THE BUSINESSWEEK 50 RANKINGS + 25

59

Waters

As concerns about the safety of drugs and food grow, so grows Waters. The company is the market leader in liquid chromatography and mass spectrometry, sophisticated equipment used to analyze chemicals and other materials for research and quality purposes. “Analytical testing is one of those behind-the-scenes businesses that play a role everywhere,” says CEO Douglas Berthiaume. “And with food and drug regulations getting stricter around the world, the demand for our equipment should keep going up.” Waters has seen revenues increase by more than 10% each year, and earnings per share by more than 15% a year. Much of its growth over the last three years can be attributed to its breakthrough Acquity UPLC (ultra performance liquid chromatography) machine. The product, which can cost from $150,000 to $600,000, enables drug companies to cut the analysis of a new chemical sample from some 60 minutes to 5, according to Berthiaume. In coming years, he sees new applications such as analysis of performance-enhancing drugs, screening of newborns, and even art preservation contributing to Waters’ growth.

Overall Grade

A-

Market Data

WAT

Market Value
(2/28/2007)

$5.5 Billion

Profitability*

37.9%

A

Sales Growth Rate**

9.6%

C

12-Month Sales

$1.3 Billion

12-Month Net Income

$0.2 Billion

Total Return Past 12 Months

26.9%

Past 36 Months

46.8%

Economic SectorHealth Care
IndustryLife Sciences Tools & Services
The overall sector letter grade reflects how the weighted average of the return on income, or return on equity, and sales growth grades compare with others in the same sector. For the overall grade as well as the ROE/ROI and sales growth grades, an "A" places a company in the top 7% of its sector and an "A-" in the top 14% of the sector. The actual ranking was done using the underlying numerical measures. Grades are for information only.
* For nonfinancial companies, three-year average pretax operating profit before interest and special items as a percentage of average invested capital. For financial companies, pretax profits as a percentage of average shareholder's equity.
*Three-year average annual sales growth based on the most recently reported 36 months, calculated using the least-squares method.

Douglas  A. Berthiaume

Douglas A. Berthiaume, 58

CEO since 1994


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Data as of 2/28/07 provided by Standard & Poor's Compustat