filings.toolsWaters (WAT) 10-K risk factor changes: FY2017 vs FY2016
The 2017-12-31 10-K against the 2016-12-31 one, compared heading by heading and sentence by sentence. One of these filings carries no fiscal year tag, so its year is the calendar year of the period end.
All filing items756 rewritten867 added751 removed1,697 unchanged
Summary
counted, not written
- Item 1A headings could not be compared: the parser did not find an Item 1A in both filings.
- Sentence by sentence, 867 added, 751 removed, 756 rewritten and 1,697 unchanged across 11 items that differ.
- Not in this year's filing: Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Sentences by item
13 items, with every count and a link to each item that changed
| Item | Added | Removed | Rewritten | Unchanged |
|---|---|---|---|---|
| Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operationsdropped | 0 | 521 | 0 | 0 |
| Item 7A. Quantitative and Qualitative Disclosures About Market Risk | 0 | 0 | 14 | 23 |
| Cover and table of contents | 635 | 56 | 150 | 523 |
| Item 8. Financial Statements and Supplementary Data | 209 | 156 | 520 | 944 |
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 0 | 0 | 0 | 1 |
| Item 9A. Controls and Procedures | 0 | 0 | 4 | 5 |
| Item 9B. Other Information | 0 | 0 | 0 | 3 |
| Item 10. Directors, Executive Officers and Corporate Governance | 3 | 1 | 4 | 9 |
| Item 11. Executive Compensation | 3 | 1 | 5 | 13 |
| Item 13. Certain Relationships and Related Transactions and Director Independence | 0 | 0 | 1 | 1 |
| Item 14. Principal Accountant Fees and Services | 0 | 0 | 1 | 3 |
| Item 15. Exhibits, Financial Statement Schedules | 14 | 8 | 54 | 135 |
| Item 16. Form 10-K Summary | 3 | 8 | 3 | 37 |
Underlined words on a shaded ground are new in FY2017; struck-through words were in FY2016. Sentences that are wholly new or wholly gone are labelled rather than marked.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
0 rewritten, 0 added, 521 removed, 0 unchanged
Dropped this year
Business and Financial Overview
The Company has two operating segments: Waters® and TA®.
Waters products and services primarily consist of high performance liquid chromatography (“HPLC”), ultra performance liquid chromatography (“UPLC®” and together with HPLC, referred to as “LC”), mass spectrometry (“MS”) and chemistry consumable products and related services.
TA products and services primarily consist of thermal analysis, rheometry and calorimetry instrument systems and service sales.
The Company’s products are used by pharmaceutical, biochemical, industrial, nutritional safety, environmental, academic and governmental 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.
##### [Table of Contents](#toc)
The Company’s operating results are as follows for the years ended December 31, 2016, 2015 and 2014 (in thousands, except per share data):
| | | | | | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | Year Ended December 31, | | | | | | | | | | | | _% change_ | | | | | | |
| | | 2016 | | | | 2015 | | | | 2014 | | | | _2016 vs. 2015_ | | | | _2015 vs. 2014_ | | |
| Revenues: | | | | | | | | | | | | | | | | | | | | |
| Product sales | | $ | 1,460,296 | | | $ | 1,385,256 | | | $ | 1,346,729 | | | | _5_ | _%_ | | | _3_ | _%_ |
| Service sales | | | 707,127 | | | | 657,076 | | | | 642,615 | | | | _8_ | _%_ | | | _2_ | _%_ |
| | | | | | | | | | | | | | | | | | | | | |
| Total net sales | | | 2,167,423 | | | | 2,042,332 | | | | 1,989,344 | | | | _6_ | _%_ | | | _3_ | _%_ |
| Costs and operating expenses: | | | | | | | | | | | | | | | | | | | | |
| Cost of sales | | | 891,453 | | | | 842,672 | | | | 824,913 | | | | _6_ | _%_ | | | _2_ | _%_ |
| Selling and administrative expenses | | | 513,031 | | | | 495,747 | | | | 512,707 | | | | _3_ | _%_ | | | _(3_ | _%)_ |
| Research and development expenses | | | 125,187 | | | | 118,545 | | | | 107,726 | | | | _6_ | _%_ | | | _10_ | _%_ |
| Purchased intangibles amortization | | | 9,889 | | | | 10,123 | | | | 10,634 | | | | _(2_ | _%)_ | | | _(5_ | _%)_ |
| Litigation provisions | | | 3,524 | | | | 3,939 | | | | — | | | | _(11_ | _%)_ | | | _—_ | |
| Acquired in-process research and development | | | — | | | | 3,855 | | | | 15,456 | | | | _(100_ | _%)_ | | | _(75_ | _%)_ |
| | | | | | | | | | | | | | | | | | | | | |
| Operating income | | | 624,339 | | | | 567,451 | | | | 517,908 | | | | _10_ | _%_ | | | _10_ | _%_ |
| _Operating income as a % of sales_ | | | _28.8_ | _%_ | | | _27.8_ | _%_ | | | _26.0_ | _%_ | | | | | | | | |
| Interest expense, net | | | (24,225 | ) | | | (25,532 | ) | | | (27,168 | ) | | | _(5_ | _%)_ | | | _(6_ | _%)_ |
| | | | | | | | | | | | | | | | | | | | | |
| Income from operations before income taxes | | | 600,114 | | | | 541,919 | | | | 490,740 | | | | _11_ | _%_ | | | _10_ | _%_ |
| Provision for income taxes | | | 78,611 | | | | 72,866 | | | | 59,120 | | | | _8_ | _%_ | | | _23_ | _%_ |
| | | | | | | | | | | | | | | | | | | | | |
| Net income | | $ | 521,503 | | | $ | 469,053 | | | $ | 431,620 | | | | _11_ | _%_ | | | _9_ | _%_ |
| | | | | | | | | | | | | | | | | | | | | |
| Net income per diluted common share | | $ | 6.41 | | | $ | 5.65 | | | $ | 5.07 | | | | _13_ | _%_ | | | _11_ | _%_ |
In 2016, the Company’s sales increased 6% as compared to 2015.
The growth was mainly driven by continued strength in our pharmaceutical market followed by growth in our industrial market, which includes sales to industrial chemical, nutritional safety and environmental customers, offset by a decline in sales to our governmental and academic customers.
Instrument systems produced mid-single-digit sales growth during 2016 and our chemistry and service businesses continued to generate high-single-digit growth rates due to higher instrument utilization and a growing base of installed instrument systems.
Geographically, the Company experienced positive sales growth in all major regions on a world-wide basis, led by Asia, which generated double-digit growth during 2016.
This double-digit sales growth rate in Asia was primarily attributed to strong demand for the Company’s products and services in China and a favorable effect of foreign currency translation in Japan.
An excerpt. Shown here: all 0 rewritten, all 0 added and 40 of 521 removed. The counts are complete. For every sentence, read Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in the FY2016 filing.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
14 rewritten, 0 added, 0 removed, 23 unchanged
At December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] the Company held foreign currency exchange contracts with notional amounts totaling [removed: $120] [added: $147] million, [removed: $116] [added: $120] million and [removed: $110] [added: $116] million, respectively.
| | | December [removed: 31, 2016] [added: 31, 2017] | | | | December [removed: 31, 2015] [added: 31, 2016] | | |
| Other current assets | | $ | [removed: 60] [added: 566] | | | $ | [removed: 616] [added: 60] | |
| Other current liabilities | | $ | [removed: 730] [added: 182] | | | $ | [removed: 402] [added: 730] | |
| | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |
| Realized [removed: (losses)] gains [added: (losses)] on closed contracts | | $ | [removed: (10,401] [added: 3,894] | [removed: )] | | $ | [removed: (2,601] [added: (10,401] | ) | | $ | [removed: 174] [added: (2,601] | [added: )] |
| Unrealized [removed: (losses)] gains [added: (losses)] on open contracts | | | [removed: (883] [added: 1,054] | [removed: )] | | | [removed: 742] [added: (883] | [added: )] | | | [removed: (1,369] [added: 742] | [removed: )] |
| Cumulative net pre-tax [removed: losses] [added: gains (losses)] | | $ | [removed: (11,284] [added: 4,948] | [removed: )] | | $ | [removed: (1,859] [added: (11,284] | ) | | $ | [removed: (1,195] [added: (1,859] | ) |
Assuming a hypothetical adverse change of 10% in year-end exchange rates (a strengthening of the U.S. dollar), the fair market value of the foreign currency exchange contracts outstanding as of December 31, [removed: 2016] [added: 2017] would decrease pre-tax earnings by approximately [removed: $12] [added: $15] million.
As of December 31, [removed: 2016,] [added: 2017,] the carrying value of the Company’s cash and cash equivalents approximated fair value.
As of December 31, [removed: 2016] [added: 2017] and [removed: 2015, $2,766] [added: 2016, $3,326] million out of [removed: $2,813] [added: $3,394] million and [removed: $2,346] [added: $2,766] million out of [removed: $2,399] [added: $2,813] million, respectively, of the Company’s total cash, cash equivalents and investments were held by foreign [removed: subsidiaries and may be subject to material tax effects on distribution to U.S. legal entities.][added: subsidiaries.]
In addition, [removed: $261] [added: $304] million out of [removed: $2,813] [added: $3,394] million and [removed: $248] [added: $261] million out of [removed: $2,399] [added: $2,813] million of cash, cash equivalents and investments were held in currencies other than the U.S. dollar at December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.
As of December 31, [removed: 2016,] [added: 2017,] the Company has no holdings in auction rate securities or commercial paper issued by structured investment vehicles.
Assuming a hypothetical adverse change of 10% in year-end exchange rates (a strengthening of the U.S. dollar), the fair market value of the Company’s cash, cash equivalents and investments held in currencies other than the U.S. dollar as of December 31, [removed: 2016] [added: 2017] would decrease by approximately [removed: $26] [added: $30] million, of which the majority would be recorded to foreign currency translation in other comprehensive income within stockholders’ equity.
Cover and table of contents
150 rewritten, 635 added, 56 removed, 523 unchanged
For the fiscal year ended December 31, [removed: 2016][added: 2017]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] [added: a] smaller reporting [added: company, or emerging growth] company.
See the [removed: definition] [added: definitions] of “large accelerated filer”, “accelerated [removed: filer” and] [added: filer”,] “smaller reporting [added: company”, and “emerging growth] company” in Rule 12b-2 of the Exchange Act.
| | | (Do not check if a smaller reporting company) | | | | [added: Emerging growth company ☐] |
State the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of July [removed: 2, 2016: $11,522,067,374.][added: 1, 2017: $14,672,588,076.]
Indicate the number of shares outstanding of the registrant’s common stock as of February [removed: 17, 2017: 80,085,831][added: 16, 2018: 78,784,462]
Portions of the registrant’s definitive proxy statement that will be filed for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders are incorporated by reference in Part III.
| [removed: Item No.] [added: Item No.] | | | | | | Page | | |
| | 1A. | | | [Risk [removed: Factors](#toc268303_2)] [added: Factors](#toc506350_2)] | | | 12 | |
| | 1B. | | | [Unresolved Staff [removed: Comments](#toc268303_3)] [added: Comments](#toc506350_3)] | | | [removed: 19] [added: 20] | |
| | 3. | | | [Legal [removed: Proceedings](#toc268303_5)] [added: Proceedings](#toc506350_5)] | | | [removed: 20] [added: 21] | |
| | 4. | | | [Mine Safety [removed: Disclosures](#toc268303_6)] [added: Disclosures](#toc506350_6)] | | | [removed: 20] [added: 21] | |
| | | | | [Executive Officers of the [removed: Registrant](#toc268303_7)] [added: Registrant](#toc506350_7)] | | | [removed: 20] [added: 21] | |
| | 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#toc268303_8)] [added: Securities](#toc506350_8)] | | | [removed: 22] [added: 23] | |
| | 6. | | | [Selected Financial [removed: Data](#toc268303_9)] [added: Data](#toc506350_9)] | | | [removed: 25] [added: 26] | |
| | 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#toc268303_10)] [added: Operations](#toc506350_10)] | | | [removed: 25] [added: 27] | |
| | 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#toc268303_11)] [added: Risk](#toc506350_11)] | | | [removed: 42] [added: 45] | |
| | 8. | | | [Financial Statements and Supplementary [removed: Data](#toc268303_12)] [added: Data](#toc506350_12)] | | | [removed: 44] [added: 47] | |
| | 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#toc268303_13)] [added: Disclosure](#toc506350_13)] | | | [removed: 90] [added: 94] | |
| | 9A. | | | [Controls and [removed: Procedures](#toc268303_14)] [added: Procedures](#toc506350_14)] | | | [removed: 90] [added: 94] | |
| | 9B. | | | [Other [removed: Information](#toc268303_15)] [added: Information](#toc506350_15)] | | | [removed: 90] [added: 94] | |
| | 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#toc268303_16)] [added: Governance](#toc506350_16)] | | | [removed: 91] [added: 95] | |
| | 11. | | | [Executive [removed: Compensation](#toc268303_17)] [added: Compensation](#toc506350_17)] | | | [removed: 91] [added: 95] | |
| | 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#toc268303_18)] [added: Matters](#toc506350_18)] | | | [removed: 91] [added: 95] | |
| | 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#toc268303_19)] [added: Independence](#toc506350_19)] | | | [removed: 92] [added: 96] | |
| | 14. | | | [Principal Accountant Fees and [removed: Services](#toc268303_20)] [added: Services](#toc506350_20)] | | | [removed: 92] [added: 96] | |
| | 15. | | | [Exhibits and Financial Statement [removed: Schedules](#toc268303_21)] [added: Schedules](#toc506350_21)] | | | [removed: 93] [added: 97] | |
| | 16. | | | [Form 10-K [removed: Summary](#toc268303_22)] [added: Summary](#toc506350_22)] | | | [removed: 97] [added: 101] | |
[removed: Waters Corporation (the “Company”) is an analytical instrument manufacturer that] [added: The Company] primarily designs, manufactures, sells and services high performance liquid chromatography (“HPLC”), ultra performance liquid chromatography (“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 [removed: a] common software [removed: platform.][added: platforms.]
The Company is also a developer and supplier of [added: advanced] software-based products that interface with the Company’s instruments, as well as other [removed: suppliers’ instruments, and are typically purchased by customers as part of the instrument system.][added: manufacturers’ instruments.]
[removed: The Company’s] LC [added: is a standard technique] and [removed: LC-MS instruments are] [added: is] utilized in [removed: this] [added: 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.
[removed: These instruments are used] [added: MS technology, principally] in [added: 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.
As a result of this evaluation, the Company determined that it has two operating segments: Waters® and [removed: TA.][added: TA®.]
The [removed: Company operates] [added: Waters operating segment is primarily] in the [removed: analytical instruments industry by] [added: business of] designing, manufacturing, distributing and servicing [added: LC and MS] instrument systems, columns and other [added: precision] chemistry consumables that can be integrated and used along with other analytical instruments.
Because of these similarities, the two [removed: operating] segments have been aggregated into one reporting segment for financial statement purposes.
The Company believes that HPLC’s performance capabilities enable it to separate, identify and quantify [removed: approximately 80%] [added: a high proportion] of all known [removed: chemicals and materials.][added: chemicals.]
HPLC is also used by universities, research institutions and governmental agencies, such as the United States Food and Drug Administration (“FDA”) and the United States Environmental Protection Agency (“EPA”) and their foreign counterparts that mandate [removed: testing requiring HPLC-based methodologies.][added: safety and efficacy testing.]
In 2004, Waters introduced a novel technology that the Company describes as ultra performance liquid chromatography that utilizes a packing material with small, uniform diameter particles and a specialized instrument, the ACQUITY UPLC®, to accommodate the increased pressure and [removed: narrow] [added: narrower] chromatographic bands that are generated by these small [added: and tightly packed] particles.
By using the ACQUITY UPLC, researchers and analysts are able to achieve more comprehensive chemical separations and faster analysis times in comparison with many analyses [added: previously] performed by HPLC.
10-K 1 d506350d10k.htm 10-K
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.
| | 1. | | | [Business](#toc506350_1) | | | 1 | |
| | 2. | | | [Properties](#toc506350_4) | | | 20 | |
| | | | | [Signatures](#toc506350_23) | | | 102 | |
Waters Corporation (the “Company”) is a specialty measurement company that has pioneered analytical workflow solutions involving liquid chromatography, mass spectrometry and thermal analysis innovations serving the life, materials and food sciences for nearly 60 years.
The TA operating segment is primarily in the business of designing, manufacturing, distributing and servicing thermal analysis, rheometry and calorimetry instruments.
In 2015, the Company introduced the Oasis® PRiME HLB cartridges, which process
instrumentation components, for $12 million, net of cash acquired.
In 2017, TA introduced the TAM Air microcalorimeter.
Although designed to characterize the curing of cement, this instrument is an ideal platform for imaginative experimental design in a wide range of applications, including cement and concrete, material science, food, pharmaceuticals and environmental analysis.
TA also introduced three new dilatometer product lines in its 800 platform, which are high precision systems designed to measure dimensional changes of a specimen brought about by dynamic thermal events in a wide range of applications, including material science, ceramics and metals.
In 2017, TA introduced the Discovery SDT 650, which is a simultaneous differential scanning calorimeter/thermogravimetric analyzer and, we believe, the only system capable of simultaneous DSC/TGA measurement.
In addition, TA introduced the Discovery HP-TGA750, a benchtop high pressure TGA that utilizes a patented ultra-high resolution magnetic suspension balance and new high precision temperature control system.
Late in 2017, TA introduced the Discovery DMA 850, which measures the viscoelastic mechanical properties of material under controlled conditions of temperature, environment and mechanical stimulus (stress or strain).
The DMA 850 features frictionless air bearing supports and a linear optical encoder, which ensures stable, accurate, high-resolution displacement measurement across the full travel range and enables displacement control of 5 nm.
In 2017, TA introduced the WinTest® 8.0 software package, which will be standard on all new ElectroForce products.
In addition, TA introduced the ElectroForce DMA 3200 in 2017, which combines fatigue and dynamic mechanical analysis into a single mechanical test platform.
“intends”, “suggests”, “appears”, “estimates”, “projects”, “should” and similar expressions, whether in the negative or affirmative.
Approximately 56% of the Company’s net sales in both 2017 and 2016 were to the worldwide pharmaceutical
_The Company’s business could be harmed by actions of distributors and other third parties that sell our products._
The Company sells some products through third parties, including distributors and value-added resellers.
This exposes us to various risks, including competitive pressure, concentration of sales volumes, credit risks and
compliance risks.
We may rely on one or a few key distributors for a product or market and the loss of these distributors could reduce our revenue or net earnings.
Distributors may also face financial difficulties, including bankruptcy, which could harm our collection of accounts receivable.
Violations of the U.S. Foreign Corrupt Practices Act (“FCPA”), the U.K. Bribery Act or similar anti-bribery laws by distributors or other third-party intermediaries could materially impact our business.
Risks related to our use of distributors may reduce sales, increase expenses and weaken our competitive position.
_The Company may be harmed by improper conduct of any of our employees, agents or business partners._
We cannot provide assurance that our internal controls and compliance systems will always protect the Company from acts committed by employees, agents or business partners that would violate domestic and international laws, including laws governing payments to government officials, bribery, fraud, kickbacks and false claims, pricing, sales and marketing practices, conflicts of interest, competition, export and import compliance, money laundering and data privacy.
In particular, the FCPA, the U.K. Bribery Act and similar anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to government officials for the purpose of obtaining or retaining business, and we operate in many parts of the world that have experienced governmental corruption to some degree.
Any such improper actions or allegations of such acts could damage our reputation and subject us to civil or criminal investigations in the U.S. and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and non-monetary penalties and could cause us to incur significant legal and investigatory fees.
In addition, the government may seek to hold us liable as a successor for violations committed by companies in which we invest or that we acquire.
We also rely on our suppliers to adhere to our supplier standards of conduct and material violations of such standards of conduct could occur that could have a material effect on our business, reputation and financial statements.
On December 22, 2017, the U.S. enacted legislation informally referred to as the Tax Cuts and Jobs Act (the “2017 Tax Act”).
The 2017 Tax Act changed the U.S. tax system to a territorial tax system, including base broadening measures on non-U.S. earnings, whereby historical unremitted, earnings of foreign subsidiaries are deemed to have been repatriated to the U.S. in 2017 regardless of when the assets are actually remitted to the U.S., as well as reducing or eliminating certain domestic deductions and credits and limiting the deductibility of interest expense and executive compensation.
Earnings deemed to have been distributed to the U.S. in accordance with the aforementioned 2017 Tax Act deemed distribution rules are subject to a Transition Toll Tax (“Transition Tax”), which is a one-time, mandatory deemed repatriation tax on the accumulated foreign earnings that have not been previously taxed.
To the extent those earnings are deemed to have been invested in cash and cash equivalents, they will be taxed at a rate of 15.5%; the remainder of those earnings will be taxed at a rate of 8.0%.
As a result, the Company’s historical unremitted foreign earnings were deemed repatriated in 2017 and the Company incurred a $550 million estimated tax provision, which primarily consisted of an estimated Transition
Tax, as well as estimated income tax provisions for state and withholding taxes and a provision associated with the remeasurement of the Company’s deferred tax assets and liabilities from 35% to the new U.S. corporate income tax rate of 21%.
10-K 1 d268303d10k.htm 10-K
| | 1. | | | [Business](#toc268303_1) | | | 1 | |
| | 2. | | | [Properties](#toc268303_4) | | | 19 | |
| | | | | [Signatures](#toc268303_23) | | | 98 | |
In 2012, the Company introduced UltraPerformance Convergence Chromatography® (“UPC2®”) with the release of the ACQUITY® UPC2® system.
This new technology marries the unrealized potential of supercritical fluid chromatography (“SFC”) with the proven UPLC technology, using carbon dioxide as the primary mobile phase.
By varying mobile phase strength, pressure, temperature and stationary phase with UPC2, a user can separate, detect and quantify structural analogs, isomers, enantiomeric and diasteriomeric mixtures — all compounds or samples that challenge today’s laboratories.
In 2014, the Company introduced the ACQUITY UPLC® M-Class instrument system.
This system delivers the sensitivity to quantify and identify vanishingly small concentrations of key molecules, particularly when used with advanced mass spectrometric characterization.
The innovations incorporated into the ACQUITY UPLC M-Class system are led by its internal low-volume design and newly redesigned fluidics that minimize dispersive and adsorptive losses during a chromatographic separation.
The Company also manufactures tailored LC systems for the analysis of biologics, as well as an LC detector utilizing evaporative light scattering technology to expand the usage of LC to compounds that are not amenable to UV absorbance detection.
In 2014, the Company expanded its CORTECS® family with a new line of 2.7 micron silica-based, solid-core particle columns for usage on UPLC, as well as HPLC systems.
In addition, the Company introduced size exclusion chromatography columns for the characterization of proteins and ACQUITY UPC2 columns for chiral and achiral separations.
In addition, the Company expanded its TorusTM SFC column line through the introduction of four new preparative SFC columns, which are typically larger diameter columns designed for purification laboratories investigating drug compounds, natural products or synthetic chemicals.
For example, the Company provides tests to identify and quantify mycotoxins (fungal biological contaminants) in various agricultural commodities.
These test kits provide reliable, quantitative detection of particular mycotoxins through the choice of fluorimetry, HPLC or LC-MS. In 2014, the Company introduced the Afla-V® AQUA test strips for detecting aflatoxins in grain and received USDA-GIPSA certification for its Afla-V® lateral flow strip tests for the quantitative analysis of total aflatoxins in corn.
In 2016, the Company announced a single extraction method for the detection of aflatoxins and fumonisins in corn and grain using the Afla-V® AQUA and Fumo-V® AQUA.
development, as well as for environmental, clinical and nutritional safety testing.
In 2014, the Company introduced the ionKey/MSTM system, Xevo® G2-XS and Xevo® TQ-S micro.
The ionKey/MS system physically integrates a UPLC separation into the mass spectrometer, producing a significant improvement in sensitivity with reduced solvent and sample sizes.
The Xevo G2-XS mass spectrometer combines the new XS Collision Cell with the signature technologies of Tof-MRM, StepWaveTM and QuanTofTM.
The Xevo TQ-S micro is a more compact, research-grade instrument designed to acquire sensitive, robust and dependable data at accelerated rates of acquisition.
In addition, the Company introduced the Vion® IMS Q-TofTM Mass Spectrometer in 2015, which is a bench-top tandem mass spectrometer featuring ion mobility and Rapid Evaporative Ionization Mass Spectrometry (“REIMSTM”) Research System with iKnifeTM sampling to combine direct-from-sample ionization with high performance time-of-flight mass spectrometry.
In July 2014, the Company acquired the net assets of Medimass Research, Development and Service Kft.
(“Medimass”), a developer of mass spectrometry-related technologies with the potential to be used for a variety of applications, for $23 million in cash.
In addition, the Company potentially has to pay additional contingent consideration, which had an estimated fair value of $3 million as of the closing date.
The net assets acquired consist primarily of the REIMS technology, including patent applications, software, databases and REIMS expertise.
REIMS is an ambient pressure surface ionization technique that, when used with mass spectrometry, can characterize the molecular topography of complex surfaces, such as cellular membranes.
The Company also believes that it has the leading combined LC and LC-MS market share in the United States, Europe and Asia (excluding Japan), and believes it may have a market share position in Japan that ranks second to an established domestic supplier.
In 2014, the Company introduced three new UNIFI-based instrument systems and now offers a total of eight UNIFI-based solutions.
different types of “loading” or other conditions.
In January 2014, the Company acquired ULSP B.V. (“ULSP”), a manufacturer of instrumentation components that enable ultra low temperature generation, for $4 million in cash.
ULSP’s core business is the manufacturing and servicing of high quality low temperature coolers for thermal analysis and rheology applications, and these products are important accessories for many TA core instrument offerings.
In 2014, TA introduced the new Air Chiller System, ACS-3, which is equipped with a three-stage cascading compressor design, enabling testing to temperatures as low as \-100°C, a capability that the Company believes competing systems do not possess.
Purchase of the Company’s instrument systems is
columns.
| | of the Company’s products, completion of purchase order documentation by our customers and ability of customers to obtain letters of credit or other financing alternatives. |
significant, robust sales will be realized.
other locations as a result of the Company’s acquisitions.
its security measures or exploit vulnerabilities in its systems.
An excerpt. Shown here: 40 of 150 rewritten, 40 of 635 added and 40 of 56 removed. The counts are complete. For every sentence, read Cover and table of contents in the FY2017 filing and the FY2016 filing.
Item 8. Financial Statements and Supplementary Data
520 rewritten, 209 added, 156 removed, 944 unchanged
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) [removed: or] [added: and] 15d-15(f) under the Exchange Act.
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in _Internal Control_ [removed: _—_ _Integrated] [added: _— Integrated] Framework [removed: 2013_] [added: (2013)_] issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on our evaluation under the framework in _Internal Control_ [removed: _—_ _Integrated] [added: _— Integrated] Framework [removed: 2013_,] [added: (2013)_,] our management, including our chief executive officer and chief financial officer, concluded that our internal control over financial reporting was effective as of December 31, [removed: 2016.][added: 2017.]
The effectiveness of our internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.
In our opinion, the [removed: accompanying] consolidated [removed: balance sheets and the related consolidated] [added: financial] statements [removed: of operations, comprehensive income, stockholders’ equity and cash flows] [added: referred to above] present fairly, in all material respects, the financial position of [removed: Waters Corporation and its subsidiaries] [added: the Company] as of December 31, [removed: 2016] [added: 2017] and [removed: December 31, 2015,] [added: 2016,] and the results of their operations and their cash flows for each of the three years in the period ended December 31, [removed: 2016] [added: 2017] in conformity with accounting principles generally accepted in the United States of America.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in [removed: Internal] [added: _Internal] Control — Integrated [removed: Framework] [added: Framework_] (2013) issued by the [removed: Committee of Sponsoring Organizations of the Treadway Commission (COSO).][added: COSO.]
The Company’s management is responsible for these [removed: financial statements and] [added: consolidated] financial [removed: statement schedule,] [added: statements,] for maintaining effective internal control over financial [removed: reporting] [added: reporting,] and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control [removed: over] [added: Over] Financial Reporting.
Our responsibility is to express opinions on [removed: these financial statements, on] the [added: Company’s consolidated] financial [removed: statement schedule,] [added: statements] and on the Company’s internal control over financial reporting based on our [removed: integrated] audits.
We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the [added: consolidated] financial statements are free of material [removed: misstatement] [added: misstatement, whether due to error or fraud,] and whether effective internal control over financial reporting was maintained in all material respects.
Our audits [removed: of the financial statements] [added: also] included [removed: examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing] [added: evaluating] the accounting principles used and significant estimates made by management, [removed: and] [added: as well as] evaluating the overall [added: presentation of the consolidated] financial [removed: statement presentation.][added: statements.]
| | | [added: 2017 | | | |] 2016 | | | | 2015 | | |
| Cash and cash equivalents [added: at beginning of period] | | [removed: $] | 505,631 | | | [removed: $] | 487,665 | | [added: | | 422,177 | |]
| Investments | | | [removed: 2,307,401] [added: 2,751,382] | | | | [removed: 1,911,598] [added: 2,307,401] | |
| Accounts receivable, net | | | [removed: 489,340] [added: 533,825] | | | | [removed: 468,315] [added: 489,340] | |
| Inventories | | | [removed: 262,682] [added: 270,294] | | | | [removed: 263,415] [added: 262,682] | |
| Other current assets | | | [removed: 70,391] [added: 72,314] | | | | [removed: 82,540] [added: 70,391] | |
| Total current assets | | | [removed: 3,635,445] [added: 4,270,134] | | | | [removed: 3,213,533] [added: 3,635,445] | |
| Property, plant and equipment, net | | | [removed: 337,118] [added: 349,278] | | | | [removed: 333,355] [added: 337,118] | |
| Intangible assets, net | | | [removed: 207,055] [added: 228,395] | | | | [removed: 218,022] [added: 207,055] | |
| Goodwill | | | [removed: 352,080] [added: 359,819] | | | | [removed: 356,864] [added: 352,080] | |
| Other assets | | | [removed: 130,361] [added: 116,728] | | | | [removed: 146,903] [added: 130,361] | |
| Total assets | | $ | [removed: 4,662,059] [added: 5,324,354] | | | $ | [removed: 4,268,677] [added: 4,662,059] | |
| Notes payable and debt | | $ | [removed: 125,297] [added: 100,273] | | | $ | [removed: 175,309] [added: 125,297] | |
| Accounts payable | | | [removed: 67,740] [added: 64,537] | | | | [removed: 70,573] [added: 67,740] | |
| Accrued employee compensation | | | [removed: 57,465] [added: 69,024] | | | | [removed: 54,653] [added: 57,465] | |
| Deferred revenue and customer advances | | | [removed: 148,837] [added: 166,840] | | | | [removed: 141,505] [added: 148,837] | |
| Accrued income taxes | | | [removed: 15,244] [added: 73,008] | | | | [removed: 14,894] [added: 15,244] | |
| Accrued warranty | | | [removed: 13,391] [added: 13,026] | | | | [removed: 13,349] [added: 13,391] | |
| Other current liabilities | | | [removed: 92,347] [added: 119,449] | | | | [removed: 93,793] [added: 92,347] | |
| Total current liabilities | | | [removed: 520,321] [added: 606,157] | | | | [removed: 564,076] [added: 520,321] | |
| Long-term debt | | | [removed: 1,701,966] [added: 1,897,501] | | | | [removed: 1,493,027] [added: 1,701,966] | |
| Long-term portion of retirement benefits | | | [removed: 72,568] [added: 67,334] | | | | [removed: 77,063] [added: 72,568] | |
| Long-term income tax liabilities | | | [removed: 10,458] [added: 456,949] | | | | [removed: 14,884] [added: 10,458] | |
| Other long-term liabilities | | | [removed: 54,797] [added: 62,625] | | | | [removed: 60,776] [added: 54,797] | |
| Total long-term liabilities | | | [removed: 1,839,789] [added: 2,484,409] | | | | [removed: 1,645,750] [added: 1,839,789] | |
| Total liabilities | | | [removed: 2,360,110] [added: 3,090,566] | | | | [removed: 2,209,826] [added: 2,360,110] | |
| Commitments and contingencies (Notes [added: 5,] 8, 9, 10, 11 and 15) | | | | | | | | |
| Preferred stock, par value $0.01 per share, 5,000 shares authorized, none issued at December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015] [added: 2016] | | | — | | | | — | |
| Common stock, par value $0.01 per share, 400,000 shares authorized, [removed: 158,634] [added: 159,845] and [removed: 157,677] [added: 158,634] shares issued, [removed: 80,023] [added: 79,337] and [removed: 81,472] [added: 80,023] shares outstanding at December 31, [removed: 2016] [added: 2017] and December 31, [removed: 2015,] [added: 2016,] respectively | | | [removed: 1,586] [added: 1,598] | | | | [removed: 1,577] [added: 1,586] | |
_Opinions on the Financial Statements and Internal Control over Financial Reporting_
We have audited the accompanying consolidated balance sheets of Waters Corporation and its subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2017, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2017 appearing under Item 15(c) (collectively referred to as the “consolidated financial statements”).
We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in _Internal Control — Integrated Framework_ (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
_Change in Accounting Principle_
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for share-based payment transactions in 2017.
_Basis for Opinions_
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
_Definition and Limitations of Internal Control over Financial Reporting_
| February 27, 2018 |
We have served as the Company’s auditor since 1994.
| Cash and cash equivalents | | $ | 642,319 | | | $ | 505,631 | |
| Net income | | $ | 20,311 | | | $ | 521,503 | | | $ | 469,053 | |
| Net income | | $ | 20,311 | | | $ | 521,503 | | | $ | 469,053 | |
| Effect of the 2017 Tax Act | | | 530,383 | | | | — | | | | — | |
| Net cash provided by operating activities | | | 697,640 | | | | 642,920 | | | | 573,248 | |
| Investment in unaffiliated company | | | (7,000 | ) | | | — | | | | — | |
| Net cash used in financing activities | | | (63,869 | ) | | | (115,701 | ) | | | (82,549 | ) |
| Other comprehensive income | | | — | | | | — | | | | — | | | | — | | | | — | | | | 106,213 | | | | 106,213 | |
| Stock options exercised | | | 972 | | | | 10 | | | | 90,904 | | | | — | | | | — | | | | — | | | | 90,914 | |
| Treasury stock | | | — | | | | — | | | | — | | | | — | | | | (332,544 | ) | | | — | | | | (332,544 | ) |
| Stock-based compensation | | | 189 | | | | 1 | | | | 40,069 | | | | — | | | | — | | | | — | | | | 40,070 | |
| Balance December 31, 2017 | | | 159,845 | | | $ | 1,598 | | | $ | 1,745,088 | | | $ | 5,405,380 | | | $ | (4,808,211 | ) | | $ | (110,067 | ) | | $ | 2,233,788 | |
Waters Corporation (the “Company”) is a specialty measurement company that has pioneered analytical workflow solutions involving liquid chromatography, mass spectrometry and thermal analysis innovations serving the life, materials and food sciences for nearly 60 years.
Past due balances over
| 2017 | | $ | 8,657 | | | $ | 9,059 | | | $ | (8,386 | ) | | $ | 9,330 | |
If the asset is deemed not recoverable, it is written down to fair value and the impairment is recorded in the consolidated statements of operations.
During the year ended December 31, 2017, the Company made a $7 million investment in a developer of analytical system solutions used to make measurements, predict stability and accelerate product discovery in the routine analytic, process monitoring and quality control release processes for life science and biopharmaceutical markets.
This investment was accounted for under the cost method of accounting.
| Total | | $ | 2,981,969 | | | $ | 35,645 | | | $ | 2,946,324 | | | $ | — | |
| Total | | $ | 3,429 | | | $ | — | | | $ | 182 | | | $ | 3,247 | |
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.
receivable and accounts payable, and the Company’s net worldwide intercompany receivables and payables, which are eliminated in consolidation.
As of December 31, 2017, the Company repurchased an aggregate of 5.5 million shares at a cost of $750 million under the May 2014 repurchase program, which is now completed.
is reasonably assured and, if applicable, upon acceptance when acceptance criteria with contractual cash holdback are specified.
| 2017 | | $ | 13,391 | | | $ | 8,746 | | | $ | (9,111 | ) | | $ | 13,026 | |
The Company adopted this standard as of January 1, 2017 and this standard did not have a material effect on the Company’s financial position, results of operations and cash flows.
The new guidance is required to be adopted on a prospective basis for the statement of operations and the Company has elected to retrospectively apply the cash flow aspects of this new guidance.
In addition, the Company has elected to continue to estimate forfeitures at the time of grant and update forfeiture estimates throughout the requisite service period.
In addition, in our opinion, the financial statement schedule of valuation and qualifying accounts appearing in the index appearing under Item 15(a)(2)(c) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.
| February 24, 2017 |
| | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Provisions for doubtful accounts on accounts receivable | | | 2,370 | | | | 1,291 | | | | 2,037 | |
| Building impairment | | | — | | | | — | | | | 4,718 | |
| Net cash provided by operating activities | | | 629,076 | | | | 560,293 | | | | 511,648 | |
| Net cash used in financing activities | | | (101,857 | ) | | | (69,594 | ) | | | (107,221 | ) |
| Cash and cash equivalents at beginning of period | | | 487,665 | | | | 422,177 | | | | 440,796 | |
| Balance December 31, 2013 | | | 155,246 | | | $ | 1,552 | | | $ | 1,270,608 | | | $ | 3,962,893 | | | $ | (3,477,759 | ) | | $ | 5,879 | | | $ | 1,763,173 | |
| Other comprehensive loss | | | — | | | | — | | | | — | | | | — | | | | — | | | | (84,584 | ) | | | (84,584 | ) |
| Stock options exercised | | | 1,185 | | | | 12 | | | | 68,809 | | | | — | | | | — | | | | — | | | | 68,821 | |
| Tax benefit related to stock option plans | | | — | | | | — | | | | 15,703 | | | | — | | | | — | | | | — | | | | 15,703 | |
| Treasury stock | | | — | | | | — | | | | — | | | | — | | | | (337,444 | ) | | | — | | | | (337,444 | ) |
| Stock-based compensation | | | 231 | | | | 2 | | | | 32,347 | | | | — | | | | — | | | | — | | | | 32,349 | |
Gains and losses from foreign currency transactions were not material for 2014.
worthiness.
| 2014 | | $ | 7,057 | | | $ | 7,551 | | | $ | (7,429 | ) | | $ | 7,179 | |
Any change in the carrying amount of an asset as a result of the Company’s evaluation is recorded in the consolidated statements of operations.
The investment had a carrying value of $2 million, which resulted in a gain on the sale of $2 million.
This investment had a balance of $2 million as of December 31, 2015 and the Company has no long-term investments remaining as of December 31, 2016.
| Total | | $ | 2,105,206 | | | $ | 35,823 | | | $ | 2,069,383 | | | $ | — | |
| Total | | $ | 4,617 | | | $ | — | | | $ | 402 | | | $ | 4,215 | |
The Company has revised the classification of the 401(k) Restoration Plan assets
from Level 2 to Level 1 at December 31, 2015 to correct the classification.
The Company concluded that the error was not material to the prior period financial statements.
After completing these validation procedures, the Company did not adjust or override any fair value measurements provided by third-party pricing services as of December 31, 2016 and 2015.
The change in fair value since December 31, 2015 is primarily due to a reduction in the future revenue projections, offset by the change in time value of money.
instrument service contracts and customer payments received in advance, prior to shipment of the instrument.
The amount of the accrued warranty liability is based on historical
| 2014 | | $ | 12,962 | | | $ | 8,148 | | | $ | (7,844 | ) | | $ | 13,266 | |
In August 2014, accounting guidance was issued which defines management’s responsibility to assess an entity’s ability to continue as a going concern at each annual and interim reporting period, and requires additional disclosures in certain circumstances.
In May 2015, accounting guidance was issued which allows a practical expedient for the measurement of certain investments using the net asset value per share of the investment.
The guidance also exempts investments using this practical expedient from categorization within the fair value hierarchy.
The adoption of this guidance removed certain retirement plan assets from the fair value hierarchy and the prior period presentation has been updated to conform with the current period presentation, see Note 15, “Retirement Plans”, for further details.
In addition, the tax benefits in excess of compensation costs, which are currently included as an inflow from financing activities, will be included as operating activities after adoption of this standard.
Furthermore, the impact of this standard after adoption is dependent on employee stock option exercise activity, which is not within the Company’s control.
| | | December 31, 2015 | | | | | | | | | | | | | | |
| U.S. Treasury securities | | $ | 628,358 | | | $ | 16 | | | $ | (1,218 | ) | | $ | 627,156 | |
| Corporate debt securities | | | 1,325,398 | | | | 159 | | | | (1,239 | ) | | | 1,324,318 | |
An excerpt. Shown here: 40 of 520 rewritten, 40 of 209 added and 40 of 156 removed. The counts are complete. For every sentence, read Item 8. Financial Statements and Supplementary Data in the FY2017 filing and the FY2016 filing.
Item 9A. Controls and Procedures
4 rewritten, 0 added, 0 removed, 5 unchanged
Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, [removed: 2016] [added: 2017] (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.
See Management’s Report on Internal Control Over Financial Reporting in Item 8 on page [removed: 44] [added: 47] of this Form 10-K.
See the report of PricewaterhouseCoopers LLP in Item 8 on page [removed: 45] [added: 48] of this Form 10-K.
No change was identified in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, [removed: 2016] [added: 2017] that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 10. Directors, Executive Officers and Corporate Governance
4 rewritten, 3 added, 1 removed, 9 unchanged
Information regarding the Company’s directors [added: and any material changes to the process by which security holders may recommend nominees to the Board of Directors] is contained in the definitive proxy statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders under the headings “Election of Directors”, “Directors Meetings and Board Committees”, “Corporate Governance”, “Report of the Audit Committee of the Board of Directors” and “Compensation of Directors and Executive Officers”.
Information regarding [removed: compliance with Section 16(a) of] the [removed: Exchange Act is contained in the] Company’s [removed: definitive proxy statement for the 2017 Annual Meeting of Stockholders under the heading “Section 16(a) Beneficial Ownership Reporting Compliance.” Information regarding the Company’s] Audit Committee and Audit Committee Financial Expert is contained in the definitive proxy statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders under the headings “Report of the Audit Committee of the Board of Directors” and “Directors Meetings and Board Committees”.
In addition, the Code is available on the Company’s website, www.waters.com, under the caption [removed: “Governance”.][added: “Corporate Governance”.]
The Company’s corporate governance guidelines and the charters of the audit committee, compensation committee, and nominating and corporate governance committee of the Board of Directors are available on the Company’s website, www.waters.com, under the caption [removed: “Governance”.][added: “Corporate Governance”.]
Information regarding compliance with Section 16(a) of the Exchange Act is contained in the Company’s definitive proxy statement for the 2018 Annual Meeting of Stockholders under the heading “Section 16(a) Beneficial Ownership Reporting Compliance”.
In 2017, the Company adopted a proxy access bylaw provision that allows eligible stockholders or groups of up to 20 stockholders who have held at least 3% of the Company’s common stock continuously for three years to nominate up to two individuals or 20% of the Board of Directors, whichever is greater, for election at the Company’s Annual Meeting of Stockholders, and to have those individuals included in the Company’s proxy materials for that meeting.
The Company believes that the proxy access bylaw adopted by the Company strikes an appropriate balance between providing meaningful proxy access for stockholders and limiting the potential for abuse.
The Company has not made any material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors.
Item 11. Executive Compensation
5 rewritten, 3 added, 1 removed, 13 unchanged
This information is contained in the Company’s definitive proxy statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders under the headings “Compensation of Directors and Executive Officers”, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report”.
Except for the Equity Compensation Plan information set forth below, this information is contained in the Company’s definitive proxy statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders under the heading “Security Ownership of Certain Beneficial Owners and Management”.
The following table provides information as of December 31, [removed: 2016] [added: 2017] about the Company’s common stock that may be issued upon the exercise of options, warrants, and rights under its existing equity compensation plans (in thousands):
| | | Number of Securities to be Issued Upon [removed: Exercise of] [added: Exercise of] Outstanding [removed: Options, Warrants] [added: Options, Warrants] and [removed: Rights] [added: Rights (1)] | | | | [removed: Weighted-Average Exercise] [added: Weighted-Average Exercise] Price [removed: of Outstanding Options, Warrants] [added: of Outstanding Options, Warrants] and [removed: Rights] [added: Rights (1)] | | | | Number of Securities Remaining Available [removed: for Future] [added: for Future] Issuance [removed: Under Equity Compensation Plans (excluding securities] [added: Under Equity Compensation Plans (excluding securities] reflected [removed: in column] [added: in column] (A)) | | |
| Equity compensation plans approved by security holders | | | [removed: 2,697] [added: 2,521] | | | $ | [removed: 106.55] [added: 124.41] | | | | [removed: 3,840] [added: 3,346] | |
| Total | | | 2,521 | | | $ | 124.41 | | | | 3,346 | |
| (1) | Column (a) includes an aggregate of 482 thousand ordinary shares to be issued upon settlement of restricted stock, restricted stock units and performance stock units. The weighted-average share price in column (b) does not take into account restricted stock, restricted stock units or performance stock units, which do not have an exercise price. |
| --- | --- |
| Total | | | 2,697 | | | $ | 106.55 | | | | 3,840 | |
Item 13. Certain Relationships and Related Transactions and Director Independence
1 rewritten, 0 added, 0 removed, 1 unchanged
This information is contained in the Company’s definitive proxy statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders under the headings “Directors Meetings and Board Committees”, “Corporate Governance” and “Compensation of Directors and Executive Officers”.
Item 14. Principal Accountant Fees and Services
1 rewritten, 0 added, 0 removed, 3 unchanged
This information is contained in the Company’s definitive proxy statement for the [removed: 2017] [added: 2018] Annual Meeting of Stockholders under the headings “Ratification of Selection of Independent Registered Public Accounting Firm” and “Report of the Audit Committee of the Board of Directors”.
Item 15. Exhibits, Financial Statement Schedules
54 rewritten, 14 added, 8 removed, 135 unchanged
The consolidated financial statements of the Company and its subsidiaries are filed as part of this Form 10-K and are set forth on pages [removed: 46] [added: 50] to [removed: 89.][added: 93.]
The report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, dated February [removed: 24, 2017,] [added: 27, 2018,] is set forth on page [removed: 39] [added: 48] of this Form 10-K.
| 3.1 | | Second Amended and Restated Certificate of Incorporation of Waters [removed: Corporation.(1)] [added: Corporation.(1)(P)] |
| 3.2 | | [removed: Certificate] [added: [Certificate] of Amendment of Second Amended and Restated Certificate of Incorporation of Waters Corporation, dated as of May 12, [removed: 1999.(3)] [added: 1999.(3)](http://www.sec.gov/Archives/edgar/data/1000697/000104746999030964/0001047469-99-030964.txt)] |
| 3.3 | | [removed: Certificate] [added: [Certificate] of Amendment of Second Amended and Restated Certificate of Incorporation of Waters Corporation, dated as of July 27, [removed: 2000.(4)] [added: 2000.(4)](http://www.sec.gov/Archives/edgar/data/1000697/000091205700035253/ex-3_12.txt)] |
| 3.4 | | [removed: Certificate] [added: [Certificate] of Amendment of Second Amended and Restated Certificate of Incorporation of Waters Corporation, dated as of May 25, [removed: 2001.(5)] [added: 2001.(5)](http://www.sec.gov/Archives/edgar/data/1000697/000092701602001727/dex313.txt)] |
| 3.5 | | [removed: Amended] [added: [Amended] and Restated Bylaws of Waters Corporation, dated as of [removed: October 16, 2013.(20)] [added: December 5, 2017.(29)](http://www.sec.gov/Archives/edgar/data/1000697/000119312517364940/d470585dex31.htm)] |
| 10.1 | | Waters Corporation Retirement [removed: Plan.(2)(*)] [added: Plan.(2)(P)(*)] |
| 10.2 | | [removed: Waters] [added: [Waters] Corporation 2003 Equity Incentive [removed: Plan.(6)(*)] [added: Plan.(6)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013503005751/b48537wcexv4w1.txt)] |
| 10.3 | | [removed: First] [added: [First] Amendment to the Waters Corporation 2003 Equity Incentive [removed: Plan.(7)(*)] [added: Plan.(7)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013504001254/b48994wcexv10w17.txt)] |
| 10.4 | | [removed: Form] [added: [Form] of Director Stock Option Agreement under the Waters Corporation 2003 Equity Incentive Plan, as [removed: amended.(8)(*)] [added: amended.(8)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013504005261/b52084wcexv10w27.txt)] |
| 10.5 | | [removed: Form] [added: [Form] of Director Restricted Stock Agreement under the Waters Corporation 2003 Equity Incentive Plan, as [removed: amended.(8)(*)] [added: amended.(8)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013504005261/b52084wcexv10w28.txt)] |
| 10.6 | | [removed: Form] [added: [Form] of Executive Officer Stock Option Agreement under the Waters Corporation 2003 Equity Incentive Plan, as [removed: amended.(8)(*)] [added: amended.(8)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013504005261/b52084wcexv10w29.txt)] |
| 10.7 | | [removed: Second] [added: [Second] Amendment to the Waters Corporation 2003 Equity Incentive [removed: Plan.(9)(*)] [added: Plan.(9)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013505004504/b55598wcexv10w38.htm)] |
| 10.8 | | [removed: Third] [added: [Third] Amendment to the Waters Corporation 2003 Equity Incentive [removed: Plan.(10)(*)] [added: Plan.(10)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013507001300/b63656wcexv10w48.txt)] |
| 10.9 | | [removed: Amended] [added: [Amended] and Restated Waters 401(k) Restoration Plan, effective January 1, [removed: 2008.(11)(*)] [added: 2008.(11)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013507006667/b67183wcexv10w52.htm)] |
| 10.10 | | [removed: Change] [added: [Change] of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and Mark T. [removed: Beaudouin.(12)(*)] [added: Beaudouin.(12)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013508001339/b68112wcexv10w53.htm)] |
| 10.11 | | [removed: Change] [added: [Change] of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and [removed: Arthur G. Caputo.(12)(*)] [added: Elizabeth B. Rae.(12)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013508001339/b68112wcexv10w58.htm)] |
| 10.12 | | [removed: Change] [added: [Change] of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and [removed: Elizabeth B. Rae.(12)(*)] [added: Eugene G. Cassis.(23)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515282127/d84496dex102.htm)] |
| [removed: 10.14] [added: 10.13] | | [removed: Amended] [added: [Amended] and Restated Waters Retirement Restoration Plan, effective January 1, [removed: 2008.(13)(*)] [added: 2008.(13)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013509001331/b72903wcexv10w49.htm)] |
| [removed: 10.15] [added: 10.14] | | [removed: Amended] [added: [Amended] and Restated Waters Corporation 1996 Non-Employee Director Deferred Compensation Plan, Effective January 1, [removed: 2008.(13)(*)] [added: 2008.(13)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013509001331/b72903wcexv10w5.htm)] |
| [removed: 10.17] [added: 10.16] | | [removed: Waters] [added: [Waters] Corporation 2009 Employee Stock Purchase [removed: Plan.(14)(*)] [added: Plan.(14)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095012309021422/b76149wcexv4w1.htm)] |
| [removed: 10.18] [added: 10.17] | | [removed: Note] [added: [Note] Purchase Agreement, dated as of February 1, 2010, between Waters Corporation and the purchases named [removed: therein.(15)] [added: therein.(15)](http://www.sec.gov/Archives/edgar/data/1000697/000095012310017583/b78684exv10w61.htm)] |
| [removed: 10.19] [added: 10.18] | | [removed: First] [added: [First] Amendment to the Note Purchase Agreement, dated as of February 1, [removed: 2010.(16)] [added: 2010.(16)](http://www.sec.gov/Archives/edgar/data/1000697/000095012311046109/b85480exv10w63.htm)] |
| [removed: 10.20] [added: 10.19] | | [removed: Note] [added: [Note] Purchase Agreement, dated March 15, 2011, between Waters Corporation and the purchases named [removed: therein.(16)] [added: therein.(16)](http://www.sec.gov/Archives/edgar/data/1000697/000095012311046109/b85480exv10w62.htm)] |
| [removed: 10.22] [added: 10.21] | | [removed: Form] [added: [Form] of Waters 2012 Stock Option Agreement - Executive [removed: Officers.(18)(*)] [added: Officers.(18)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312512498191/d453660dex101.htm)] |
| 10.23 | | [removed: Form] [added: [Form] of Waters 2012 [added: Restricted] Stock [removed: Option] Agreement - [removed: Directors.(18)(*)] [added: Directors.(18)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312512498191/d453660dex103.htm)] |
| [removed: 10.25] [added: 10.36] | | [removed: Credit] [added: [Credit] Agreement, dated as of [removed: June 25, 2013,] [added: November 30, 2017,] among Waters Corporation, JPMorgan Chase Bank, N.A., JP Morgan Europe Limited and other Lenders party [removed: thereto.(19)] [added: thereto.](https://www.sec.gov/Archives/edgar/data/1000697/000119312518060830/d506350dex1036.htm)] |
| [removed: 10.26] [added: 10.24] | | [removed: Form] [added: [Form] of Waters 2012 Restricted Stock Unit Agreement for Executive Officers - Five Year [removed: Vesting.(21)(*)] [added: Vesting.(19)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312513469540/d644445dex101.htm)] |
| [removed: 10.27] [added: 10.25] | | [removed: Form] [added: [Form] of Waters 2012 Restricted Stock Unit Agreement for Executive Officers - One Year [removed: Vesting.(21)(*)] [added: Vesting.(19)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312513469540/d644445dex102.htm)] |
| [removed: 10.28] [added: 10.26] | | [removed: Note] [added: [Note] Purchase Agreement, dated June 30, 2014, between Waters Corporation and the purchases named [removed: therein.(22)] [added: therein.(20)](http://www.sec.gov/Archives/edgar/data/1000697/000119312514290679/d760078dex101.htm)] |
| [removed: 10.29] [added: 10.27] | | [removed: Change] [added: [Change] of Control/Severance Agreement, dated as of April 1, 2015, between Waters Corporation and Michael F. [removed: Silveira.(24)(*)] [added: Silveira.(22)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515178581/d919579dex101.htm)] |
| [removed: 10.32] [added: 10.29] | | [removed: Change] [added: [Change] of Control/Severance Agreement, dated as of September 8, 2015, between Waters Corporation and Christopher J. [removed: O’Connell.(25)(*)] [added: O’Connell.(23)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515282127/d84496dex102.htm)] |
| [removed: 10.33] [added: 10.30] | | [removed: Note] [added: [Note] Purchase Agreement, dated as of May 12, 2016, between Waters Corporation and the purchasers named [removed: therein.(26)] [added: therein.(24)](http://www.sec.gov/Archives/edgar/data/1000697/000119312516672751/d207602dex101.htm)] |
| [removed: 10.34] [added: 10.31] | | [removed: Form] [added: [Form] of Waters 2012 Performance Stock Unit Award [removed: Agreement.(27)(*)] [added: Agreement.(25)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312516672751/d207602dex101.htm)] |
| [removed: 10.35] [added: 10.32] | | [removed: Senior] [added: [Senior] Vice President and Chief Financial Officer Employment [removed: Agreement.(*)] [added: Agreement.(26)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312517056239/d268303dex1035.htm)] |
| [removed: 10.36] [added: 10.33] | | [removed: Change] [added: [Change] of Control/Severance Agreement, dated as of January 9, 2017, between Waters Corporation and Sherry L. [removed: Buck.(*)] [added: Buck.(26)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312517056239/d268303dex1036.htm)] |
| 23.1 | | [removed: Consent] [added: [Consent] of PricewaterhouseCoopers LLP, an independent registered public accounting [removed: firm.] [added: firm.](https://www.sec.gov/Archives/edgar/data/1000697/000119312518060830/d506350dex231.htm)] |
| 31.1 | | [removed: Chief] [added: [Chief] Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1000697/000119312518060830/d506350dex311.htm)] |
| 31.2 | | [removed: Chief] [added: [Chief] Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002.] [added: 2002.](https://www.sec.gov/Archives/edgar/data/1000697/000119312518060830/d506350dex312.htm)] |
| 10.15 | | [2014 Waters Corporation Management Incentive Plan.(21)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515067900/d849246dex1017.htm) |
| 10.20 | | [Waters Corporation 2012 Equity Incentive Plan.(17)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312512380231/d404655dex41.htm) |
| 10.22 | | [Form of Waters 2012 Stock Option Agreement - Directors.(18)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312512498191/d453660dex102.htm) |
| 10.28 | | [President and Chief Executive Employment Agreement.(23)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515282127/d84496dex101.htm) |
| 10.34 | | [Form of Change of Control/Severance Agreement.(27)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312517097172/d342392dex101.htm) |
| 10.35 | | [Employment Agreement, dated July 21, 2017, between Waters Corporation and Dr. Rohit Khanna.(28)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312517332011/d435252dex101.htm) |
| 21.1 | | [Subsidiaries of Waters Corporation.](https://www.sec.gov/Archives/edgar/data/1000697/000119312518060830/d506350dex211.htm) |
| (26) | Incorporated by reference to the Registrant’s Report on Form 10-K dated February 24, 2017 (File No. 001-14010). |
| (27) | Incorporated by reference to the Registrant’s Report on Form 8-K dated March 27, 2017 (File No. 001-14010). |
| (P) | Paper Filing |
| --- | --- |
| 2017 | | $ | 61,225 | | | $ | (6,363 | ) | | $ | 7,236 | | | $ | 62,098 | |
| --- | --- |
| --- | --- |
| 10.13 | | Change of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and Eugene G. Cassis.(23)(*) |
| 10.16 | | 2014 Waters Corporation Management Incentive Plan.(23)(*) |
| 10.21 | | Waters Corporation 2012 Equity Incentive Plan.(17)(*) |
| 10.24 | | Form of Waters 2012 Restricted Stock Agreement - Directors.(18)(*) |
| 10.30 | | Credit Agreement, dated as of April 23, 2015, among Waters Corporation, JPMorgan Chase Bank, N.A., JP Morgan Europe Limited and other Lenders party thereto.(24) |
| 10.31 | | President and Chief Executive Employment Agreement.(25)(*) |
| 21.1 | | Subsidiaries of Waters Corporation. |
| 2014 | | $ | 94,952 | | | $ | 1,505 | | | $ | (13,907 | ) | | $ | 82,550 | |
An excerpt. Shown here: 40 of 54 rewritten, all 14 added and all 8 removed. The counts are complete. For every sentence, read Item 15. Exhibits, Financial Statement Schedules in the FY2017 filing and the FY2016 filing.
Item 16. Form 10-K Summary
3 rewritten, 3 added, 8 removed, 37 unchanged
Date: February [removed: 24, 2017][added: 27, 2018]
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on February [removed: 24, 2017.][added: 27, 2018.]
| [removed: /S/ CHRISTOPHER] [added: Christopher] J. [removed: O’CONNELL] [added: O’Connell] | | [removed: President and Chief] Executive Officer [added: (principal executive officer)] |
| /S/ CHRISTOPHER J. O’CONNELL | | Chairman of the Board of Directors, President and Chief |
| /S/ FLEMMING ORNSKOV | | Director |
| Flemming Ornskov | | |
| | | |
| Christopher J. O’Connell | | (principal executive officer) |
| /S/ DOUGLAS A. BERTHIAUME | | Chairman of the Board of Directors |
| Douglas A. Berthiaume | | |
| /S/ JOSHUA BEKENSTEIN | | Director |
| Joshua Bekenstein | | |
| /S/ WILLIAM J. MILLER | | Director |
| William J. Miller | | |