FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended June 30, 1995
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 001-10109
BECKMAN INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-104-0600
(State of Incorporation) (I.R.S. Employer
Identification No.)
2500 Harbor Boulevard, Fullerton, California 92634
(Address of principal executive offices) (Zip Code)
(714) 871-4848
(Registrant's telephone number including area code)
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 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 ( ).
APPLICABLE ONLY TO CORPORATE ISSUERS:
Outstanding shares of common stock, $0.10 par value, as of July 13, 1995:
29,010,316 shares.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Statements of Earnings
for the three and six month periods ended June 30,
1995 and 1994 3
Condensed Consolidated Balance Sheets
as of June 30, 1995 and December 31, 1994 4
Condensed Consolidated Statements of Cash Flows
for the six month periods ended June 30, 1995
and 1994 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes In Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of
Security-Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
BECKMAN INSTRUMENTS
SECOND QUARTER REPORT
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in Millions, Except Amounts Per Share)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Sales $230.6 $222.2 $435.6 $420.8
Operating costs and expenses:
Cost of sales 108.0 105.2 205.2 200.3
Marketing, administrative and general 73.8 69.2 139.0 132.6
Research, development and engineering 22.0 22.9 44.1 44.5
Restructuring charge 3.4 1.1 6.5 2.3
------ ------ ------ ------
207.2 198.4 394.8 379.7
------ ------ ------ ------
Operating income 23.4 23.8 40.8 41.1
Nonoperating income (expense):
Interest income 1.1 1.2 2.4 2.3
Interest expense (3.0) (3.3) (5.8) (6.0)
Other, net (0.6) (1.7) (0.9) (2.4)
------ ------ ------ ------
(2.5) (3.8) (4.3) (6.1)
------ ------ ------ ------
Earnings before income taxes 20.9 20.0 36.5 35.0
Income tax provision 7.1 7.0 12.4 12.2
------ ------ ------ ------
Net earnings before cumulative effect of
change in accounting principles 13.8 13.0 24.1 22.8
Cumulative effect of change in
accounting principles:
Accounting for postemployment benefits
(net of tax benefit of $3.0) - - - (5.1)
------ ------ ------ ------
Net earnings $ 13.8 $ 13.0 $ 24.1 $ 17.7
====== ====== ====== ======
Weighted average common shares and common
share equivalents - (thousands) 28,674 27,977 28,749 27,948
Net earnings per share before cumulative
effect of change in accounting principles $ 0.48 $ 0.46 $ 0.84 $ 0.81
Cumulative effect of change in
accounting principles:
Accounting for postemployment benefits
(net of tax benefit of $3.0) - - - (0.18)
------ ------ ------ ------
Net earnings per share $ 0.48 $ 0.46 $ 0.84 $ 0.63
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN INSTRUMENTS,INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
Unaudited
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
--------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and equivalents $ 15.1 $ 44.2
Short-term investments 6.4 0.7
Trade receivables 274.3 265.9
Inventories 171.8 150.7
Deferred income taxes 39.0 37.8
Other current assets 15.4 12.7
------ ------
Total current assets 522.0 512.0
------ ------
Property, plant and equipment, net 245.9 232.6
Deferred income taxes 58.5 56.6
Other assets 40.2 27.9
------ ------
Total assets $866.6 $829.1
====== ======
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 31.0 $ 12.2
Accounts payable and accrued expenses 189.1 202.9
Income taxes 55.9 53.7
------ ------
Total current liabilities 276.0 268.8
Long-term debt, less current maturities 130.3 117.3
Other liabilities 116.0 126.0
------ ------
Total liabilities 522.3 512.1
Stockholders' equity 344.3 317.0
------ ------
Total liabilities and stockholders' equity $866.6 $829.1
====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN INSTRUMENTS,INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
Unaudited
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1995 1994
------ ------
<S> <C> <C>
Cash Flows from Operating Activities
Net earnings $ 24.1 $ 17.7
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Depreciation and amortization 36.1 33.9
Deferred income taxes (2.5) (1.8)
Changes in assets and liabilities:
Trade receivables 0.1 (3.4)
Inventories (17.7) 0.6
Accounts payable and accrued expenses (6.7) (4.7)
Restructuring reserve (10.3) (22.5)
Income taxes 2.2 6.3
Other (25.5) 20.2
------ -------
Net cash provided (used)
by operating activities (0.2) 46.3
------ -------
Cash Flows from Investing Activities
Additions to property, plant and equipment (51.5) (41.5)
Net disposals of property, plant and equipment 6.8 8.0
Sale (purchase) of short-term investments (5.7) 21.7
------ -------
Net cash used by investing activities (50.4) (11.8)
------ -------
Cash Flows from Financing Activities
Dividends to stockholders (6.2) (5.6)
Proceeds from issuance of stock 9.0 5.9
Purchase of treasury stock (7.3) -
Notes payable borrowings 22.1 3.1
Notes payable reductions (4.8) (11.3)
Long-term debt borrowings 9.3 4.6
Long-term debt reductions - (23.9)
Other (0.8) (0.3)
------ -------
Net cash provided (used)
by financing activities 21.3 (27.5)
Effect of exchange rates on cash and equivalents 0.2 0.3
------ -------
Increase (decrease) in cash and equivalents (29.1) 7.3
Cash and equivalents -- beginning of period 44.2 24.2
------ -------
Cash and equivalents -- end of period $ 15.1 $ 31.5
====== =======
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest $ 2.9 $ 5.9
Income taxes $ 13.3 $ 4.7
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN INSTRUMENTS, INC.
Notes To
Condensed Consolidated Financial Statements
(Dollars in Millions, Except Amounts Per Share)
1 Report by Management
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting only
of normal recurring accruals, necessary for a fair presentation of the
results for the periods. The statements are prepared in accordance with the
requirements of Form 10-Q and do not include all disclosures required by
generally accepted accounting principles or those made in the Annual Report
on Form 10-K for 1994 which is on file with the Securities and Exchange
Commission.
The results of operations for the three and six month periods ended June
30, 1995 are not necessarily indicative of the results to be expected for
the year ending December 31, 1995.
2 Earnings Per Share
In 1995, earnings per share is computed including common share equivalents.
Common share equivalents represent the dilutive effect of outstanding stock
options. Common share equivalents were excluded in periods prior to 1995
as they were less than three percent dilutive. Primary earnings per share
approximates fully diluted earnings per share. Earnings per share are
calculated as follows:
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
June 30, 1995 June 30, 1994
Earnings Earnings
(In thousands,except amounts per share) Shares Per Share Shares Per Share
------- ------- ------- ------
<S> <C> <C> <C> <C>
Weighted average shares of
common stock outstanding 28,064 $0.49 27,977 $0.46
Common share equivalents 610 (0.01) * *
------- ------- ------- ------
Weighted average common and
common share equivalents 28,674 $0.48 27,977 $0.46
======= ======= ======= ======
</TABLE>
*Less than 3% dilutive
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1995 June 30, 1994
Earnings Earnings
(In thousands,except amounts per share) Shares Per Share Shares Per Share
------ -------- ------ --------
<S> <C> <C> <C> <C>
Weighted average shares of
common stock outstanding 28,073 $0.86 27,948 $0.63
Common share equivalents 676 (0.02) * *
------ ------ ------ ------
Weighted average common and
common share equivalents 28,749 $0.84 27,948 $0.63
====== ====== ====== ======
</TABLE>
*Less than 3% dilutive
3 Inventories
Inventories are comprised of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------- -------
<S> <C> <C>
Finished products $120.0 $104.1
Raw materials, parts
and assemblies 44.4 41.3
Work in-process 7.4 5.3
------- -------
$171.8 $150.7
======= =======
</TABLE>
4 Investments
In May 1995, the Company agreed to acquire Genomyx Corporation of Foster
City, California. Genomyx is a developer and manufacturer of advanced DNA
sequencing products and is expected to complement the Company's
biotechnology business. The acquisition, which is not material to the
Company, will be accounted for as a step-acquisition.
In March 1995, the Company formed a marketing and service alliance with
BioSepra Inc. (BioSepra), a biochromatography systems manufacturer, to
offer systems for high speed, high resolution separation of biomolecules.
The Company paid $3.0 for the exclusive rights to market and sell certain
of BioSepra's products.
Also in March 1995, the Company made a $5.0 investment in Sepracor Inc.
(Sepracor), receiving exchangeable preferred stock and certain rights in
regard to the disposition of Sepracor's shares of its subsidiary, BioSepra.
5 Change in Accounting Principles
Postemployment benefits
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112 ("SFAS 112") "Employers' Accounting for
Postemployment Benefits". This statement requires the Company to recognize
an obligation for postemployment benefits provided to former or inactive
employees, their beneficiaries and covered dependents after employment but
before retirement. Accordingly, the Company recognized a transition
obligation of $8.1 and a net expense of $5.1 (net of tax benefit of $3.0)
as the cumulative effect of the accounting change.
6 Contingencies
Environmental
The Company is involved in the investigation and remediation of soil and
groundwater contamination for property it sold in 1984. In 1990 the Company
entered into an agreement with the purchaser for settlement of a 1988
lawsuit and for sharing current and future costs of investigation,
remediation and other claims. In 1991 a lawsuit was filed against the 1984
purchaser by a third party that had subsequently purchased a portion of the
above property, alleging damages caused by the pollution of the property.
Although the Company is not a named defendant in the action, the Company is
obligated to contribute to any resolution of that action pursuant to its
1990 settlement agreement with the original purchaser.
During 1994 the County formally acknowledged completion of remediation of a
major portion of the soil, although there remains some areas of soil
contamination that may require further remediation. The Company continues
to operate a groundwater treatment system at the property and expects to do
so for the foreseeable future. The Company believes it has established
adequate reserves to complete the remediation of any remaining soil
contamination, operation and maintenance of the groundwater treatment
system and any necessary additional groundwater investigations.
In September 1994, one of the tenants of the apartment houses built on the
above-mentioned property filed a lawsuit against the original purchaser and
a number of other defendants, not including the Company. The lawsuit
alleges damages caused by the pollution of the property. Although the
Company is not a named defendant at this time, the Company is obligated to
contribute to any resolution of this lawsuit.
Investigations on the property are continuing and there can be no assurance
that further investigations will not reveal additional contamination or
result in additional costs. The Company believes additional remediation
costs for the contamination discovered by the current investigations and
liability for the resolution of the 1991 and 1994 lawsuits, if any, beyond
those already provided will not have a material adverse effect on the
Company's operations or financial position.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in millions, except per share amounts)
Operations
Sales for the second quarter and six month period ended June 30, 1995 were
$230.6 and $435.6, an increase of $8.4 and $14.8 as compared with the same
periods from the prior year. Excluding the impact of changes in foreign
currency exchange rates, second quarter sales remained comparable to the
same period in 1994 and the six months reported sales were higher by about
$1.0 compared to last year. Sales for the North American diagnostic and
bioresearch business increased over the prior year. The international
diagnostic and bioresearch markets continue to be impacted by the European
recession and cost containment initiatives in several European health care
systems. The weakness in the international markets, particularly in
Europe, is expected to continue.
Operating income for the second quarter and six months ended June 30, 1995
before restructuring charges were $26.8 and $47.3, representing an increase
of 8% and 9% over the same periods in 1994. Cost of sales for the second
quarter and six months increased over the same periods in the prior year,
but remained constant as a percent of sales. Marketing, general and
administrative expenses in the second quarter and first six months of 1995
increased, compared to the same period last year, primarily as a result of
foreign currency fluctuations. Research and development expenses were
comparable to the second quarter and first six months of last year. After
giving effect to its 1995 restructuring charges, the Company reported
operating income of $23.4 and $40.8 for the second quarter and six months
ended June 30, 1995.
The reorganization and restructuring plan announced in the fourth quarter
of 1993 has resulted in year-to-date 1995 savings of about $22 which are
mainly attributable to the reduction of greater than 1,100 personnel from
1993. The Company anticipates savings from the restructuring program to be
$45 in 1995, but not incremental to earnings due to certain transition
costs, general salary and cost increases, as well as fluctuating foreign
currencies.
Nonoperating expenses decreased by $1.3 for the second quarter and $1.8 for
the first six months compared to prior year.
Earnings before income taxes for the second quarter and first six months
compared to the same period of the prior year, excluding the restructuring
charge, increased by $3.2 and $5.7. Including the restructuring charge,
1995 earnings before taxes were $20.9 for the quarter and $36.5 for six
months. The effective tax rate decreased to 34% from 35% in the prior year
as a result of increased income in lower tax rate jurisdictions. Net
earnings for the second quarter and first six months of 1995 before
restructuring charges and change in accounting principles increased to
$16.0 and $28.4 or $0.56 and $0.99 per share ($0.57 and $1.01 per share
before the dilutive effect of common share equivalents), compared to $13.7
and $24.3, or $0.49 and $0.87 per share for the prior year.
In the first quarter of 1994, the Company adopted Statement of Financial
Accounting Standard No. 112 ("SFAS 112") "Employers' Accounting for
Postemployment Benefits". This statement requires the Company to recognize
a prior service obligation resulting from the Company's commitment to
provide benefits to former or inactive employees, their beneficiaries and
covered dependents after employment but before retirement. Adoption of
SFAS 112 resulted in the Company recording an after tax charge of $5.1 in
the first quarter of 1994.
Net earnings for the second quarter and first six months of 1995 were $13.8
and $24.1, or $0.48 and $0.84 per share ($0.49 and $0.86 per share before
the dilutive effect of common share equivalents) compared to $13.0 and
$17.7, or $0.46 and $0.63 per share in 1994.
The following tables summarize the impact of the dilutive effect of common
share equivalents, restructuring charges and the cumulative effect of
change in accounting principles on net earnings and earnings per share.
<TABLE>
<CAPTION>
Quarter Ended June 30, 1995 1994
---------------------- ---------------------
(Shares in thousands) Per Per
Shares Amt Share Shares Amt Share
------ ----- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Net earnings before
restructuring charge and
cumulative effect of change
in accounting principles 28,064 $16.0 $0.57 27,977 $13.7 $0.49
Common share equivalents 610 - (0.01) * - -
------ ----- ------ ------ ----- ------
Net earnings before restructuring
charge and cumulative effect of
change in accounting principles 28,674 16.0 0.56 27,977 13.7 0.49
Restructuring charge, net of tax
benefit 28,674 (2.2) (0.08) 27,977 (0.7) (0.03)
Cumulative effect of change in
accounting principles 28,674 - - 27,977 - -
----- ------ ----- ------
Net earnings 28,674 $13.8 $0.48 27,977 $13.0 $0.46
====== ===== ====== ====== ===== ======
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1995 1994
------------------------ ---------------------
(Shares in thousands) Per Per
Shares Amt Share Shares Amt Share
------ ----- ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Net earnings before
restructuring charge and
cumulative effect of change
in accounting principles 28,073 $28.4 $1.01 27,948 $24.3 $0.87
Common share equivalents 676 - (0.02) * - -
------ ----- ------ ------ ----- ------
Net earnings before restructuring
charge and cumulative effect of
change in accounting principles 28,749 28.4 0.99 27,948 24.3 0.87
Restructuring charge, net of tax
benefit 28,749 (4.3) (0.15) 27,948 (1.5) (0.06)
Cumulative effect of change in
accounting principles 28,749 - - 27,948 (5.1) (0.18)
----- ------ ------ ----- ------
Net earnings 28,749 $24.1 $0.84 27,948 $17.7 $0.63
====== ===== ====== ====== ===== ======
</TABLE>
* Less than 3% dilutive
Financial Condition
For the six months ended June 30, 1995, the Company had negative cash flow
from operating and investing activities of $50.6. This represents a
decrease of $85.1 from the same period in 1994. Contributing to the
decrease was increased pension plan funding, incentive compensation
payments and investments compared to 1994.
The ratio of debt to capitalization at June 30, 1995 was 31.9% compared to
29.0% at December 31, 1994. The ratio of current assets to current
liabilities at June 30, 1995 of 1.9 is comparable to December 31, 1994.
The Company believes it has adequate financial resources to meet expected
cash flow requirements for the foreseeable future.
On June 1, 1995, the Company paid a quarterly cash dividend of $0.11 per
share of common stock for a total of $3.1.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported, the Company is obligated to contribute to
any resolution of a lawsuit filed by Forest City Properties
Corporation and FC Irvine, Inc. (collectively, "Forest City")
against The Prudential Insurance Company of America
("Prudential") in 1991 concerning property in Irvine, California
formerly owned by the Company. The Company's obligation arises
from its 1990 settlement of earlier litigation between the
Company and Prudential concerning the same property. The trial
of this matter began before a jury in Los Angeles County Superior
Court, California on May 10, 1995. The case was submitted to the
jury on July 13, 1995. A verdict has not yet been rendered.
Item 2. Changes In Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10.1 The Company's Executive Incentive Plan, adopted by
the Company in 1995.
10.2 Amendment to the December 1, 1993 Agreement
Regarding Retriement Benefits of Arthur A.
Torrellas, dated as of May 30, 1995, between the
Company and Arthur A. Torrellas.
11. Statement re Computation of Per Share Earnings:
This information is set forth in Note 2 Earnings
Per Share of the Condensed Consolidated Financial
Statements included in Part I herein.
15. Independent Accountants' Review Report,
July 14, 1995
27. Financial Data Schedule
b) Reports on Form 8-K
None.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BECKMAN INSTRUMENTS, INC.
(Registrant)
Date: July 20, 1995 by WILLIAM H. MAY
William H. May
Vice President, General
Counsel and Secretary
Date: July 18, 1995 by D. K. WILSON
Dennis K. Wilson
Vice President, Finance
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
FORM 10-Q, SECOND QUARTER, 1995
Exhibit
Number Description
- ------- -----------
10.1 The Company's Executive Incentive Plan, adopted by the
Company in 1995.
10.2 Amendment to the December 1, 1993 Agreement Regarding
Retriement Benefits of Arthur A. Torrellas, dated as of May
30, 1995, between the Company and Arthur A. Torrellas.
11. Statement re Computation of Per Share Earnings: This
information is set forth in Note 2 Earnings Per Share of the
Condensed Consolidated Financial Statements included in Part
I herein.
15. Independent Accountants' Review Report, July 14, 1995
27. Financial Data Schedule
Exhibit 15
KPMG Peat Marwick LLP
Certified Public Accountants
Orange County Office
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
Independent Accountants' Review Report
The Stockholders and Board of Directors
Beckman Instruments, Inc:
We have reviewed the condensed consolidated balance sheet of Beckman
Instruments, Inc. and subsidiaries as of June 30, 1995, and the related
condensed consolidated statements of earnings and cash flows for the three-
month and six-month periods ended June 30, 1995 and 1994. These condensed
consolidated financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion regarding
the financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Beckman Instruments, Inc. and
subsidiaries as of December 31, 1994, and the related consolidated
statements of operations and cash flows for the year then ended (not
presented herein); and in our report dated January 19, 1995, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1994, is fairly presented, in
all material respects, in relation to the consolidated balance sheet from
which it has been derived.
As discussed in Note 5 to the condensed consolidated financial statements,
the Company changed its method of accounting for postemployment benefits in
1994.
(KPMG Peat Marwick LLP)
Orange County, California
July 14, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the Condensed Consolidated Balance Sheet and the Condensed
Consolidated Statement of Earnings and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 15
<SECURITIES> 7
<RECEIVABLES> 283
<ALLOWANCES> 9
<INVENTORY> 172
<CURRENT-ASSETS> 522
<PP&E> 614
<DEPRECIATION> 368
<TOTAL-ASSETS> 867
<CURRENT-LIABILITIES> 276
<BONDS> 130
<COMMON> 3
0
0
<OTHER-SE> 341
<TOTAL-LIABILITY-AND-EQUITY> 867
<SALES> 361
<TOTAL-REVENUES> 436
<CGS> 156
<TOTAL-COSTS> 205
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 36
<INCOME-TAX> 12
<INCOME-CONTINUING> 24
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24
<EPS-PRIMARY> .84
<EPS-DILUTED> .84
</TABLE>
Exhibit 10.1
BECKMAN
FY 95 EXECUTIVE INCENTIVE PLAN
CLASSES 12 AND 13
Background
Key executives have two separate incentive opportunities with different
time horizons and different performance measures. For the annual incentive
opportunity, the focus will be on annual results in terms of Earnings Per
Share Achievement as a Percent of Targeted EPS, with sales revenue and an
individual performance multiplier as additional elements in determining the
final incentive award. The second time horizon of incentive opportunity
will be based on company "Economic Value Added" for a two-year cycle under
a long-term incentive plan.
ANNUAL (EPS) INCENTIVE
Earnings per share continues to be a critical factor in the company's
performance and valuation by the financial community. Because of its
importance, the level of achievement of EPS as a percent of target is the
fundamental measurement for annual incentive opportunity. The basic award
guidelines for the degree of achievement are as follows:
EPS Achievement Award Performance
Percent of Target* of Base Earnings
_____________________________________________
104% 27.7%
102% 25.4%
100% 23.1%
98% 17.3%
96% 11.6%
94% 5.8%
below 94% 0%
A pro rata percentage is calculated for achievement between the above
award levels.
*Before special charges
Sales Revenue Modifier
The award percentage for EPS achievement will be increased by 10% if EPS is
at target or higher for FY 95 and the company's sales goal is met or
exceeded.
Individual Incentive Award Determination
The final step in the calculation of individual incentive awards is the
application of an individual performance multiplier to the award percentage
for EPS achievement after any adjustment for sales revenue. This multiplier
is derived from the "overall rating" for Performance Expectations in the
EXCEL process and is expressed as a percentage to be applied to the EPS
award guideline. Base earnings for the period of incentive eligibility
(eligible earnings) are then multiplied by the final award percentage to
determine the amount of incentive award.
Overall Performance Rating Performance Multiplier to be
for Performance Expectations Applied to Award Guideline
______________________________________________________________
Exceptional 130% - 150%
High 100% - 120%
Good 50% - 90%
Improved Performance Required 0
Example of How the Annual Incentive Award is Calculated
Assume that EPS achievement is 102% of target before special charges and
the company sales revenue goal is met or exceeded. In this example, the
total amount award percentage before applying the individual performance
multiplier is 27.9% (25.4% + 10% x 25.4% rounded). The 27.9% award will be
increased to a 33.5% individual incentive award with an individual
performance multiplier of 120%. Conversely, an individual performance
modifier of 80% would reduce the 27.9% award to a 22.3% final EPS annual
incentive award.
Administration
1. All financial results will be measured on an "as reported" basis with no
adjustment for any effect of currency fluctuations.
2. Qualifying events that may cause a modification to the original EPS
award level milestones must be: 1) unanticipated; 2) non-recurring; 3)
material in nature; and 4) not part of normal business operations.
3. To be eligible for an annual EPS incentive award, a participant must be
in active pay status at the end of the measurement period. Partial
payments will be made for retirees, as defined by the company's pension
plan, who leave before the end of the fiscal year.
<PAGE>
BECKMAN
TWO-YEAR ECONOMIC VALUE ADDED (EVA) INCENTIVE PLAN
CYCLE THREE BEGINNING FY 95
CLASSES 12 AND 13
Background
The two year (long-term plan) incentive is based upon maintaining and
improving the base amount of total company EVA through a two-year
measurement cycle. EVA benchmarks for incentive eligibility will be
established for each two-year cycle at its beginning and successive cycles
overlap by one year. For example, the second year of cycle two, fiscal year
1995, will be the first year of cycle three.
EVA Definition
EVA is defined as the net operating profit after-tax (excluding
restructuring charges), less a cost of capital charge on a thirteen-month
average capital base (excluding restructuring reserves). This performance
measurement reflects the relationship between profits generated by the
company and the cost of the balance sheet investment. Certain events may
trigger a reassessment of the EVA targets for incentive eligibility.
EVA Award Eligibility
The EVA target for cycle three, ending December 31, 1996, is based upon the
1994-1998 Strategic Plan. EVA is planned to increase from the actual amount
at the end of 1994, which is the threshold for award eligibility, to the
target level as operating and asset management objectives are achieved. For
Class 12 and 13 executives, this will generate a 10.0% of base earnings
award. Gradations in performance above and below the targeted EVA are
depicted below.
EVA CYCLE THREE (1995 & 1996)
EVA Achievement Final EVA
Percent of Target Award
__________________________________________________
less than 42% 0.0%
42% 5.0%
100% 10.0%
139% 20.0%
greater than 139% 20.0%
A pro rata incentive award percentage is calculated for EVA improvement
between the specific EVA achievement levels listed.
Individual Eligible Earnings for EVA Award
Although the EVA measurement period is two years, the actual award
calculation will be based upon an individual participant's annualized base
earnings at the end of the second year of the two-year cycle. One year of
eligible earnings is applied because of the overlapping nature of the two-
year cycles.
Deferred Stock Award Alternative
Payment of the earned incentive will be made in cash, subject to standard
withholding taxes and deductions, or a participant may elect to be paid in
restricted stock. Details of the restricted stock payment alternative are
described in the insert to this document.
Administration
1. All financial results will be measured on an "as reported" basis with no
adjustment for any effect of currency fluctuations.
2. Qualifying events that may cause adjustments to original approved EVA
targets must be: 1) unanticipated; 2) non-recurring; 3) material in
nature; and 4) not part of normal business operations.
3. To be eligible for a full EVA incentive award, a participant must be in
active pay status at the end of the two-year measurement period. Partial
payments will be made in cash for retirees, as defined by the company's
pension plan, who do not elect payment in restricted stock and leave
before completion of the EVA cycle.
The acronym EVA for economic value added is attributed to Stern Steward & Co.
<PAGE>
BECKMAN
TWO-YEAR ECONOMIC VALUE ADDED (EVA) INCENTIVE PLAN - CYCLE THREE
RESTRICTED STOCK AWARD ALTERNATIVE
The Organization and Compensation Committee of the Company's Board of
Directors intends to accept requests to receive restricted stock in lieu of
a cash payment of any award made under the Cycle Three EVA Incentive Plan.
Restricted stock awards are made under the Incentive Compensation Plan of
1990, as amended, and the following terms:
1) Elections to receive restricted stock in lieu of cash must be made for
the full amount of the award under this EVA Incentive Plan. The election
must be made no later than August 1, 1996.
2) To encourage stock ownership, the amount of the award will be increased
by a 33 1/3% premium and then converted into whole shares of Beckman
common stock based on the closing price of Beckman common stock on the
last trading day of the two-year EVA cycle. No fractional shares will be
granted and any remainder which would have resulted in a fractional
share will instead be paid in cash on the regular incentive payment
date.
3) Restricted Stock will be issued pursuant to an agreement, which will
provide that such stock cannot be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of for a twenty-four (24) month
period beginning on the date of issuance (which will be the EVA
incentive payment date established by the Company). However, these
restrictions will lapse earlier in the event of termination due to
death, total disability, or Normal or Late retirement (but not Early
Retirement) under the Beckman Pension Plan. All shares awarded will be
forfeited in the event of a voluntary termination due to Early
Retirement during the twenty-four month period; provided, however, that
where there has been a prior Section 83(b) election (and payment of
applicable taxes) by an Early Retirement eligible employee, there will
be no forfeiture of shares upon termination but, the restrictions on
transferability will remain for the balance of the 24-month period. A
voluntary termination causes forfeiture of the shares even if a prior
Section 83(b) election was made (and applicable taxes were paid). In the
event of an involuntary termination, for cause or otherwise, no shares
will be forfeited but the restrictions on transferability will remain in
effect for the full 24-month period from the date of issuance of the
Restricted Stock.
Under current tax law, compensation income is not recognized until the
earliest to occur of (i) the last day of the full 24-month period beginning
on the date of issuance of the Restricted Stock, (ii) the date of
occurrence of death or termination due to total disability, the date of
eligibility for Normal Retirement (but not Early Retirement) under the
Company's Pension Plan, or the date of issuance of Restricted Stock if
eligible for Normal or Late Retirement under the Company's Pension Plan on
that date, (iii) the date of any other termination of employment, if
forfeiture does not occur as a result thereof, or (iv) the date of issuance
of Restricted Stock, if an Section 83(b) election is made and applicable
taxes have been paid as a result thereof. The amount of income to be
recognized by you will be equal to the closing price of Beckman common
stock on the date of the applicable event described above, times the number
of Beckman common shares awarded to you under this alternative. All
applicable payroll taxes are due at that time also.
IMPORTANT
The Restricted Stock Agreement and Election Form will be distributed for
your consideration closer to the election deadline. Information on the
effect on certain of Beckman's other benefit plans and additional tax
information. Certain reporting requirements under Section 16(a) of the
Securities Exchange Act of 1934 apply. Also, participants are advised to
consult with counsel in advance of making any election to determine
potential Section 16(b) issues regarding the purchase and sale of the
Company's common stock.
<PAGE>
BECKMAN
FY 95 EXECUTIVE INCENTIVE PLAN
CLASSES 14 THROUGH 17
Background
Key executives have two separate incentive opportunities with different
time horizons and different performance measures. For the annual incentive
opportunity, the focus will be on annual results in terms of company
Earnings Per Share Achievement as a Percent of Targeted EPS, with sales
revenue and an individual performance multiplier as additional elements in
determining the final incentive award. The second time horizon of incentive
opportunity will be based on company "Economic Value Added" for a two-year
cycle under a long-term incentive plan.
ANNUAL (EPS) INCENTIVE
Earnings per share continues to be a critical factor in the company's
performance and valuation by the financial community. Because of its
importance, the level of achievement of EPS as a percent of target is the
fundamental measurement for the annual incentive opportunity. The basic
award guidelines for the degree of achievement are as follows:
EPS Achievement Award Percentage
Percent of Target* of Base Earnings
______________________________________________
104% 35.3%
102% 32.3%
100% 29.4%
98% 22.1%
96% 14.7%
94% 7.4%
below 94% 0%
A pro rata percentage is calculated for achievement between the
above award levels.
*Before special charges
Sales Revenue Modifier
The award percentage for EPS achievement will be increased by 10% if EPS is
at target or higher for FY 95 and the company's sales goal is met or
exceeded.
Individual Incentive Award Determination
The final step in the calculation of individual incentive awards is the
application of an individual performance multiplier to the award percentage
for EPS achievement after any adjustment for sales revenue. This multiplier
is derived from the "overall rating" for Performance Expectations in the
EXCEL process and is expressed as a percentage to be applied to the EPS
award guideline. Base earnings for the period of incentive eligibility
(eligible earnings) are then multiplied by the final award percentage to
determine the amount of incentive award.
Overall Performance Rating Performance Multiplier to be
for Performance Expectations Applied to Award Guideline
_________________________________________________________________
Exceptional 130% - 150%
High 100% - 120%
Good 50% - 90%
Improved Performance Required 0
Example of How the Annual Incentive Award is Calculated
Assume that EPS achievement is 102% of target before special charges and
the company sales revenue goal is met or exceeded. In this example, the
total annual award percentage before applying the individual performance
multiplier is 35.5% (32.3% + 10% x 32.3% rounded). The 35.5% award will be
increased to a 42.6% individual incentive award with an individual
performance multiplier of 120%. Conversely, an individual performance
modifier of 80% would reduce the 35.5% award to a 28.4% final EPS annual
incentive award.
Administration
1. All financial results will be measured on an "as reported" basis with no
adjustment for any effect of currency fluctuations.
2. Qualifying events that may cause a modification to the original approved
EPS award level milestones must be: 1) unanticipated; 2) non-recurring;
3) material in nature; and 4) not part of normal business operations.
3. To be eligible for an annual EPS incentive award, a participant must be
in active pay status at the end of the measurement period. Partial
payments will be made for retirees, as defined by the company's pension
plan, who leave before the end of the fiscal year.
<PAGE>
BECKMAN
TWO-YEAR ECONOMIC VALUE ADDED (EVA) INCENTIVE PLAN
CYCLE THREE BEGINNING FY 95
CLASSES 14 THROUGH 17
Background
The two year (long-term plan) incentive is based upon maintaining and
improving the base amount of total company EVA through a two-year
measurement cycle. EVA benchmarks for incentive eligibility will be
established for each two-year cycle at its beginning and successive cycles
overlap by one year. For example, the second year of cycle two, fiscal year
1995, will be the first year of cycle three.
EVA Definition
EVA is defined as the net operating profit after-tax (excluding
restructuring charges), less a cost of capital charge on a thirteen-month
average capital base (excluding restructuring reserves). This performance
measurement reflects the relationship between profits generated by the
company and the cost of the balance sheet investment. Certain events may
trigger a reassessment of the EVA targets for incentive eligibility.
EVA Award Eligibility
The EVA target for the cycle three, ending December 31, 1996, is based upon
the 1994-1998 Strategic Plan. EVA is planned to increase from the actual
amount at the end of 1994, which is the threshold for award eligibility, to
the target level as operating and asset management objectives are achieved.
For Class 14-17 executives, this will generate a 12.6% of base earnings
award. Gradations in performance above and below the targeted EVA are
depicted below.
EVA CYCLE THREE (1995 & 1996)
EVA Achievement Final EVA
Percent of Target Award
____________________________________
less than 42% 0.0%
42% 6.3%
100% 12.6%
139% 25.2%
greater than 139% 25.2%
A pro rata incentive award percentage is calculated for EVA improvement
between the specific EVA achievement levels listed.
Individual Eligible Earnings for EVA Award
Although the EVA measurement period is two years, the actual award
calculation will be based upon an individual participant's annualized base
earnings at the end of the second year of the two-year cycle. One year of
eligible earnings is applied because of the overlapping nature of the two-
year cycles.
Deferred Stock Award Alternative
Payment of the earned incentive will be made in cash, subject to standard
withholding taxes and deductions, or a participant may elect to be paid in
restricted stock. Details of the restricted stock payment alternative are
described in the insert to this document.
Administration
1. All financial results will be measured on an "as reported" basis with no
adjustment for any effect of currency fluctuations.
2. Qualifying events that may cause adjustments to original approved EVA
targets must be: 1) unanticipated; 2) non-recurring; 3) material in
nature; and 4) not part of normal business operations.
3. To be eligible for an EVA incentive award, a participant must be in
active pay status at the end of the two-year measurement period. Partial
payments will be made in cash for retirees, as defined by the company's
pension plan, who do not elect payment in restricted stock, and leave
before completion of the EVA cycle.
The acronym EVA for economic value added is attributed to Stern Steward & Co.
<PAGE>
BECKMAN
TWO-YEAR ECONOMIC VALUE ADDED (EVA) INCENTIVE PLAN - CYCLE THREE
RESTRICTED STOCK AWARD ALTERNATIVE
The Organization and Compensation Committee of the Company's Board of
Directors intends to accept requests to receive restricted stock in lieu of
a cash payment of any award made under the Cycle Three EVA Incentive Plan.
Restricted stock awards are made under the Incentive Compensation Plan of
1990, as amended, and the following terms:
1) Elections to receive restricted stock in lieu of cash must be made for
the full amount of the award under this EVA Incentive Plan. The election
must be made no later than August 1, 1996.
2) To encourage stock ownership, the amount of the award will be increased
by a 33 1/3% premium and then converted into whole shares of Beckman
common stock based on the closing price of Beckman common stock on the
last trading day of the two-year EVA cycle. No fractional shares will be
granted and any remainder which would have resulted in a fractional
share will instead be paid in cash on the regular incentive payment
date.
3) Restricted Stock will be issued pursuant to an agreement, which will
provide that such stock cannot be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of for a twenty-four (24) month
period beginning on the date of issuance (which will be the EVA
incentive payment date established by the Company). However, these
restrictions will lapse earlier in the event of termination due to
death, total disability, or Normal or Late retirement (but not Early
Retirement) under the Beckman Pension Plan. All shares awarded will be
forfeited in the event of a voluntary termination due to Early
Retirement during the twenty-four month period; provided, however, that
where there has been a prior Section 83(b) election (and payment of
applicable taxes) by an Early Retirement eligible employee, there will
be no forfeiture of shares upon termination but, the restrictions on
transferability will remain for the balance of the 24-month period. A
voluntary termination causes forfeiture of the shares even if a prior
Section 83(b) election was made (and applicable taxes were paid). In the
event of an involuntary termination, for cause or otherwise, no shares
will be forfeited but the restrictions on transferability will remain in
effect for the full 24-month period from the date of issuance of the
Restricted Stock.
Under current tax law, compensation income is not recognized until the
earliest to occur of (i) the last day of the full 24-month period beginning
on the date of issuance of the Restricted Stock, (ii) the date of
occurrence of death or termination due to total disability, the date of
eligibility for Normal Retirement (but not Early Retirement) under the
Company's Pension Plan, or the date of issuance of Restricted Stock if
eligible for Normal or Late Retirement under the Company's Pension Plan on
that date, (iii) the date of any other termination of employment, if
forfeiture does not occur as a result thereof, or (iv) the date of issuance
of Restricted Stock if an Section 83(b) election is made and applicable
taxes have been paid as a result thereof. The amount of income to be
recognized by you will be equal to the closing price of Beckman common
stock on the date of the applicable event described above, times the number
of Beckman common shares awarded to you under this alternative. All
applicable payroll taxes are due at that time also.
IMPORTANT
The Restricted Stock Agreement and Election Form will be distributed for
your consideration closer to the election deadline. Information on the
effect on certain of Beckman's other benefit plans and additional tax
information. Certain reporting requirements under Section 16(a) of the
Securities Exchange Act of 1934 apply. Also, participants are advised to
consult with counsel in advance of making any election to determine
potential Section 16(b) issues regarding the purchase and sale of the
Company's common stock.
<PAGE>
BECKMAN
FY '95 OFFICER EXECUTIVE INCENTIVE PLAN
TREASURER AND DIRECTOR,
CORPORATE BUSINESS DEVELOPMENT AND LICENSING
Bonus Eligibility
The key elements in determining incentive awards are:
1) EPS Achievement
2) Sales Revenue, and
3) Individual overall EXCEL rating
EPS Achievement
Earnings per share continues to be a critical factor in the company's
performance and valuation by the financial community. Because of its
importance, the level of achievement of EPS as a percent of target is the
fundamental measurement for the annual incentive opportunity. The basic
award guidelines for the degree of achievement are as follows:
EPS Achievement Award Percentage
Percent of Target* of Base Earnings
______________________________________________
104% 30.0%
102% 22.0%
100% 14.0%
98% 10.5%
96% 7.0%
94% 3.5%
below 94% 0%
A pro rata incentive award percentage is calculated for gradations
between achievement levels.
*Before special charges.
Sales Revenue Modifier
The award percentage for EPS achievement will be increased by 10% if EPS is
at target or higher for FY '95 and the company's sales goal is met or
exceeded.
Individual Incentive Award Determination
The final step in the calculation of individual incentive awards is the
application of an individual performance multiplier to the award percentage
for EPS achievement after any adjustment for sales revenue. EXCEL
descriptions of overall performance levels will be the basis for
determining individual performance multipliers. The performance multiplier,
expressed as a percentage, is applied to the EPS award guideline. Base
earnings for the period of incentive eligibility (eligible earnings) are
then multiplied by the final award percentage to determine the amount of
incentive award.
Performance Multiplier to be
Overall Performance Applied to Award Guideline
___________________________________________________________
Exceptional 125% - 150%
High 100% - 125%
Good 75% - 100%
Improved Performance Required 0%
Example of How the Annual Incentive Award is Calculated
Assume that EPS achievement is 100% of target (before special charges) and
the company sales revenue goal is met or exceeded. In this example, the
total annual award percentage before applying the individual performance
multiplier is 15.4% (14.0% + 10% x 14.0%). The 15.4% award will be
increased to a 18.5% individual incentive award with an individual
performance multiplier of 120%. Conversely, an individual performance
modifier of 80% would reduce the 15.4% award to a 12.3% final EPS incentive
award.
Administration
1. All financial results will be measured on an "as reported" basis with no
adjustment for any effect of currency fluctuations.
2. Qualifying events that may cause a modification to the original EPS
award level milestones must be: 1) unanticipated; 2) non-recurring; 3)
material in nature; and 4) not part of normal business operations.
3. To be eligible for an incentive award, a participant must be in active
pay status at the end of the measurement period. Exceptions may be
approved on a pro rata basis for participants who retire in midyear or
other special circumstances.
EXECUTIVE INCENTIVE AWARD GUIDELINES
PRESIDENT AND CHIEF OPERATING OFFICER
FY 95 ANNUAL (EPS) INCENTIVE
EPS Achievement
Percent of Target* Award Percentage
____________________________________________
104% 46.2%
102% 42.4%
100% 38.5%
98% 28.9%
96% 19.3%
94% 9.6%
below 94% 0.0%
A pro rata incentive award percentage is calculated for gradations
between achievement levels.
*Before special charges.
EVA CYCLE TWO (1994 & 1995) EVA CYCLE THREE (1995 & 1996)
Absolute EVA Final EVA EVA Achievement Final EVA
($ million) Award Percent of Target Award
______________________________ _____________________________
less than $0.6 0.0% less than 42% 0.0%
$0.6 8.25% 42% 8.25%
$20.6 16.5% 100% 16.5%
$30.0 33.0% 139% 33.0%
greater than $30.0 33.0% greater than 139% 33.0%
A pro rata incentive award is calculated for EVA improvement between
the specific EVA achievement levels listed.
EXECUTIVE INCENTIVE AWARD GUIDELINES
CHIEF EXECUTIVE OFFICER
FY 95 ANNUAL INCENTIVE
EPS Achievement
Percent of Target* Award Percentage
_______________________________________________
104% 50.4%
102% 46.2%
100% 42.0%
98% 31.5%
96% 21.0%
94% 10.5%
below 94% 0.0%
A pro rata incentive award percentage is calculated for gradations
between achievement levels.
*Before special charges.
EVA CYCLE TWO (1994 & 1995) EVA CYCLE THREE (1995 & 1996)
Absolute EVA Final EVA EVA Achievement Final EVA
($ million) Award Percent of Target Award
_____________________________ _____________________________
less than $0.6 0.0% less than 42% 0.0%
$0.6 9.0% 42% 9.0%
$20.6 18.0% 100% 18.0%
$30.0 36.0% 139% 36.0%
greater than $30.0 36.0% greater than 139% 36.0%
A pro rata incentive award is calculated for EVA improvement between
the specific EVA achievement levels listed.
Exhibit 10.2
AMENDMENT TO THE DECEMBER 1, 1993 AGREEMENT
REGARDING RETIREMENT BENEFITS OF ARTHUR A. TORRELLAS
WHEREAS, Arthur A. Torrellas (Executive") has been employed by Beckman
Instruments, Inc. ("Company") for approximately 17 years; and
WHEREAS, the Executive and the Company wish to amend the Agreement
Regarding Retirement Benefits of Arthur A. Torrellas adopted as of December
1, 1993 and executed on December 20, 1993 ("the Agreement") so that the
Executive will continue to remain employed by and provide unique worldwide
field operations experience to the Company beyond October 31, 1995.
NOW, THEREFORE, this Amendment to the Agreement between the Executive and
the Company is hereby adopted as of May 30, 1995 and amends the Agreement
as follows:
1. All reference to October 31, 1995 in the Agreement is changed to
December 31, 1996 except for paragraph 2 entitled Voluntary Termination
Before or After October 31, 1995 which is deleted and the following
inserted.
2. Voluntary Termination. The increase referred to in paragraph 1 does
not apply if Executive, before October 31, 1995 or after December 31,
1996, voluntarily terminates employment (retires). The benefit
payable under such circumstances would be the benefit normally
payable from the Pension Plan and the Supplemental Plan. If the
Executive voluntarily terminates employment (retires) after October
31, 1995 but before January 1, 1997, the Executive would receive the
increase referred to in paragraph 1.
2. All other terms and provisions of the Agreement shall remain the same.
This Amendment to the Agreement is entered into as of May 30, 1995.
EXECUTIVE
By: ARTHUR A. TORRELLAS
Arthur A. Torrellas
COMPANY
BECKMAN INSTRUMENTS, INC.
By: JOHN P. WAREHAM
John P. Wareham
Its: President and Chief Operating Officer
