Waters Corporation and Agilent Technologies Deutschland GmbH Resolve Outstanding HPLC Litigation

The settlement provides for the resolution of a finding of patentinfringement by a court in the United Kingdom with respect to aportion of the pump technology used in Waters' Alliance HPLCinstruments. In 2002, Waters discontinued the use of the patentedtechnology and the settlement has no effect on the Company's abilityto sell its Alliance HPLC instruments in the United Kingdom.

In connection with the settlement, Waters and its United Kingdomaffiliate have been released from any claims of past infringementunder the patent and Waters has agreed to make a one time payment toAgilent of 3.5 million British Pounds Sterling.

As a result of the settlement, Waters has revised its fourthquarter 2005 and full year 2005 results as previously reported in apress release on January 24, 2006, to include a pre-tax $3.1 millionprovision for damages and estimated remaining costs related to thismatter. This has reduced GAAP earnings per diluted share for thefourth quarter of 2005 to $0.69 per diluted share from $0.71 perdiluted share and to $1.74 per diluted share from $1.76 per dilutedshare for the full year 2005. Updated condensed financial statementsare attached.

Similar patent infringement actions to the case noted above arecurrently pending in France and Germany. Waters believes, however,that any potential damages resulting from these ongoing disputes areunlikely to be materially different from amounts previously recorded.

Waters Corporation holds worldwide leading positions in threecomplementary analytical technologies - liquid chromatography, massspectrometry and thermal analysis. These markets account for $4.5 -$5.0 billion of the overall $20 + billion analytical instrumentmarket.

Certain statements contained herein are forward looking. Manyfactors could cause actual results to differ from these statements, inparticular, uncertainties of litigation.
Waters Corporation and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)


(Unaudited) (Unaudited)
Three Months Ended Year Ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004

Net sales 332,270 324,154 1,158,236 1,104,536
Cost of sales 133,980 130,144 478,355 454,807

Gross profit 198,290 194,010 679,881 649,729

Selling and
administrative expenses 81,593 80,916 321,694 300,150
Research and development
expenses 16,691 16,475 66,905 65,241
Purchased intangibles
amortization 1,216 1,236 5,005 4,814
Litigation provisions
and settlement (A) 3,122 - 3,122 (9,277)
Impairment of long-lived
asset (B) - 3,997 - 3,997
Restructuring and other
unusual charges, net - - - (54)

Operating income 95,668 91,386 283,155 284,858

Other expense, net (C) (3,103) (1,014) (3,103) (1,014)
Interest (expense)
income, net (3,421) 156 (5,489) 1,827
Income from operations
before income taxes 89,144 90,528 274,563 285,671

Provision for income
taxes (D) 13,546 19,011 72,588 61,618

Net income 75,598 71,517 201,975 224,053

Net income per basic
common share $ 0.70 $ 0.59 $ 1.77 $ 1.87

Weighted average number
of basic common shares 108,364 120,266 114,023 119,640


Net income per diluted
common share $ 0.69 $ 0.58 $ 1.74 $ 1.82

Weighted average number
of diluted common
shares and equivalents 109,962 122,679 115,945 123,069

(A) The results for the three months and year ended December 31, 2005
include provisions of $3.1 million for ongoing patent litigation
with Hewlett-Packard Company. The results for the year ended
December 31, 2004 include provisions of $7.8 million for the same
ongoing patent litigation with Hewlett-Packard Company as well as
settlement income of $17.1 million related to patent litigation
with Perkin-Elmer Corporation.

(B) The results for the three months and year ended December 31, 2004
include charges of $4.0 million recorded for a write-down of a
technology licensed asset.

(C) The results for the three months and year ended December 31, 2005
include charges of $4.8 million recorded for a write-off of an
equity investment and gain of $1.7 million related to the sale of
an equity investment. The results for the three months and year
ended December 31, 2004 include charges of $1.0 million recorded
for full write-down of an investment in an unaffiliated company.

(D) The results for the year ended December 31, 2005 include a tax
provision of approximately $24.0 million related to a qualified
dividends distribution under the American Jobs Creation Act of
2004.


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


(Unaudited) (Unaudited)
Three Months Ended Year Ended
December December December December
31, 31, 31, 31,
2005 2004 2005 2004

Reconciliation of income
per diluted share, in
accordance with
generally accepted
accounting principles,
with adjusted results:


Income per diluted share $ 0.69 $ 0.58 $ 1.74 $ 1.82
---------- -------- ---------- ----------

Adjustment for
litigation provisions
and settlement, net of
tax 2,569 - 2,569 (5,688)
Income per diluted share
effect 0.02 - 0.02 (0.05)
---------- -------- ---------- ----------

Adjustment for
restructuring and other
unusual charges, net of
tax - - (57)
Income per diluted share
effect - - - (0.00)
---------- -------- ---------- ----------

Adjustment for tax
provision for qualified
dividends distribution - - 24,000 -
Income per diluted share
effect - - 0.21 -
---------- -------- ---------- ----------

Impairment of long-lived
asset, net of tax - 3,158 - 3,158
Income per diluted share
effect - 0.03 - 0.03
---------- -------- ---------- ----------

Other expense, write
down and sale of
certain investments,
net of tax 2,554 801 2,554 801
Income per diluted share
effect 0.02 0.01 0.02 0.01
---------- -------- ---------- ----------

Adjusted income per
diluted share: $ 0.73 $ 0.62 $ 1.99 $ 1.81
========== ======== ========== ==========

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


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



December December
31, 2005 31, 2004


Cash and cash equivalents 493,588 539,077
Accounts receivable 256,809 271,731
Inventories 131,554 139,900
Other current assets 31,550 23,176
Total current assets 913,501 973,884

Property, plant and equipment, net 141,030 135,908
Other assets 387,874 350,634
Total assets 1,442,405 1,460,426


Notes payable and debt 326,286 206,663
Accounts payable and accrued expenses 278,544 286,327
Total current liabilities 604,830 492,990

Long-term debt 500,000 250,000
Other long-term liabilities 41,408 38,750
Total liabilities 1,146,238 781,740

Total equity 296,167 678,686
Total liabilities and equity 1,442,405 1,460,426