filings.toolsWaters (WAT) 10-K risk factor changes: FY2019 vs FY2018
The 2019-12-31 10-K against the 2018-12-31 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.
Item 1A0 rewritten178 added0 removed0 unchanged
All filing items219 rewritten3,369 added2,786 removed251 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, 3,369 added, 2,786 removed, 219 rewritten and 251 unchanged across 15 items that differ.
- New this year: Item 1A. Risk Factors; Item 3. Legal Proceedings; Item 2. Properties; Item 4. Mine Safety Disclosures.
- Not in this year's filing: Item 7A. Quantitative and Qualitative Disclosures About Market Risk; Item 8. Financial Statements and Supplementary Data; Item 9A. Controls and Procedures; Item 9B. Other Information; Item 10. Directors, Executive Officers and Corporate Governance; Item 11. Executive Compensation; Item 14. Principal Accountant Fees and Services; Item 16. Form 10-K Summary.
Sentences by item
15 items, with every count and a link to each item that changed
| Item | Added | Removed | Rewritten | Unchanged |
|---|---|---|---|---|
| Item 1A. Risk Factorsnew | 178 | 0 | 0 | 0 |
| Item 7A. Quantitative and Qualitative Disclosures About Market Riskdropped | 0 | 58 | 0 | 0 |
| Item 3. Legal Proceedingsnew | 3 | 0 | 0 | 0 |
| Cover and table of contents | 219 | 871 | 160 | 162 |
| Item 2. Propertiesnew | 52 | 0 | 0 | 0 |
| Item 4. Mine Safety Disclosuresnew | 2,727 | 0 | 0 | 0 |
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 80 | 0 | 0 | 1 |
| Item 15. Exhibits, Financial Statement Schedules | 110 | 18 | 59 | 88 |
| Item 8. Financial Statements and Supplementary Datadropped | 0 | 1,734 | 0 | 0 |
| Item 9A. Controls and Proceduresdropped | 0 | 9 | 0 | 0 |
| Item 9B. Other Informationdropped | 0 | 3 | 0 | 0 |
| Item 10. Directors, Executive Officers and Corporate Governancedropped | 0 | 16 | 0 | 0 |
| Item 11. Executive Compensationdropped | 0 | 24 | 0 | 0 |
| Item 14. Principal Accountant Fees and Servicesdropped | 0 | 4 | 0 | 0 |
| Item 16. Form 10-K Summarydropped | 0 | 49 | 0 | 0 |
Underlined words on a shaded ground are new in FY2019; struck-through words were in FY2018. Sentences that are wholly new or wholly gone are labelled rather than marked.
Item 1A. Risk Factors
0 rewritten, 178 added, 0 removed, 0 unchanged
New section this year
Risk Factors
The Company is subject to risks and uncertainties, including, but not limited to, the following:
The Company’s international operations may be negatively affected by political events, wars or terrorism and regulatory changes, related to either a specific country or a larger region.
These potential political, currency and economic disruptions, as well as foreign currency exchange rate fluctuations, could have a material adverse effect on the Company’s results of operations or financial condition.
Approximately 71% and 72% of the Company’s net sales in 2019 and 2018, respectively, were outside of the United States and were primarily denominated in foreign currencies.
In addition, the Company has considerable manufacturing operations in Ireland and the U.K., as well as significant subcontractors located in Singapore.
As a result, a significant portion of the Company’s sales and operations are subject to certain risks, including adverse developments in the political, regulatory and economic environment, in particular, uncertainty regarding possible changes to foreign and domestic trade policy; the effect of the U.K.’s exit from the European Union as well as the financial difficulties and debt burden experienced by a number of European countries; the instability and potential impact of war or terrorism; the instability and possible dissolution of the Euro as a single currency; sudden movements in a country’s foreign exchange rates due to a change in a country’s sovereign risk profile or foreign exchange regulatory practices; tariffs and other trade barriers; the impact of public health epidemics, such as the coronavirus currently impacting China and elsewhere; difficulties in staffing and managing foreign operations; and associated adverse operational, contractual and tax consequences.
Additionally, the U.S. dollar value of the Company’s net sales, cost of sales, operating expenses, interest, taxes and net income varies with foreign currency exchange rate fluctuations.
Significant increases or decreases in the value of the U.S. dollar relative to certain foreign currencies, particularly the Euro, Japanese yen and British pound, could have a material adverse effect or benefit on the Company’s results of operations or financial condition.
Global economic conditions may decrease demand for the Company’s products and harm the Company’s financial results.
The Company is a global business that may be adversely affected by changes in global economic conditions.
These changes in global economic conditions, both inside and outside the U.S., may affect the demand for the Company’s products and services.
This may result in a decline in sales in the future, increased rate of order cancellations or delays, increased risk of excess or obsolete inventories, longer sales cycles and potential difficulty in collecting sales proceeds.
There can be no assurance regarding demand for the Company’s products and services in the future.
The Company’s financial results are subject to changes in customer demand, which may decrease for a number of reasons, many beyond the Company’s control.
The demand for the Company’s products is dependent upon the size of the markets for its LC,
LC-MS,
thermal analysis, rheometry and calorimetry products; the timing and level of capital spending and expenditures of the Company’s customers; changes in governmental regulations, particularly affecting drug, food and drinking water testing; funding available to academic, governmental and research institutions; general economic conditions and the rate of economic growth in the Company’s major markets; and competitive considerations.
The Company typically experiences an increase in sales in its fourth quarter as a result of purchasing habits for capital goods by customers that tend to exhaust their spending budgets by calendar year end.
However, there can be no assurance that the Company will effectively forecast customer demand and appropriately allocated research and development expenditures to products with high growth and high margin prospects.
Additionally, there can be no assurance that the Company’s results of operations or financial condition will not be adversely impacted by a change in any of the factors listed above or the continuation of uncertain global economic conditions.
Additionally, the analytical instrument market may, from time to time, experience low sales growth.
Approximately 57% and 56% of the Company’s net sales in 2019 and 2018, respectively, were to worldwide pharmaceutical and biotechnology companies, which may be periodically subject to unfavorable market conditions and consolidations.
Unfavorable industry conditions could have a material adverse effect on the Company’s results of operations or financial condition.
Disruption in worldwide financial markets could adversely impact the Company’s access to capital and financial condition.
Financial markets in the U.S., Europe and Asia have experienced times of extreme disruption, including, among other things, sharp increases in the cost of new capital, credit rating downgrades and bailouts, severely diminished capital availability and severely reduced liquidity in money markets.
Financial and banking institutions have also experienced disruptions, resulting in large asset write-downs, higher costs of capital, rating downgrades and reduced desire to lend money.
There can be no assurance that there will not be future deterioration or prolonged disruption in financial markets or financial institutions.
Any future deterioration or prolonged disruption in financial markets or financial institutions in which the Company participates may impair the Company’s ability to access its existing cash, utilize its existing syndicated bank credit facility funded by such financial institutions, and impair its ability to access sources of new capital.
The cost to the Company of any new capital raised and interest expense would increase if this were to occur.
Competitors may introduce more effective or less expensive products than the Company’s, which could result in decreased sales.
The competitive landscape may transform as a result of potential changes in ownership, mergers and continued consolidations among the Company’s competitors, which could harm the Company’s business.
The analytical instrument market and, in particular, the portion related to the Company’s HPLC, UPLC,
LC-MS,
thermal analysis, rheometry and calorimetry product lines, is highly competitive and subject to rapid changes in technology.
The Company encounters competition from several international instrument suppliers and other companies in both domestic and foreign markets.
Some competitors have instrument businesses that are generally more diversified than the Company’s business, but are typically less focused on the Company’s chosen markets.
Over the years, some competitors have merged with other competitors for various reasons, including increasing product line offerings, improving market share and reducing costs.
There can be no assurance that the Company’s competitors will not introduce more effective and less costly products than those of the Company or that the Company will be able to increase its sales and profitability from new product introductions.
There can be no assurance that the Company’s sales and marketing forces will compete successfully against the Company’s competitors in the future.
An excerpt. Shown here: all 0 rewritten, 40 of 178 added and all 0 removed. The counts are complete. For every sentence, read Item 1A. Risk Factors in the FY2019 filing.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
0 rewritten, 0 added, 58 removed, 0 unchanged
Dropped this year
_Derivative Transactions_
The Company is a global company that operates in over 35 countries and, as a result, the Company’s net sales, cost of sales, operating expenses and balance sheet amounts are significantly impacted by fluctuations in foreign currency exchange rates.
The Company is exposed to currency price risk on foreign currency exchange rate fluctuations when it translates its non-U.S. dollar foreign subsidiaries’ financial statements into U.S. dollars, and when any of the Company’s subsidiaries purchase or sell products or services in a currency other than its own currency.
The Company’s principal strategies in managing exposures to changes in foreign currency exchange rates are to (1) naturally hedge the foreign-currency-denominated liabilities on the Company’s balance sheet against corresponding assets of the same currency, such that any changes in liabilities due to fluctuations in foreign currency exchange rates are typically offset by corresponding changes in assets and (2) mitigate foreign exchange risk exposure of international operations by hedging the variability in the movement of foreign currency exchange rates on a portion of its Euro-denominated net asset investments.
The Company presents the derivative transactions in financing activities in the statement of cash flows.
##### [Table of Contents](#toc)
Foreign Currency Exchange Contracts
The Company does not specifically enter into any derivatives that hedge foreign-currency-denominated operating assets, liabilities or commitments on its balance sheet, other than a portion of certain third-party accounts receivable and accounts payable, and the Company’s net worldwide intercompany receivables and payables, which are eliminated in consolidation.
The Company periodically aggregates these net worldwide balances by currency and then enters into foreign currency exchange contracts that mature within 90 days to hedge a portion of the remaining balance to minimize some of the Company’s currency price risk exposure.
The foreign currency exchange contracts are not designated for hedge accounting treatment.
Principal hedged currencies include the Euro, Japanese yen, British pound, Mexican peso and Brazilian real.
Interest Rate Cross-Currency Swap Agreements
In 2018, the Company entered into three-year interest rate cross-currency swap derivative agreements with a notional value of $300 million to hedge the variability in the movement of foreign currency exchange rates on a portion of its Euro-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 comprehensive income 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.
The Company’s foreign currency exchange contracts and interest rate cross-currency swap agreements included in the consolidated balance sheets are classified as follows (in thousands):
| | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | December 31, 2018 | | | | | | | | December 31, 2017 | | | | | | |
| | | Notional Value | | | | Fair Value | | | | Notional Value | | | | Fair Value | | |
| Foreign currency exchange contracts: | | | | | | | | | | | | | | | | |
| Other current assets | | $ | 112,212 | | | $ | 503 | | | $ | 110,759 | | | $ | 566 | |
| Other current liabilities | | $ | 40,175 | | | $ | 224 | | | $ | 37,104 | | | $ | 182 | |
| Interest rate cross-currency swap agreements: | | | | | | | | | | | | | | | | |
| Other assets | | $ | 300,000 | | | $ | 1,093 | | | $ | — | | | $ | — | |
| Accumulated other comprehensive income | | | | | | $ | (1,093 | ) | | | | | | $ | — | |
The following is a summary of the activity included in the statements of comprehensive income related to the foreign currency exchange contracts (in thousands):
| | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | Financial Statement Classification | | | | | | | | | | | | |
| | | Year Ended December 31, | | | | | | | | | | | | |
| | | 2018 | | | | 2017 | | | | 2016 | | | | |
| Foreign currency exchange contracts: | | | | | | | | | | | | | | |
| Realized (losses) gains on closed contracts | | Cost of sales | | $ | (6,684 | ) | | $ | 3,894 | | | $ | (10,401 | ) |
| Unrealized (losses) gains on open contracts | | Cost of sales | | | (105 | ) | | | 1,054 | | | | (883 | ) |
| | | | | | | | | | | | | | | |
| Cumulative net pre-tax (losses) gains | | Cost of sales | | $ | (6,789 | ) | | $ | 4,948 | | | $ | (11,284 | ) |
| | | | | | | | | | | | | | | |
| Interest rate cross-currency swap agreements: | | | | | | | | | | | | | | |
| Interest earned | | Interest income | | $ | 2,713 | | | $ | — | | | $ | — | |
An excerpt. Shown here: all 0 rewritten, all 0 added and 40 of 58 removed. The counts are complete. For every sentence, read Item 7A. Quantitative and Qualitative Disclosures About Market Risk in the FY2018 filing.
Item 3. Legal Proceedings
0 rewritten, 3 added, 0 removed, 0 unchanged
New section this year
Legal Proceedings
From time to time, the Company and its subsidiaries are involved in various litigation matters arising in the ordinary course of business.
The Company believes it has meritorious arguments in its current litigation matters and believes any outcome, either individually or in the aggregate, will not be material to the Company’s financial position or results of operations.
Cover and table of contents
160 rewritten, 219 added, 871 removed, 162 unchanged
[removed: UNITED] [added: UNITED] STATES SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]
[removed: Washington,] [added: Washington,] D.C. [removed: 20549][added: 20549]
[removed: Form 10-K][added: Form]
| ☑ | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR [removed: 15(d)] [added: 15(d)] |
| | [removed: OF] [added: OF] THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |
[removed: For] [added: For] the fiscal year ended December 31, [removed: 2018][added: 2019]
| ☐ | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR [removed: 15(d)] [added: 15(d)] |
[removed: Commission] [added: Commission] File Number: [removed: 01-14010]
[removed: Waters Corporation][added: Waters Corporation]
[removed: _(Exact] [added: (Exact] name of registrant as specified in its [removed: charter)_][added: charter)]
| [removed: Delaware] [added: Delaware] | | [removed: 13-3668640] [added: 13-3668640] |
| [removed: _(State] [added: (State] or other jurisdiction [removed: of_ _incorporation] [added: of incorporation] or [removed: organization)_] [added: organization)] | | [removed: _(I.R.S. Employer_ _Identification No.)_] [added: (I.R.S. Employer Identification No.)] |
[removed: 34] [added: 34] Maple [removed: Street][added: Street]
[removed: Milford,] [added: Milford,] Massachusetts [removed: 01757][added: 01757]
[removed: _(Address,] [added: (Address,] including zip code, of principal executive [removed: offices)_][added: offices)]
[removed: (508) 478-2000][added: 478-2000]
[removed: _(Registrant’s] [added: (Registrant’s] telephone number, including area [removed: code)_][added: code)]
| Securities registered pursuant to Section 12(b) of the Act: | | [removed: Common Stock, par value $0.01 per share] |
Yes [removed: ☑ No ☐]
Yes [removed: ☐ 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 [removed: 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).]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a [removed: non-accelerated filer, a smaller reporting company, or emerging growth company.]
See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule [removed: 12b-2 of the Exchange Act.]
| Large accelerated filer ☑ | | Accelerated filer ☐ | | Non-accelerated filer ☐ | [removed: |] Smaller reporting company ☐ |
| | | | | | [removed: |] Emerging growth company ☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule [removed: 12b-2 of the Act).]
State the aggregate market value of the registrant’s common stock held by [removed: non-affiliates of the registrant as of June 30, 2018: $14,912,684,699.]
Indicate the number of shares outstanding of the registrant’s common stock as of February [removed: 22, 2019: 71,512,391][added: 21, 2020: 62,158,045]
[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]
Portions of the registrant’s definitive proxy statement that will be filed for the [removed: 2019] [added: 2020] Annual Meeting of Stockholders are incorporated by reference in Part III.
[removed: WATERS] [added: WATERS] CORPORATION AND [removed: SUBSIDIARIES][added: SUBSIDIARIES]
[removed: ANNUAL] [added: ANNUAL] REPORT ON FORM [removed: 10-K]
[removed: INDEX][added: INDEX]
| [removed: Item No.] [added: Item No.] | | | | | | [removed: Page] [added: Page] | | |
| | | | | [removed: PART I] [added: PART I] | | | | |
| | 1A. | | | [Risk [removed: Factors](#toc612944_2)] [added: Factors](#toc862312_2)] | | | [removed: 11] [added: 12] | |
| | 1B. | | | [Unresolved Staff [removed: Comments](#toc612944_3)] [added: Comments](#toc862312_3)] | | | 19 | |
| | 3. | | | [Legal [removed: Proceedings](#toc612944_5)] [added: Proceedings](#toc862312_5)] | | | [removed: 21] [added: 20] | |
| | 4. | | | [Mine Safety [removed: Disclosures](#toc612944_6)] [added: Disclosures](#toc862312_6)] | | | [removed: 21] [added: 20] | |
| | | | | [removed: PART II] [added: PART II] | | | | |
10-K
or
| | OF THE SECURITIES EXCHANGE ACT OF 1934 |
01-14010
(508)
| 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. |
| --- | --- | --- |
No
No
Yes
No
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
No
non-accelerated
filer, a smaller reporting company, or emerging growth company.
12b-2
of the Exchange Act.
| | | | | | |
| --- | --- | --- | --- | --- | --- |
12b-2
of the Act).
Yes
No
non-affiliates
, 2019: $14,554,561,947.
10-K
| | 1. | | | [Business](#toc862312_1) | | | 1 | |
| | 2. | | | [Properties](#toc862312_4) | | | 19 | |
| | | | | [Information About Out Executive Officers](#toc862312_7) | | | 20 | |
| | | | | [Signatures](#toc862312_23) | | | 104 | |
Waters
TM
The Company primarily designs, manufactures, sells and services high performance liquid chromatography (“HPLC”), ultra performance liquid chromatography (“UPLC
TM
(“LC-MS”)
and sold as integrated instrument systems using common software platforms.
TM
10-K 1 d612944d10k.htm 10-K
##### [Table of Contents](#toc)
| --- | --- |
or
| Name of each exchange on which registered: | | New York Stock Exchange, Inc. |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
| | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | 1. | | | [Business](#toc612944_1) | | | 1 | |
| | 2. | | | [Properties](#toc612944_4) | | | 20 | |
| | | | | [Executive Officers of the Registrant](#toc612944_7) | | | 21 | |
| | | | | [Signatures](#toc612944_23) | | | 106 | |
ACQUITY UPLC instrument systems and, furthermore, that its ACQUITY UPLC instruments primarily use ACQUITY UPLC columns.
In 2016, the Company continued to expand its column chemistry capabilities through the introduction of CORTECSTM C8, CORTECSTM Phenyl, CORTECSTM T3 and CORTECSTM Shield RP18.
Quadrupole time-of-flight (“Q-TofTM”) instruments, such as the Company’s SYNAPTTM G2-S, are often used to analyze the role of proteins in disease processes, an application sometimes referred to as “proteomics”.
In 2016, the Company introduced the XevoTM TQ-XS mass spectrometry system enabled by the newly designed StepWaveTM SX ion guide, which features a unique combination of ion optics, detection and ionization technologies resulting in levels of sensitivity not previously seen.
The Company also introduced SONAR in 2016, which is a new data acquisition technology for use with the Xevo G2-XS that allows for the quantification and identification of lipids, metabolites and proteins in complex samples in a more efficient manner.
In 2016, the Company announced two reference libraries available within UNIFI, the Metabolic Profiling CCS Library and the _Rapi_Fluor-MSTM Glycan GU Scientific Library.
The Company also introduced Symphony Data Pipeline software in 2016, which is a client-server application that automates the movement and transformation of large amounts of LC-MS data to speed up analytical workflows and liberate scientists from mundane yet necessary tasks associated with managing data files.
In 2016, TA introduced a new line of differential scanning calorimeters and thermogravimetric analyzers.
These new Discovery DSC systems feature enhanced sensing technologies resulting in unprecedented performance in baseline flatness, sensitivity, resolution and reproducibility.
In addition, TA introduced the ACS-2 Air Chiller System, ElectroForce 3310 test instrument and DuraPulseTM Stent Graft test instrument in 2016.
In September 2016, the Company acquired all of the outstanding stock of Rubotherm GmbH (“Rubotherm”), a manufacturer of gravimetric analysis systems, for approximately $6 million in cash, $5 million of which was paid at closing and an additional $1 million paid after closing to settle certain liabilities.
Rubotherm develops and manufactures analytical test instruments for thermogravimetric and sorption measurements that are used in both industrial and academic research laboratories in disciplines that include chemistry, material science and engineering.
The Rubotherm acquisition has helped support and further expand product offerings within TA’s thermal analysis business.
Regulation and the European In-Vitro Diagnostic Directive).
However, the Company does not have knowledge that any of its conflict minerals originated from the Democratic Republic of the Congo or adjoining countries.
The results of this and future evaluations may impose additional costs and may introduce new risks related to the Company’s ability to verify the origin of any conflict minerals contained in its products.
each of its three primary technologies.
| --- | --- | --- | --- |
| | changes in timing and demand for the Company’s products among the Company’s customers and various market sectors, particularly if they should reduce capital expenditures or are unable to obtain funding, as in the cases of governmental, academic and research institutions; the effect of mergers and acquisitions on customer demand for the Company’s products; and the Company’s ability to sustain and enhance service. |
The Company is subject to risks and uncertainties, including, but not limited to, the following:
_The Company’s international operations may be negatively affected by political events, wars or terrorism and regulatory changes, related to either a specific country or a larger region.
These potential political, currency and economic disruptions, as well as foreign currency exchange rate fluctuations, could have a material adverse effect on the Company’s results of operations or financial condition._
Approximately 72% and 71% of the Company’s net sales in 2018 and 2017, respectively, were outside of the United States and were primarily denominated in foreign currencies.
In addition, the Company has considerable manufacturing operations in Ireland and the United Kingdom, as well as significant subcontractors located in Singapore.
As a result, a significant portion of the Company’s sales and operations are subject to certain risks, including adverse developments in the political, regulatory and economic environment, in particular, uncertainty regarding possible changes to foreign and domestic trade policy; the effect of the U.K. voting to exit the European Union as well as the financial difficulties and debt burden experienced by a number of European countries; the instability and potential impact of war or terrorism; the instability and possible dissolution of the Euro as a single currency; sudden movements in a country’s foreign exchange rates due to a change in a country’s sovereign risk profile or foreign exchange regulatory practices; tariffs and other trade barriers; difficulties in staffing and managing foreign operations; and associated adverse operational, contractual and tax consequences.
Additionally, the U.S. dollar value of the Company’s net sales, cost of sales, operating expenses, interest, taxes and net income varies with foreign currency exchange rate fluctuations.
An excerpt. Shown here: 40 of 160 rewritten, 40 of 219 added and 40 of 871 removed. The counts are complete. For every sentence, read Cover and table of contents in the FY2019 filing and the FY2018 filing.
Item 2. Properties
0 rewritten, 52 added, 0 removed, 0 unchanged
New section this year
Properties
Waters Corporation operates 23 United States facilities and 67 international facilities, including field offices.
The Company believes its facilities are suitable and adequate for its current production level and for reasonable growth over the next several years.
The Company’s primary facilities are summarized in the table below.
Primary Facility Locations
| | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Location | | Function (1) | | | | Owned/Leased | | |
| Golden, CO | | | M, R, S, D, A | | | | Leased | |
| New Castle, DE | | | M, R, S, D, A | | | | Owned | |
| Franklin, MA | | | D | | | | Leased | |
| Milford, MA | | | M, R, S, A | | | | Owned | |
| Taunton, MA | | | M, R | | | | Owned | |
| Cambridge, MA | | | R, S | | | | Leased | |
| Wakefield, MA | | | M, R, S, D, A | | | | Leased | |
| Eden Prairie, MN | | | M, R, S, D, A | | | | Leased | |
| Nixa, MO | | | M, S, D, A | | | | Leased | |
| Sharpsburg, PA | | | M, R, S, D, A | | | | Leased | |
| Lindon, UT | | | M, R, S, D, A | | | | Leased | |
| Newcastle, England | | | R, S, D, A | | | | Leased | |
| Solihull, England | | | M,A | | | | Owned | |
| Wilmslow, England | | | M, R, S, D, A | | | | Owned | |
| St. Quentin, France | | | S, A | | | | Leased | |
| Bochum, Germany | | | R, S, A | | | | Leased | |
| Huellhorst, Germany | | | M, R, S, D, A | | | | Owned | |
| Budapest, Hungary | | | R | | | | Leased | |
| Wexford, Ireland | | | M, R, D, A | | | | Owned | |
| Etten-Leur, Netherlands | | | S, D, A | | | | Owned | |
| Brasov, Romania | | | R, A | | | | Leased | |
| Singapore | | | R, S, D, A | | | | Leased | |
| (1) | M = Manufacturing; R = Research; S = Sales and Service; D = Distribution; A = Administration |
| --- | --- |
The Company operates and maintains 11 field offices in the United States and 56 field offices abroad in addition to sales offices in the primary facilities listed above.
The Company’s field office locations are listed below.
Field Office Locations (2)
| | | | | | | |
| --- | --- | --- | --- | --- | --- | --- |
| United States | | International | | | | |
| | | | | | | |
| Costa Mesa, CA | | Australia | | India | | Portugal |
An excerpt. Shown here: all 0 rewritten, 40 of 52 added and all 0 removed. The counts are complete. For every sentence, read Item 2. Properties in the FY2019 filing.
Item 4. Mine Safety Disclosures
0 rewritten, 2,727 added, 0 removed, 0 unchanged
New section this year
Mine Safety Disclosures
Not applicable.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
Officers of the Company are elected annually by the Board of Directors and hold office at the discretion of the Board of Directors.
The following persons serve as executive officers of the Company:
Christopher J.
O’Connell, 53, has served as a Director of the Company since September 2015, when he assumed the position of President and Chief Executive Officer of the Company.
In December 2017, Mr. O’Connell was appointed as the Chairman of the Board of Directors of the Company.
Mr. O’Connell served as Executive Vice President and President of Restorative Therapies Group of Medtronic plc from August 2009 to August 2015.
From 1994 to August 2009, Mr. O’Connell served in the following positions at Medtronic plc: Senior Vice President and President of Medtronic Diabetes, President of Medtronic Physio-Control, Vice President of Sales and Marketing for the Cardiac Rhythm Management business, Vice President/General Manager of the Patient Management Business, Vice President of Corporate Strategy, Director of Investor Relations and Corporate Development Associate.
Keeley Aleman, 43, was appointed Senior Vice President, General Counsel and Secretary in October of 2019.
Ms. Aleman joined Waters Corporation in 2006 as the Assistant General Counsel and held various legal roles focusing on business transactions, commercial strategies, international development, compliance, corporate governance and organizational matters.
Prior to joining Waters Corporation she held corporate associate positions at Goodwin Procter, LLP, and Testa, Hurwitz & Thibeault, LLP.
Sherry L.
Buck, 56, was appointed Senior Vice President and Chief Financial Officer in January 2017.
Previously, Ms. Buck served as the Vice President, Chief Financial Officer of Libbey Inc. since August 2012.
From 1993 to 2012, Ms. Buck held several positions at Whirlpool Corporation, including Vice President, Finance/Chief Financial Officer, Global Product and Enterprise Cost Leadership; Vice President, Finance—US; Vice President, Cost Leadership; Vice President, Finance—International; and Vice President, Business Performance Management.
Robert G.
Carson, 46, was appointed Senior Vice President, Corporate Development in February 2018.
Prior to joining Waters Corporation, he held several positions during his 16 years at Medtronic plc, including Vice President and General Manager, Pacemaker Business from January 2017 to January 2018.
In addition, Mr. Carson spent nearly 12 years in Medtronic’s spinal implants and biologics business, serving as Vice President and General Manager from July 2016 to January 2017, Vice President of Global Marketing & Strategy from April 2015 to July 2016 and Vice President & Therapy Segment Leader from October 2012 to April 2015.
Mr. Carson began his career with Banc of America Securities.
Dr. Michael C.
Harrington, 59, was appointed Senior Vice President, Global Markets in February 2016.
Dr. Harrington joined Waters Corporation in 1987 and has held several senior positions with Waters Corporation, including Vice President, Europe and Asia Pacific Operations, Senior Director of US Sales Operations, Director of US Chemistry Sales and General Manager of Phase Separations.
Prior to joining Waters Corporation, Dr. Harrington held senior sales positions at Celsis, Inc.
Jonathan M.
Pratt, 50, was appointed Senior Vice President and President, TA Instruments in August 2019.
Prior to joining Waters Corporation, Mr. Pratt was President of Beckman Coulter Life Sciences.
Additionally, he held senior positions at Pall Corporation, where he was President of its Food & Beverage, Laboratory and ForteBio businesses.
Francis Kim, 53, was appointed Senior Vice President, Global Operations in February 2018.
Mr. Kim previously served as Vice President of Global Quality Assurance since November 2016.
Prior to joining Waters Corporation, he held several positions during his 20 years at Medtronic plc, including Vice President of Quality, Restorative Therapies Group from May 2015 to November 2016 and Vice President of Quality, Regulatory and Clinical Affairs, Surgical Technologies Division from January 2011 to May 2015.
On February 17, 2020, Mr. Kim notified the Company that he will be resigning his position on March 16, 2020.
Ian S.
King, 63, was appointed Senior Vice President, Global Products in July 2017.
Mr. King joined Waters in 1982 and previously served as Senior Vice President, Instrument Technology; Vice President, Separations Technologies; and Vice President and General Manager of Consumable Division, as well as a variety of scientific and management positions in Waters Corporation’s international subsidiaries.
Prior to joining Waters Corporation, Mr. King worked at Edinburgh University as a research scientist.
Elizabeth B.
Rae, 62, was appointed Senior Vice President, Global Human Resources in February 2016 and was Vice President of Human Resources since October 2005 and Vice President of Worldwide Compensation and Benefits since January 2002.
An excerpt. Shown here: all 0 rewritten, 40 of 2,727 added and all 0 removed. The counts are complete. For every sentence, read Item 4. Mine Safety Disclosures in the FY2019 filing.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
0 rewritten, 80 added, 0 removed, 1 unchanged
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
| Item 9A: | Controls and Procedures |
| --- | --- |
Evaluation of Disclosure Controls and Procedures
The Company’s chief executive officer and chief financial officer (principal executive officer and principal financial officer), with the participation of management, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act) as of the end of the period covered by this annual report on Form
10-K.
Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2019 (1) to ensure that information required to be disclosed by the Company, including its consolidated subsidiaries, in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its chief executive officer and chief financial officer, to allow timely decisions regarding the required disclosure and (2) to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Management’s Annual Report on Internal Control Over Financial Reporting
See Management’s Report on Internal Control Over Financial Reporting in Item 8 on page 46 of this Form
10-K.
Report of the Independent Registered Public Accounting Firm
See the report of PricewaterhouseCoopers LLP in Item 8 beginning on page 47 of this Form
10-K.
Changes in Internal Control Over Financial Reporting
No change was identified in the Company’s internal control over financial reporting (as defined in Rules
13a-15(f)
and
15d-15(f)
under the Exchange Act) during the quarter ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
| Item 9B: Other | Information |
| --- | --- |
None.
PART III
| Item 10: | Directors, Executive Officers and Corporate Governance |
| --- | --- |
Information regarding the Company’s directors and any material changes to the process by which security holders may recommend nominees to the Board of Directors is contained in the definitive proxy statement for the 2020 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 compliance with Section 16(a) of the Exchange Act is contained in the Company’s definitive proxy statement for the 2020 Annual Meeting of Stockholders under the heading “Delinquent Section 16(a) Reports”.
Information regarding the Company’s Audit Committee and Audit Committee Financial Expert is contained in the definitive proxy statement for the 2020 Annual Meeting of Stockholders under the headings “Report of the Audit Committee of the Board of Directors” and “Directors Meetings and Board Committees”.
Such information is incorporated herein by reference.
Information regarding the Company’s executive officers is contained in Part I of this Form
10-K.
The Company has adopted a Global Code of Business Conduct & Ethics (the “Code”) that applies to all of the Company’s employees (including its executive officers) and directors and that is in compliance with Item 406 of Regulation
S-K.
The Code has been distributed to all employees of the Company.
In addition, the Code is available on the Company’s website,
www.waters.com
An excerpt. Shown here: all 0 rewritten, 40 of 80 added and all 0 removed. The counts are complete. For every sentence, read Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure in the FY2019 filing and the FY2018 filing.
Item 15. Exhibits, Financial Statement Schedules
59 rewritten, 110 added, 18 removed, 88 unchanged
The consolidated financial statements of the Company and its subsidiaries are filed as part of this Form [removed: 10-K and are set forth on pages 52 to 97.]
The report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, dated February [removed: 26, 2019,] [added: 25, 2020,] is set forth [added: beginning] on page [removed: 50] [added: 47] of this Form [removed: 10-K.]
[removed: | | (2) |] [added: Exhibits,] Financial Statement [removed: Schedule: |][added: Schedules]
| | [removed: (3)] [added: (2)] | Exhibits: |
| [removed: Exhibit Number] [added: Exhibit Number] | | [removed: Description] [added: | | Description] of [removed: Document] [added: Document] |
| [added: |] 3.1 | | [added: |] Second Amended and Restated Certificate of Incorporation of Waters Corporation.(1)(P) |
| [added: |] 3.2 | | [added: |] [Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Waters Corporation, dated as of May 12, 1999.(3)](http://www.sec.gov/Archives/edgar/data/1000697/000104746999030964/0001047469-99-030964.txt) |
| [added: |] 3.3 | | [added: |] [Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Waters Corporation, dated as of July 27, 2000.(4)](http://www.sec.gov/Archives/edgar/data/1000697/000091205700035253/ex-3_12.txt) |
| [added: |] 3.4 | | [added: |] [Certificate of Amendment of Second Amended and Restated Certificate of Incorporation of Waters Corporation, dated as of May 25, 2001.(5)](http://www.sec.gov/Archives/edgar/data/1000697/000092701602001727/dex313.txt) |
| [added: |] 3.5 | | [added: |] [Amended and Restated Bylaws of Waters Corporation, dated as of December 5, 2017.(29)](http://www.sec.gov/Archives/edgar/data/1000697/000119312517364940/d470585dex31.htm) |
| [added: |] 10.1 | | [added: |] Waters Corporation Retirement Plan.(2)(P)(*) |
| [added: |] 10.2 | | [added: |] [Waters Corporation 2003 Equity Incentive Plan.(6)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013503005751/b48537wcexv4w1.txt) |
| [added: |] 10.3 | | [added: |] [First Amendment to the Waters Corporation 2003 Equity Incentive Plan.(7)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013504001254/b48994wcexv10w17.txt) |
| [added: |] 10.4 | | [added: |] [Form of Director Stock Option Agreement under the Waters Corporation 2003 Equity Incentive Plan, as amended.(8)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013504005261/b52084wcexv10w27.txt) |
| [added: |] 10.5 | | [added: |] [Form of Director Restricted Stock Agreement under the Waters Corporation 2003 Equity Incentive Plan, as amended.(8)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013504005261/b52084wcexv10w28.txt) |
| [added: |] 10.6 | | [added: |] [Form of Executive Officer Stock Option Agreement under the Waters Corporation 2003 Equity Incentive Plan, as amended.(8)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013504005261/b52084wcexv10w29.txt) |
| [added: |] 10.7 | | [added: |] [Second Amendment to the Waters Corporation 2003 Equity Incentive Plan.(9)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013505004504/b55598wcexv10w38.htm) |
| [added: |] 10.8 | | [added: |] [Third Amendment to the Waters Corporation 2003 Equity Incentive Plan.(10)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013507001300/b63656wcexv10w48.txt) |
| [added: |] 10.9 | | [added: |] [Amended and Restated Waters 401(k) Restoration Plan, effective January 1, 2008.(11)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013507006667/b67183wcexv10w52.htm) |
| [added: |] 10.10 | | [added: |] [Change of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and Mark T. Beaudouin.(12)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013508001339/b68112wcexv10w53.htm) |
| [added: |] 10.11 | | [added: |] [Change of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and Elizabeth B. Rae.(12)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013508001339/b68112wcexv10w58.htm) |
| [added: |] 10.12 | | [added: |] [Change of Control/Severance Agreement, dated as of February 27, 2008, between Waters Corporation and Eugene G. Cassis.(21)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515067900/d849246dex1014.htm) |
| [added: |] 10.13 | | [added: |] [Amended and Restated Waters Retirement Restoration Plan, effective January 1, 2008.(13)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013509001331/b72903wcexv10w49.htm) |
| [added: |] 10.14 | | [added: |] [Amended and Restated Waters Corporation 1996 Non-Employee Director Deferred Compensation Plan, Effective January 1, 2008.(13)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095013509001331/b72903wcexv10w5.htm) |
| [added: |] 10.15 | | [added: |] [2014 Waters Corporation Management Incentive Plan.(21)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515067900/d849246dex1017.htm) |
| [added: |] 10.16 | | [added: |] [Waters Corporation 2009 Employee Stock Purchase Plan.(14)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000095012309021422/b76149wcexv4w1.htm) |
| [added: |] 10.17 | | [added: |] [Note Purchase Agreement, dated as of February 1, 2010, between Waters Corporation and the purchases named therein.(15)](http://www.sec.gov/Archives/edgar/data/1000697/000095012310017583/b78684exv10w61.htm) |
| [added: |] 10.18 | | [added: |] [First Amendment to the Note Purchase Agreement, dated as of February 1, 2010.(16)](http://www.sec.gov/Archives/edgar/data/1000697/000095012311046109/b85480exv10w63.htm) |
| [added: |] 10.19 | | [added: |] [Note Purchase Agreement, dated March 15, 2011, between Waters Corporation and the purchases named therein.(16)](http://www.sec.gov/Archives/edgar/data/1000697/000095012311046109/b85480exv10w62.htm) |
| [added: |] 10.20 | | [added: |] [Waters Corporation 2012 Equity Incentive Plan.(17)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312512380231/d404655dex41.htm) |
| [added: |] 10.21 | | [added: |] [Form of Waters 2012 Stock Option Agreement - Executive Officers.(18)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312512498191/d453660dex101.htm) |
| [added: |] 10.22 | | [added: |] [Form of Waters 2012 Stock Option Agreement - Directors.(18)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312512498191/d453660dex102.htm) |
| [added: |] 10.23 | | [added: |] [Form of Waters 2012 Restricted Stock Agreement - Directors.(18)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312512498191/d453660dex103.htm) |
| [added: |] 10.24 | | [added: |] [Form of Waters 2012 Restricted Stock Unit Agreement for Executive Officers - Five Year Vesting.(19)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312513469540/d644445dex101.htm) |
| [added: |] 10.25 | | [added: |] [Form of Waters 2012 Restricted Stock Unit Agreement for Executive Officers - One Year Vesting.(19)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312513469540/d644445dex102.htm) |
| [added: |] 10.26 | | [added: |] [Note Purchase Agreement, dated June 30, 2014, between Waters Corporation and the purchases named therein.(20)](http://www.sec.gov/Archives/edgar/data/1000697/000119312514290679/d760078dex101.htm) |
| [added: |] 10.27 | | [added: |] [Change of Control/Severance Agreement, dated as of April 1, 2015, between Waters Corporation and Michael F. Silveira.(22)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515178581/d919579dex101.htm) |
| [added: |] 10.28 | | [added: |] [President and Chief Executive Employment Agreement.(23)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515282127/d84496dex101.htm) |
| [added: |] 10.29 | | [added: |] [Change of Control/Severance Agreement, dated as of September 8, 2015, between Waters Corporation and Christopher J. O’Connell.(23)(*)](http://www.sec.gov/Archives/edgar/data/1000697/000119312515282127/d84496dex102.htm) |
| [added: |] 10.30 | | [added: |] [Note Purchase Agreement, dated as of May 12, 2016, between Waters Corporation and the purchasers named therein.(24)](http://www.sec.gov/Archives/edgar/data/1000697/000119312516672751/d207602dex101.htm) |
10-K
and are set forth on pages 50 to 95.
10-K.
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| | 4.1 | | | [Description of Registrant’s Securities](https://www.sec.gov/Archives/edgar/data/1000697/000119312520048303/d862312dex41.htm) |
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| Exhibit Number | | | | Description of Document |
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See (c) below.
| | | |
##### [Table of Contents](#toc)
| (c) | Financial Statement Schedule: |
The following additional financial statement schedule should be considered in conjunction with the consolidated financial statements.
All other schedules have been omitted because the required information is either not applicable or not sufficiently material to require submission of the schedule.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
For each of the three years in the period ended December 31, 2018
| | | | | | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | Balance at Beginning of Period | | | | Charged to Provision for Income Taxes* | | | | Other | | | | Balance at End of Period | | |
| Valuation allowance for deferred tax assets: | | | | | | | | | | | | | | | | |
| 2018 | | $ | 62,098 | | | $ | (2,128 | ) | | $ | (6,077 | ) | | $ | 53,893 | |
| 2017 | | $ | 61,225 | | | $ | (6,363 | ) | | $ | 7,236 | | | $ | 62,098 | |
| 2016 | | $ | 68,595 | | | $ | (5,473 | ) | | $ | (1,897 | ) | | $ | 61,225 | |
| * | These amounts have been recorded as part of the income statement provision for income taxes. The income statement effects of these amounts have largely been offset by amounts related to changes in other deferred tax balance sheet accounts. |
| | The change in the valuation allowance during the year ended December 31, 2018 is primarily due to the write-off of a valuation allowance to Retained Earnings for the tax effect related to intra-entity asset transfers. The change in the valuation allowance during the years ended December 31, 2017 and 2016 is primarily due to the effect of foreign currency translation on a valuation allowance related to a net operating loss carryforward. In addition, 2016 includes the release of a valuation allowance related to a foreign tax credit carryforward due to expiration. |
An excerpt. Shown here: 40 of 59 rewritten, 40 of 110 added and all 18 removed. The counts are complete. For every sentence, read Item 15. Exhibits, Financial Statement Schedules in the FY2019 filing and the FY2018 filing.
Item 8. Financial Statements and Supplementary Data
0 rewritten, 0 added, 1,734 removed, 0 unchanged
Dropped this year
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in _Internal Control_ _— Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on our evaluation under the framework in _Internal Control_ _— Integrated Framework (2013)_, our management, including our chief executive officer and chief financial officer, concluded that our internal control over financial reporting was effective as of December 31, 2018.
The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.
##### [Table of Contents](#toc)
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Waters Corporation
_Opinions on the Financial Statements and Internal Control over Financial Reporting_
We have audited the accompanying consolidated balance sheets of Waters Corporation and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, 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, 2018, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2018 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, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 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, 2018, based on criteria established in Internal Control — Integrated Framework (2013) issued by the COSO.
_Change in Accounting Principle_
As discussed in Note 10 to the consolidated financial statements, the Company changed the manner in which it accounts for share-based payment transactions in 2017.
_Basis for Opinions_
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.
Our audits also included performing such other procedures as we considered necessary in the circumstances.
We believe that our audits provide a reasonable basis for our opinions.
##### [Table of Contents](#toc)
_Definition and Limitations of Internal Control over Financial Reporting_
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| |
| --- |
| /s/ PricewaterhouseCoopers LLP |
| Boston, Massachusetts |
| February 26, 2019 |
An excerpt. Shown here: all 0 rewritten, all 0 added and 40 of 1,734 removed. The counts are complete. For every sentence, read Item 8. Financial Statements and Supplementary Data in the FY2018 filing.
Item 9A. Controls and Procedures
0 rewritten, 0 added, 9 removed, 0 unchanged
Dropped this year
_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 annual report on Form 10-K.
Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2018 (1) to ensure that information required to be disclosed by the Company, including its consolidated subsidiaries, in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its chief executive officer and chief financial officer, to allow timely decisions regarding the required disclosure and (2) to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
_Management’s Annual Report on Internal Control Over Financial Reporting_
See Management’s Report on Internal Control Over Financial Reporting in Item 8 on page 49 of this Form 10-K.
_Report of the Independent Registered Public Accounting Firm_
See the report of PricewaterhouseCoopers LLP in Item 8 on page 50 of this Form 10-K.
_Changes in Internal Controls Over Financial Reporting_
No change was identified in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2018 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 9B. Other Information
0 rewritten, 0 added, 3 removed, 0 unchanged
Dropped this year
None.
##### [Table of Contents](#toc)
PART III
Item 10. Directors, Executive Officers and Corporate Governance
0 rewritten, 0 added, 16 removed, 0 unchanged
Dropped this year
Information regarding the Company’s directors and any material changes to the process by which security holders may recommend nominees to the Board of Directors is contained in the definitive proxy statement for the 2019 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 compliance with Section 16(a) of the Exchange Act is contained in the Company’s definitive proxy statement for the 2019 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 2019 Annual Meeting of Stockholders under the headings “Report of the Audit Committee of the Board of Directors” and “Directors Meetings and Board Committees”.
Such information is incorporated herein by reference.
Information regarding the Company’s executive officers is contained in Part I of this Form 10-K.
The Company has adopted a Global Code of Business Conduct & Ethics (the “Code”) that applies to all of the Company’s employees (including its executive officers) and directors and that is in compliance with Item 406 of Regulation S-K.
The Code has been distributed to all employees of the Company.
In addition, the Code is available on the Company’s website, www.waters.com, under the caption “Corporate Governance”.
The Company intends to satisfy the disclosure requirement regarding any amendment to, or waiver of a provision of, the Code applicable to any executive officer or director by posting such information on its website.
The Company shall also provide to any person without charge, upon request, a copy of the Code.
Any such request must be made in writing to the Secretary of the Company, c/o Waters Corporation, 34 Maple Street, Milford, MA 01757.
The Company’s corporate governance guidelines and the charters of the audit committee, compensation committee, finance committee and nominating and corporate governance committee of the Board of Directors are available on the Company’s website, www.waters.com, under the caption “Corporate Governance”.
The Company shall provide to any person without charge, upon request, a copy of any of the foregoing materials.
Any such request must be made in writing to the Secretary of the Company, c/o Waters Corporation, 34 Maple Street, Milford, MA 01757.
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.
Item 11. Executive Compensation
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Dropped this year
This information is contained in the Company’s definitive proxy statement for the 2019 Annual Meeting of Stockholders under the headings “Compensation of Directors and Executive Officers”, “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report”.
Such information is incorporated herein by reference.
| Item 12: | _Security Ownership of Certain Beneficial Owners and Management_ _and Related Stockholder Matters_ |
| --- | --- |
Except for the Equity Compensation Plan information set forth below, this information is contained in the Company’s definitive proxy statement for the 2019 Annual Meeting of Stockholders under the heading “Security Ownership of Certain Beneficial Owners and Management”.
Such information is incorporated herein by reference.
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Equity Compensation Plan Information
The following table provides information as of December 31, 2018 about the Company’s common stock that may be issued upon the exercise of options, warrants, and rights under its existing equity compensation plans (in thousands):
| | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | A | | | | B | | | | C | | |
| | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) | | | | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (1) | | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (A)) | | |
| Equity compensation plans approved by security holders | | | 2,234 | | | $ | 142.47 | | | | 3,005 | |
| Equity compensation plans not approved by security holders | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | |
| Total | | | 2,234 | | | $ | 142.47 | | | | 3,005 | |
| | | | | | | | | | | | | |
| (1) | Column (a) includes an aggregate of 444 shares of common stock to be issued upon settlement of restricted stock, restricted stock units and performance stock units. The weighted-average share price in column (b) does not take into account restricted stock, restricted stock units or performance stock units, which do not have an exercise price. |
| --- | --- |
See Note 13, Stock-Based Compensation, in the Notes to Consolidated Financial Statements for a description of the material features of the Company’s equity compensation plans.
Item 13: _Certain Relationships and Related Transactions and Director Independence_
This information is contained in the Company’s definitive proxy statement for the 2019 Annual Meeting of Stockholders under the headings “Directors Meetings and Board Committees”, “Corporate Governance” and “Compensation of Directors and Executive Officers”.
Such information is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
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Dropped this year
This information is contained in the Company’s definitive proxy statement for the 2019 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”.
Such information is incorporated herein by reference.
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PART IV
Item 16. Form 10-K Summary
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Dropped this year
The optional summary in Item 16 has not been included in this Form 10-K.
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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/ SHERRY L. BUCK |
| Sherry L. Buck |
| _Senior Vice President and_ |
| _Chief Financial Officer_ |
Date: February 26, 2019
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 26, 2019.
| | | |
| --- | --- | --- |
| | | |
| /S/ CHRISTOPHER J. O’CONNELL | | Chairman of the Board of Directors and Chief |
| Christopher J. O’Connell | | Executive Officer (principal executive officer) |
| | | |
| /S/ SHERRY L. BUCK | | Senior Vice President and Chief Financial Officer |
| Sherry L. Buck | | (principal financial officer) (principal accounting officer) |
| | | |
| /S/ LINDA BADDOUR | | Director |
| Linda Baddour | | |
| | | |
| /S/ DR. MICHAEL J. BERENDT | | Director |
| Dr. Michael J. Berendt | | |
| | | |
| /S/ EDWARD CONARD | | Director |
| Edward Conard | | |
| | | |
| /S/ DR. LAURIE H. GLIMCHER | | Director |
| Dr. Laurie H. Glimcher | | |
| | | |
| /S/ GARY HENDRICKSON | | Director |
| Gary Hendrickson | | |
| | | |
| /S/ CHRISTOPHER A. KUEBLER | | Director |
| Christopher A. Kuebler | | |
An excerpt. Shown here: all 0 rewritten, all 0 added and 40 of 49 removed. The counts are complete. For every sentence, read Item 16. Form 10-K Summary in the FY2018 filing.