<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _______.
Commission File Number: 01-14010
Waters Corporation
(Exact name of registrant as specified in the charter)
Delaware 13-3668640
(State or other jurisdiction of (I.R.S Employer Identification No.)
incorporation or organization)
34 Maple Street
Milford, Massachusetts 01757
(Address of principal executive offices)
Registrant's telephone number, include area code: (508) 478-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities and Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days
Yes (X) No ( )
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on
its behalf by the undersigned hereunto duly authorized.
Waters Employee Investment Plan
Date: November 14, 1997 By: /s/ Phil S. Taymor
Retirement Committee
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
TO ACCOMPANY 1996 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
for the years ended December 31, 1996 and 1995
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
for the years ended December 31, 1996 and 1995
Page(s)
Report of Independent Accountants 2 - 3
Financial Statements:
Statements of Net Assets Available for
Benefits as of
December 31, 1996 and 1995 4
Statements of Changes in Net Assets Available
for Benefits for the
year ended December 31, 1996 5
Notes to the Financial Statements 6 - 13
Supplemental Schedules*
Item 27a - Schedule of Assets Held for
Investment Purposes as of
December 31, 1996 14
Item 27d - Schedule of Reportable Transactions
for the year ended
December 31, 1996 15
* Other schedules required by Section 2520.103-10 of the
Department of
Labor's Rules and Regulations for Reporting and
Disclosure under
ERISA have been omitted because they are not applicable.
1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Plan Administrator of the
Waters Employee Investment Plan:
We have audited the accompanying statements of net assets available
for benefits of the Waters Employee Investment Plan (the "Plan") as
of December 31, 1996 and 1995, and the related statement of changes
in net assets available for benefits for the year ended December
31, 1996. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
Except as explained in the following paragraph, we conducted our
audits in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
As permitted by 29 CFR 2520.103-8 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974, investment assets
held by The Bank of New York, the custodian of the Plan, and
transactions of those assets were excluded from the scope of our
audit of the Plan's 1995 financial statements, except for comparing
the information provided by the custodian, which is summarized in
Note C, with the related information included in the financial
statements.
Because of the significance of the information that we did not
audit, we are unable to, and do not, express an opinion on the
Plan's financial statements as of December 31, 1995. The form and
content of the information included in the 1995 financial
statements, other than that derived from the information certified
by the custodian, have been audited by us and, in our opinion, are
presented in compliance with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974.
In our opinion, the financial statements, referred to above, of the
Waters Employee Investment Plan as of December 31, 1996, and for
the year then ended present fairly, in all material respects, the
financial status of the Waters Employee Investment Plan as of
December 31, 1996, and changes in its financial status for the year
then ended in conformity with generally accepted accounting
principles.
Our audit of the Plan's financial statements as of and for the year
ended December 31, 1996, was made for the purpose of forming an
opinion on the financial statements taken as a whole. The
supplemental schedules as listed in the accompanying index are
presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The supplemental
schedules have been subjected to the auditing procedures
2
<PAGE>
applied in the audit of the basic financial statements for the year ended
December 31, 1996, and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements
taken as a whole.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
September 10, 1997
3
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
as of December 31, 1996 and 1995
___________________
<TABLE>
<CAPTION>
December 31,
1996 1995
------------ ------------
Assets:
Investments, at fair value:
<S> <C> <C>
Millipore Corporation Common Stock Fund $ - $ 1,031,885
Waters Corporation Common Stock Fund 2,457,412 -
Dreyfus Stable Value Fund - 3,334,639
INVESCO Stable Value Fund - 624,438
Dreyfus A Bonds Plus Fund - 2,791,402
Fidelity Puritan Fund 15,939,594 * 9,760,037 *
Fidelity Magellan Fund 18,515,888 * 13,397,107 *
Fidelity Growth Company Fund 632,983 -
Fidelity Growth & Income Portfolio 5,401,808 * -
Fidelity Intermediate Bond Fund 3,493,756 -
Fidelity Low-Priced Stock Fund 801,444 -
Fidelity Diversified International Fund 6,599,494 * -
Vanguard International Growth Fund - 3,805,171 *
AIM Constellation Fund 12,230,979 * 7,492,753 *
Putnam Separately Managed Fund - 23,775,818 *
Self-Directed Brokerage Link Fund 87,064 -
Participant loans receivable 3,843,669 3,055,722
------------ ------------
Total investments 70,004,091 69,068,972
------------ ------------
Cash and cash equivalents 23,646,569 * 867,050
Receivables:
Employer contributions receivable 44,292 -
Employee contributions receivable 117,169 -
Accrued income receivable - 2,014
------------ ------------
Total assets 93,812,121 69,938,036
------------ ------------
Liabilities:
Accrued expenses - 10,473
------------ ------------
Total liabilities - 10,473
------------ ------------
Net assets available for benefits $ 93,812,121 $ 69,927,563
============ ============
* Investment exceeds 5% of net assets available for benefits.
The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE>
<TABLE>
Waters Employee Investment Plan
Statement of Changes in Net Assets Available for Benefits With Fund Information
for the year ended December 31, 1996
<CAPTION>
Millipore Waters Dreyfus INVESCO
Corporation Corporation Stable Stable Dreyfus A
Common Stock Common Stock Value Value Bonds Plus
Fund Fund Fund Fund Fund
------------ ------------- ---------- ----------- -----------
Additions:
<S> <C> <C> <C> <C> <C>
Interest income $ - $ 3,744 $ - $ - $ -
Dividend income 3,357 - 127,864 90,515 145,533
Net appreciation (depreciation) of investments (44,973) 515,388 - - (125,462)
Loan repayments 85 51,568 - 118,550 102,126
Employer contributions 24 25,089 23 63,141 64,405
Employee contributions 48 83,211 46 165,775 170,443
Rollovers - 4,181 - 35,544 27,925
------------ ------------ ------------ ------------ ------------
Total additions (repayments) (41,459) 683,181 127,933 473,525 384,970
------------ ------------ ------------ ------------ ------------
Deductions:
Benefit payments to beneficiaries and participants 5,520 2,968 286,744 182,985 72,422
Loan withdrawals 1,184 88,863 60,406 62,865 144,728
Administrative expenses 111 614 2,002 933 2,057
------------ ------------ ------------ ------------ ------------
Total deductions (withdrawals) 6,815 92,445 349,152 246,783 219,207
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in plan assets (48,274) 590,736 (221,219) 226,742 165,763
------------ ------------ ------------ ------------ ------------
Net interfund transfers (975,152) 1,870,981 (3,113,420) (851,180) (2,957,165)
------------ ------------ ------------ ------------ ------------
Transfer of net assets from TAI Plan - - - - -
------------ ------------ ------------ ------------ ------------
Net assets available for benefits:
Beginning of year 1,023,426 - 3,334,639 624,438 2,791,402
------------ ------------ ------------ ------------ ------------
End of year $ - $ 2,461,717 $ - $ - $ -
============ ============ ============ ============ ============
Fidelity
Retirement Fidelity Fidelity
Fidelity Fidelity Government Growth Growth &
Puritan Magellan Money Market Company Income
Fund Fund Portfolio Fund Portfolio
------------ ------------ ------------ ------------ ------------
Additions:
Interest income $ - $ - $ 475,149 $ - $ -
Dividend income 1,521,876 2,598,152 - 8,295 5,984
Net appreciation (depreciation) of investments 211,156 (830,726) - (12,705) (2,460)
Loan repayments 372,494 535,573 33,074 925 1,079
Employer contributions 313,571 421,936 18,857 1,484 1,700
Employee contributions 901,216 1,192,050 48,603 6,502 8,340
Rollovers 135,491 148,167 17,234 10,786 22,776
------------ ------------ ------------ ------------ ------------
Total additions (repayments) 3,455,804 4,065,152 592,917 15,287 37,419
------------ ------------ ------------ ------------ ------------
Deductions:
Benefit payments to beneficiaries and participants 389,966 377,902 115,129 - -
Loan withdrawals 441,487 594,934 63,382 - 292
Administrative expenses 6,481 8,896 - - -
------------ ------------ ------------ ------------ ------------
Total deductions (withdrawals) 837,934 981,732 178,511 - 292
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in plan assets 2,617,870 3,083,420 414,406 15,287 37,127
------------ ------------ ------------ ------------ ------------
Net interfund transfers 1,584,393 (187,404) 21,051,395 619,696 1,309,737
------------ ------------ ------------ ------------ ------------
Transfer of net assets from TAI Plan 2,011,764 2,265,569 2,190,942 - 4,057,775
------------ ------------ ------------ ------------ ------------
Net assets available for benefits:
Beginning of year 9,760,037 13,397,107 - - -
------------ ------------ ------------ ------------ ------------
End of year $15,974,064 $ 18,558,692 $23,656,743 $ 634,983 $ 5,404,639
============ ============ ============ ============ ============
Fidelity Fidelity Fidelity Vanguard
Intermediate Low-Priced Diversified International AIM
Bond Stock International Growth Constellation
Fund Fund Fund Fund Fund
------------ ------------ ------------ ------------ ------------
Additions:
Interest income $ - $ - $ - $ - $ -
Dividend income 37,234 6,554 216,570 - 421,302
Net appreciation (depreciation) of investments 19,705 9,306 162,775 436,199 1,036,201
Loan repayments 24,756 525 36,959 124,058 315,362
Employer contributions 20,596 1,377 37,137 114,101 289,341
Employee contributions 52,254 6,687 110,914 347,328 832,116
Rollovers 6,059 12,830 58,128 42,902 256,850
------------ ------------ ------------ ------------ ------------
Total additions (repayments) 160,604 37,279 622,483 1,064,588 3,151,172
------------ ------------ ------------ ------------ ------------
Deductions:
Benefit payments to beneficiaries and participants 41,944 - 29,931 181,277 212,470
Loan withdrawals 38,100 - 27,589 127,524 408,703
Administrative expenses - - - 2,742 2,400
------------ ------------ ------------ ------------ ------------
Total deductions (withdrawals) 80,044 - 57,520 311,543 623,573
------------ ------------ ------------ ------------ ------------
Net increase (decrease) in plan assets 80,560 37,279 564,963 753,045 2,527,599
------------ ------------ ------------ ------------ ------------
Net interfund transfers 3,288,806 766,559 6,053,188 (4,558,216) 2,245,323
------------ ------------ ------------ ------------ ------------
Transfer of net assets from TAI Plan 133,520 - - - -
------------ ------------ ------------ ------------ ------------
Net assets available for benefits:
Beginning of year - - - 3,805,171 7,492,753
------------ ------------ ------------ ------------ ------------
End of year $ 3,502,886 $ 803,838 $ 6,618,151 $ - $12,265,675
============ ============ ============ ============ ============
Putnam
Separately Self-Directed Participant
Managed Brokerage Link Loans
Fund Fund Receivable Total
------------ ------------ ------------ ------------
Additions:
Interest income $ - $ - $ 243,414 $ 722,307
Dividend income - - - 5,183,236
Net appreciation (depreciation) of investments 2,197,054 (2,358) - 3,569,100
Loan repayments - - (1,717,134) -
Employer contributions - - - 1,372,782
Employee contributions 1,748 - - 3,927,281
Rollovers - - - 778,873
------------ ------------ ------------ ------------
Total additions (repayments) 2,198,802 (2,358) (1,473,720) 15,553,579
------------ ------------ ------------ ------------
Deductions:
Benefit payments to beneficiaries and participants 593,798 - 60,394 2,553,450
Loan withdrawals - - (2,060,057) -
Administrative expenses 10,909 - - 37,145
------------ ------------ ------------ ------------
Total deductions (withdrawals) 604,707 - (1,999,663) 2,590,595
------------ ------------ ------------ ------------
Net increase (decrease) in plan assets 1,594,095 (2,358) 525,943 12,962,984
------------ ------------ ------------ ------------
Net interfund transfers (26,236,963) 89,422 - -
------------ ------------ ------------ ------------
Transfer of net assets from TAI Plan - - 262,004 10,921,574
------------ ------------ ------------ ------------
Net assets available for benefits:
Beginning of year 24,642,868 - 3,055,722 69,927,563
------------ ------------ ------------ ------------
End of year $ - $ 87,064 $ 3,843,669 $93,812,121
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
---------------
A. General
-------
Description of Plan
-------------------
The Waters Employee Investment Plan (the "Plan"), effective
August 19, 1994, was created to provide an opportunity for
eligible employees of Waters Technologies Corporation
("Waters" or the "Company"), Waters Operating Corporation,
and any legally affiliated company (a "Waters Company") to
provide for their future financial security through
participation in a systematic savings program to which each
participating employer (the "Employer" or "Employers") also
contributes. The Plan covers substantially all employees of
a Waters Company who work in the United States or Puerto
Rico, except employees of the former Extrel Division, and is
designed to take advantage of provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), which allow a
participant to elect to reduce taxable compensation (subject
to certain limitations), with the amount of such reduction
being contributed to the Plan by the Employer on behalf of
the electing participant. TA Instruments, Inc. ("TAI"), a
Waters Company, adopted the Plan effective December 31,
1996.
Effective January 1, 1997, the Waters Employee Investment
Plan for Puerto Rico was established to allow eligible
employees who work in Puerto Rico to contribute on a before-
tax basis. The Waters Employee Investment Plan only allowed
for contributions on an after-tax basis for these employees.
The following is provided for general information purposes
only. Participants should refer to the Plan document for a
more complete description of the Plan's provisions.
Plan Merger
-----------
Waters Corporation acquired substantially all of the assets
of TA Instruments, Inc. on May 1, 1996 ("TAI Acquisition").
As noted above, TAI adopted the Waters Employee Investment
Plan as of December 31, 1996. Prior to that date,
retirement benefits were provided to TAI employees through
the TA Instruments, Inc. Savings and Investment Plan ("TAI
Plan"). Effective December 31, 1996, the TAI Plan was
merged into the Waters Employee Investment Plan and all the
assets and liabilities of the TAI Plan were transferred to
the Plan.
Eligibility for Participation
-----------------------------
Effective October 1, 1996, employees are eligible to
participate in the Plan thirty days following the date of
hire. Prior to this date, employees were not eligible to
participate in the Plan until they met the one-year service
requirement. The Employer does not begin to match
contributions until the employees have completed one year of
service in which they work at least 1,000 hours.
6
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
---------------
Former participants in the TAI Plan became immediate
participants under the Plan effective January 1, 1997. All
non-vested participant balances in the TAI Plan became
vested in the Waters Plan effective January 1, 1997.
Contributions
-------------
The Plan is a defined contribution plan subject to the
provisions of the Employee Retirement Income Security Act of
1974 (ERISA). Participants may elect to voluntarily
contribute to the Plan from 1% to 15% of their annual
compensation up to $9,500 in 1996 and $9,240 in 1995 on a
before-tax basis, except for employees domiciled in Puerto
Rico who contributed on an after-tax basis prior to 1997.
Beginning January 1, 1997, employees domiciled in Puerto
Rico may contribute to the Waters Employee Investment Plan
for Puerto Rico on a before-tax basis. If an employee is
considered a highly compensated employee, the amount that
may be contributed to the Plan may be further limited by IRS
restrictions. For contribution purposes, compensation
includes base pay, lump sum cash payments for merit pay
increases, commissions, overtime, shift differentials, short-
term disability benefits, vacation pay, and certain
management-approved incentive bonuses. The Employer will
match 50% of the first 6% contributed by the employee upon
completion of the one-year service requirement.
Participant Accounts
--------------------
Each participant's account is credited with the
participant's contributions and allocations of (a) the
Employer's matching contributions and, (b) Plan earnings,
and charged with an allocation of administrative expenses to
the extent that they are paid by the Plan. Allocations are
based on the participant account balances, as defined. The
benefit to which a participant is entitled is the benefit
that can be provided from the participant's account balance.
Vesting
-------
Participants are fully vested in their own contributions, as
well as Employer matching contributions, at all times.
Rollover Election
-----------------
Employees may make a rollover contribution to the Plan at
any time, even if they are not yet eligible to participate
in the Plan.
Employees may irrevocably elect to rollover all or any
portion of a distribution from the Waters Employee
Investment Plan to the Waters Retirement Plan following
termination (other than for death or disability).
7
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
---------------
Investments
-----------
Beginning on October 1, 1996, the Plan provides eleven (11)
investment options to which participants may direct their
contributions. Each investment option offers a different
level of risk and expected rate of return. Current
investment options available to Plan participants include
the Fidelity Retirement Government Money Market Portfolio,
Fidelity Intermediate Bond Fund, Fidelity Puritan Fund,
Fidelity Growth and Income Portfolio, Fidelity Growth
Company Fund, Fidelity Magellan Fund, Fidelity Low-Priced
Stock Fund, AIM Constellation Fund, Fidelity Diversified
International Fund, Waters Corporation Common Stock Fund,
and a self-directed brokerage fund. The Fidelity Institutional
Money Market Funds: Money Market Class I used as a temporary
investment for funds in the Waters Corporation Common Stock Fund
that have not been used to purchase shares of common stock.
The Plan provided the following seven (7) investment options
during the period January 1 to September 30, 1996: the
INVESCO Stable Value Fund, Dreyfus A Bonds Plus Fund,
Fidelity Puritan Fund, Fidelity Magellan Fund, AIM
Constellation Fund, the Vanguard International Fund and the
Waters Corporation Common Stock Fund.
The following frozen investments were liquidated on or after
September 30, 1996: the Dreyfus A Bonds Plus Fund, Dreyfus
Stable Value Fund, Vanguard International Growth Fund, the
INVESCO Stable Value Fund, and the Putnam Separately Managed
Fund.
Any balances remaining in the Dreyfus A Bonds Plus Fund were
transferred to the Fidelity Intermediate Bond Fund and any
funds remaining in the Dreyfus Stable Value Fund were
transferred to the Fidelity Retirement Government Money
Market Portfolio. Any balances in the Vanguard
International Growth Fund were transferred to the Fidelity
Diversified International Fund. Participants were allowed
to maintain their investments in the INVESCO Stable Value
Fund, however, the balance remaining in this fund at
December 10, 1996 was automatically transferred to the
Fidelity Retirement Government Money Market Portfolio Fund.
Prior to that date, participants were allowed to transfer
their account balances from the INVESCO Stable Value Fund to
any non-competing investment option at any time.
Balances transferred from the Millipore Corporation
Employees' Participation and Savings Plan were made up of
two parts, the Participation Plan and the Savings Plus Plan.
Waters employees' accumulated benefit balances in the
Millipore Participation Plan were valued as of September 30,
1994 and transferred to the Putnam Fund in December of 1994.
Beginning in 1995, participants began to transfer 25% of
this account balance per year into other investment options.
At December 31, 1995, the Putnam Fund consisted of
investments in the following: the Putnam International
Trust, Putnam Core Growth Trust, Putnam Cap Growth Trust
DBT, Putnam International Fixed Income Trust, Putnam High
Yield Managed Trust, Putnam Horizon Management Trust, and
the Putnam Short Term Investment Fund. On October 1, 1996,
the remaining Putnam Fund balance was liquidated and all
funds were transferred to the Fidelity Retirement Government
Money Market Portfolio, the fund option which had the least
8
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
---------------
investment risk. Beginning in November 1996, employees
could transfer all or any portion of these funds to any of
the other remaining investment vehicles.
Any monies invested in the Millipore Common Stock Fund on
August 19, 1994 were transferred to investments offered
under the Waters Employee Investment Plan, if so directed by
the participant. Amounts remaining in this fund at April
1, 1996 were liquidated and invested in the same manner as
current participant contributions.
Administration
--------------
The Company entered into an agreement with Fidelity
Management Trust Company ("Fidelity") to act as the
investment manager, custodian, trustee, and recordkeeper for
the Plan effective October 1, 1996. Prior to this date,
Waters was the trustee, The Bank of New York was the
custodian for Plan investments and State Street Global
Advisors (formerly Wyatt Preferred Choice, LLC) was the
recordkeeper ("Recordkeeper") of the Plan.
Benefits
--------
Benefits are paid in one lump-sum upon death, disability,
retirement, or termination. Participants who are actively
employed and have attained the age of 59 1/2 may withdraw
all or any portion of their account balance for any reason.
The Plan also provides for certain hardship withdrawals upon
approval of the Plan Administrator.
Loans
-----
Participants in the Plan may borrow from their account
balance. A participant may borrow an amount greater than
$1,000 but not to exceed the lesser of (a) $50,000 minus the
largest outstanding loan balance in the 12 months preceding
the loan request, (b) 50% of the total account balance minus
current outstanding loan balances, or (c) the sum of any
before-tax, rollover, after-tax, and Company-matching
account balances. Beginning in October 1996, item (c) above
became unavailable as a method of calculating potential loan
availability for participants.
Principal is repaid through payroll deductions for a period
up to five years, except for loans made in purchasing or
constructing a principal residence for which the repayment
term may be up to 20 years. The loans bear interest at a
fixed rate equal to the prime rate on the first business day
of the calendar quarter in which the loan is funded and are
collateralized by the participants' account balance. At
December 31, 1996 and December 31, 1995, interest rates on
outstanding loans ranged from 5.5% to 10.0% and 5.5% to
9.0%, respectively.
9
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
---------------
Plan Amendment and Termination
------------------------------
The Company expects to continue the Plan indefinitely but
reserves the right to modify, amend or terminate the Plan at
any time. No such modification or amendment, however, shall
have the effect of retroactively changing or depriving
participants or beneficiaries of rights already accrued
under the Plan. If the Plan is terminated, the assets of
the Plan will remain 100% vested to the participants.
B. Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
---------------------
The financial statements of the Plan are presented on the
accrual basis of accounting in conformity with generally
accepted accounting principles.
Investment Valuation
--------------------
Investments in mutual funds are stated at fair market value
based on quoted market price at which shares of the fund may
be purchased or redeemed as reported by the Plan's Trustee,
Fidelity.
Investments in the Waters Common Stock Fund are stated at
fair market value based on the quoted market price at which
Waters Common Stock may be purchased or redeemed and fair
market value of short-term liquid investments necessary to
satisfy the fund's cash needs for transfers and payments, as
reported by Fidelity.
Investments in the Self-Directed Brokerage Link Fund are
stated at fair market value based on the quoted market price
at which the underlying investments may be purchased or
redeemed as reported by Fidelity.
Participant loans are valued at cost, which approximates
fair market value.
The Plan presents in the statement of changes in net assets
the net appreciation (depreciation) in the fair value of its
investments which consists of the realized gains or losses
and unrealized appreciation (depreciation) on those
investments.
Investment Transactions and Investment Income
---------------------------------------------
Investment transactions are accounted for on a trade date
basis. Realized gains and losses are computed on the basis
of the identified cost of securities sold or redeemed.
Interest income is recorded on the accrual basis. Dividend
income is recorded on the ex-dividend date.
10
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
---------------
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include cash on hand and short-
term highly liquid investments having a maturity of three
months or less at acquisition. Investments in the Fidelity
Retirement Government Money Market Portfolio are reported as
cash and cash equivalents at December 31, 1996. Investments
in The Bank of New York Collective Short Term Investment
Fund and the Putnam Short Term Investment Fund are reported
as cash and cash equivalents at December 31, 1995.
Contributions
-------------
Contributions are recorded in the period in which payroll
deductions are made from the employee's compensation.
Benefit Payments
----------------
Benefit distributions are recorded when paid.
Use of Estimates
----------------
The preparation of the Plan's financial statements in
conformity with generally accepted accounting principles
requires the Plan Administrator to make significant
estimates and assumptions that affect the reported amounts
of net assets available for benefits at the date of the
financial statements and the changes in net assets available
for benefits during the reporting period and, when
applicable, disclosures of contingent assets and liabilities
at the date of the financial statements. Actual results
could differ from those estimates.
Risks and Uncertainties
-----------------------
The Plan provides for various investment options in any
combination of stocks, bonds, fixed income securities,
mutual funds, and other investment securities. Investment
securities are exposed to various risks, such as interest
rate, market, and credit risks. Due to the level of risk
associated with certain investment securities, it is at
least reasonably possible that changes in the values of
investment securities will occur in the near term and that
such changes could materially affect participants' account
balances and the amounts reported in the statement of net
assets available for benefits.
C. Information Certified by the Custodian
--------------------------------------
The Plan administrator elected the method of compliance
permitted under 29 CFR 2520.103-8 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974
for the year ended December 31, 1995. Information certified
11
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
---------------
as complete and accurate includes fair value of investments,
net appreciation of investments, interest and dividend
income and reportable transactions.
D. Reconciliation of Financial Statements to Form 5500
---------------------------------------------------
The following is a reconciliation of net assets available
for benefits included in the financial statements to the
Form 5500:
<TABLE>
<CAPTION>
December 31,
1996 1995
---- ----
<S> <C> <C>
Net assets available for benefits
included in the financial statements $93,812,121 $69,927,563
Benefits payable 10,810 29,365
----------- -----------
Net assets available for benefits
per the Form 5500 $93,801,311 $69,898,198
=========== ===========
</TABLE>
The following is a reconciliation of benefits paid to
participants included in the financial statements to the
Form 5500:
Year ended
December 31, 1996
-----------------
Benefits paid to participants included in the
financial statements $2,553,450
Add: Benefits payable at December 31, 1996 10,810
Less: Benefits payable at December 31, 1995 (29,365)
----------
Benefits paid to participants per the Form 5500 $2,534,895
==========
Amounts allocated to withdrawing participants are recorded
on the Form 5500 for benefit claims that have been processed
and approved for payment prior to December 31, 1996, but not
yet paid as of that date.
E. Administrative Expenses
-----------------------
Expenses incurred in the administration of the Plan are paid
by the Company, except for individual account administration
fees which are paid by the participants. Expenses incurred
by the Company were approximately $60,392 and $37,020 for
the years ended December 31, 1996 and December 31, 1995,
respectively.
12
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
---------------
F. Fund Valuation Errors
---------------------
Subsequent to December 31, 1995, the Recordkeeper determined
that participant account balances in the Dreyfus Stable
Value Fund and the Putnam Fund were improperly valued during
and for the year ended December 31, 1995. These valuation
errors were corrected in the participant accounts, and the
disclosures set forth herein reflect the appropriate
valuation for the funds.
Because of the valuation error in the Dreyfus Stable Value
Fund, certain participants received excess distributions
from the Plan ($7,269 in total). The Recordkeeper
reimbursed the Plan with respect to the excess
distributions.
Participant account balances in the Putnam Fund were
undervalued, and as a result, certain participants who
terminated from the Plan during the 1995 Plan year received
deficient distributions amounting to $4,627. Each
participant account balance was adjusted to reflect the
correct fund valuation, and an additional distribution was
made in 1996 to those participants who, after adjustment
with respect to the Dreyfus Stable Value Fund, received
deficient distributions during 1995.
G. Tax Status
----------
The Internal Revenue Service has determined and informed the
Company by a letter dated October 5, 1995, that the Plan is
designed in accordance with applicable sections of the
Internal Revenue Code ("IRC"). The Plan has since been
amended, as herein described. Although a request for an
updated determination letter has not been made, the Plan
Administrator has asserted that the Plan has been and
continues to be operated in accordance with all applicable
provisions of the IRC and ERISA.
13
<PAGE>
<TABLE>
WATERS EMPLOYEE INVESTMENT PLAN
SUPPLEMENTAL SCHEDULE
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
____________
<CAPTION>
Shares Description Cost Fair Value
-------------- -------------------------------------------------------- ------------- -------------
<C> <S> <C> <C>
79,266.00 Waters Corporation Common Stock Fund $ 2,057,845 $ 2,457,412
924,570.39 Fidelity Puritan Fund 15,092,452 15,939,594
229,583.24 Fidelity Magellan Fund 17,424,884 18,515,888
15,644.66 Fidelity Growth Company Fund 645,687 632,983
175,782.89 Fidelity Growth & Income Portfolio 5,404,267 5,401,808
346,602.78 Fidelity Intermediate Bond Fund 3,476,014 3,493,756
37,538.38 Fidelity Low-Priced Stock Fund 792,139 801,444
448,639.99 Fidelity Diversified International Fund 6,437,757 6,599,494
484,203.44 AIM Constellation Fund 10,295,965 12,230,979
87,064.42 Self-Directed Brokerage Link Fund 87,064 87,064
23,646,568.84 Fidelity Retirement Government Money Market Portfolio 23,646,569 23,646,569
N/A Participant loans, with interest rates ranging from 5.5% to 10.0% 3,843,669 3,843,669
------------- -------------
$ 89,204,312 $ 93,650,660
============= =============
</TABLE>
14
<PAGE>
WATERS EMPLOYEE INVESTMENT PLAN
SUPPLEMENTAL SCHEDULE
ITEM 27d - SCHEDULE OF REPORTABLE (5%) TRANSACTIONS
Year ended December 31, 1996
----------------------------
<TABLE>
<CAPTION>
Party Type of No. of Purchase Selling
Involved Description of Assets Transaction Transactions Price Price
- -------- --------------------- ----------- ------------- ----------- ----------
Individual transactions:
<S> <C> <C> <C> <C> <C>
Fidelity Fidelity Growth & Income Portfolio Purchase 1 $ 4,057,775 -
Fidelity Fidelity Diversified International Fund Purchase 1 $ 5,764,905 -
Fidelity Fidelity Retirement Government Money Market Portfolio Purchase 1 $20,562,396 -
Bank of New York Putnam Core Growth Trust Sale 1 - $5,644,180
Bank of New York Putnam Horizon Management Trust Sale 1 - $4,588,479
Bank of New York Putnam Short Term Investment Fund Purchase 1 $ 5,100,000 -
Bank of New York Putnum Short Term Investment Fund Sale 1 8,157,739
Bank of New York Vanguard International Group Sale 1 - $5,764,877
Series of transactions:
Fidelity Fidelity Puritan Fund Purchase 44 $ 3,166,724 -
Fidelity Fidelity Puritan Fund Sale 21 - $ 904,277
Fidelity Fidelity Magellan Fund Purchase 41 $ 3,076,340 -
Fidelity Fidelity Magellan Fund Sale 22 - $1,502,252
Fidelity Fidelity Growth & Income Portfolio Purchase 29 $ 5,404,560 -
Fidelity Fidelity Growth & Income Portfolio Sale 2 - $ 292
Fidelity Fidelity Intermediate Bond Fund Purchase 42 $ 3,748,684 -
Fidelity Fidelity Intermediate Bond Fund Sale 19 - $ 274,633
Fidelity Fidelity Diversified International Fund Purchase 41 $ 6,616,585 -
Fidelity Fidelity Diversified International Fund Sale 17 - $ 179,866
Fidelity Fidelity Retirement Government Money Market Portfolio Purchase 52 $26,437,088 -
Fidelity Fidelity Retirement Government Money Market Portfolio Sale 23 - $2,790,519
Bank of New York Dreyfus Stable Value Fund Purchase 12 $ 150,012 -
Bank of New York Dreyfus Stable Value Fund Sale 74 - $3,484,651
Bank of New York Dreyfus A Bonds Purchase 56 $ 1,323,413 -
Bank of New York Dreyfus A Bonds Sale 75 - $3,989,502
Bank of New York Fidelity Puritan Fund Purchase 71 $ 5,022,659 -
Bank of New York Fidelity Puritan Fund Sale 74 - $1,316,707
Bank of New York Fidelity Magellan Fund Purchase 49 $ 6,499,513 -
Bank of New York Fidelity Magellan Fund Sale 106 - $2,124,091
Bank of New York Vanguard International Group Purchase 77 $ 2,076,530 -
Bank of New York Vanguard International Group Sale 53 - $6,318,010
Bank of New York AIM Constellation Fund Purchase 91 $ 4,472,882 -
Bank of New York AIM Constellation Fund Sale 64 - $1,136,282
Bank of New York Collective Short Term Investment Fund Purchase 113 $ 3,311,167 -
Bank of New York Collective Short Term Investment Fund Sale 91 - $3,311,167
Bank of New York Putnam Cap Growth Trust Purchase 10 $ 1,140,552 -
Bank of New York Putnam Cap Growth Trust Sale 5 - $9,081,755
Bank of New York Putnam Core Growth Trust Purchase 1 $ 723,461 -
Bank of New York Putnam Core Growth Trust Sale 3 - $7,753,242
Bank of New York Putnam High Yield Managed Trust Purchase 1 $ 778,384 -
Bank of New York Putnam High Yield Managed Trust Sale 5 - $2,613,611
Bank of New York Putnam Horizon Management Trust Purchase 2 $ 1,555,803 -
Bank of New York Putnam Horizon Management Trust Sale 3 - $6,095,827
Bank of New York Putnam International Fixed Income Trust Purchase 2 $ 793,512 -
Bank of New York Putnam International Fixed Income Trust Sale 4 - $2,134,673
Bank of New York Putnam International Trust Purchase 1 $ 605,169 -
Bank of New York Putnam International Trust Sale 4 - $4,027,441
Bank of New York Putnam Short Term Investment Fund Purchase 11 $ 8,145,522 -
Bank of New York Putnam Short Term Investment Fund Sale 30 - $9,012,572
Current Value
of Asset on
Party Cost of Transaction
Involved Description of Assets Asset Date Net Gain
- -------- --------------------- ----------- ----------- -----------
Individual transactions:
Fidelity Fidelity Growth & Income Portfolio $ - $ 4,057,775 -
Fidelity Fidelity Diversified International Fund $ - $ 5,764,905 -
Fidelity Fidelity Retirement Government Money Market Portfolio $ - $20,562,396 -
Bank of New York Putnam Core Growth Trust $ 3,670,222 $ 5,644,180 $ 1,973,958
Bank of New York Putnam Horizon Management Trust $ 4,108,004 $ 4,588,479 $ 480,475
Bank of New York Putnam Short Term Investment Fund $ - $ 5,100,000 -
Bank of New York Putnum Short Term Investment Fund $ 8,157,739 $ 8,157,739 $ -
Bank of New York Vanguard International Group $ 5,109,310 $ 5,764,877 $ 655,567
Series of transactions:
Fidelity Fidelity Puritan Fund $ 3,166,724 $ 3,166,724 -
Fidelity Fidelity Puritan Fund $ 904,277 $ 904,277 $ -
Fidelity Fidelity Magellan Fund $ 3,076,340 $ 3,076,340 -
Fidelity Fidelity Magellan Fund $ 1,502,252 $ 1,502,252 $ -
Fidelity Fidelity Growth & Income Portfolio $ 5,404,560 $ 5,404,560 -
Fidelity Fidelity Growth & Income Portfolio $ 292 $ 292 $ -
Fidelity Fidelity Intermediate Bond Fund $ 3,748,684 $ 3,748,684 -
Fidelity Fidelity Intermediate Bond Fund $ 274,633 $ 274,633 $ -
Fidelity Fidelity Diversified International Fund $ 6,616,585 $ 6,616,585 -
Fidelity Fidelity Diversified International Fund $ 179,866 $ 179,866 $ -
Fidelity Fidelity Retirement Government Money Market Portfolio $26,437,088 $26,437,088 -
Fidelity Fidelity Retirement Government Money Market Portfolio $ 2,790,519 $ 2,790,519 $ -
Bank of New York Dreyfus Stable Value Fund $ 150,012 $ 150,012 -
Bank of New York Dreyfus Stable Value Fund $ 3,484,651 $ 3,484,651 $ -
Bank of New York Dreyfus A Bonds $ 1,323,413 $ 1,323,413 -
Bank of New York Dreyfus A Bonds $ 4,063,511 $ 3,989,502 $ (74,009)
Bank of New York Fidelity Puritan Fund $ 5,022,659 $ 5,022,659 -
Bank of New York Fidelity Puritan Fund $ 1,206,928 $ 1,316,707 $ 109,779
Bank of New York Fidelity Magellan Fund $ 6,499,513 $ 6,499,513 -
Bank of New York Fidelity Magellan Fund $ 2,034,265 $ 2,124,091 $ 89,826
Bank of New York Vanguard International Group $ 2,076,530 $ 2,076,530 -
Bank of New York Vanguard International Group $ 5,607,547 $ 6,318,010 $ 710,463
Bank of New York AIM Constellation Fund $ 4,472,882 $ 4,472,882 -
Bank of New York AIM Constellation Fund $ 947,485 $ 1,136,282 $ 188,797
Bank of New York Collective Short Term Investment Fund $ 3,311,167 $ 3,311,167 -
Bank of New York Collective Short Term Investment Fund $ 3,311,167 $ 3,311,167 -
Bank of New York Putnam Cap Growth Trust $ 1,140,552 $ 1,140,552 -
Bank of New York Putnam Cap Growth Trust $ 5,831,126 $ 9,081,755 $ 3,250,629
Bank of New York Putnam Core Growth Trust $ 723,461 $ 723,461 -
Bank of New York Putnam Core Growth Trust $ 5,162,264 $ 7,753,242 $ 2,590,978
Bank of New York Putnam High Yield Managed Trust $ 778,384 $ 778,384 -
Bank of New York Putnam High Yield Managed Trust $ 2,283,388 $ 2,613,611 $ 330,223
Bank of New York Putnam Horizon Management Trust $ 1,555,803 $ 1,555,803 -
Bank of New York Putnam Horizon Management Trust $ 5,393,521 $ 6,095,827 $ 702,306
Bank of New York Putnam International Fixed Income Trust $ 793,512 $ 793,512 -
Bank of New York Putnam International Fixed Income Trust $ 1,915,382 $ 2,134,673 $ 219,291
Bank of New York Putnam International Trust $ 605,169 $ 605,169 -
Bank of New York Putnam International Trust $ 3,398,510 $ 4,027,441 $ 628,931
Bank of New York Putnam Short Term Investment Fund $ 8,145,522 $ 8,145,522 -
Bank of New York Putnam Short Term Investment Fund $ 9,012,572 $ 9,012,572 -
</TABLE>
15
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the
registration statement of Waters Corporation on Form S-8
(File No. 33-80677) of our report dated September 10, 1997
on our audit of the financial statements of the Waters
Employee Investment Plan as of December 31, 1996 and 1995,
and for the year ended December 31, 1996 which report is
included in this Annual Report on Form 11-K.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
November 14, 1997
