Waters Corporation completed the acquisition of Wyatt Technology in May 2023 for $1.3 billion in cash. This acquisition expands Waters' portfolio and increases exposure to large molecule applications, indicating a strategic move towards new markets.

Sales in China decreased by 22% in 2023, driven by lower customer demand due to weak economic conditions and increased government regulations. This decline significantly impacted the Company's overall growth, highlighting the importance of the Chinese market.

In July 2023, Waters Corporation implemented a workforce reduction impacting approximately 5% of its employees, which is expected to yield annual savings of approximately $48 million. This indicates a strategic effort to streamline operations and improve efficiency.

Despite the workforce reduction and other cost-saving initiatives, operating income decreased in 2023 due to higher salary expenses, severance-related costs, and expenses related to the Wyatt acquisition. This suggests challenges in effectively managing expenses.

The Wyatt acquisition resulted in increased expenses, including $27 million of intangible asset amortization and $19 million of costs associated with retention agreements. Successfully integrating Wyatt and managing these costs will be critical for future performance.

The Company's research and development expenses remain significant, indicating a commitment to innovation. However, the decrease in R&D expenses in 2023 may raise concerns about future product development.

The Company acknowledges the risks associated with international operations, including political events, economic conditions, regulatory changes, and foreign currency exchange rate fluctuations. These factors could have a material adverse effect on the Company's results of operations or financial condition.

The Company notes the decline in economic conditions in China and trade tensions between the U.S. and China as factors impacting customer purchasing decisions. Any further changes in U.S. trade policy could trigger retaliatory actions, resulting in trade wars and increased costs.

The Company acknowledges the potential vulnerability of its technology infrastructure to damage or interruption from various factors, including cyber-attacks. Cybersecurity incidents could have a material adverse effect on the Company's business.

The Company acknowledges competition from several worldwide suppliers and other companies in both domestic and foreign markets. Competitors continuously introduce new products and have instrument businesses that are generally more diversified than the Company's business.

The Company's corporate strategy is fundamentally based on winning through organic innovation and deep application expertise. The Company is in the process of developing new products with recently acquired technologies. The future development of these new products will require a significant amount of spending over the next few years before any significant, robust sales will be realized.

The analytical instrument market, and, in particular, the portion related to the Company's HPLC, UPLC, LC-MS, light scattering, thermal analysis, rheometry and calorimetry product lines, is highly competitive. The Company encounters competition from several international instrument suppliers and other companies in both domestic and foreign markets.

Cost of sales decreased 4% in 2023 as compared to 2022, primarily due to the change in sales mix and the lower material and freight costs.

In July 2023, the Company made organizational changes to better align its resources with its growth and innovation strategies, resulting in a worldwide workforce reduction that impacted approximately 5% of the Company's employees.

Any prolonged disruption to the operations at any of these facilities, whether due to labor difficulties, destruction of or damage to any facility, power interruptions, cybersecurity incidents, weather events or natural disasters (including the potential impacts of climate change) or other reasons, could harm our customer relationships, impede our ability to generate sales and have a material adverse effect on the Company's results of operations or financial condition.

The Company's research and development expenditures for 2023, 2022 and 2021 were $175 million, $176 million and $168 million, respectively.

In addition, 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.

The Company is in the process of developing new products with recently acquired technologies. The future development of these new products will require a significant amount of spending over the next few years before any significant, robust sales will be realized.

On May 16, 2023, the Company completed the acquisition of Wyatt Technology, LLC and its three operating subsidiaries for a total purchase price of $1.3 billion in cash.

While the Company believes that it has the financial flexibility to fund these share repurchases, as well as to invest in research, technology and business acquisitions, given current cash levels and debt borrowing capacity, it has temporarily suspended its share repurchases due to its acquisition of Wyatt in the second quarter of 2023.

In December 2023, the Company's Board of Directors authorized the extension of the share repurchase program through January 21, 2025. The Company's remaining authorization is $1.0 billion.

In November 2023, the Company published its 2023 ESG Report, detailing the Company's efforts to address its environmental impact and uphold its social responsibilities in 2023.

The Company is subject to the rules of the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which require disclosure as to whether certain materials (tantalum, tin, gold and tungsten), known as conflict minerals, which may be contained in the Company's products, are mined from the Democratic Republic of the Congo and adjoining countries.

In addition, the Company continues to monitor environmental, health and safety regulations in countries in which it operates throughout the world, in particular, European Union and China Restrictions on the use of certain Hazardous Substances in electrical and electronic equipment and European Union Waste Electrical and Electronic Equipment directives.

Global economic conditions may have an adverse effect on the demand for, and supply of, the Company's products and harm the Company's financial results.

Public health crises, epidemics or pandemics have had, and could in the future have, a negative impact on our business and operations, including Company sales and cash flow.

China's government continues to play a significant role in regulating industry development by imposing sector-specific policies, and it maintains control over China's economic growth through setting monetary policy and determining treatment of particular industries or companies.