Waters Corp

Core operations · Operational disruption and business continuity

Disruption of operations, including at the Company's manufacturing facilities, or disruption or failure of the Company's key technology systems could have a material impact on the Company's business, results of operations and financial condition. Any prolonged disruption to the operations at any of these facilities, whether due to labor difficulties (including shortages), destruction of or damage to any facility, power interruptions, cybersecurity incidents or breaches, failure of key technology systems, weather events or natural disasters could harm our customer relationships.

Supply chain and procurement · Supplier operation and dependance

The Company may be unable to provide (or obtain from third parties) the same types and level of services to the BDS Business that historically have been provided by BD or may be unable to provide (or obtain) them at the same cost. The Company may be unable to replace these services in a timely manner or on terms and conditions as favorable as those the BDS Business currently receives from BD.

Project and contract management · Project execution and delivery risks

The success of the Company will depend, in significant part, on its ability to successfully integrate the BDS Business with the Company's existing business and its ability to grow revenues and realize the anticipated strategic benefits and synergies from the BDS Business Acquisition. Potential difficulties include risks associated with the failure to implement the business plan for the Company and performance shortfalls as a result of the diversion of management and employee attention.

Project and contract management · Government contract dependency

The Company is subject to laws and regulations governing government contracts, and failure to address these laws and regulations or comply with government contracts could harm its business by leading to a reduction in revenues associated with these customers. The Company derives a portion of its revenue from direct and indirect sales to U.S. federal, state and local as well as foreign governments and their respective agencies.

Human capital and workforce · Key personnel dependence and succession

Our future success depends, in part, upon the continued service of our executive officers and other key management and technical personnel. The failure to attract or retain members of the Company's senior management team and key talent could have a negative effect on the Company's operating results.

Cybersecurity and data protection · Third party data security and vendors

If the Company's security measures are compromised or fail to adequately protect its technology infrastructure, research and development efforts or manufacturing operations, the Company's products and services may be perceived as vulnerable or unreliable, the information protected by the Company's controls and processes may be subject to unauthorized access, acquisition or modification.

Cybersecurity and data protection · Data breaches and cyber attacks

Disruption, cyber-attack or unforeseen problems with the security, maintenance or upgrade of the Company's information and web-based systems could have an adverse effect on the Company's business strategy, results of operations and financial condition. The Company's technology infrastructure and that of its third-party partners has been, and may in the future be, vulnerable to damage or interruption from, but not limited to, natural disasters, power loss, telecommunication failures, terrorist attacks, computer viruses, ransomware, unauthorized access to customer or employee data.

Digital transformation and innovation · Technology obsolescence and evolution

The Company's products are subject to rapid changes in technology. Rapidly changing technology could make some or all of our product lines obsolete unless the Company is able to continually improve our existing products and develop new products.

Technology infrastructure · Technology systems and infrastructure failure

Our worldwide enterprise resource planning (ERP) system is integral to our ability to accurately and efficiently maintain our books and records, record transactions, coordinate resource allocation between our manufacturing facilities across the globe. Transitioning from the existing ERP system to the new ERP system has required and will continue to require significant investment of human and financial resources.

Strategic execution · Merger acquisition and divestiture risks

The Company's failure to successfully integrate the BDS Business within the expected timeline could adversely affect the Company's future results. Difficulties in integrating the practices and operations of these two businesses may result in the Company performing differently than expected, operational challenges or the delay or failure to realize anticipated benefits and synergies.

Market position and competition · Market cyclicality and demand volatility

The Company's growth can suffer if the markets into which it sells products and services decline, do not grow as anticipated or experience cyclicality. The Company's quarterly sales and profits depend substantially on the volume and timing of orders received during the quarter, which are difficult to forecast.

Market position and competition · Industry consolidation and market concentration

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. Over the years, some competitors have merged with other competitors for various reasons, including increasing product line offerings, improving market share and reducing costs.

Customer and revenue · Reimbursement and pricing pressure healthcare or insurance

Market dynamics, changes in reimbursement practices and coverage policies and third-party payer cost containment measures could affect the demand for the Company's products and the prices at which they are sold. Coverage policies and reimbursement levels can vary across the payer community globally, regionally, and locally, and may affect which products customers purchase.

Market position and competition · Competitive pressure and market share loss

Competitors may introduce more effective or less expensive products than the Company's, which could result in decreased sales. The analytical instrument market is highly competitive. The Company encounters significant competition from several international instrument suppliers and other companies in both domestic and foreign markets.

Corporate governance · Ethics and compliance culture

The Company may be harmed by improper conduct of any of our employees, agents or business partners. We cannot provide assurance that our internal controls and compliance systems will always protect the Company from acts committed by employees, agents or business partners that would violate domestic and international laws, including laws governing payments to government officials, bribery, fraud, kickbacks and false claims.

Corporate governance · Internal controls and risk management

As a publicly traded company, the Company is subject to the rules of the SEC and the New York Stock Exchange. The Company must comply with the Sarbanes-Oxley regulations, which require the Company to establish and maintain adequate internal control over financial reporting. While we continue to enhance our controls, we cannot be certain that we will be able to prevent future significant deficiencies or material weaknesses.

Credit and liquidity · Debt service and covenant compliance

The Company's credit facilities contain financial and restrictive covenants that could limit the Company's ability to, among other things, make dividend or other payments, secure other indebtedness, enter into transactions with affiliates and consolidate, merge or transfer all or substantially all of the Company's assets. The Company's failure to comply with such covenants could result in an event of default that, if not cured or waived, could result in the acceleration of all of the Company's indebtedness.

Capital structure and performance · Debt management and refinancing

The amount of indebtedness that the Company assumed as a result of the BDS Business Acquisition is substantial. Upon consummation of the BDS Business Acquisition, the Company assumed $4.0 billion of indebtedness incurred by SpinCo in connection with the payment of the SpinCo Cash Distribution which consists of a $3.5 billion tranche maturing and payable in full on February 6, 2027 and a $500 million tranche maturing and payable in full on February 6, 2028.

Economic and market conditions · Inflation and deflation pressures

The Company is a global business with operations, supply chains, suppliers and customers that may be adversely affected by changes in global economic conditions such as changes in the rate of inflation (including the cost of raw materials, commodities and supplies) and interest rates.

Industry regulation · Regulatory compliance and changes

Changes in governmental regulations and compliance failures could harm the Company's business. The Company is subject to regulation by various federal, state and foreign governments and agencies in areas including, among others, health and safety, antitrust, fraud and abuse, import/export, privacy and data protection, anti-bribery and environmental laws and regulations.