contained in Exhibit 101).

(*)

This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act 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.

4134

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/ Amol Chaubal
		Amol Chaubal
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)

Date: ~~November~~May 7, ~~2023~~2024

4235


	Balance at Beginning of Period		Additions		Deductions			Balance at End of Period
Allowance for Credit Losses
September 30, 2023	$	14,311	$	3,727	$	(3,434	)	$	14,604
October 1, 2022	$	13,228	$	4,980	$	(4,973	)	$	13,235


	Total at September 30, 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		26,460		26,460		—		—
Foreign currency exchange contracts		129		—		129		—
Interest rate cross-currency swap agreements		25,679		—		25,679		—
Interest rate swap cash flow hedge		778		—		778		—

Total	$	53,944	$	26,460	$	27,484	$	—

Liabilities:
Foreign currency exchange contracts	$	119	$	—	$	119	$	—
Interest rate cross-currency swap agreements		1,018		—		1,018		—
Interest rate swap cash flow hedge		175		—		175		—

Total	$	1,312	$	—	$	1,312	$	—


	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


	Financial Statement Classification		Three Months Ended						Nine Months Ended
			September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
			September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
Foreign currency exchange contracts:
Realized losses
on closed contracts		Cost of sales	$	(755	)	$	(3,811	)	$	(50	)	$	(6,603	)
Unrealized gains (losses)
on open contracts		Cost of sales		168			461			(123	)		(93	)
Cumulative net pre-tax

losses		Cost of sales	$	(587	)	$	(3,350	)	$	(173	)	$	(6,696	)

Interest rate cross-currency swap agreements:
Interest earned		Interest income	$	2,720		$	2,362		$	8,048		$	6,214
Unrealized gains		Other comprehensive
on open contracts		income	$	18,936		$	31,108		$	10,280		$	73,812
Interest rate swap cash flow hedges:
Interest earned		Interest income	$	93		$	—		$	93		$	—
Unrealized gains		Other comprehensive
on open contracts		income	$	510		$	—		$	510		$	—


Purchase Price
Cash paid	$	1,311,531
Less: cash acquired		(25,624	)

Net cash consideration		1,285,907

Identifiable Net Assets (Liabilities) Acquired
Accounts receivable		20,099
Inventory		14,706
Prepaid and other assets		1,327
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		(3,871	)
Deferred revenue		(15,219	)
Other liabilities		(5,728	)

Total identifiable net assets acquired		406,806
Goodwill		879,101

Net cash consideration	$	1,285,907


	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


	September 30, 2023		October 1, 2022
Revenue	$	2,174,209	$	2,197,028
Net income		426,238		448,102


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


	September 30, 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		1,200,000			270,000
Unamortized debt issuance costs		(4,735	)		(5,122	)

Total long-term debt		2,455,265			1,524,878

Total debt	$	2,505,265		$	1,574,878


	Three Months Ended September 30, 2023
	Net Income (Numerator)		Weighted- Average Shares (Denominator)		Per Share Amount
Net income per basic common share	$	134,552		59,093	$	2.28
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities		—		162		(0.01	)

Net income per diluted common share	$	134,552		59,255	$	2.27


	Nine Months Ended September 30, 2023
	Net Income (Numerator)		Weighted- Average Shares (Denominator)		Per Share Amount
Net income per basic common share	$	426,029		59,061	$	7.21
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities		—		201		(0.02	)

Net income per diluted common share	$	426,029		59,262	$	7.19


	Nine Months Ended October 1, 2022
	Net Income (Numerator)		Weighted- Average Shares (Denominator)		Per Share Amount
Net income per basic common share	$	480,693		60,200	$	7.98
Effect of dilutive stock option, restricted stock, performance stock unit and restricted stock unit securities		—		321		(0.04	)

Net income per diluted common share	$	480,693		60,521	$	7.94


	Currency Translation			Unrealized Gain (Loss) on Retirement Plans			Unrealized Gain (Loss) on Derivative Instruments		Accumulated Other Comprehensive Loss

Balance at December 31, 2022	$	(146,120	)	$	4,548		$	—	$	(141,572	)
Other comprehensive (loss) income, net of tax		(4,909	)		(204	)		388		(4,725	)

Balance at September 30, 2023	$	(151,029	)	$	4,344		$	388	$	(146,297	)