Waters (WAT) 8-K Waters Corporation Fourth Quarter 2003 Earnings Rise with Improved Pharmaceutical Industry Demand and Favorable Currency Translation

     Exhibit 99.2

Waters Corporation and Subsidiaries
Supplemental Information
(unaudited)

Free Cash Flow:

Waters defines free cash flow as the change in reported cash and restricted cash balances, plus or minus the change in reported debt, and adjusted for certain investing activities and unusual transactions.

	For the 3 months ended December 31,
Free cash flow in millions:	2003			2002
Cash and cash equivalents at September 30		288.1			235.8
Restricted cash at September 30		—			69.4
		288.1			305.2
Cash at December 31,		356.8			263.3
Restricted cash at December 31		—			49.9
		356.8			313.2
Increase in cash and restricted cash		68.7			8.0
Increase in debt		(59.6	)		(1.5	)
Add back purchase of treasury shares		72.8			45.0
Reduction for proceeds from stock plans		(3.2	)		(2.3	)
Other investing activities		2.0			0.2
Total free cash flow		80.7			49.4

	For the year ended December 31,
	2003			2002
Cash and cash equivalents at the beginning of the year		263.4			226.8
Restricted cash at the beginning of the year		49.9			—
		313.3			226.8
Cash at the end of the year		356.8			263.4
Restricted cash at the end of the year		—			49.9
		356.8			313.3
Increase in cash and restricted cash		43.5			86.5
Increase in debt		(238.3	)		(1.5	)
Add back purchase of treasury shares		324.6			99.3
Reduction for proceeds from stock plans		(27.8	)		(11.2	)
Add back payment for litigation settlement		59.7			—
Business acquisitions, net of cash acquired		35.7			5.8
Investments in unaffiliated companies		—			12.0
Proceeds from sale of businesses		(1.7	)		—
Other investing activities		5.9			1.3
Total free cash flow		201.6			192.2

The free cash flow presented above is not in accordance with generally accepted accounting principles (GAAP). The above identifies those items included or excluded by management to measure cash from operations. While the Company may incur and pay litigation settlements on a recurring basis, the above payment is considered to be significant compared to prior transactions. Similarly, the other transactions set forth above are also not indicative of cash used or generated from operations in assessing the liquidity outlook for the business.

Waters Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands and unaudited)

		December 31, 2003		December 31, 2002
Cash and cash equivalents			356,781		263,312
Restricted cash			0		49,944
Accounts receivable			213,894		201,309
Inventories			128,724		130,241
Other current assets			14,898		13,341
	Total current assets		714,297		658,147
Property, plant and equipment, net			108,162		100,329
Other assets			308,134		255,478
	Total assets		1,130,593		1,013,954
Notes payable and debt			120,921		7,701
Accounts payable and accrued expenses			247,797		313,758
	Total current liabilities		368,718		321,459
Other long-term liabilities			171,381		27,185
	Total liabilities		540,099		348,644
Total equity			590,494		665,310
	Total liabilities and equity		1,130,593		1,013,954

Waters Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

			(Unaudited)
			Three Months Ended						Year Ended
			December 31						December 31
			2003			2002			2003			2002
Net sales				275,073			256,389			958,205			889,967
Cost of sales				113,104			108,402			397,848			373,468
	Gross profit			161,969			147,987			560,357			516,499
Selling, general and administrative expenses				67,219			62,920			264,252			246,816
Research and development expenses				16,786			13,424			59,242			51,923
Purchased intangibles amortization				1,008			903			4,242			3,600
Litigation provisions (A)				—			5,100			1,500			7,900
Loss on disposal of business (B)				—			—			5,031			—
Impairment of long-lived asset (C)				—			2,445			—			2,445
Restructuring and other unusual charges (D)				(161	)		7,404			918			7,404
Expensed in-process research and development (E)				840			—			6,000			—
	Operating income			76,277			55,791			219,172			196,411
Other expense, net (F)				(250	)		(6,113	)		(250	)		(5,997	)
Interest income, net				485			458			4,764			4,997
	Income from operations before income taxes			76,512			50,136			223,686			195,411
Provision for income taxes				18,110			9,892			52,795			43,193
	Income before cumulative effect of change in accounting principle			58,402			40,244			170,891			152,218
Cumulative effect of change in accounting principle (G)				—			—			—			(4,506	)
	Net income			58,402			40,244			170,891			147,712
Income per basic common share:
	Net income before cumulative effect of accounting principle change			0.48			0.31			1.39			1.17
	Cumulative effect of change in accounting principle (G)			—			—			—			(0.03	)
		Net income		0.48			0.31			1.39			1.13
Income per diluted common share:
	Net income before cumulative effect of accounting principle change			0.47			0.30			1.34			1.12
	Cumulative effect of change in accounting principle (G)			—			—			—			(0.03	)
		Net income		0.47			0.30			1.34			1.09
Weighted average number of basic common shares				120,961			128,752			123,189			130,489
Weighted average number of diluted common shares and equivalents				124,784			133,573			127,579			135,762

(A)	The results for the year ended December 31, 2003 include a $1.2 million provision for an environmental matter with the Commonwealth of Massachusetts.
(B)	The results for the year ended December 31, 2003 include a loss on disposal of the inorganic mass spectrometry product line.
(C)	Charges recorded for full write-down of a technology licensed asset.
(D)	The results for the three months and year ended December 31, 2003 include restructuring and other incremental costs and adjustments recorded in relation to the Company’s reorganization of the HPLC and mass spectrometry businesses.
(E)	The results for the year ended December 31, 2003 include charges for expensed in-process research and development relating to the acquisition of Creon Lab Control, AG.
(F)	Includes write-down of certain non-affiliate investments.
(G)	Effect at January 1, 2002 of a change in accounting method for patent related costs.

Waters Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)

	(Unaudited)
	Three Months Ended					Year Ended
	December 31					December 31
	2003			2002		2003		2002
Reconciliation of income per diluted share, in accordance with generally accepted accounting principles, with pro-forma results:
Income per diluted share before cumulative effect of change in accounting principle		0.47			0.30		1.34		1.12
Adjustment for litigation provisions, net of tax		—			3,315		1,155		5,359
Income per diluted share effect		—			0.03		0.01		0.04
Adjustment for restructuring and other unusual charges, net of tax		(124	)		5,701		707		5,701
Income per diluted share effect		(0.00	)		0.04		0.01		0.04
Loss on disposal of business, net of tax		—			—		3,522		—
Income per diluted share effect		—			—		0.03		—
Impairment of long-lived asset, net of tax		—			1,589		—		1,589
Income per diluted share effect		—			0.01		—		0.01
Other expense, write down of certain investments, net of tax		220			4,063		—		3,974
Income per diluted share effect		0.00			0.03		—		0.03
Expensed in-process research and development		840			—		6,000		—
Income per diluted share effect		0.01			—		0.05		—
Pro-forma income per diluted share:		0.48			0.41		1.44		1.24

The pro-forma income per diluted share presented above is used by the management of the Company to measure operating performance with prior periods and is not in accordance with generally accepted accounting principles (GAAP). The above reconciliation identifies those items management has excluded as non-operational activities or transactions. Management feels these transactions are not indicative of understanding the ongoing operations of the business or its future outlook.