FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 1994
Commission File Number 001-10109
BECKMAN INSTRUMENTS, INC.
2500 Harbor Boulevard, Fullerton, California 92634
(714) 871-4848 (Principal Executive Offices)
State of Incorporation: Delaware
I.R.S. Employer Identification No.: 95-104-0600
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Common Stock, $.10 par value
Name of each exchange on which registered: New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 ( ).
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to the
Form 10-K. ( )
Aggregate market value of voting stock held by non-affiliates of
the registrant as of January 27, 1995: $863,994,264.
Common Stock, $.10 par value, outstanding as of January 27, 1995:
29,041,824 shares.
Documents incorporated by reference in this report:
Documents incorporated Form 10-K part number
Annual Report to stockholders for
the fiscal year ended December 31, 1994 Part I and Part II
Proxy Statement for the 1995 Annual
Meeting of Stockholders to be held on
April 6, 1995 Part III
<PAGE>
BECKMAN INSTRUMENTS, INC.
PART I
Item 1. Business
Beckman Instruments, Inc. ("Beckman" or "the Company") is one of the
world's leading manufacturers of instrument systems that make laboratories
more efficient by simplifying and automating biologically based processes.
The Company designs, manufactures, markets and services a broad range of
laboratory instrument systems, reagents and related products, which
customers typically use to conduct basic scientific research, new product
research and development or diagnostic analysis of patient samples. In
1994 about 60 percent of total sales were for diagnostic applications,
principally in hospital laboratories, while about 40 percent of sales were
for life science applications in universities, medical schools and research
institutes, or new product research and development in pharmaceutical and
biotechnology companies. About half of reported sales were to customers
outside the United States.
Background
The Company was founded in 1934 by Dr. Arnold O. Beckman to
manufacture analytical instruments and became a publicly traded corporation
in 1952, subsequently being listed on the New York Stock Exchange in 1955.
In 1968 the Company expanded its laboratory instrument focus to include
health care applications in clinical diagnostics. Beckman was acquired by
SmithKline Corporation to form SmithKline Beckman Corporation ("SmithKline
Beckman") in 1982 and the Company was operated as a wholly owned subsidiary
of SmithKline Beckman until November 4, 1988. At that time approximately
16% of Beckman's common stock was sold in a public offering and the stock
was listed on the New York Stock Exchange. On July 26, 1989, SmithKline
Beckman distributed the remainder of its Beckman common stock as a tax free
dividend to the stockholders of SmithKline Beckman. This was part of a
transaction involving the merger of SmithKline Beckman and Beecham Group
p.l.c., a public limited company organized under the laws of the United
Kingdom ("Beecham"). Since that time Beckman has operated as a fully
independent publicly owned company.
Simplification and Automation of Laboratory Processes
The Company's primary expertise and activity is the integration of
chemical, biological, engineering and software sciences into complete
systems that simplify and automate biologically focused laboratory
processes and the distribution and support of those systems around the
world. These laboratory processes can generally be grouped into four
categories:
Synthesis and Sample Preparation/Handling -
Synthesizing compounds useful in subsequent analysis
and scientific investigation or placing material into a
proper container, with necessary pretreatment,
dilution, measurement, weighing and identification.
Separation - Isolating materials of interest from
extraneous material or separating mixtures into
individual constituents, often in preparation for
subsequent processes.
Detection, Measurement and Characterization -
Determining the identity, structure, or quantity of
specific analytes (compounds or molecules of interest)
present in sample specimens.
Data Processing - Acquiring, reporting, analyzing,
archiving or calculating the results of laboratory
analysis.
Beckman's experience, knowledge and ability in simplifying and
automating these processes for biological laboratories forms a
technological continuum that extends across the Company. From this common
technical base comes a range of products that are configured to meet
specific needs of academic research, pharmaceutical and biotechnology
companies, hospitals and reference laboratories (large central laboratories
to which hospitals and physicians refer specialized tests). By serving
several customer groups with differing needs related through common
science, the Company has the opportunity to broadly apply its technology.
There is a corresponding scientific and technical continuum reflected
in customer laboratories. Virtually all new analytical methods and tests
originate in academic research in universities and medical schools. If the
utility of a new method or test is demonstrated by fundamental research, it
often will then be used by pharmaceutical investigators, biotechnology
companies, teaching hospitals or specialized clinical laboratories in an
investigatory mode. In some cases these new techniques eventually emerge
in routine, high volume clinical testing at hospitals and reference labs.
Generally instruments used at each stage from research to routine clinical
applications employ the same fundamental processes but may differ in
operating features such as number of tests performed per hour and degree of
automation.
Markets
Beckman's products facilitate a wide range of laboratory processes in
facilities concerned with cells, sub-cellular particles, biochemical
compounds and analysis of patient samples. In 1994 the worldwide market for
the types of products the Company provides was about $6 billion. Slightly
over half of this market was in clinical diagnostic applications, with the
remaining portion of the market in more general purpose life science
applications. Other similar or related product categories not currently
offered by the Company represent an additional market potential which is
estimated to be approximately $10 billion. The size and growth of markets
for the Company's products are influenced by technological innovation in
bioanalytical practice, government funding for basic and disease related
research (for example, heart disease, AIDS and cancer), research and
development spending by biotechnology and pharmaceutical companies, health
care spending and physician practice.
Products
The Company offers a wide range of instrument systems and related
products, including consumables, accessories, and support services, which
can be grouped into categories by type of laboratory process or
application:
Synthesis and Sample Preparation/Handling
Separation Processes
Detection, Measurement and Characterization
Data Processing
Automated General Chemistry for Clinical Diagnostics
Special Chemistry Applications for Clinical Diagnostics
PRODUCT SALES AS A PERCENT OF TOTAL PRODUCT SALES
FOR CATEGORIES REPRESENTING
MORE THAN 10 PERCENT OF SALES
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Separation Processes 28 27 28
Automated General Chemistry
for Clinical Diagnostics 40 40 39
Special Chemistry Applications
for Clinical Diagnostics 20 20 21
</TABLE>
Synthesis and Sample Preparation/Handling
DNA Synthesizers
DNA synthesizers automate the process of making synthetic
oligonucleotides from organic chemicals. The Beckman Oligo 1000
significantly reduces the time required for synthesis and informs the user
of synthesis progress by providing reaction and reagents status throughout
the process. The Company recently introduced its new multi-column Oligo
1000M DNA Synthesizer for laboratories with high-volume oligonucleotide
needs. With its ultra fast chemistry and eight columns, the Oligo 1000M
produces high-quality oligonucleotides faster, more economically and more
conveniently than other DNA synthesizers. Designed for continuous
operation and ease of use, this is the first DNA synthesizer that is
practical for multi-user environments. Oligo systems sell in the $18,000
to $30,000 price range.
Robotic Workstations
The Biomek(R) automated laboratory workstations perform complex
operations involving liquids, including dispensing measured samples, adding
reagents, diluting, mixing and transferring small volumes between reaction
vessels. The systems handle multiple samples in parallel and may be
equipped with a photometer for detection purposes. In 1994 the Company
began shipping its second generation bio-robotics system, the Biomek(R)
2000 Laboratory Automation Workstation. Using the Biomek 2000 and the
easy-to-use Windows*-based BioWorks(TM) operating system, users can easily
program complex and repetitive tasks, including sample preparation for DNA
sequencing. Biomek systems range in price from $35,000 to over $80,000.
(*Windows is a trademark of Microsoft Corporation.)
Separation Processes
Centrifuges
Centrifuges separate liquid sample mixtures on the basis of density
(weight per unit volume) differences between the mixture's components.
Samples are put into tubes which are placed in rotors and spun at speeds
varying from a few thousand to 120,000 revolutions per minute ("rpm"). The
resulting centrifugal forces cause sample components to separate according
to their density.
Centrifuges are used for the nondestructive separation of protein and
DNA fractions, cellular components and other materials of interest in
modern biology and biotechnology. In addition to efficiency (low power
consumption), reliability and an environmentally friendly design (e.g.,
without freon) on many models, Beckman centrifuges are distinguished from
those of competitors by the wide variety of rotor designs available to meet
the precise needs of customer applications, including the separation of
blood cells from serum, an important use in clinical diagnostic
laboratories.
Beckman manufactures a broad line of centrifuges with varying speed
characteristics ranging from "low speed" (few thousand rpm) to "high speed"
(10,000 to 35,000 rpm) to "ultracentrifuges" (35,000 to 120,000 rpm) and
sample capacities ranging from microliters (one millionth of a liter) to
liters. The Avanti(TM) J-25 Centrifuge System, recently introduced by the
Company, provides a revolutionary high-torque drive system which
accelerates and brakes in half the time of conventional high-speed drives
and delivers higher speeds and g-forces with larger volumes. The Avanti J-
25 is ideal for a broad range of applications and features easy run set-up
and a compact, ergonomic design. Prices of the Company's centrifuges vary
from about $2,000 for a small low speed centrifuge to over $50,000 for an
ultracentrifuge and over $100,000 for an analytical ultracentrifuge.
High Performance Liquid Chromatographs ("HPLC")
HPLC systems rely upon the difference in the rates of passage of the
components in a chemical mixture through a tubular column filled with
chemically active material. HPLC systems are powerful separation devices
for biologically active compounds, since they are generally non-
destructive, sensitive and capable of resolving very complex mixtures of
similar compounds. The System Gold(R) HPLC manufactured by Beckman, which
is designed to be particularly useful in life sciences laboratories,
consists of several instrument modules that are used in various
combinations, consumables, accessories and software tailored to specific
applications, such as drug metabolism assays. Introduced in 1994 for use
in quality control laboratories, the System Gold(R) Nouveau HPLC offers a
variety of configurations for a wide range of applications. Beckman's HPLC
systems typically sell for $20,000 to $55,000.
Protein Sequencers
Beckman manufactures and sells protein sequencer systems and related
chemicals. Protein sequencing is used to determine the primary structure,
i.e., the amino acid sequence, of a protein. Protein sequencer systems
sell in the range of $90,000 to $130,000.
Electrophoresis
Electrophoresis systems separate mixtures of proteins, DNA, and other
molecules principally on the basis of differences in mass and electrical
charge. The P/ACE(TM) capillary electrophoresis product line represents a
powerful extension of electrophoresis technology by combining the speed of
traditional electrophoresis with the discrimination powers of
chromatography.The result is an automated system for high speed, high
sensitivity separation of proteins, nucleic acids and other biological
materials. P/ACE systems typically sell for $40,000 to $60,000.
Detection and Measurement
Spectrophotometer Systems
Spectrophotometers detect and measure the presence of compounds in
liquid mixtures by sensing the absorption of specific wavelengths of light
as that light passes through the sample. Some Beckman spectrophotometers
have the capability of measuring changes in absorption during biological
reactions. These spectrophotometers, in conjunction with Beckman software,
automatically control the time, temperature and wavelength of the
measurement while computing and recording the results of the experiment.
Depending on the specific model, accessories or software, Beckman
spectrophotometers sell in the $9,000 to $25,000 range.
Nuclear Counters
Radioactive "labeling," which is the substitution or addition of a
radioactive atom into a compound of interest, is a powerful and accepted
method for tracing the path of a biochemical in a living system. A labeled
compound which is fed to or injected into a test animal or plant can then
be traced to specific tissue or waste product by detecting the presence of
the radioactive label. Scintillation counters can be used for this
purpose. Beckman scintillation counters are distinguished by sophisticated
software and system features that combine accurate measurement with user
convenience. They typically sell in the $15,000 to $30,000 range.
Data Processing
In addition to the software associated directly with Beckman's
instrument systems, the Company produces computer software programs to aid
in the data processing functions of analytical laboratories. These systems
control laboratory instruments, direct data acquisition from the
instruments, and compute, store and report the results in formats needed
for internal purposes and satisfaction of regulatory requirements.
Beckman's data management systems are characterized by several features,
including the capability to operate on a variety of manufacturers'
computers and applications flexibility which lets customers configure the
system to meet their individual needs. These systems vary greatly in cost
depending upon the customer's requirements, but typically range from
$50,000 to $250,000.
Automated General Chemistry for Clinical Diagnostics
Automated general chemistry systems automatically detect and quantify
various chemical substances of clinical interest (analytes) in human blood,
urine and other body fluids. Beckman offers several general chemistry
systems with a range of capabilities to meet specific customer
requirements, principally for use in medium to large hospital laboratories,
but also with some application in reference laboratories.
SYNCHRON(R) Systems
The Company's SYNCHRON(R) line of automated general chemistry systems
is a family of modular automated diagnostic instruments and the reagents,
standards and other consumable products required to perform commonly
requested diagnostic tests. The SYNCHRON analyzer series includes the
SYNCHRON AS(R) system, originally introduced as the ASTRA(R), which is an
automated "stat" (immediate test) routine multi-channel analyzer. The
original system, since extended, determines the concentration of eight of
the most commonly measured analytes.
In response to changes in reimbursement policies for hospitals and
clinical laboratories, which required them to be more efficient, the
Company developed a newer series of instrument systems, the SYNCHRON CX(R)
line. The SYNCHRON CX systems have been designed as compatible modules
which may be used independently or in various combinations with each other,
to meet the specific needs of individual customers. The smallest of these
modules, the SYNCHRON CX3 analyzer, is an upgrade of the ASTRA analyzer
offering improved software, easier operation and reduced reagent
consumption. The SYNCHRON CX(R)3 DELTA, introduced in 1994, is an
extension of the original CX(R)3 that adds computer enhanced software
features including positive sample identification and up to nine "on-board"
chemistries.
The SYNCHRON CX(R)4CE, CX5CE, and CX7 are computer enhanced models
offering bi-directional communications with laboratory information systems.
The SYNCHRON series will be further extended with the 1995 introduction of
the SYNCHRON CX4 DELTA, CX5 DELTA and CX7 DELTA. These models offer
industry leading, innovative software features to enhance laboratory
productivity and a menu of over 65 different types of tests. The extensive
menu includes immunoproteins, therapeutic drugs, drugs of abuse, and a
complete listing of general chemistries. SYNCHRON systems range in price
from $49,000 to $185,000 and are sold principally based on their ability to
improve laboratory efficiency.
Other Automated Clinical Chemistry Products
The Company has a family of electrolyte analyzers that provide
automated analysis of patient electrolyte concentrations such as sodium,
potassium, and chloride. These analyzers include the LABLYTE(R) and
SYNCHRON EL-ISE(R) series and range in price from $6,000 to $20,000.
Beckman also offers a family of low cost instruments that perform manual
analyses of glucose, blood urea nitrogen and creatinine.
Special Chemistry Applications For Clinical Diagnostics
Immunochemistry Systems
The Array(R) 360 Protein and Therapeutic Drug Monitoring Systems
combine automated instrumentation and advanced software that significantly
enhance the efficiency of protein and drug analysis. The Array provides
automated random access testing which allows the operator to mix samples at
random, eliminating the need to run identical analytes in batches. At the
customer's option, it can incorporate a computer enhancement that allows
automatic reading of bar-coded sample tubes for positive sample
identification and bi-directional communication with the laboratory's
information system. Array systems sell in the $45,000 to $55,000 price
range.
Electrophoresis For Clinical Diagnostics
The Appraise(R) densitometer and the Paragon(R) Electrophoresis
Systems allow the Company to offer a full range of electrophoresis products
that provide specialized protein analysis for clinical laboratories.
Paragon reagent kits are used in the diagnosis of diabetes, cardiac, liver
and other diseases. The Appraise densitometer can be used in conjunction
with Paragon kits. It ranges in price from $17,000 to $24,000.
Other Special Chemistry Products
The Company also produces a series of single use, self-contained
diagnostic test "kits" for use in physicians' offices and group practices.
For example, the Hemoccult(R) disposable fecal occult blood testing kit is
used in the diagnosis of gastrointestinal disease. In 1994 the Company
introduced the FlexSure(TM) HP test kit, a test used as an aid in the
diagnosis of H.pylori infection which is associated with several
gastrointestinal diseases.
Competition
The markets for the Company's products are highly competitive, with
hundreds of companies participating in one or more portions of the market.
There are a number of competitors which sell both life sciences and
diagnostic products, including the Hitachi Ltd./ Boehringer Mannheim GmbH
collaboration, E.I. du Pont de Nemours & Co. Inc., Bio-Rad Laboratories,
Inc. and LKB Pharmacia AB. Additional competitors focused more directly on
life sciences include Hewlett-Packard Co. and The Perkin-Elmer Corporation.
Additional competitors in the clinical laboratory market include Abbott
Laboratories, Hoechst Corporation (Behring Diagnostics Division), Johnson &
Johnson, Inc. and Bayer Diagnostics. Competitors include divisions or
subsidiaries of corporations with substantial resources. In addition the
Company competes with several companies that sell reagents for laboratory
instruments that are manufactured by Beckman and others.
The Company competes primarily on the basis of improved laboratory
productivity, product quality and technology, service and price.
Discounting is used as a competitive tool when necessary. Management
believes that its extensive installed instrument base provides the Company
with a competitive advantage in obtaining both instrument and after-market
follow-on business.
Research, Development and Engineering
The Company's new products originate from four sources: internal
research, development and engineering ("RD&E") programs; external
collaborative efforts with individuals in academic institutions and
technology companies; devices or techniques that are generated in
customers' laboratories; and business acquisitions. The Company's RD&E
teams are skilled in optics, chemistry, electronics, mechanical and other
engineering disciplines and software, in addition to a broad range of
biological and chemical sciences. Research studies are usually conducted
in conjunction with individuals in academic institutions or other outside
scientists. Development programs focus on production of new generations of
existing product lines, such as the SYNCHRON(R) analyzers, as well as new
product categories not currently offered by the Company. Other areas of
pursuit include innovative approaches to immunochemistry, molecular biology
and advanced electrophoresis technologies, such as capillary
electrophoresis.
The Company's RD&E expenditures for fiscal years 1994, 1993, and 1992
were $91.5 million, $93.3 million and $85.9 million respectively.
Management intends to maintain the present level of the Company's
investment in RD&E spending.
Sales and Service
The Company has sales in over 120 countries and maintains its own
marketing, service and sales forces throughout the world. While nearly all
of the Company's products are distributed by Beckman sales groups
throughout the world, the Company employs independent distributors to serve
those markets that are more efficiently reached through such channels.
Beckman's sales force is technically educated and trained in the operation
and application of the Company's products. The sales force is supported by
a staff of scientists and technical specialists in each product line and in
each major scientific discipline served by the Company's products. In
addition to direct sales of its instruments, the Company leases certain
instruments, principally those sold for clinical diagnostic applications in
hospitals.
Beckman provides accessory products, consumables and service for its
instruments worldwide. Service offices and inventory depots are associated
with sales offices, subsidiaries and dealer locations. The Company
considers its reputation for service responsiveness and competence to be an
important competitive asset.
Patents and Trademarks
To complement and protect the innovations created by the Company's
RD&E efforts, the Company has an active patent protection program which
includes more than 600 active U.S. patents and patent applications. The
Company also files important corresponding applications in principal
foreign countries. The Company has taken an aggressive posture in
protecting its patent rights; however, no one patent is considered
essential to the success of the business.
The Company's primary trademark is "Beckman", with the trade name also
being Beckman or Beckman Instruments, Inc. The Company vigorously protects
its primary trademark, which is used on the Company's products and is
recognized throughout the worldwide scientific and diagnostic community.
The Company owns and uses secondary trademarks on various products, but
none of these secondary trademarks is considered of primary importance to
the business.
Government Regulations
Certain of the Company's products are subject to regulations of the
U.S. Food and Drug Administration (the "FDA") which require such products
to be manufactured in accordance with "good manufacturing practices". Such
laws and regulations also require that such products be safe and effective
and that the labeling of those products conform with specific requirements.
Testing is conducted to demonstrate performance claims and to provide other
necessary assurances. Clinical systems and reagents must be reviewed by
the FDA before sale and, in some instances, are subject to product
standards, other special controls or a formal FDA premarket approval
process. New federal regulations under the Clinical Laboratory Improvement
Amendments of 1988 will require FDA review and approval of quality
assurance protocols for the Company's clinical reagent products.
Originally scheduled for implementation in 1994, implementation is now
scheduled for September, 1996. While adding to the overall regulatory
review process, this is not expected to materially affect the sale of the
Company's products. Certain of the Company's products are subject to
comparable regulations in other countries as well.
In January 1993 the member states of the European Union (EU) began
implementation of their plan for a new unified EU market with reduced trade
barriers and harmonized regulations. The EU adopted a significant
international quality standard, the International Organization for
Standardization Series 9000 Quality Standards ("ISO 9000"). The Company's
manufacturing operations in its Brea, Carlsbad, Fullerton, Palo Alto and
Porterville, California; Allendale, New Jersey; Sharon Hill, Pennsylvania;
Naguabo, Puerto Rico and Galway, Ireland facilities have been certified as
complying with the requirements of ISO 9000. Many of the Company's
international sales subsidiaries have also been certified, including those
located in Australia, Canada, France, Germany, Italy, The Netherlands,
Singapore, South Africa, Spain, Sweden, Switzerland and the United Kingdom.
The design of the Company's products and the potential market for
their use may be directly or indirectly affected by U.S. and foreign
regulations concerning reimbursement for clinical testing services. The
configuration of new products, such as the SYNCHRON(R) series of clinical
analyzers, reflects the Company's response to the changes in hospital
capital spending patterns such as those engendered by the Medicare
Diagnostic Related Groups ("DRGs"). Under the DRG system, a hospital is
reimbursed a fixed sum for the services rendered in treating a patient,
regardless of the actual cost of the services provided.
Prior to the U.S. Government fiscal year which began October 1, 1991,
inpatient capital costs incurred by a hospital were an exception to the DRG
system and were reimbursed, to the extent of Medicare utilization, through
a supplement to the DRG payment known as "capital cost pass-through."
Effective October 1, 1991, the capital cost payment provisions of the
Medicare Prospective Payment System were changed to provide for the
transition from a "pass-through" payment methodology to a "prospective DRG
based capital payment" methodology for all inpatient capital related costs
incurred by a hospital.
Under this new payment methodology, "low capital costs" hospitals are
expected to receive greater capital payments from Medicare than they would
have had they remained under the prior capital payment system. "High
capital costs" hospitals are paid under a "hold harmless" payment
methodology which assures the hospital of certain minimum payment levels
for historical capital costs and new capital costs during the ten year
transition period to a "fully prospective" payment system for inpatient
capital costs.
To date, the Company has not experienced, and does not expect to
experience in the future, any material financial impact from the change in
Medicare's payment for inpatient capital costs.
The current health care reform efforts in the United States and in
some foreign countries are expected to further alter the methods and
financial aspects of doing business in the health care field. The Company
is closely following these developments so that it may position itself to
take advantage of them. However, the Company cannot predict the effect on
its business of these reforms should they occur nor of any other future
government regulation.
Environmental Matters
The Company is subject to federal, state, local and foreign
environmental laws and regulations. The Company believes that its
operations comply in all material respects with applicable federal, state,
and local environmental laws and regulations. Although the Company
continues to make expenditures for environmental protection, it does not
anticipate any significant expenditures in order to comply with such laws
and regulations which would have a material impact on the Company's
operations or financial position.
In 1983 the Company discovered organic chemicals in the groundwater
near a waste storage pond at a Company facility in Porterville, California.
SmithKline Beckman, the Company's former controlling stockholder, agreed to
indemnify the Company with respect to this matter for any costs incurred by
the Company in excess of applicable insurance, eliminating any impact on
the Company's earnings or financial position. SmithKline Beecham p.l.c.,
the surviving entity of the 1989 merger between SmithKline Beckman and
Beecham, assumed the obligations of SmithKline Beckman in this respect.
In 1984 the Company sold approximately 40 acres of land in Irvine,
California to The Prudential Insurance Company of America ("Prudential").
In 1988 the Company was sued by Prudential in U.S. District Court in
California for recovery of costs and other alleged damages with respect to
soil and groundwater contamination allegedly caused by operations on the
property. In 1990 the Company entered into an agreement with Prudential
for settlement of the lawsuit and for sharing current and future costs of
investigation, remediation and other claims. Prudential has since sold the
property to Mola Development Corporation which subsequently sold a portion
of the property to F.C. Irvine, Inc., each local property developers. This
has resulted in additional litigation against the Company and Prudential.
See "Legal Proceedings" herein.
Investigations conducted on the property have determined that soil and
groundwater remediation is required and such remediation is underway.
During 1994 the County formally acknowledged completion of remediation of a
major portion of the soil, although there remain other areas of soil
contamination that may require further remediation. The Company also
operated a groundwater treatment system throughout 1994. The Company
believes that it has established adequate reserves for remediation of any
remaining soil contamination, operation and maintenance of the groundwater
treatment system and any necessary additional groundwater investigations.
Investigations on the property are continuing and there can be no
assurance that further investigation will not reveal additional
contamination or result in additional costs. The Company believes that
additional remediation costs, if any, beyond those already provided for the
contamination discovered by the current investigations will not have a
material adverse effect on the Company's operations or financial position.
Employee Relations
The Company and its subsidiaries presently employ approximately 5,900
persons throughout the world, including approximately 4,200 in the United
States. The Company considers that its relations with its employees are
generally good.
Geographic Area Information
Information with respect to the above-captioned item is incorporated
by reference to Note 12 Business Segment Information of the Company's
Annual Report to Stockholders for the year ended December 31, 1994.
Item 2. Properties
The Company's primary instrument assembly and manufacturing facilities
are located in Fullerton, Brea, and Palo Alto, California. Central
manufacturing support facilities for parts and electronic subassemblies are
located in Porterville, California. An additional manufacturing facility
is located in Galway, Ireland. Reagents are manufactured in Carlsbad,
California, Naguabo, Puerto Rico, and Galway, Ireland. The Company's
computer software products business is located in Allendale, New Jersey.
The Company's facility for the production of Hemoccult(R) test kits and
related products is located in Sharon Hill, Pennsylvania.
All U.S. manufacturing facilities, including land and buildings, are
owned by the Company with the exception of Allendale and Sharon Hill which
are leased facilities, and Palo Alto, where the Company has built and owns
its buildings on a long-term land lease expiring in 2054. All
manufacturing facilities outside the U.S. are leased. The central
production facilities for the Company also include plastics fabrication and
machine shop capabilities in Fullerton to serve the entire Company. This
facility, in conjunction with electronic subassembly work done in
Porterville, supplies the primary parts and subassemblies for the
instrument systems to the various instrument assembly locations in
California. The Company's principal distribution locations are in Brea and
Fullerton, California, Somerset, New Jersey and Frankfurt, Germany. In
1994 the Company established a European administration center at a facility
in Nyon, Switzerland.
The Company believes that its production facilities meet applicable
government environmental, health and safety regulations, and industry
standards for maintenance, and that its facilities in general are adequate
for its current business.
Item 3. Legal Proceedings
As previously reported, in 1991 Forest City Properties Corporation and
F.C. Irvine, Inc. (collectively, "Forest City"), current owners and
developers of a portion of the same real property in Irvine referred to
under the caption "Environmental Matters" herein, filed suit against
Prudential in the California Superior Court for the County of Los Angeles,
alleging breach of contract and damages caused by the pollution of the
property. Forest City originally sought damages of more than $20 million
but recently increased its demand to $40 million. Forest City also seeks
additional remediation of the property. Although the Company is not a
named defendant in the Forest City action, it is obligated to contribute to
any resolution of that action pursuant to the Company's 1990 settlement
agreement with Prudential. See "Environmental Matters" herein. The trial
of this matter is scheduled to begin February 14, 1995. The Company has
established a reserve for the resolution of this lawsuit. Although the
outcome of litigation cannot be predicted with certainty, the Company
believes that any additional liability beyond that provided for will not
have a material adverse effect on the Company's operations or financial
position.
As previously reported, in September 1994 Prudential, Forest City and
a number of other defendants, not including the Company, were sued by one
of the tenants of the apartment houses built by Forest City on the above
mentioned property in Irvine, California. The complaint, filed in the
California Superior Court for the County of Orange as Etezadi v. Prudential
Insurance Company, et. al., seeks damages for alleged personal injury,
emotional distress, lost earnings, and medical expenses, as well as
punitive and other damages (no dollar amount is specified) in connection
with alleged soil and groundwater contamination of the Irvine property.
Although the Company is not a named defendant at this time, the Company is
obligated to contribute to any resolution of this lawsuit. The Company
believes that any liability resulting from this lawsuit will not have a
material adverse effect on the Company's operations or financial position.
As previously reported, since 1992 four toxic tort lawsuits* have been
filed in Maricopa County Superior Court, Arizona by a number of residents
of the Phoenix/Scottsdale area against the Company and a number of other
defendants, including Motorola, Inc., Siemens Corporation, the cities of
Phoenix and Scottsdale, and others. The Company is indemnified by
SmithKline Beecham p.l.c., the successor of its former controlling
stockholder, for any costs incurred in these matters in excess of
applicable insurance, and thus the outcome of these litigations, even if
unfavorable to the Company, should have no effect on the Company's earnings
or financial position. The lawsuits seek damages for alleged personal
injury, emotional distress, lost earnings and medical expenses, as well as
punitive and other damages (no dollar amount is specified) in connection
with alleged groundwater contamination in an area in Scottsdale, Arizona
close to a former Company manufacturing facility. The suits are currently
in the discovery phase and a trial date has not been scheduled for any of
them. In one of the cases, Baker v. Motorola, Inc. et al, the Court in
1994 certified two classes of plaintiffs, one for property damage claims
and another for medical monitoring claims. This is a significant
development which will substantially increase the number of claimants. The
Company is vigorously defending all of the suits which it believes are
without merit.
* Baker v. Motorola, Inc. et al (filed February 1992),
Lofgren v. Motorola, Inc. et al (filed April 1993),
Betancourt v. Motorola, Inc. et al (filed July 1993) and Ford
v. Motorola, Inc. et al (filed June 1994).
As previously reported, the public prosecutor in Palermo (Sicily),
Italy is investigating the activities of officials at a local government
hospital and laboratory. In addition to staff members in charge of the
laboratory for the Palermo hospital, a number of representatives of the
principal worldwide companies marketing diagnostic equipment in Italy were
taken into temporary custody for questioning as part of the investigation.
Included were three employees of the Company's Italian subsidiary (the
"Subsidiary"). The investigation, which is still underway, also obtained
documents from the Subsidiary and from other major diagnostic companies.
The inquiry of the Subsidiary focuses on past leasing practices for
placement of diagnostic equipment which were common industrywide practices
throughout Italy, but now are alleged to be improper. Criminal accusations
could possibly be made against individuals at the Subsidiary; however, no
formal charges have been issued by the Palermo prosecutor. Recently, new
inquiries to the Subsidiary have been initiated by the prosecutor from the
region of Florence.
Although no criminal action would be brought against the Subsidiary,
it could be liable with respect to any civil action for damages caused by
the alleged improper conduct of the individuals. It will not be feasible
to evaluate the likelihood of any criminal conviction or civil liability
until the Palermo prosecutor reveals the evidence which allegedly supports
the possible accusations. Although it is very difficult to evaluate the
political climate in Italy and the activities of the Italian public
prosecutors, at the present time the Company does not expect this matter to
have a material adverse effect on its operations or financial position.
In addition, the Company and its subsidiaries are involved in a number
of lawsuits which the Company considers ordinary and routine in view of its
size and the nature of its business. The Company does not believe that any
ultimate liability resulting from any such lawsuits will have a material
adverse effect on the operations or financial position of the Company. See
also "Environmental Matters" herein.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of stockholders during the fourth
quarter of the fiscal year covered by this report.
<PAGE>
Executive Officers of the Company
The following is a list of the executive officers of the Company as of
February 7, 1995, showing their ages, present positions and offices with
the Company and their business experience during the past five or more
years. Officers are elected by the Board of Directors and serve until the
next annual Organization Meeting of the Board. Officers may be removed by
the Board at will. There are no family relationships among any of the
named individuals, and no individual was selected as an officer pursuant to
any arrangement or understanding with any other person.
Louis T. Rosso, 61, Chairman of Mr. Rosso was named Chairman
the Boad and Chief Executive of the Board of the Company in
Officer 1989, was named Chief
Executive Officer in 1988 and
was its President from 1982
until 1993. He also served as
a Vice President of SmithKline
Beckman from 1982 to 1989.
Mr. Rosso first joined the
Company in 1959 and was named
Corporate Vice President in
1974. He is a director of
Allergan, Inc. and is a member
of the Board of Trustees of
St. Jude Heritage Foundation
in Fullerton, California and
of Harvey Mudd College. Mr.
Rosso has been a director of
the Company since 1988.
John P. Wareham, 53, Director, Mr. Wareham was named
President, and Chief Operating President and Chief Operating
Officer Officer of the Company
effective October 15, 1993.
On December 1, 1993 he was
elected to the Board of
Directors. Mr. Wareham joined
the Company in 1984 as Vice
President, Diagnostic Systems
Group and served in that
capacity until his appointment
as President. Prior thereto
he had been President of
Norden Laboratories, Inc., a
wholly owned subsidiary of
SmithKline Beckman engaged in
developing, manufacturing and
marketing veterinary products.
Mr. Wareham first joined
SmithKline Beckman in 1968.
He is a director of the Little
Rapids Corporation and The
John Henry Foundation.
Michael T. O'Neill, 54, Senior Mr. O'Neill was named Senior
Vice President, Commercial Vice President, Commercial
Operations Operations of the Company
effective October 15, 1993.
He had been Vice President,
Bioanalytical Systems Group
since 1989. Prior thereto he
had been Vice President,
International Operations for
the Bioanalytical systems
Group since 1985. Mr. O'Neill
first joined the Company in
1973.
Dennis K. Wilson, 59, Vice Mr. Wilson was named Vice
President, Finance and Chief President, Finance and Chief
Financial Officer Financial Officer of the
Company effective December 24,
1993. He was Vice President,
Treasurer of the Company from
1989 until his current
appointment. Prior thereto he
had been Vice President,
Corporate Accounting and
Assistant Controller of
SmithKline Beckman since 1984.
Mr. Wilson first joined the
Company in 1969.
James T. Glover, 44, Vice Mr. Glover was appointed to
President and Controller his present position as Vice
President and Controller of
the Company in May 1993.
From 1989 until assuming his
current position, he was Vice
President, Controller -
Diagnostic Systems Group. Mr.
Glover joined the Company in
1983 and prior to that held
management positions with KPMG
Peat Marwick and R.J.
Reynolds, Inc.
William H. May, 52, Vice Mr. May has been General
President, General Counsel and Counsel and Secretary of the
Secretary Company since 1984 and has
been Vice President, General
Counsel and Secretary of the
Company since 1985. Mr. May
first joined the Company in
1976.
Richard K. Sears, 62, Vice Mr. Sears has been Vice
President, Human Resources President, Human Resources of
the Company since 1991. Prior
thereto he had been President
of Haiku/Hawaii, a building
material and development
company, from 1989 to 1990.
Before that he was Vice
President - Corporate
Administration of the Irvine
Company of Newport Beach,
California, a major California
real estate developer, from
1984 to 1987, and served as
the principal of his own
consulting practice in the
field of planning and general
management from 1987 to 1989.
Mr. Sears originally joined
the Company in 1955 when he
served in a number of
administrative and management
positions for a period of 14
years.
Bruce A. Tatarian, 46, Vice Mr. Tatarian was named Vice
President, Bioresearch President, Bioresearch
Commercial Operations Commercial Operations
International International of the Company
effective January 1, 1994. He
was Vice President, Marketing
Operations for the
Bioanalytical Systems Group
from 1991 until his current
appointment. Prior thereto he
had been Vice President -
Manager, Analytical Business
Unit from 1990 to 1991. He
rejoined the Company in 1989
as Director of Product
Planning and Technical
Assessment of the
Bioanalytical Systems Group.
Mr. Tatarian originally joined
the Company in 1973 when he
served in a number of
marketing positions for a
period of ten years.
Arthur A. Torrellas, 64, Vice Mr. Torrellas was named Vice
President, Diagnostic President, Diagnostic
Commercial Operations Commercial Operations of the
Company effective January 1,
1994. He had been Vice
President, International
Operations for the Diagnostic
Systems Group since 1985. Mr.
Torrellas first joined the
Company in 1977.
Albert R. Ziegler, 56, Vice Mr. Ziegler was named Vice
President, Diagnostics President, Diagnostics
Development Center Development Center of the
Company effective January 1,
1994. He joined the Company
in 1986 as Vice President,
North America Operations for
the Diagnostic Systems Group.
Prior thereto he had been
President of Branson
Ultrasonics Corporation, a
manufacturer of industrial
ultrasound instruments and a
subsidiary of SmithKline
Beckman until the divestiture
of SmithKline Beckman's
industrial instruments
businesses in 1984. Mr.
Ziegler first joined
SmithKline Beckman in 1971.
Paul Glyer, 38, Treasurer Mr. Glyer was named Treasurer
of the Company effective
December 24, 1993. He served
as Assistant Treasurer since
1989 when he first joined the
Company.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
Information with respect to the above-captioned Item is incorporated
herein by reference to the sections entitled "Stock Exchanges and Prices"
and "Dividends" of the Company's Annual Report to Stockholders for the year
ended December 31, 1994. During 1994 the Company paid four consecutive
quarterly dividends of $.10 per share of common stock, for a total of $.40
per share for the year. During 1993 the Company paid four consecutive
quarterly dividends of $.09 per share of common stock, for a total of $.36
per share for the year. Information with respect to dividend restrictions
is incorporated by reference to Note 5 Debt of the "NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS" of the Company's Annual Report to Stockholders for
the year ended December 31, 1994. In addition, as of January 27, 1995,
there were approximately 10,115 holders of record of the Company's common
stock.
Item 6. Selected Financial Data
Information with respect to the above-captioned Item is incorporated
herein by reference to the section entitled "FIVE-YEAR FINANCIAL AND
STATISTICAL DATA" of the Company's Annual Report to Stockholders for the
year ended December 31, 1994.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Information with respect to the above-captioned Item is incorporated
herein by reference to the section entitled "FINANCIAL REVIEW" of the
Company's Annual Report to Stockholders for the year ended December 31,
1994.
Item 8. Financial Statements and Supplementary Data
Information with respect to the above-captioned Item is incorporated
herein by reference to the consolidated financial statements, including all
the notes thereto, and the sections entitled "REPORT BY MANAGEMENT",
"INDEPENDENT AUDITORS' REPORT" and "QUARTERLY DATA (UNAUDITED)" of the
Company's Annual Report to Stockholders for the year ended December 31,
1994.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors - The information with respect to directors required by this
Item is incorporated herein by reference to those parts of the Company's
Proxy Statement for the Annual Meeting of Stockholders to be held April 6,
1995 entitled "ELECTION OF DIRECTORS" and "BOARD OF DIRECTORS INFORMATION."
Executive Officers - The information with respect to executive
officers required by this Item is set forth in Part I of this report.
Item 11. Executive Compensation
The information with respect to executive compensation required by
this Item is incorporated by reference to that part of the Company's Proxy
Statement for the Annual Meeting of Stockholders to be held April 6, 1995
entitled "EXECUTIVE COMPENSATION."
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information with respect to security ownership required by this
Item is incorporated by reference to that part of the Company's Proxy
Statement for the Annual Meeting of Stockholders to be held April 6, 1995
entitled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
Item 13. Certain Relationships and Related Transactions
The information with respect to certain relationships and related
transactions required by this Item is incorporated by reference to that
part of the Company's Proxy Statement for the Annual Meeting of
Stockholders to be held April 6, 1995 entitled "BOARD OF DIRECTORS
INFORMATION, Compensation Committee Interlocks and Insider Participation."
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1), (a)(2) Financial Statements and Financial Statement
Schedules
The financial statements and financial statement schedules filed as
part of the report are incorporated by reference in the "INDEX OF FINANCIAL
STATEMENTS AND SCHEDULES" following this Part IV.
(a)(3) Exhibits
Management contracts and compensatory plans or
arrangements are identified by *.
3.1 Third Restated Certificate of Incorporation of the
Company, June 5, 1992 (incorporated by reference to
Exhibit 3.1 of the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K for the
fiscal year ended December 31, 1992, File No. 001-10109).
3.2 Amended and Restated By-Laws of the Company, as of November
30, 1994.
4.1 Specimen Certificate of Common Stock (incorporated by
reference to Exhibit 4.1 of Amendment No.1 to the Company's
Form S-1 registration statement, File No. 33-24572).
4.2 Rights Agreement between the Company and Morgan Shareholder
Services Trust Company, as Rights Agent, dated as of March
28, 1989 (incorporated by reference to Exhibit 4 of the
Company's current report on Form 8-K filed with the
Securities and Exchange Commission on April 25, 1989, File
No. 1-10109).
4.3 First amendment to the Rights Agreement dated as of March
28, 1989 between the Company and First Chicago Trust Company
of New York (formerly Morgan Shareholder Services Trust
Company), as Rights Agent, dated as of June 24, 1992
(incorporated by reference to Exhibit 1 of the Company's
current report on Form 8-K filed with the Securities and
Exchange Commission on July 2, 1992, File No. 001-10109).
4.4 Amendment 1993-1 to the Company's Savings and Investment
Plan, adopted November 3, 1993, filed in connection with the
Form S-8 Registration Statement filed with the Securities
and Exchange Commission on September 1, 1992, File No. 33-
51506 (incorporated by reference to Exhibit 4 of the
Company's Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarterly period ended March
31, 1994, File No. 001-10109).
10.1 Revolving Credit Agreement, dated as of September 26, 1994,
among the Company, the lenders named therein and Citicorp
USA, Inc. as Agent (incorporated by reference to Exhibit
10.1 of the Company's Quarterly Report to the Securities
and Exchange Commission on Form 10-Q for the quarterly
period ended September 30, 1994, File No. 001-10109).
10.2 Revolving Credit Agreement, dated as of July 2, 1992, among
the Company, the lenders named therein and Citicorp USA,
Inc. as Agent (incorporated by reference to Exhibit 10.16 of
the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended December
31, 1992, File No. 001-10109).
10.3 First Amendment to Revolving Credit Agreement, dated as of
December 31, 1993, among the Company, the lenders named
therein and Citicorp USA, Inc. as Agent (incorporated by
reference to Exhibit 10.13 of the Company's Annual Report to
the Securities and Exchange Commission on Form 10-K for the
fiscal year ended December 31, 1993, File No. 001-10109).
10.4 Note Agreement, dated as of February 5, 1993, among the
Company, Nationwide Life Insurance Company and three other
insurance companies named therein (incorporated by reference
to Exhibit 10.17 of the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K for the
fiscal year ended December 31, 1992, File No. 001-10109).
10.5 Line of Credit Promissory Note in favor of Mellon Bank,
N.A., dated as of October 6, 1993 (incorporated by reference
to Exhibit 10.21 of the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K for the
fiscal year ended December 31, 1992, File No. 001-10109).
10.6 Loan Agreement (Multiple Advance), dated September 30, 1993,
between Beckman Instruments (Japan) Limited and the
Industrial Bank of Japan, Limited (English translation,
including certification as to accuracy; original document
executed in Japanese) (incorporated by reference to Exhibit
10.21 of the Company's Annual Report to the Securities and
Exchange Commission on Form 10-K for the fiscal year ended
December 31, 1993, File No. 001-10109).
10.7 Term Loan Agreement, dated as of September 30, 1993, between
Beckman Instruments (Japan) Limited and Citibank, N.A.,
Tokyo Branch (incorporated by reference to Exhibit 10.22 of
the Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended December
31, 1993, File No. 001-10109).
10.8 Term Loan Agreement, dated as of December 9, 1993, between
Beckman Instruments (Japan) Limited and The Dai-Ichi Kangyo
Bank Limited (English translation, including certification
as to accuracy; original document executed in Japanese)
(incorporated by reference to Exhibit 10.23 of the Company's
Annual Report to the Securities and Exchange Commission on
Form 10-K for the fiscal year ended December 31, 1993, File
No. 001-10109).
10.9 Trust Agreement between the Company and Mellon Bank, N.A. as
Trustee, for the benefit of Participating Employees, dated
as of January 31, 1993 (incorporated by reference to Exhibit
10.22 of the Company's Annual Report to the Securities and
Exchange Commission on Form 10-K for the fiscal year ended
December 31, 1992, File No. 001-10109).
* 10.10 The Company's Executive Incentive Plan, adopted by the
Company in 1994 (incorporated by reference to Exhibit 10 of
the Company's Quarterly Report to the Securities and
Exchange Commission on Form 10-Q for the quarterly period
ended June 30, 1994, File No. 001-10109).
* 10.11 Supplement to the Company's Executive Incentive Plan,
adopted by the Company in 1994: Company Memorandum, FY 94
Incentive Plans, May 11, 1994 (incorporated by reference to
Exhibit 10.2 of the Company's Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for the
quarterly period ended September 30, 1994, File No. 001-
10109).
* 10.12 The Company's Executive Bonus Plan, adopted by the Company
in 1993 (incorporated by reference to Exhibit 10.15 of the
Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended December
31, 1993, File No. 001-10109).
* 10.13 The Company's Incentive Compensation Plan of 1990, as
restated with amendments of January 29, 1992, amendments
approved by stockholders May 6, 1992 (incorporated by
reference to Exhibit 10.20 of the Company's Annual Report to
the Securities and Exchange Commission on Form 10-K for the
fiscal year ended December 31, 1992, File No. 001-10109).
* 10.14 The Company's Incentive Compensation Plan, as amended by the
Company's Board of Directors on October 26, 1988 and as
amended and restated by the Company's Board of Directors on
March 28, 1989 (incorporated by reference to Exhibit 10.16
of the Company's Annual Report to the Securities and
Exchange Commission on Form 10-K for the fiscal year ended
December, 31 1989, File No. 001-10109).
* 10.15 Beckman Instruments, Inc. Supplemental Pension Plan, adopted
by the Company October 24, 1990 (incorporated by reference
to Exhibit 10.4 of the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K for the
fiscal year ended December, 31 1990, File No. 001-10109).
* 10.16 The Company's Stock Option Plan for Non-Employee
Directors, as restated with amendments of January 29, 1992,
amendments approved by stockholders May 6, 1992
(incorporated by reference to Exhibit 10.19 of the Company's
Annual Report to the Securities and Exchange Commission on
Form 10-K for the fiscal year ended December 31, 1992, File
No. 001-10109).
* 10.17 Form of Restricted Stock Agreement, dated as of September
16, 1991, between the Company, each of its Executive
Officers and certain other key employees (incorporated by
reference to Exhibit 10.19 of the Company's Annual Report to
the Securities and Exchange Commission on Form 10-K for the
fiscal year ended December 31, 1991, File No. 001-10109).
* 10.18 Form of Legended Stock Agreement and Election For Deferral
of a Portion of the FY 93 Executive Bonus Plan, between the
Company and some of its Executive Officers and other key
employees (incorporated by reference to Exhibit 10.20 of the
Company's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended December
31, 1993, File No. 001-10109).
* 10.19 Form of Change in Control Agreement, dated as of May 1,
1989, between the Company, each of its Executive Officers
and certain other key employees (incorporated by reference
to Exhibit 10.34 of the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K for the
fiscal year ended December 31, 1989, File No. 001-10109).
* 10.20 Agreement Regarding Retirement Benefits of Arthur A.
Torrellas, dated December 20, 1993, between the Company and
Arthur A. Torrellas (incorporated by reference to Exhibit
10.24 of the Company's Annual Report to the Securities and
Exchange Commission on Form 10-K for the fiscal year ended
December 31, 1993, File No. 001-10109).
* 10.21 Beckman Instruments, Inc. Deferred Directors' Fee Program,
adopted by the Company November 30, 1994.
10.22 Distribution Agreement, dated as of April 11, 1989, among
SmithKline Beckman Corporation the Company and Allergan,
Inc. (incorporated by reference to Exhibit 3 to SmithKline
Beckman Corporation's Current Report on Form 8-K filed with
the Securities and Exchange Commission on April 14, 1989,
File No. 1-4077).
10.23 Amendment to the Distribution Agreement effective as of June
1, 1989 between SmithKline Beckman Corporation, the Company
and Allergan, Inc. (incorporated by reference to Exhibit
10.26 of Amendment No. 2 to the Company's Form S-1
registration statement, File No. 33-28853).
10.24 Cross-Indemnification Agreement between the Company and
SmithKline Beckman Corporation (incorporated by reference to
Exhibit 10.1 of Amendment No. 1 to the Company's Form S-1
registration statement, File No. 33-24572).
10.25 Tax Agreement, dated as of April 11, 1989, between
SmithKline Beckman Corporation and the Company (incorporated
by reference to Exhibit 4 to SmithKline Beckman
Corporation's Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 14, 1989, File
No. 1-4077).
10.26 Tax Sharing Agreement between the Company and SmithKline
Beckman Corporation (incorporated by reference to Exhibit
10.2 of Amendment No. 1 to the Company's Form S-1
registration statement, File No. 33-24572).
11. Statement regarding computation of per share earnings:
This information is incorporated by reference to Note 1
Summary of Significant Accounting Policies of the Company's
Annual Report to Stockholders for the year ended December
31, 1994.
13. WORDS ON NUMBERS, FINANCIAL REVIEW Section of the Company's
annual Report to Stockholders for the year ended
December 31, 1994.
21. Subsidiaries
24. Consent of KPMG Peat Marwick LLP, February 3, 1995.
27. Financial Data Schedule.
(b) Reports on Form 8-K During Fourth Quarter ended
December 31, 1994.
No Reports on Form 8-K were filed during the quarter ended
December 31, 1994.
<PAGE>
Beckman Instruments, Inc.
INDEX TO
FINANCIAL STATEMENTS AND SCHEDULES
The consolidated financial statements of the Company and the related
report of KPMG Peat Marwick LLP, dated January 19, 1995 are incorporated by
reference to the financial section entitled "Words on Numbers of the
Company's Annual Report to stockholders for the year ended December 31,
1994.
The information required to be reported in the Supplementary Financial
Schedule entitled, VIII Allowance for Doubtful Accounts, for the three year
period ended December 31, 1994 is set forth in Note 13, Supplementary
Information, of the "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS" of the
Company's Annual Report to Stockholders for the year ended December 31,
1994. Schedules not included herein have been omitted because they are not
applicable, are no longer required or the required information is presented
in the consolidated financial statements or in the notes to the
consolidated financial statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: February 2, 1995 By LOUIS T. ROSSO
Louis T. Rosso
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
_________ _____ ____
Chairman of the Board
and Chief Executive
Officer (Principal
LOUIS T. ROSSO Executive Officer) February 2, 1995
Louis T. Rosso
President,
Chief Operating Officer
JOHN P. WAREHAM and Director February 2, 1995
John P. Wareham
Vice President, Finance
and Chief Financial Officer
(Principal Financial
DENNIS K. WILSON and Accounting Officer) February 2, 1995
Dennis K. Wilson
Vice President and
JAMES T. GLOVER Controller February 2, 1995
James T. Glover
EARNEST H. CLARK, JR. Director February 2, 1995
Earnest H. Clark, Jr.
CAROLYNE K. DAVIS Director February 6, 1995
Carolyne K. Davis, Ph.D.
DENNIS C. FILL Director February 2, 1995
Dennis C. Fill
GAVIN HERBERT Director February 2, 1995
Gavin S. Herbert
WILLIAM N. KELLEY Director February 2, 1995
William N. Kelley, M.D.
FRANCIS P. LUCIER Director February 2, 1995
Francis P. Lucier
C. RODERICK O'NEIL Director February 2, 1995
C. Roderick O'Neil
DAVID S. TAPPAN, JR. Director February 2, 1995
David S. Tappan, Jr.
HENRY WENDT Director February 5, 1995
Henry Wendt
BETTY WOODS Director February 2, 1995
Betty Woods
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- --------- ----------
3.2 Amended and Restated By-Laws, as of
November 30, 1994.
10.21 Beckman Instruments, Inc. Deferred
Directors' Fee Program, adopted by the
Company November 30, 1994.
13. WORDS ON NUMBERS, FINANCIAL REVIEW Section
of the Company's Annual Report
to Stockholders for the year ended
December 31, 1994.
21. Subsidiaries
24. Consent of KPMG Peat Marwick LLP,
February 3, 1995.
27. Financial Data Schedule
<PAGE>
Revised November 30, 1994 Exhibit 3.2
BECKMAN INSTRUMENTS, INC.
AMENDED AND RESTATED BY-LAWS
ARTICLE I
Offices
Section 1. REGISTERED OFFICE. The registered office shall be The
Prentice-Hall Corporation System, Inc., 32 Loockerman Square, Suite L-100,
in the city of Dover, County of Kent, State of Delaware, 19901.
Section 2. PRINCIPAL OFFICE. The principal office for the
transaction of the business of the corporation is hereby fixed and located
at 2500 Harbor Boulevard, Fullerton, Orange County, California.
ARTICLE II
Meetings of Stockholders
Section 1. PLACE OF MEETINGS. All annual meetings of stockholders
shall be held at the principal office of the corporation, unless from time
to time the Board of Directors, pursuant to authority hereby expressly
conferred by resolution, fixes a different place where annual meetings of
stockholders shall be held.
All other meetings of stockholders shall be held at the principal
office or at any other place which may be designated by the Board of
Directors pursuant to authority hereby expressly granted.
Section 2. ANNUAL MEETINGS. The annual meetings of stockholders
shall be held on the first Thursday of April of each year, at 10:00 o'clock
A.M. of said day or such other day and time as may be designated by
resolution of the Board of Directors; provided, however, that should said
day fall upon a legal holiday, then any such annual meeting of stockholders
shall be held at the same time and place on the next day thereafter ensuing
which is not a legal holiday.
At an annual meeting of stockholders, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been
brought before the annual meeting (a) by, or at the direction of, a
majority of the Directors, or (b) by any stockholder of the corporation who
complies with the notice procedures set forth in this section. For a
proposal to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
secretary of the corporation. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of
the corporation not less than 60 days prior to the scheduled annual
meeting, regardless of any postponements, deferrals or adjournments of that
meeting to a later date; provided, however, that if less than 70 days'
notice or prior public disclosure of the date of the scheduled annual
meeting is given or made, notice by the stockholder, to be timely, must be
so delivered or received not later than the close of business on the tenth
day following the earlier of the day on which such notice of the date of
the scheduled annual meeting was mailed or the day on which such public
disclosure was made. A stockholder's notice to the secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such business at
the annual meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business and any
other stockholders known by such stockholder to be supporting such
proposal, (c) the class and number of shares of the corporation's stock
which are beneficially owned by the stockholder on the date of such
stockholder notice and by any other stockholders known by such stockholder
to be supporting such proposal on the date of such stockholder notice, and
(d) any financial interest of the stockholder in such proposal.
The presiding officer of the annual meeting shall determine and
declare at the annual meeting whether the stockholder proposal was made in
accordance with the terms of this section. If the presiding officer
determines that a stockholder proposal was not made in accordance with the
terms of this section, he shall so declare at the annual meeting and any
such proposal shall not be acted upon at the annual meeting.
This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but, in connection with such reports,
no new business shall be acted upon at such annual meeting unless stated,
filed and received as herein provided.
Section 3. NOTICE OF MEETINGS AND ADJOURNED MEETING. Written notice
stating the place, date and hour of any meeting shall be given not fewer
than ten (10) nor more than sixty (60) days before the date of the meeting
to each stockholder entitled to vote at such meeting. If mailed, notice is
given when deposited in the United States mail, postage prepaid, directed
to the stockholder at his address as it appears on the records of the
corporation. If a stockholder gives no address, notice shall be deemed to
have been given him if sent by mail or other means of written communication
addressed to the place where the principal office of the corporation is
situated, or if published, at least once in a newspaper of general
circulation in the country in which said office is located.
When a meeting is adjourned to another time or place, notice need not
be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business that might have
been transacted at the original meeting.
If the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 4. SPECIAL MEETINGS. Special meetings of the stockholders of
the corporation for any purpose or purposes may be called at any time by
the Board of Directors, the chairman of the Board of Directors or the chief
executive officer of the corporation. Special meetings of the stockholders
of the corporation may not be called by any other person or persons.
Except in special cases where other express provision is made by statute,
notice of such special meetings shall be given in the same manner as for
annual meetings of the stockholders. Notices of any special meetings shall
specify, in addition to the place, day and hour of such meeting, the
general nature of the business to be transacted.
Section 5. VOTING; PROXIES. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten (10) days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares registered
in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting
is to be held, which place may be specified in the notice of the meeting,
or it not so specified, at the place where the meeting is to be held. The
list also shall be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who
is present.
Upon the willful neglect or refusal of the Directors to produce such a
list at any meeting for the election of Directors, they shall be ineligible
for election to any office at such meeting.
Each stockholder entitled to vote at a meeting of stockholders may
authorize another person or persons to act for him by proxy. A stockholder
may grant such authority by (a) executing a writing authorizing another
person or persons to act for him as proxy, which execution may be
accomplished by the stockholder or his authorized officer, director,
employee or agent signing such writing or causing his or her signature to
be affixed to such writing by any reasonable means including, but not
limited to, by facsimile signature, or (b) authorizing another person or
persons to act for him as proxy by transmitting or authorizing the
transmission of a telegram, cablegram, or other means of electronic
transmission to the person who will be the holder of the proxy or to a
proxy solicitation firm, proxy support service organization or like agent
duly authorized by the person who will be the holder of the proxy to
receive such transmission, provided that any such telegram, cablegram or
other means of electronic transmission must either set forth or be
submitted with information from which it can be determined that the
telegram, cablegram or other electronic transmission was authorized by the
stockholder. If it is determined that such telegrams, cablegrams or other
electronic transmissions are valid, the inspectors or, if there are no
inspectors, such other persons making that determination shall specify the
information upon which they relied. Any copy, facsimile telecommunication
or other reliable reproduction of the writing or transmission created
pursuant to the foregoing subsection (b) may be substituted or used in lieu
of the original writing or transmission for any and all purposes for which
the original writing or transmission could be used, provided that such
copy, facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission. Each original
writing, telegram, cablegram or other means of electronic transmission, or
a copy, facsimile telecommunication or other reliable reproduction thereof,
shall be filed with the secretary of the corporation not later than the day
on which exercised. No proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period.
Except as otherwise specifically provided by law, the Certificate of
Incorporation or these by-laws, the affirmative vote of the majority of
shares present in person or represented by proxy at the meeting and
entitled to vote on the subject matter shall be the act of the
stockholders. Elections of Directors need not be by written ballot.
Except as otherwise specifically provided by law, all other votes may be
viva voce or by ballot.
Section 6. QUORUM. Except as otherwise provided by the law, the
Certificate of Incorporation or these by-laws, the presence, in person or
by proxy, of the holders of a majority of the outstanding shares entitled
to vote shall constitute a quorum, but in no event shall a quorum consist
of less than one-third (1/3) of the shares entitled to vote at a meeting.
The stockholders present at a duly organized meeting can continue to do
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 7. WAIVER OF NOTICE. The transactions of any meeting of
stockholders, either annual or special, however called and noticed, shall
be as valid as though had at a meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each of the persons entitled to vote, not
present in person or by proxy, signs a written waiver of notice.
Attendance of a person at a meeting shall constitute a waiver of notice of
such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened.
All such waivers shall be filed with the corporate records or made a part
of the minutes of the meeting.
Section 8. NO ACTION WITHOUT MEETING. Any action required or
permitted to be taken at any annual or special meeting of stockholders may
be taken only upon the vote of the stockholders at an annual or special
meeting duly called and may not be taken by written consent of the
stockholders.
ARTICLE III
Directors
Section 1. POWERS.
(a) General Powers. The Board of Directors shall have all
powers necessary or appropriate to the management of the
corporation, and, in addition to the power and authority
conferred by these by-laws, may exercise all powers of the
corporation and do all such lawful acts and things as are not
by statute, these by-laws or the Certificate of Incorporation
directed or required to be exercised or done by the
stockholders.
(b) Specific Powers. Without limiting the general powers
conferred by the last preceding clause and the powers
conferred by the Certificate of Incorporation and by-laws of
the corporation, it is expressly declared that the Board of
Directors shall have the following powers:
First - To select and remove all the other officers,
agents and employees of the corporation, prescribe
such powers and duties for them as may not be
inconsistent with law, with the Certificate of
Incorporation or the by-laws, fix their compensation
and require from them security for faithful service.
Second - To conduct, manage and control the affairs and
business of the corporation, and to make such rules
and regulations therefor not inconsistent with law, or
with the Certificate of Incorporation or the by-laws,
as they may deem best.
Third - To change the principal office for the transaction
of the business of the corporation from one location
to another as provided in Article I, Section 2 hereof;
to designate the place and time of annual and other
meetings of stockholders as provided in Article II,
Section 2 and Article II, Section 4 of these by-laws;
and to adopt, make and use a corporate seal, and to
prescribe the forms of certificates of stock, and to
alter the form of such seal and of such certificates
from time to time, as in their judgment they may deem
best, provided such seal and such certificates shall
at all times comply with the provisions of law.
Fourth - To authorize the issuance of shares of stock of the
corporation from time to time, upon such terms as may
be lawful, in consideration of cash, services
rendered, personal property, real property, leases of
real property, or a combination thereof, or in the
case of shares issued as a dividend against amounts
transferred from surplus to stated capital.
Fifth - To borrow money and incur indebtedness for the
purposes of the corporation, and to cause to be
executed and delivered therefor, in the corporate
name, promissory notes, bonds, debentures, deeds of
trust, mortgages, pledges, hypothecations or other
evidences of debt and securities therefor.
Sixth - To appoint an Executive Committee and other
committees, and to delegate to the Executive
Committee, to the extent allowed by law, any of the
powers and authority of the Board in the management of
the business and affairs of the corporation, except
the power to declare dividends and to adopt, amend or
repeal by-laws. The Board of Directors shall have the
power to prescribe the manner in which proceedings of
the Executive Committee and other committees shall be
conducted. The Executive Committee shall be composed
of two or more Directors. Unless the Board of
Directors shall otherwise provide: meetings of the
Executive Committee may be called by the Chairman of
the Board, chief executive officer, president, any
Board elected Vice President who is a member of the
Executive Committee, or any two members thereof, upon
written notice to the members of the Executive
Committee of the time and place of such meeting given
in the manner provided for the giving of written
notice to members of the Board of Directors of the
time and place of special meetings of the Board of
Directors; vacancies in the membership of the
Executive Committee may be filled by the Board of
Directors; a majority of the authorized number of
members of the Executive Committee shall constitute a
quorum for the transaction of business; and
transactions of any meeting of the Executive
Committee, however called and noticed or wherever
held, after regular call and notice, if a quorum be
present and if, either before or after the meeting,
each of the members not present signs a written waiver
of notice or a consent to holding such meeting or an
approval of the minutes thereof.
All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the
minutes of the meeting.
Section 2. INDEFINITE NUMBER OF DIRECTORS AUTHORIZED. The authorized
number of Directors shall be not less than six nor more than twelve. The
exact number of Directors shall be fixed from time to time, within the
limits specified in this section, by a resolution duly adopted by the Board
of Directors.
Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be
elected at each annual meeting of the stockholders but, if any such annual
meeting is not held or the Directors are not elected thereat, the Directors
may be elected at any special meeting of stockholders held for that
purpose.
The Directors of the corporation shall be divided into three classes,
as nearly equal in number as reasonably possible, with the Directors in
each class to hold office until their successors are elected and qualified.
At each annual meeting of stockholders of the corporation, the successors
to the class of Directors whose term shall then expire shall be elected to
hold office for a three year term. If the number of Directors is changed,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of Directors in each class as nearly equal as possible,
and any additional Directors of any class elected to fill a vacancy
resulting from an increase in such class shall hold office for a term that
shall coincide with the remaining term of that class, but in no case will a
decrease in the number of Directors shorten the term of any incumbent
Director. A Director shall hold office until the annual meeting for the
year in which his term expires and until his successor shall be elected and
shall qualify, subject, however, to prior death, resignation, retirement
disqualification or removal from office.
Notwithstanding the foregoing, no person shall be elected or serve as
a Director if such person is in a management position with or a director of
a direct competitor of the corporation.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the corporation shall have
the right, voting separately by class or series, to elect Directors at an
annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of the Certificate of Incorporation or the resolution
or resolutions adopted by the Board of Directors pursuant to Paragraph 4 of
the Certificate of Incorporation, and such Directors so elected shall not
be divided into classes pursuant to this section unless expressly provided
by such terms.
Subject to the rights, if any, of the holders of shares of Preferred
Stock then outstanding only persons who are nominated in accordance with
the following procedures shall be eligible for election as Directors.
Nominations of persons for election to the Board of Directors of the
corporation may be made at a meeting of stockholders by or at the direction
of the Board of Directors by any nominating committee or person appointed
by the board or by any stockholder of the corporation entitled to vote for
the election of Directors at the meeting who complies with the notice
procedures set forth in this section. Such nominations, other than those
made by or at the direction of the Board, shall be made pursuant to timely
notice in writing to the secretary of the corporation. To be timely, a
stockholder's notice must be delivered to, or mailed and received at, the
principal executive offices of the corporation not less than 60 days prior
to the scheduled annual meeting, regardless of any postponement, deferrals
or adjournments of that meeting to a later date; provided, however, that if
less than 70 days' notice or prior public disclosure of the date of the
scheduled annual meeting is given or made, notice by the stockholder, to be
timely, must be so delivered or received not later than the close of
business on the tenth day following the earlier of the day on which such
notice of the date of the scheduled annual meeting was mailed or the day on
which such public disclosure was made. A stockholder's notice to the
secretary shall set forth (a) as to each person whom the stockholder
proposes to nominate for election or reelection as a Director, (i) the
name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and
number of shares of capital stock of the corporation which are beneficially
owned by the person and (iv) any other information relating to the person
that is required to be disclosed in solicitations for proxies for election
of Directors pursuant to Rule 14a under the Securities Exchange Act of
1934, as amended; and (b) as to the stockholder giving the notice (i) the
name and address, as they appear on the corporation's books, of the
stockholder and (ii) the class and number of shares of the corporation's
stock which are beneficially owned by the stockholder on the date of such
stockholder notice. The corporation may require any proposed nominee to
furnish such other information as may reasonably be required by the
corporation to determine the eligibility of such proposed nominee to serve
as Director of the corporation.
The presiding officer of the annual meeting shall determine and
declare at the annual meeting whether the nomination was made in accordance
with the terms of this section. If the presiding officer determines that a
nomination was not made in accordance with the terms of this section, he
shall so declare at the annual meeting and any such defective nomination
shall be disregarded.
Section 4. VACANCIES. Newly created directorships resulting from any
increase in the number of Directors or any vacancy on the Board of
Directors resulting from death, resignation, disqualification, removal or
other cause shall be filled solely by the affirmative vote of a majority of
the remaining Directors then in office,even though less than a quorum, or
by a sole remaining Director. Any Director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of
the class of Directors in which the new directorship was created or the
vacancy occurred and until such Director's successor shall have been
elected and qualified. No decrease in the number of Directors constituting
the Board of Directors shall shorten the term of any incumbent Director.
Section 5. PLACE OF MEETING. Regular meetings of the Board of
Directors shall be held at any place within or without the State of
Delaware as a majority of the Directors from time to time may designate or
by written consent of all members of the Board. In the absence of such
designation regular meetings shall be held at the principal office for the
transaction of business of the corporation. Special meetings of the Board
may be held either at a place so designated or at the principal office.
Section 6. ORGANIZATION MEETING. Immediately following each annual
meeting of the stockholders the Board of Directors shall hold a regular
meeting for the purpose of organization, election of officers, and the
transaction of other business. Notice of such organizational meetings is
hereby dispensed with.
Section 7. MEETINGS. Meetings of the Board of Directors for any
purpose or purposes shall be called at any time by the chairman of the
Board, chief executive officer or the president or, if the chief executive
officer and president are absent or unable or refuse to act, by any Board
elected vice president or by any two Directors.
Written notice of the time and place of meetings shall be delivered
personally to each Director or sent to each Director by mail or by other
form of written communication, charges prepaid, addressed to him at his
address as it is shown upon the records of the corporation or, if it is not
so shown on such records or is not readily ascertainable, at the place in
which the meetings of the Directors are regularly held. In case such
notice is mailed or telegraphed, it shall be deposited in the United States
mail or delivered to the telegraph company in the place in which the
principal office of the corporation is located at least forty-eight (48)
hours prior to the time of the holding of the meeting. In case such notice
is delivered personally as above provided, it shall be so delivered at
least twenty-four (24) hours prior to the time of the holding of the
meeting. Such mailing, telegraphing or delivery as above provided shall be
due, legal and personal notice to such Director.
Section 8. NOTICE OF ADJOURNMENT. Notice of the time and place of
holding an adjourned meeting need not be given to absent Directors if the
time and place be fixed at the meeting adjourned.
Section 9. CONSENT OF ABSENTEES; WAIVER OF NOTICE. The transactions
of any meeting of the Board of Directors, however called and noticed or
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice, if a quorum be present and if, either before or
after the meeting, each of the Directors not present signs a written waiver
of notice or a consent to holding such meeting or an approval of the
minutes thereof. Attendance of a Director at a meeting shall constitute a
waiver of notice of such meeting, except when the Director attends meeting
for the express purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully called
or convened. All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.
Section 9.1 ACTION WITHOUT A MEETING. Any action required or
permitted to be taken by the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board or
committee, as the case may be, individually or collectively consent in
writing to such action. Such written consent or consents shall be filed
with the minutes of the proceedings of the Board or committee. Such action
by written consent shall have the same force and effect as a unanimous vote
of the Directors.
Section 10. QUORUM. A majority of the total number of Directors
shall be necessary to constitute a quorum for the transaction of business,
except to adjourn as hereinafter provided. Every act or decision done or
made by a majority of the Directors present at a meeting duly held at which
a quorum is present shall be regarded as the act of the Board of Directors,
unless a greater number be required by law or by the Certificate of
Incorporation.
Section 11. ADJOURNMENT. A quorum of the Directors may adjourn any
Directors' meeting to meet again at a stated day and hour; provided,
however, that in the absence of a quorum a majority of the Directors
present at any Directors' meeting, either regular or special, may adjourn
from time to time until the time fixed for the next regular meeting of the
Board.
Section 12. FEES AND COMPENSATION. Directors and members of
committees may receive such compensation, if any, for their services, and
such reimbursement for expenses, as may be fixed or determined by
resolution of the Board.
Section 13. REMOVAL OF DIRECTORS BY STOCKHOLDERS. Subject to the
rights, if any, of the holders of shares of Preferred Stock then
outstanding, any or all of the Directors of the corporation may be removed
from office by the stockholders at any annual or special meeting of
stockholders of the corporation, the notice of which shall state that the
removal of a Director or Directors is among the purposes of the meeting,
but only for cause, by the affirmative vote of at least 66-2/3% of the
outstanding shares of Common Stock of the corporation.
Section 14. RESIGNATIONS. Any Director may resign at any time by
submitting his written resignation to the corporation. Such resignation
shall take effect at the time of its receipt by the corporation unless
another time be fixed in the resignation, in which case it shall become
effective at the time so fixed. The acceptance of a resignation shall not
be required to make it effective.
Section 15. PARTICIPATION BY CONFERENCE TELEPHONE. Directors may
participate in regular or special meetings of the Board by telephone or
similar communications equipment by means of which all other persons at the
meeting can hear each other, and such participation shall constitute
presence in person at the meeting.
Section 16. AGE LIMITATION. A person shall not hold office as a
director following the annual meeting of stockholders held on or after the
date of such person's 70th birthday; provided, however, that nothing in
this provision shall prohibit directors elected in 1988 from serving two
terms if duly nominated and elected.
ARTICLE IV
Officers
Section 1. OFFICERS. The officers of the corporation shall be a
chief executive officer, a president, a vice president, a secretary and a
treasurer. The corporation may also have, at the discretion of the Board
of Directors, a chairman of the Board, one or more additional vice
presidents, one or more assistant secretaries, one or more assistant
treasurers, and such other officers as may be appointed in accordance with
the provisions of Section 3 of this Article. One person may hold two or
more offices except that the secretary shall not be the same person as the
chief executive officer or the president.
Section 2. ELECTION. The officers of the corporation, except such
officers as may be appointed in accordance with the provisions of Section 3
or Section 5 of this Article IV, shall be chosen annually by the Board of
Directors, and each shall hold his office until he shall resign or shall be
removed or otherwise disqualified to serve, or his successor shall be
elected and qualified.
Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may
appoint such other officers as the business of the corporation require,
each of whom shall hold office for such period, shall have such authority
and shall perform such duties as are provided in the by-laws or as the
Board of Directors may from time to time determine.
Section 4. REMOVAL AND RESIGNATION. Any officer may be removed
either with or without cause, by the Board of Directors, at any regular or
special meeting thereof, or, except in the case of an officer chosen by the
Board of Directors pursuant to Section 2 of this Article IV, by any officer
upon whom such power of removal may be conferred by the Board of Directors.
Any officer may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, the chief executive officer,
the president, or the secretary of the corporation. Any such resignation
shall take effect at the date of the receipt of such notice or at any later
time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled
in the manner prescribed in the by-laws for regular appointments to such
office.
Section 6. DELEGATION OF OFFICE. The Board of Directors may delegate
the powers or duties of any officer of the corporation to any other officer
or to any Director from time to time.
Section 7. CHAIRMAN OF THE BOARD. The Chairman of the Board, if
there shall be such an officer, shall, if present, preside at all meetings
of the Board of Directors and exercise and perform such other powers and
duties as may be from time to time assigned to him by the Board of
Directors or prescribed by the by-laws.
Section 8. CHIEF EXECUTIVE OFFICER. Subject to such supervisory
powers, if any, as may be given by the Board of Directors to the Chairman
of the Board, if there be such an officer, the chief executive officer of
the corporation shall, subject to the control of the Board of Directors,
have general supervision, direction and control of the business and
officers of the corporation. He shall preside at all meetings of the
stockholders and, in the absence of the Chairman of the Board, or if there
be none, at all meetings of the Board of Directors. He shall have the
general powers and duties of management usually vested in the office of
chief executive officer of a corporation, and shall have such other powers
and duties as may be prescribed by the Board of Directors or the by-laws.
Section 9. PRESIDENT. The president shall be the chief operating
officer of the corporation next in authority to the Chairman of the Board
and the chief executive officer both of whom he shall assist in the
management of the business of the corporation and the implementation of
orders and resolutions of the Board of Directors. In the absence of the
Chairman of the Board and the chief executive officer, he shall preside at
all meetings of the shareholders and of the Board of Directors and shall
exercise all other powers and perform all other duties of the chairman of
the Board of Directors and the chief executive officer; and he shall
perform such other duties as the Board of Directors may from time to time
prescribe.
Section 10. VICE PRESIDENTS. In the absence or disability of the
chief executive officer, the president, the chief operating officer, the
most senior of the board elected vice presidents in order of their rank as
fixed by the Board of Directors or, if not ranked, the vice president
designated by the Board of Directors, shall perform all the duties of the
chief executive officer, and when so acting shall have all the powers of,
and be subject to all the restrictions upon, the chief executive officer.
The Board elected vice presidents shall have such other powers and perform
such other duties as from time to time may be prescribed for them
respectively by the Board of Directors or the by-laws.
Section 11. SECRETARY. The secretary shall keep or cause to be kept,
at the principal office or such other place as the Board of Directors may
order, a book of minutes of all meetings of Directors and stockholders,
with the time and place of holding, whether regular or special, and, if
special, how authorized, the notice thereof given, the names of those
present at Directors' meetings, the number of shares present or represented
at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office
or at the office of the corporation's transfer agent, a share register, or
a duplicate share register, showing the names of the stockholders and their
addresses, the number and classes of shares held by each, the number and
date of certificates issued for the same, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all the
meetings of the stockholders and of the Board of Directors required by the
by-laws or by law to be given, and he shall keep the seal of the
corporation in safe custody, and shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or by the
by-laws.
Section 12. TREASURER. The treasurer shall keep and maintain, or
cause to be kept and maintained, adequate and correct accounts of the
properties and business transactions of the corporation, including accounts
of its assets, liabilities, receipts, disbursements, gains, losses,
capital, surplus and shares. Any surplus, including earned surplus, paid-
in surplus and surplus arising from a reduction of stated capital, shall be
classified according to source and shown in a separate account. The books
of account shall at all reasonable times be open to inspection by any
Director.
The treasurer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation, shall render to the chief executive officer, the president and
Directors, whenever they request it, an account of all of his transactions
as treasurer and of the financial condition of the corporation, and shall
have such other powers and perform such other duties as may be prescribed
by the Board of Directors or the by-laws.
ARTICLE V
Miscellaneous
Section l. RECORD DATE. The Board of Directors may fix, in advance,
a record date to determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, entitled to
receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful
action. Such date shall be not more than sixty (60) nor fewer than ten
(10) days before the date of any such meeting, nor more than sixty (60)
days prior to any other action.
If no record date is fixed, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on
which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held.
The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, the Board of Directors may fix a new record
date for the adjourned meeting.
Section 2. INSPECTION OF CORPORATE RECORDS. The share register or
duplicate share register, the books of account, and minutes of proceedings
of the stockholders and Directors and of the executive and other committees
of the Directors shall be open to inspection upon the written demand of any
stockholder or holder of a voting trust certificate, at any reasonable
time, and for a purpose reasonably related to his interests as a
stockholder or as the holder of a voting trust certificate and shall be
exhibited at any time when required by the demand of ten percent (10%) of
the shares represented at any stockholders' meeting. Such inspection may
be made in person or by an agent or attorney, and shall include the right
to make extracts. Demand of inspection other than at a stockholders'
meeting shall be made in writing upon the secretary of the corporation and
shall state the purpose of such demand.
Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for payment of money, notes or other evidences of indebtedness, issued in
the name of or payable to the corporation, shall be signed or endorsed by
such person or persons and in such manner as, from time to time, shall be
determined by resolution of the Board of Directors.
Section 4. ANNUAL REPORTS. The Board of Directors of the corporation
may cause to be sent to the stockholders, not later than one hundred twenty
(120) days after the close of the fiscal or calendar year, an annual report
in such form as may be deemed appropriate by the Board of Directors.
Section 5. EXECUTION OF INSTRUMENTS. The Board of Directors, except
as otherwise provided in the by-laws, may authorize any officer or
officers, agent or agents, to enter into any contract or execute any
instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances; and, unless so
authorized by the Board of Directors, no officer, agent or employee shall
have any power or authority to bind the corporation by any contract or
engagement or to pledge its credit or to render it liable for any purpose
or to any amount.
Section 6. CERTIFICATES OF STOCK. A certificate or certificates for
shares of the capital stock of the corporation shall be issued to each
stockholder when any such shares are fully paid up. All such certificates
shall be signed by the chief executive officer, president or a Board
elected vice president and the secretary or an assistant secretary, or be
authenticated by facsimiles of the signatures of the chief executive
officer, president and secretary or by a facsimile of the signature of the
president and the written signature of the secretary or an assistant
secretary. Every certificate authenticated by a facsimile of a signature
must be countersigned by a transfer agent or transfer clerk, and be
registered by an incorporated bank or trust company, either domestic or
foreign, as registrar of transfers, before issuance.
Certificates for shares may be issued prior to full payment under such
restrictions and for such purposes as the Board of Directors or the by-laws
may provide; provided, however, that any such certificate so issued prior
to full payment shall state the amount remaining unpaid and the terms of
payment thereof. Upon the declaration of any dividend on fully paid
shares, the corporation shall declare a dividend upon partly paid shares of
the same class, but only upon the basis of the percentage of the
consideration actually paid thereon.
Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS. The
chief executive officer or president or any Board elected vice president
and the secretary or assistant secretary of this corporation are authorized
to vote, represent and exercise on behalf of this corporation all rights
incident to any and all shares of any other corporation or corporations
standing in the name of this corporation. The authority herein granted to
said officers to vote or represent on behalf of this corporation any and
all shares held by this corporation in any other corporation or
corporations may be exercised either by such officers in person or by any
other person authorized so to do by proxy or power of attorney duly
executed by said officers.
Section 8. INSPECTION OF BY-LAWS. The corporation shall keep in its
principal office for the transaction of business the original or a copy of
the by-laws as amended or otherwise altered to date, certified by the
secretary, which shall be open to inspection by the stockholders at all
reasonable times during office hours.
Section 9. TRANSFER OF SHARES. Transfer of shares shall be made on
the books of the corporation only upon surrender of the share certificate,
fully endorsed and otherwise in proper form for transfer, which certificate
shall be canceled at the time of the transfer. No transfer of shares shall
be made on the books of this corporation if such transfer is in violation
of a lawful restriction noted conspicuously on the certificate.
Section 10. LOST, STOLEN OR DESTROYED SHARE CERTIFICATES. The
corporation may issue a new certificate of stock or uncertificated shares
in place of any certificate previously issued by it, alleged to have been
lost, stolen or destroyed, and the corporation may require the owner of the
lost, stolen, or destroyed certificate, or his legal representative, to
give the corporation a bond sufficient to indemnify it against any claim
that may be made against it on account of the alleged loss, theft or
destruction of any such certificate or the issuance of such new certificate
or uncertificated shares.
Section 11. CONSTRUCTION AND DEFINITIONS. Unless the context
otherwise requires, the general provisions, rules of construction and
definitions contained in the General Corporation Law of the State of
Delaware shall govern the construction of these by-laws. Without limiting
the generality of the foregoing the masculine gender includes the feminine
and neuter, the singular number includes the plural and the plural number
includes the singular, and the term "person" includes a corporation as well
as a natural person.
ARTICLE VI
Seal
The form of the seal of the corporation, called the corporate seal of
the corporation, shall be as impressed
[Form of Seal]
adjacent hereto.
ARTICLE VII
Fiscal Year
The fiscal year of the corporation shall begin on January 1 and end on
December 31.
ARTICLE VIII
Indemnification of Directors and Officers and Other Persons
Section 1. INDEMNIFICATION. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative,
(hereinafter a "proceeding"), by reason of the fact that he or she, or a
person of whom he or she is the legal representative, is or was a Director
or officer of the corporation or is or was serving at the request of the
corporation as a Director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis
of such proceeding is alleged action in an official capacity as a Director,
officer, employee or agent or in any other capacity while serving as a
Director, officer, employee or agent, shall be indemnified and held
harmless by the corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that
such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or
to be paid in settlement) reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a person
who has ceased to be a Director, officer, employee or agent and shall inure
to the benefit of his or her heirs, executors and administrators; provided,
however, that, except as provided in Section 2 of this Article VIII, the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person
only if such proceeding (or part thereof) was authorized by the Board of
Directors of the corporation. The right to indemnification conferred in
this Article VIII shall be a contract right and shall include the right to
be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if
the Delaware General Corporation Law requires, the payment of such expenses
incurred by a Director or officer in his or her capacity as a Director or
officer (and not in any other capacity in which service was or is rendered
by such person while a Director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition of
a proceeding, shall be made upon delivery to the corporation of an
undertaking, by or on behalf of such Director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such
Director or officer is not entitled to be indemnified under this Article
VIII or otherwise. The right to indemnification conferred in this Article
VIII shall include any claim made against the lawful spouse (whether such
status is derived by reason of statutory law, common law or otherwise of
any applicable jurisdiction in the world) of a Director or officer for
claims arising solely out of his or her capacity as the spouse of a
Director or officer, including such claims that seek damages recoverable
from marital community property, property jointly held by the Director or
officer and the spouse, or property transferred from the Director or
officer to the spouse; provided, however, that this right shall not include
any claim for any actual or alleged Wrongful Act of the spouse and that
this right of indemnification shall apply only to actual or alleged
Wrongful Acts of a Director or officer. The corporation may, by action of
its Board of Directors, provide indemnification to employees and agents of
the corporation with the same scope and effect as the foregoing
indemnification of Directors and officers.
Section 2. CLAIM FOR INDEMNIFICATION. If a claim under Section 1 of
this Article VIII is not paid in full by the corporation within thirty days
after a written claim has been received by the corporation, the claimant
may at any time thereafter bring suit against the corporation to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that
the claimant has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the corporation to indemnify
the claimant for the amount claimed, but the burden of proving such defense
shall be on the corporation. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the
circumstances because he or she has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual
determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not
met such applicable standard of conduct, shall be a defense to the action
or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 3. RIGHT NOT EXCLUSIVE. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article VIII shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, by-law, agreement,
vote of stockholders or disinterested Directors or otherwise.
Section 4. INSURANCE. The corporation may maintain insurance, at its
expense, to protect itself and any Director, officer, employee or agent of
the corporation or another corporation, partnership, joint venture, trust
or other enterprise against any such expense, liability or loss, whether or
not the corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Corporation Law.
ARTICLE IX
Amendments
Section 1. AMENDMENTS.
(a) By Stockholders. These by-laws may be amended or
repealed in whole or in part, and new or additional by-laws may be
adopted, by the vote of stockholders entitled to exercise a majority
of the voting power of the corporation, except that the vote of
stockholders holding more than eighty percent (80%) of the voting
power shall be necessary to reduce the authorized number of Directors
below five.
(b) By the Board of Directors. If the Certificate of
Incorporation so provides, these by-laws may be adopted, amended, or
repealed by the Board of Directors, provided, however, that no
alteration, amendment or repeal of these by-laws that limits
indemnification rights or changes the manner or vote required to make
such alteration, amendment or repeal, shall be made except by the
affirmative vote of stockholders entitled to exercise a majority of
the voting power of the corporation. The fact that the power has been
so conferred upon the Board of Directors to adopt, amend or repeal
these by-laws shall not divest the stockholders of the power nor limit
their power to adopt, amend or repeal by-laws.
#####
<PAGE>
Exhibit 10.21
BECKMAN INSTRUMENTS, INC
DEFERRED DIRECTORS' FEE PROGRAM
PURPOSE
To provide nonemployee directors of Beckman Instruments, Inc. ("Beckman")
with a means to defer income until termination of status as a director.
ELIGIBILITY
Directors of Beckman entitled to directors' fees.
PROCEDURE
A fixed dollar amount or a percentage of director's fees (including annual
retainer, meeting, chair and any other fees paid, but not including
reimbursement of expenses) to be deferred must be specified by the director
in writing to Beckman no later than December 31 of the calendar year
immediately preceding the calendar year in which the fees shall be payable.
The election to defer and the amount or percentage elected are irrevocable.
For subsequent years, no additional deferral of fees will take place unless
a new election is made by the director. The amount deferred is an offset
against and cannot exceed the amount of the director's fees otherwise
payable to the participant for that calendar year.
ADJUSTMENT FACTOR
Deferred amounts are treated as having been invested in Beckman Common
Stock (Stock Value Factor). The calculation of the number of shadow shares
from the initial amounts deferred and adjustments thereafter are made in
the following manner:
Stock Value Factor
1. The number of shares from the amount deferred is
calculated to the nearest one-thousandth of a share at the
closing price of Beckman Common Stock on the New York Stock
Exchange on the day in which payment in cash otherwise (but for
the election to defer) would have been paid.
2. Beckman Common Stock dividends or other distributions will be
treated as if paid to the participant and will be credited to each
participant's account on the payment date for stockholders of
record. These dividends/ distributions will be treated as having
been invested by the participant in Beckman Common Stock. The
share price will be calculated in the same manner as (1.) above.
3. The total number of "shadow" shares in a participant's account as
of the end of any calendar year will be valued using the per share
closing price of Beckman Common Stock on the last trading day such
calendar year and the dollar amount will be adjusted to reflect
such valuation.
4. In the event of installment payments, the participant's
entitlement will be valued at the per share closing price of
Beckman Common Stock on the last day preceding the date of each
installment payment.
PAYMENTS
Payment in lump sum or in annual installments will be at the sole
discretion of Beckman. Such payment shall be made in cash. If installment
payment is used, the number of installments will be the lesser of ten or
twice the number of years the director participated in the program.
1. If the participant's service as a director terminates between January 1
and June 30, the lump sum payment or the first installment will be paid
no later than December 31 of the year of termination.
2. If the participant's service as a director terminates between July 1
and December 31, the lump sum payment or the first installment, may be
deferred at the discretion of Beckman, until the January immediately
following termination.
3. If payment is made in installments, the second installment will be paid
during January of the year following the year in which the first
installment was paid and all remaining installments will be paid
annually in the month of January.
4. In the event of the participant's death, payments will be
made in a lump sum to the designated beneficiary.
TAXES
Beckman shall be entitled to withhold applicable federal and/or state and
local income taxes from payments made to participants or beneficiaries at
the then prevailing withholding tax rates. Beckman is entitled to an
income tax deduction in the year deferred amounts, including the adjustment
factor, are paid. Directors should consult with their personal tax
advisors concerning tax (including any applicable income tax and self-
employment tax) consequences of participation in the program.
ANNUAL STATEMENTS
Each participant will receive an annual statement on the value of their
account by February 28 of the following year.
<PAGE>
Exhibit 13
WORDS ON NUMBERS
FINANCIAL REVIEW
Section of the Company's
Annual Report to Stockholders
for the year ended
December 31, 1994
FINANCIAL REVIEW
DOLLARS IN MILLIONS, EXCEPT AMOUNTS PER SHARE
OVERVIEW
The Company designs, manufactures, markets and services a broad range
of laboratory instrument systems, reagents and related products, that
address the needs of diagnostic laboratories in hospitals and independent
clinical reference laboratories as well as bioanalytical laboratories in
the life sciences market, including those in universities, research
institutes, pharmaceutical companies and biotechnology companies.
Generally, the Company's products simplify and automate laboratory
processes, saving time and money. Products for clinical diagnostic
laboratories include general and special chemistry systems together with
reagents, accessories and software which are used to detect and quantify
various substances of clinical interest in human blood and other body
fluids. Products for life sciences laboratories include centrifuges, high
performance liquid chromatographs, spectrophotometers, laboratory robotic
workstations, capillary electrophoresis systems, nuclear counters,
protein sequencers, DNA synthesizers and the reagents and supplies for
their operation. Beckman supports its products with a worldwide sales and
service network.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the results of
operations as a percentage of sales:
<TABLE>
<CAPTION>
Years ended December 31, 1994 1993 1992
- ------------------------ ------ ------ ------
<S> <C> <C> <C>
Sales 100.0% 100.0% 100.0%
Operating costs and expenses
Cost of sales 46.8 47.8 48.5
Marketing, administrative
and general 31.8 31.7 32.4
Operating income before research,
development, and engineering (1) 21.4 20.5 19.1
Research, development
and engineering 10.3 10.7 9.5
Operating income (1) 11.1 9.8 9.6
Earnings before income taxes (2) (3) 9.7 8.4 7.8
Net earnings before cumulative
effect of changes in
accounting principles (2) (3) 6.4% 5.4% 4.8%
(1) Excludes pretax restructuring charge of $11.3, 1.3% of sales, and
$114.7, 13.1% of sales, in 1994 and 1993, respectively. Including the
restructuring charge, 1994 operating income was 9.8% of sales and 1993
operating loss was 3.3% of sales.
(2) 1994 excludes a pretax restructuring charge of $11.3 which represents
1.3% of sales. This charge resulted in earnings before income taxes of
8.4% of sales and net earnings before cumulative effect of change in
accounting principle of 5.3% of sales.
(3) 1993 excludes pretax restructuring and environmental charges of $114.7
and $12.5, respectively, which together represent 14.5% of sales.
Including these charges, the Company reported a loss before income taxes of
6.1% and a net loss before cumulative effect of changes in accounting
principles of 3.8% of sales.
</TABLE>
REDIRECTED BUSINESS STRATEGY AND REORGANIZATION
In 1993, the Company announced a redirected business strategy and new
organization. Beckman is concentrating on clinical diagnostics and
centrifugation, while at the same time has shifted its investment to the
biotechnology based portion of the life sciences business including
molecular biology and related sciences. To implement this strategy,
Beckman's former operating groups, the Bioanalytical Systems Group and
Diagnostic Systems Group, were reorganized into a single unit. The planned
reorganization included a net reduction of approximately 800 positions
worldwide, primarily in 1994. The restructuring plan included a voluntary
separation program for U.S. based long-term employees, including an
enhanced early retirement program; consolidation of European finance and
administrative functions; and consolidation of U.S. based manufacturing,
finance, and administrative functions.
The Company has made substantial progress in implementing the
restructuring plan including the following: 350 U.S. based long-term
employees participated in the voluntary separation program; 300 employees
were reduced internationally as the Company began the centralization of
certain European administrative and financial functions in Switzerland as
well as other operational consolidations; 300 U.S employees were reduced
through consolidation processes; and, the cable assembly operation was sold
which included 100 employees. In addition, the Company began the process
of consolidating previously separate operations into new facilities in the
United Kingdom and Japan. During 1995, the Company will continue to
implement the restructuring plan with the consolidation of facilities and
functions worldwide. Since implementation of the restructuring plan,
employee levels have declined by over 1,000. Employee levels may fluctuate
in the short-term based upon the change in mix between temporary personnel
and employees during this time of transition as well as outsourcing of
certain functions.
In 1993, the Company established a restructuring reserve of $114.7,
for incurred expenses, as part of the overall $135.0 restructuring plan.
Through 1994, $88.6 has been charged against the reserve which primarily
includes costs associated with the U.S. based voluntary separation program
and worldwide employee termination costs. In addition, a restructure
charge of $11.3 was recorded in 1994 for facility moves and transition
costs which were anticipated and directly associated with the 1993
restructuring but could not be recognized in establishment of the original
restructuring reserve under generally accepted accounting principles. The
Company anticipates a similar restructuring charge in 1995 for facility
moves and transition costs as part of the overall $135.0 restructuring
plan. Noncash charges in 1993 were approximately $43.0 consisting of
pension and postretirement benefit costs associated with the U.S. based
voluntary separation program.
Savings from the restructuring program were approximately $29.0 in
1994. Partially offsetting this improvement in 1994 were constrained
market conditions, restructuring transition costs, general salary and cost
increases, as well as management and employee performance-based incentive
costs. Savings in 1995 are anticipated to be approximately $45.0, but will
not all be incremental to earnings.
1994 COMPARED TO 1993
Sales in 1994 were $888.6 representing an increase of 1.5% from 1993.
Differences in currency exchange rates did not materially impact sales
compared to the prior year. Sales to areas outside the United States were
over 50% of total sales.
Both diagnostic and life sciences markets were unfavorably impacted by
the European recession, and cost containment initiatives in several
European health care systems. Diagnostic sales, which represent
approximately 60% of total sales, increased in 1994 by 3%. The diagnostic
market remains highly competitive with sales growth obtained through
continued market penetration. Sales of life sciences instrumentation
declined by 1% in 1994. In addition to the factors mentioned above, the
life sciences market was adversely affected by reductions of U.S.
pharmaceutical capital spending in response to anticipated health care
legislation. Cost containment initiatives in U.S. and European health care
systems are expected to be continuing factors which may affect the
Company's sales in the short-term.
In 1994, SmithKline Diagnostics, Inc. (SKD), a wholly owned
subsidiary, and Procter & Gamble Pharmaceuticals Germany G.m.b.H. (P&G)
completed an agreement that will allow SKD to reassume control of the well-
recognized H(A)EMOCCULT brand fecal occult blood testing products in
Germany, Austria and several other international countries. The agreement
returns a license to SKD from P&G under which P&G manufactured and sold the
H(A)EMOCCULT diagnostic products. The H(A)EMOCCULT products are the German
equivalent of SKD's successful HEMOCCULT(R) brand fecal occult blood testing
products sold in the U.S. and internationally.
Excluding the impact of the restructuring charge of $11.3 and $114.7
in 1994 and 1993, respectively (see "Redirected Business Strategy and
Reorganization"), operating income increased by 16% to $98.9 in 1994 from
$85.6 in 1993. Operating income before the restructuring charges increased
as a percent of sales to 11.1% in 1994 from 9.8% in 1993. The increase of
$13.3 in operating income was primarily the result of expense reductions
resulting from the restructuring plan. The Company's investment in
research, development and engineering decreased 2% from the prior year to
$91.5. The Company's rate of profitability before, and after, investment
in research, development and engineering continues to improve as indicated
in the above table. Including the restructuring charges, operating income
was $87.6 in 1994 compared to an operating loss of $29.1 in 1993.
Net nonoperating expenses, excluding a $12.5 environmental charge in
1993, increased by $0.4 to $12.7 in 1994. Including the 1993 environmental
charge, net nonoperating expenses decreased by $12.1 from 1993.
Earnings before income taxes, excluding the restructuring and
environmental charges, increased by 18% to $86.2. Including the
restructuring charge, earnings before income taxes were $74.9. The 1994
effective tax rate, before the restructuring charge, was reduced to 34%
from 36% in 1993 as a result of favorable withholding tax rates and
increased income in lower tax rate jurisdictions. The effective tax rate
of 15% on the restructuring charge was due to the limited tax benefits
available for certain elements of the restructuring charge. The 1994
effective tax rate was 1.8% higher than the rate experienced in the first
three quarters due to the impact of the restructuring charge.
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 the prior service obligations 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
aftertax charge of $5.1 in the first quarter. The impact on 1994
operations was not material and is not expected to be material in future
years as a result of the newly adopted accounting principle.
The following table summarizes the impact of the restructuring and
cumulative effect of change in accounting principle on net earnings and
earnings per share for the year.
<TABLE>
<CAPTION>
Year ended December 31, 1994 Amount Per Share
- ----------------------------------------- -------- --------
<S> <C> <C>
Net earnings before the restructuring
charge and cumulative effect of
change in accounting principle $56.9 $2.03
Restructuring charge, net of tax benefit (9.6) (0.35)
Cumulative effect of change in
accounting principle
Accounting for postemployment
benefits (5.1) (0.18)
________ ________
Net earnings $42.2 $1.50
======== ========
</TABLE>
Net earnings before the restructuring charge and cumulative effect of
change in accounting principle increased by 21% to $56.9 compared to 1993.
The restructuring charge and cumulative effect of change in accounting
principle reduced net earnings in 1994 by $9.6 and $5.1, respectively. The
Company reported net earnings of $42.2 in 1994 compared to a net loss of
$37.6 in 1993.
Earnings per share, before restructuring charges and cumulative effect
of changes in accounting principles in 1994 and 1993 and environmental
charge in 1993, increased 20% from 1993 to $2.03. The restructuring charge
and cumulative effect of change in accounting principle in 1994 reduced
earnings per share by $0.35 and $0.18, respectively, resulting in net
earnings per share of $1.50 for 1994 compared to a net loss per share in
1993 of $1.35.
1993 COMPARED TO 1992
Sales in 1993 were $875.7 representing a decrease of 4% from 1992.
Without the unfavorable impact of changes in foreign currency exchange
rates, sales would have increased by 1%. Sales to areas outside the United
States were over 50% of total sales.
Both diagnostic and life sciences markets were unfavorably impacted by
the European recession, cost containment initiatives in several European
health care systems, and changes in currency. Diagnostic sales,
representing over 55% of total sales, decreased in 1993 by 3% with currency
unfavorably impacting sales by 6%. Sales of life sciences
instrumentation declined by 5% in 1993 with currency unfavorably impacting
sales by 3%.
Excluding the impact of the restructuring charge (see "REDIRECTED
BUSINESS STRATEGY AND REORGANIZATION")recorded in 1993, operating income
decreased by 2% to $85.6 in 1993 from $87.2 in 1992. Operating income
before the restructuring charge increased as a percent of sales to 9.8% in
1993 from 9.6% in 1992. Contributing to the increase in operating income as
a percent of sales was improved gross margin resulting from an increase in
sales of higher margin products and a decrease in operating expenses
partially offset by an increased investment in research, development and
engineering. Operating expenses decreased due to cost containment as well
as a reduction in Company performance based incentive compensation. The
Company's investment in research, development and engineering increased 9%
from the prior year to $93.3. Including the restructuring charge, the
operating loss was $29.1 in 1993 compared to operating income of $87.2 in
1992.
Net nonoperating expenses, excluding a $12.5 environmental charge,
(see "Environmental Matters") decreased by $4.2 to $12.3 in 1993. The
decrease was the result of lower foreign currency expense in 1993 compared
to 1992. Foreign currency expense was higher in 1992 primarily as a result
of the collapse of the European Exchange Rate Mechanism (ERM). Including
the environmental charge, net nonoperating expenses increased by $8.3
to $24.8.
Earnings before income taxes, excluding the restructuring and
environmental charges, increased by 4% to $73.3. Including the
restructuring and environmental charges, the loss before income taxes was
$53.9. The 1993 effective tax rate, before the restructuring and
environmental charges, was reduced to 36% from 38% in 1992 as a result of
increased income in lower tax rate jurisdictions.
In the first quarter of 1993, the Company was required to adopt two
new accounting principles which together resulted in a one-time, noncash
charge to net earnings of $4.0. The adoption of Statement of Financial
Accounting Standards No. 106 ("SFAS 106"), "Employers' Accounting for
Postretirement Benefits Other Than Pensions" resulted in an aftertax
increase to the net loss of $30.2. This cumulative effect adjustment
represents a previously unrecognized postretirement benefit obligation to
retirees, employees, employees' beneficiaries and covered dependents. The
adoption of Statement of Financial Accounting Standards No. 109 ("SFAS
109"), "Accounting for Income Taxes" resulted in a reduction in the net loss
of $26.2. The cumulative effect adjustment represents an expected benefit
to be realized from increased net deductible temporary differences. The
impact on future operating results of the newly adopted accounting
principles - when taken in combination with changes in benefit plans - is not
expected to be material.
The following table summarizes the impact of the restructuring and
environmental charges and the cumulative effect of changes in accounting
principles on net earnings (loss) and earnings (loss) per share for the
year.
<TABLE>
<CAPTION
Year ended December 31, 1993 Amount Per Share
-------- ---------
<S> <C> <C>
Net earnings before the restructuring
and environmental charges and
cumulative effect of changes
in accounting principles $ 46.9 $ 1.69
Restructuring charge, net of tax benefit (73.0) (2.63)
Environmental charge, net of tax benefit ( 7.5) (0.27)
Cumulative effect of changes
in accounting principles
Accounting for income taxes 26.2 0.95
Accounting for postretirement
benefits other than pensions (30.2) (1.09)
-------- --------
Net loss $(37.6) $(1.35)
======== ========
</TABLE>
Net earnings before the restructuring and environmental charges and
the cumulative effect of changes in accounting principles increased by 7%
to $46.9 compared to 1992. The restructuring and environmental charges
reduced net earnings by $73.0 and $7.5, respectively, and the cumulative
effect of changes in accounting principles increased the net loss by $4.0.
The Company reported a net loss of $37.6 in 1993 compared to net earnings
of $43.8 in 1992.
Earnings per share before the cumulative effect of changes in
accounting principles and the restructuring and environmental charges
increased 10% from 1992 to $1.69. The restructuring and environmental
charges reduced earnings per share by $2.63 and $0.27, respectively, and
the cumulative effect of changes in accounting principles increased the net
loss per share by $0.14 resulting in net loss per share of $1.35 for 1993
compared to net earnings per share in 1992 of $1.53.
FINANCIAL CONDITION
Liquidity and Capital Resources
Net cash provided by operating activities in 1994 was $109.6 compared
to $53.3 in 1993 and $90.2 in 1992. Contributing to the increase in 1994
was lower funding to the Company's pension plan and reduced investment in
working capital partially offset by restructuring charge payments.
Operating cash in excess of investing activities was $50.5 in 1994, an
increase of $69.7 from 1993, resulting from improved cash flow from
operating activities as well as maturity of short-term investments. The
Company believes that net cash provided by operating activities,
supplemented as necessary with funds expected to be available under the
Company's credit agreement, will provide sufficient resources to meet
present and reasonably foreseeable working capital requirements, debt
service and other cash needs.
During 1993, the Company was authorized to acquire up to 1,000,000
common shares per year up to a maximum of 3,000,000 additional shares.
Under this program, Beckman repurchased approximately 500,000 shares of its
common stock during 1994 to meet the needs of the Company's existing stock-
related employee benefit plans.
In September 1994 the Company replaced its then existing revolving
credit agreement which was scheduled to expire on July 1, 1996. The
Company's current $150.0 revolving credit agreement (the "Credit
Agreement") expires on September 30, 1999 (see Note 5 "Debt"). Borrowings
under the Credit Agreement are determined by current market rates and are
subject to a number of conditions, including the absence of a significant
change in control of the Company. In addition, the Credit Agreement
requires the Company to maintain specified amounts of consolidated net
worth, and specified ratios of debt to total capital and operating income
to interest charges. The Credit Agreement also limits the Company's
capability to mortgage its assets, to merge or consolidate or to sell
assets. Defaults under the Credit Agreement include nonpayment, breach of
covenants, bankruptcy and certain cross defaults to other Company debt.
Aggregate dividend payments are limited to the sum of $45.0 and 30% of
consolidated cumulative net earnings of the Company from June 30, 1992. As
of December 31, 1994, the Company was in compliance with the covenants of
the Credit Agreement.
Capital Expenditures
Expenditures for property, plant and equipment, including instruments
provided to customers on an operating lease basis, totaled $98.7 in 1994
compared with $92.8 in 1993 and $91.4 in 1992. The Company plans to invest
at approximately the same level in 1995 and intends to finance this capital
spending primarily through cash provided by operating activities.
Dividends
The Company paid cash dividends to stockholders each quarter for a
total of $0.40 per share in 1994, $0.36 per share in 1993, and $0.30 per
share in 1992. In February 1995 the Board of Directors declared a first
quarter dividend of $0.11 per share. This dividend is payable March 2,
1995 to stockholders of record on February 10, 1995. The Company intends
to continue paying cash dividends of at least the current per share amount,
subject to future business conditions, requirements of the operations and
financial condition of the Company.
Inflation
Inflation increases the costs of goods and services used by the
Company. Competitive and regulatory conditions in many markets restrict
the Company's capability to fully recover the higher costs of acquired goods
and services through price increases. The Company continues to improve
productivity and reduce costs to mitigate the effects of inflation.
Foreign Currency
The Company derives over 50% of its sales from sources outside of the
United States. In the short-term, the relative strength or weakness of the
U.S. dollar is not likely to have a material effect on the Company's
business decisions. The Company actively manages its foreign currency
exposures through foreign currency contracts. The Company may adjust
certain aspects of its operations in the event of a sustained material
change in such exchange rates.
Environmental Matters
In 1983 the Company discovered organic chemicals in the groundwater
near a waste storage pond at a Company facility in Porterville, California.
SmithKline Beckman, the Company's former controlling stockholder, agreed to
indemnify the Company with respect to this matter for any costs incurred by
the Company in excess of applicable insurance, eliminating any impact on
the Company's earnings or financial position. SmithKline Beecham p.l.c.,
the surviving entity of the 1989 merger between SmithKline and Beecham
Group p.l.c., assumed the obligations of SmithKline Beckman in this
respect.
The Company is also 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. In 1993 the Company
increased its existing reserves for soil and groundwater remediation and
for resolution of the 1991 lawsuit by $12.5.
During 1994 the County formally acknowledged completion of remediation
of a major portion of the soil, although there remain some areas of soil
contamination that may require further remediation. The Company also
operated a groundwater treatment system throughout 1994. 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 investigation 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
(see Note 10 "COMMITMENTS AND CONTINGENCIES").
Litigation
Local authorities in Palermo (Sicily), Italy are investigating the
activities of officials at a local government hospital and laboratory. In
addition to staff members in charge of the laboratory for the Palermo
hospital, a number of representatives of the principal worldwide companies
marketing diagnostic equipment in Italy were taken into temporary custody
as part of the investigation. Included were three employees of the
Company's Italian subsidiary (the "Subsidiary"). The investigation, which
is still underway, also obtained documents from the Subsidiary and from
other major diagnostic companies. The inquiry of the Subsidiary focuses on
past leasing practices for placement of diagnostic equipment which were
common industrywide practices throughout Italy, but now are alleged to be
improper. Recently, new inquiries to the Subsidiary have been initiated by
the prosecutor from the region of Florence. At the present time the
Company does not expect this matter to have a material adverse effect on
its operations or financial position (see Note 10 "COMMITMENTS AND
CONTINGENCIES").
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 1994 1993
- ------------------------------ ------- -------
Dollars in millions
<S> <C> <C>
Assets
Current assets
Cash and equivalents $ 44.2 $ 24.2
Short-term investments 0.7 21.9
Trade receivables 265.9 252.1
Inventories 150.7 163.9
Deferred income taxes 37.8 70.6
Other current assets 12.7 11.8
Total current assets 512.0 544.5
Property, plant and equipment, net 232.6 216.8
Deferred income taxes 56.6 30.3
Other assets 27.9 28.4
-------- --------
Total assets $829.1 $820.0
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ 12.2 $ 31.7
Accounts payable 44.4 42.7
Accrued compensation 43.4 33.2
Other accrued expenses 115.1 166.8
Income taxes 53.7 48.9
-------- --------
Total current liabilities 268.8 323.3
Long-term debt, less current maturities 117.3 113.7
Other liabilities 126.0 107.5
-------- --------
Total liabilities 512.1 544.5
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.10 par value;
authorized 10,000,000 shares;
none issued - -
Common stock, $0.10 par value;
authorized 75,000,000 shares;
shares issued 29,124,457 at 1994 and
1993; shares outstanding 28,004,957
at 1994 and 27,849,959 at 1993 2.9 2.9
Additional paid-in capital 130.0 129.6
Foreign currency translation adjustment 8.6 (1.1)
Retained earnings 203.4 172.4
Treasury stock, at cost (27.9) (28.3)
-------- --------
Total stockholders' equity 317.0 275.5
-------- --------
Total liabilities
and stockholders' equity $829.1 $820.0
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years ended December 31, 1994 1993 1992
- ---------------------------------------- ------ ------ ------
Dollars in millions, except amounts per share
<S> <C> <C> <C>
Sales $888.6 $875.7 $908.8
Operating costs and expenses
Cost of sales 416.3 418.3 440.9
Marketing, administrative and general 281.9 278.5 294.8
Research, development and engineering 91.5 93.3 85.9
Restructuring charge 11.3 114.7 -
------- ------- -------
801.0 904.8 821.6
------- ------- -------
Operating income (loss) 87.6 (29.1) 87.2
Nonoperating income (expense)
Interest income 5.1 4.1 4.8
Interest expense (13.2) (12.7) (13.0)
Other, net (4.6) (16.2) (8.3)
------- ------- -------
(12.7) (24.8) (16.5)
------- ------- -------
Earnings (loss) before income taxes 74.9 (53.9) 70.7
Income tax provision (benefit) 27.6 (20.3) 26.9
------- ------- -------
Net earnings (loss) before cumulative effect
of changes in accounting principles 47.3 (33.6) 43.8
Cumulative effect of changes in
accounting principles
Accounting for income taxes - 26.2 -
Accounting for postretirement benefits other
than pension (net of tax benefit of $17.0) - (30.2) -
Accounting for postemployment benefits
(net of tax benefit of $3.0) (5.1) - -
------- ------- -------
Net earnings (loss) $ 42.2 $(37.6) $ 43.8
======= ======= =======
Average number of shares
outstanding - (in thousands) 28,079 27,827 28,658
Net earnings (loss) per share
before cumulative effect of
changes in accounting principles $ 1.68 $(1.21) $ 1.53
Cumulative effect of changes in
accounting principles
Accounting for income taxes - 0.95 -
Accounting for postretirement benefits
other than pensions - (1.09) -
Accounting for postemployment benefits (0.18) - -
------- -------- -------
Net earnings (loss) per share $ 1.50 $ (1.35) $ 1.53
======= ======== =======
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years ended December 31, 1994 1993 1992
- --------------------------------------- ------ ------ ------
Dollars in millions
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net earnings (loss) $ 42.2 $(37.6) $ 43.8
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities
Depreciation and amortization 70.1 63.5 64.7
Net deferred income taxes 6.9 (39.2) 5.5
Changes in assets and liabilities
Trade receivables (7.0) (1.5) (13.1)
Inventories 15.8 (5.8) (0.6)
Accounts payable and accrued expenses 5.9 (13.1) (3.1)
Restructuring reserve (42.1) 66.8 -
Accrued income taxes 6.3 7.0 2.6
Other 11.5 13.2 (9.6)
------- ------- -------
Net cash provided by operating activities 109.6 53.3 90.2
------- ------- -------
Cash Flows from Investing Activities
Additions to property, plant and equipment (97.4) (90.4) (88.0)
Net disposals of property,
plant and equipment 17.1 19.7 13.3
Sale (Purchase) of short-term investments 21.2 (1.8) (14.1)
Other - - (0.7)
-------- ------- -------
Net cash used by investing activities (59.1) (72.5) (89.5)
-------- ------- -------
Cash Flows from Financing Activities
Dividends to stockholders (11.2) (10.1) (8.5)
Proceeds from issuance of stock 15.0 13.5 19.5
Purchases of treasury stock (14.6) (28.3) (27.8)
Notes payable borrowings 5.9 11.5 43.8
Notes payable reductions (27.8) (22.3) (31.0)
Long-term debt borrowings 4.9 82.0 2.3
Long-term debt reductions (1.9) (27.3) (1.6)
Other (1.1) (0.9) 0.6
-------- ------- -------
Net cash provided (used) by
financing activities (30.8) 18.1 (2.7)
-------- ------- -------
Effect of exchange rates on cash and equivalents 0.3 (0.6) -
-------- ------- -------
Increase (decrease) in cash and equivalents 20.0 (1.7) (2.0)
Cash and equivalents-beginning of year 24.2 25.9 27.9
-------- ------- -------
Cash and equivalents-end of year $ 44.2 $ 24.2 $ 25.9
======== ======= =======
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for
Interest $ 14.5 $ 12.4 $ 21.8
Income taxes $ 11.8 $ 14.5 $ 24.4
Noncash investing and financing activities
Capital lease obligations of $1.3 for 1994,
$2.4 for 1993, and $3.4 for 1992 were incurred
when the Company entered into leases for new equipment.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollars in millions, except amounts per share
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of
Beckman Instruments, Inc., and its wholly owned subsidiaries. The
consolidated entity is referred to as the Company in the accompanying
consolidated financial statements.
All significant transactions among the consolidated entities have
been eliminated from the financial statements. The accounts of most of
the Company's non-U.S. subsidiaries are included on the basis of their
fiscal years ended November 30.
Foreign Currency Translation
Non-U.S. assets and liabilities are translated into U.S. dollars at
fiscal year-end exchange rates. Operating results are translated at
exchange rates prevailing during the year. The resulting translation
adjustments are accumulated as a separate component of stockholders'
equity.
Gains and losses resulting from foreign currency transactions and
translation adjustments relating to foreign entities deemed to be
operating in U.S. dollar functional currency or in highly inflationary
economies are included in the statement of operations in the caption
other, net. The Company experienced net foreign currency expenses of $4.5
in 1994, $2.1 in 1993, and $8.1 in 1992.
Derivatives
Gains and losses on hedges of existing assets or liabilities are
included in the carrying amounts of those assets or liabilities and are
ultimately recognized in income as part of those carrying amounts. Gains
and losses related to qualifying hedges of firm commitments or
anticipated transactions also are deferred and are recognized in income
in "other, net" or as adjustments of carrying amounts when the hedged
transaction occurs. Interest expense is adjusted for the net amount
receivable or payable under interest rate swap agreements.
Cash and Equivalents
For purposes of the consolidated statements of cash flows, the
Company considers cash and equivalents to include cash in banks, time
deposits and investments having an original maturity of three months or
less. All cash and equivalents are carried at cost which approximates
market.
Short-Term Investments
Short-term investments are principally comprised of investments with
original maturities in excess of three months. Investments are carried
at cost which approximates market.
Inventories
Inventories are valued at the lower of cost or market (net
realizable value). Cost is determined by the first-in, first-out method.
Property, Plant and Equipment and Depreciation
Land, buildings and machinery and equipment are carried at cost. The
cost of additions and improvements are capitalized, while maintenance and
repairs are expensed as incurred. Depreciation is computed generally on
the straight-line method over the estimated useful lives of the related
assets. Leasehold improvements are amortized over the lesser of the life
of the asset or the term of the lease.
Earnings Per Share
Earnings (loss) per share is calculated using the weighted average
number of common shares outstanding during the period. The effect of
common stock equivalents were not included as they did not have a
significant dilutive effect. Common stock equivalents are primarily
comprised of stock options. Primary earnings per share approximates
fully diluted earnings per share for each period presented.
Revenue Recognition
In general, revenue is recognized as the product is shipped. When a
customer enters into an operating-type lease agreement, revenue is
recognized over the life of the lease. Under a sales-type lease
agreement, revenue is recognized at the time of shipment with appropriate
interest income recognized over the life of the lease. Service revenues
are recognized ratably over the life of the service agreement or as
service is performed, if not under contract.
Income Taxes
In the first quarter of 1993, the Company adopted Statement of
Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for
Income Taxes." SFAS 109 requires a change from the deferred method of
accounting for income taxes of Accounting Principle Board Opinion 11
("APB Opinion 11") to the asset and liability method of accounting for
income taxes. Under the asset and liability method of SFAS 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
Accordingly, the Company recognized deferred tax assets reflecting the
benefit expected to be realized from net deductible temporary
differences. The recognition resulted in the Company recording income
and a deferred tax asset equal to the cumulative effect of the accounting
change of $26.2 (net of a valuation allowance of $10.1) in the first
quarter of 1993.
For the period ended December 31, 1992, income taxes were based upon
pretax financial statement income with an appropriate tax provision in
accordance with APB Opinion 11 to provide for current taxes payable and
for the tax effect of timing differences between pretax financial
statement income and taxable income per the tax return.
2. REDIRECTED BUSINESS STRATEGY AND REORGANIZATION
In the fourth quarter of 1993, the Company announced a redirected
business strategy and a new organization. The Company is concentrating
on clinical diagnostics and centrifugation while shifting its investment
to the biotechnology-based portion of the life sciences business,
including molecular biology and related sciences. The redirected
strategy positions the Company to capitalize on the technical and market
continuum that exists between the life sciences and clinical fields by
enabling the Company to serve a growing research market today that will
spawn clinical opportunities in the future. To implement this strategy
the Company's operating groups, the Bioanalytical Systems Group and
Diagnostic Systems Group, were reorganized into a single unit.
In support of the redirected business strategy and adjustment to
unfavorable market conditions, including the European recession, the
worldwide drive to contain health care costs and generally weak economic
conditions, the Company announced a restructuring plan. The restructure
resulted in a net reduction of over 1,000 positions worldwide, primarily
in 1994. The plan included a voluntary separation program for U.S.
based long-term employees, including an enhanced early retirement
program, consolidation of European finance and administrative functions
and consolidation of U.S. based manufacturing, finance and administrative
functions. To accomplish these changes, a pretax restructuring charge of
$114.7 was recorded in the fourth quarter of 1993. The Company incurred
an additional restructuring charge of approximately $11.3 in 1994 and
anticipates a further charge of approximately $10.0 in 1995. The 1994
and 1995 restructuring charges consist primarily of costs for facility
moves and transition which were anticipated and directly associated with
the 1993 restructuring plan but could not be recognized under generally
accepted accounting principles. The restructuring charge in 1993
consisted primarily of employee related severance, pension and
postretirement costs as well as costs associated with the reduction of
facilities. Asset disposal costs were approximately $4.1 of the 1993
charge.
At December 31, 1994 and 1993, the Company's remaining obligations
relating to the 1993 restructuring charge were $69.1 and $111.2,
respectively. Of the remaining obligations at December 31, 1994 and 1993,
$26.1 and $68.2, respectively, are included in other accrued expenses,
with the remaining balance associated with pension and postretirement
costs included in other liabilities (see Note 7 "Pension and Retirement
Benefits").
3. DISTRIBUTION OF COMPANY STOCK OWNED BY SMITHKLINE
In 1989 SmithKline Beckman ("SmithKline") entered into an agreement
to reorganize and combine certain of its businesses with Beecham Group
p.l.c. This agreement was approved by the stockholders of both companies
creating the new company of SmithKline Beecham p.l.c. As a result of
this agreement, all shares of Beckman Common Stock owned by SmithKline
were distributed to the holders of SmithKline stock, effective July 1989.
In conjunction with the distribution of Beckman Common Stock, the Company
entered into a tax agreement ("Tax Agreement") and a distribution
agreement with SmithKline. Certain provisions of such agreements are
still in effect at December 31, 1994.
4. COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Trade receivables
Trade receivables $273.5 $261.2
Current portion of lease receivables 2.8 2.8
Less allowance for doubtful receivables (10.4) (11.9)
------- -------
$265.9 $252.1
======= =======
Inventories
Finished products $104.1 $110.2
Raw materials, parts and assemblies 41.3 42.0
Work in process 5.3 11.7
------- -------
$150.7 $163.9
======= =======
Property, plant and equipment, net
Land $ 10.3 $ 10.3
Buildings 135.9 133.1
Machinery and equipment 215.4 214.3
Instruments subject to lease(a) 217.7 166.4
------- -------
579.3 524.1
======= =======
Less accumulated depreciation
Building, machinery and equipment (225.9) (214.8)
Instruments subject to lease(a) (120.8) (92.5)
------- -------
$232.6 $216.8
======= =======
Other accrued expenses
Restructure reserve $ 26.1 $ 68.2
Unrealized service income 36.1 35.4
Insurance 26.0 25.1
Accrued warranty and installation costs 5.9 5.9
Other 21.0 32.2
------- -------
$115.1 $166.8
======= =======
(a) Includes instruments leased to customers under three-to
five-year cancelable operating leases.
</TABLE>
5. DEBT
Notes payable consist primarily of bank borrowings by the Company's
subsidiaries outside the U.S. under local line of credit facilities and
the current portion of long-term debt. The bank borrowings are short-
term borrowings at rates which approximate the current market rates;
therefore, the carrying value of the notes approximates the market value.
At December 31, 1994 approximately $126.6 of unused short term lines of
credit were available to the Company's subsidiaries outside the U.S. at
various interest rates. Within the U.S., the Company had available $18.9
in committed unused short-term lines of credit at market rates.
Compensating balances and commitment fees on these lines of credit are
not material and there are no withdrawal restrictions.
The Company's 1993 $100.0 revolving credit agreement was replaced in
1994 with an increased line of $150.0 (the "Credit Agreement") expiring on
September 30, 1999. Borrowings under the Credit Agreement bear interest at
current market rates and are subject to a number of conditions, including
the absence of a significant change in control of the Company. In
addition, the Credit Agreement requires the Company to maintain minimum
consolidated tangible net worth and specified ratios of debt to total
capital and operating income to interest charges. The Credit Agreement
also limits the Company's capability to mortgage its assets, to merge or
consolidate or to sell certain assets. Defaults under the Credit Agreement
include nonpayment, breach of covenants, bankruptcy and certain cross
defaults to other Company debt. Aggregate dividend payments are limited to
the sum of $45.0 and 30% of consolidated cumulative net earnings of the
Company from June 30, 1992. As of December 31, 1994, there were no
borrowings against the credit line and the Company is in compliance with
the covenants of the Credit Agreement.
Long-term debt consisted of the following at December 31:
<TABLE>
<CAPTION>
Average Rate
of Interest 1994 1993
------------ ------ ------
<S> <C> <C> <C>
Senior notes,
maturing 2000,
unsecured 7.4% $ 50.0 $ 50.0
Commercial paper 6.1% 46.6 48.4
Other long-term debt 5.7% 22.5 17.6
------ ------
119.1 116.0
Less current maturities 1.8 2.3
------ ------
Long-term debt, less current maturities $117.3 $113.7
====== ======
</TABLE>
The $50.0 senior notes mature in the year 2000 and are comprised of
Series A $20.0 and Series B $30.0. Series A notes bear interest at 7.3%,
and Series B notes bear interest at 7.4% annually. Interest is payable
semiannually on both Series A and Series B notes. The terms and
conditions of the senior notes are similar to those of the Credit
Agreement. The market value of the senior notes has been determined by
quotes from a financial institution. At December 31, 1994 the market
value of the senior notes is approximately $2.4 lower than the face
value.
The commercial paper program is backed by the Company's Credit
Agreement. The commercial paper is issued at current market rates;
therefore, the carrying value approximates the market value.
Other long-term debt at December 31, 1994 and 1993 consists
principally of $17.2 and $11.1 of yen denominated senior notes. Of the
1994 balance, $12.1 matures in 1998 and $5.1 matures in 1999.
Capitalized leases of $5.3 in 1994 and $6.5 in 1993 are also included in
other long-term debt.
The aggregate maturities of long-term debt for the five years
subsequent to December 31, 1994 are $1.8 in 1995, $0.9 in 1996, $0.5 in
1997, $12.3 in 1998, $51.9 in 1999 and $51.7 in 2000 and beyond.
6. INCOME TAXES
As discussed in Note 1, the Company adopted SFAS 109 in the first
quarter of 1993. The income tax provision for 1992 was prepared in
accordance with APB Opinion 11.
The components of earnings (loss) before income taxes were:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
U.S. $30.5 $(66.0) $ 8.4
Non-U.S. 44.4 12.1 62.3
------- ------- -------
Total $74.9 $(53.9) $ 70.7
======= ======= =======
</TABLE>
The provision (benefit) for income taxes consisted of the following:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Current
U.S. federal $ 6.1 $ 4.8 $ 8.5
Non-U.S. 9.5 9.3 16.3
U.S. state and
Puerto Rico 3.0 2.7 2.2
------- ------- -------
Total current 18.6 16.8 27.0
------- ------- -------
Deferred
U.S. federal 7.8 (20.2) -
Non-U.S. 1.2 (16.9) (0.1)
------- ------- -------
Total deferred, net 9.0 (37.1) (0.1)
------- ------- -------
Total $27.6 $(20.3) $ 26.9
======= ======= =======
</TABLE>
The reconciliations of the U.S. federal statutory tax rate to the
consolidated effective tax rate is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- ------
<S> <C> <C> <C>
Statutory tax rate 35.0% (35.0)% 34.0%
State taxes, net of
U.S. tax benefit 0.5 1.1 1.7
Ireland and
Puerto Rico income (8.0) (14.9) (10.5)
Non-U.S. taxes 9.3 6.0 15.1
Tax credit utilization (6.9) - (6.6)
Losses producing
limited tax benefits - - 2.3
Foreign income taxed
in the U.S. 5.3 5.3 -
Other 1.6 (0.2) 2.0
------- ------- ------
Effective tax rate 36.8% (37.7)% 38.0%
======= ======= ======
</TABLE>
Certain income of subsidiaries operating in Puerto Rico and Ireland
is taxed at substantially lower income tax rates than the U.S. federal
statutory tax rate. The lower rates reduced expected income taxes by
approximately $6.0 in 1994, reduced the net loss in 1993 by approximately
$8.1 and increased net earnings by approximately $7.4 in 1992. Since
April 1990, earnings from manufacturing operations in Ireland are subject
to a 10% tax. The lower Puerto Rico income tax rate expires in July 2003.
The components of the provision for deferred income taxes are:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ ------
<S> <C> <C> <C>
Restructuring costs $14.5 $(43.5) $ -
International
transactions (2.2) 5.9 -
Accelerated depreciation (0.5) (0.7) (2.0)
Accrued expenses 2.4 (5.0) (4.5)
Pension costs (5.3) 5.0 6.1
Postretirement
medical costs (1.1) (0.9) -
Other 1.2 2.1 0.3
------- ------ ------
$ 9.0 $(37.1) $(0.1)
======= ====== ======
</TABLE>
Based upon the Company's historical pretax earnings, adjusted for
significant items such as non-recurring charges, management believes it
is more likely than not that the Company will realize the benefit of the
existing deferred tax asset at December 31, 1994. Management believes
the existing net deductible temporary differences will reverse during
periods in which the Company generates net taxable income. Certain tax
planning or other strategies will be implemented, if necessary, to
supplement income from operations to fully realize recorded tax benefits.
The tax effect of temporary differences which give rise to significant
portions of deferred tax assets and liabilities at December 31 consist of
the following:
<TABLE>
<CAPTION>
Deferred Tax Assets 1994 1993
- -------------------- ------- -------
<S> <C> <C>
Receivables $ 1.2 $ 1.6
Inventories 2.6 5.0
Capitalized expenses 1.9 2.7
Intercompany transactions 5.2 7.7
Pension expense 8.1 8.8
Accrued expenses 23.8 18.1
Restructuring costs 16.5 31.0
Environmental costs 5.0 5.9
Postretirement benefits 24.1 23.0
Other 22.6 9.3
------- -------
111.0 113.1
Less: Valuation allowance (14.4) (11.5)
------- -------
Total deferred tax assets 96.6 101.6
Deferred tax liabilities
Depreciation 2.2 0.7
------- -------
Net deferred tax assets $ 94.4 $100.9
======= =======
</TABLE>
Included as a component of the 1994 deferred tax asset is the $3.0
tax benefit, net of a $0.5 valuation allowance, related to the adoption
of Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits."
At December 31, 1994 and 1993 the Company recorded a valuation
allowance of $14.4 and $11.5 for certain deductible temporary differences
for which it is more likely than not that the Company will not receive
future benefits.
Non-U.S. withholding taxes and U.S. taxes have not been provided on
approximately $203.7 of unremitted earnings of certain non-U.S.
subsidiaries because such earnings are or will be reinvested in
operations or will be offset by appropriate credits for foreign income
taxes paid.
SmithKline and its consolidated subsidiaries (including the Company)
have settled all issues with the U.S. Internal Revenue Service through
1986. All U.S. federal income tax liability issues between the Company
and SmithKline have been resolved through 1986 in accordance with the Tax
Agreement. Such resolution did not have a material effect on the
Company's consolidated financial position or operating results. The
Company believes that its ultimate U.S. federal income tax liability to
SmithKline, if any, for all applicable post 1986 tax years will not have
a material effect on its consolidated financial position or operations.
7. PENSION AND RETIREMENT BENEFITS
The Company has defined benefit pension plans covering substantially
all of its employees. Consolidated pension expense was $17.8 in 1994, $53.0
in 1993, including amounts associated with the restructuring, and $16.3 in
1992.
U.S. pension benefits are based on years of service and compensation
during the five highest consecutive earnings years. Components of U.S.
pension expense were:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Service cost $ 10.2 $ 11.5 $ 9.7
Interest cost 24.4 20.4 18.4
Actual return on
plan assets (23.0) (23.5) (16.7)
Net amortization
and deferral 2.2 3.1 0.4
------- ------- -------
$ 13.8 $ 11.5 $ 11.8
======= ======= =======
</TABLE>
As part of the Company's reorganization in 1993, (see Note 2
"Redirected Business Strategy and Reorganization"), the Company
implemented a voluntary separation program for U.S. based long-term
employees. Eligible voluntary separation program participants also
received a substantial enhancement to their pension benefit. Eligible
participants' pension benefit was calculated by adding five years to
their age and five years to their service period. This enhanced pension
benefit resulted in the Company recording in 1993 a $35.9 pension expense
associated with the restructuring.
The Company's funding policy is to provide currently for accumulated
benefits, subject to federal regulations. Plan assets consist principally
of U.S. government fixed income securities and corporate stocks and
bonds. Funded status of the Company's pension liabilities and assets and
amounts recognized in the Company's financial statements with respect to
the U.S. plans were:
<TABLE>
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Vested benefit obligation $246.7 $269.7
------- -------
Accumulated benefit obligation $248.2 $278.3
Projected compensation increases 27.9 59.2
------- -------
Projected benefit obligation 276.1 337.5
Plan assets at fair market value (225.1) (248.5)
------- -------
Projected benefit obligation
in excess of plan assets 51.0 89.0
Unrecognized transition obligation (2.9) (3.4)
Unrecognized net loss (8.7) (59.0)
Unrecognized prior service cost (9.2) (10.1)
Adjustment required to recognize
minimum liability - 13.5
------- -------
Accrued pension cost
in other liabilities $ 30.2 $ 30.0
======= =======
</TABLE>
The expected long-term rate of return on U.S. plan assets was 9.75%
in 1994 and 1993. The discount rate used in determining obligations was
9% in 1994 and 7.25% in 1993, and the assumed average rate of increase in
future compensation levels was 4.25% in 1994 and 1993.
Certain subsidiaries outside the U.S. have separate pension plan
arrangements which include both funded and unfunded plans. Unfunded
foreign pension obligations are recorded as a liability on the Company's
consolidated balance sheets. Plan assets and accrued liabilities for
those plans exceed vested benefits. Pension expense for plans outside of
the U.S. were $4.0 in 1994, $4.5 in 1993 and $3.9 in 1992.
The Company has a voluntary defined contribution savings plan for
its U.S. employees. Eligible employees may contribute a portion of their
compensation to this plan. Company contributions, which are based on a
percentage of employee contributions, were $3.8 in 1994, $4.2 in 1993 and
$3.9 in 1992. Employees generally become fully vested with respect to
Company contributions after three years of service with the Company.
In addition to pension benefits, the Company and its subsidiaries
presently provide certain health care and life insurance benefits for
retired U.S. employees and their dependents. Eligibility for the plan
and participant cost sharing is dependent upon the participant's age at
retirement, years of service and retirement date. In January 1993, the
Company adopted Statement of Financial Accounting Standards No. 106
("SFAS 106"), "Employers' Accounting for Postretirement Benefits Other
Than Pensions." This statement required the Company to accrue, as
current costs, the postretirement benefits during the period the
employees provide their service. SFAS 106 also required the Company to
recognize a transition obligation for prior years' service cost.
Accordingly, the Company recorded a transition obligation for past
service of $47.2 million and a net expense of $30.2 (net of tax benefits
of $17.0) as the cumulative effect of the accounting change in 1993.
Annual pretax postretirement benefits expense for 1993 increased
$2.6 due to the implementation of SFAS 106.
The net periodic cost for postretirement health care and life
insurance benefits includes the following:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Service cost $2.0 $1.4
Interest cost 4.9 3.9
---- ----
$6.9 $5.3
==== ====
</TABLE>
The voluntary separation program resulted in a curtailment loss to
the postretirement benefits plan of $7.2 which was recognized in 1993 as
a component of the 1993 restructuring cost of $114.7 (see Note 2
"Redirected Business Strategy and Reorganization").
The following table sets forth the plan's funded status and amounts
recognized in the Company's consolidated balance sheet in "other
liabilities" at December 31:
Accumulated postretirement benefit
obligations
<TABLE>
<CAPTION>
1994 1993
------ ------
<S> <C> <C>
Retirees $29.2 $44.0
Fully eligible active
plan participants 1.6 1.9
Other active plan participants 12.0 21.7
------ ------
Total obligation 42.8 67.6
Plan assets - -
Accumulated postretirement benefit
obligation in excess of plan assets 42.8 67.6
Unrecognized net gain (loss) 17.2 (10.7)
------ ------
Accrued postretirement benefit liability $60.0 $56.9
====== ======
</TABLE>
In 1994,the costs of the retiree health and life insurance benefits
were calculated using a health care cost trend rate which assumed an 8%
increase in health care costs in 1995 with the rate decreasing to a 5.5%
increase by the year 2004. In 1993, a health care cost trend rate was
used which assumed a 12% increase in 1994 with the rate decreasing to a
6% increase by 2007. An assumed 1% increase in the health care cost
trend rate for each year would have resulted in an increase in the net
periodic cost to $8.1 in 1994 and $6.1 in 1993 and an accumulated
postretirement benefit obligation of $47.6 in 1994 and $76.8 in 1993.
The accumulated postretirement benefit obligation was calculated using a
discount rate of 9% in 1994 and 7.25% in 1993.
For the year ended December 31, 1992, the cost of retiree health
care insurance benefits was recognized as expense as expenditures were
incurred amounting to $2.5. Employees outside the U.S. generally receive
similar benefits from government-sponsored plans.
8. BENEFIT AND STOCK OPTION PLANS
In 1988, the Company adopted an Incentive Compensation Plan for its
officers and key employees, which provided for stock-based incentive
awards based upon several factors including Company performance. This
plan expired on December 31, 1990, but options outstanding on that date
were not affected by such termination. Pursuant to this plan, the
Company has granted options to purchase approximately 755,000 shares,
with an expiration date of ten years from the date of grant.
The Company has also adopted the Incentive Compensation Plan of
1990. This 1990 plan reserves shares of the Company's common stock for
grants of options and restricted stock. Granted options expire ten years
from the date of grant. Subsequent to stockholder approval in 1992,
amendments were adopted to extend the expiration of the plan to 2001 and
to increase each year, commencing January 1, 1993, the number of shares
available under the plan by 1.5% of the number of common shares issued
and outstanding as of the prior December 31. As of January 1, 1995,
616,196 shares remain available for grant under this plan.
The following is a summary of transactions of the Incentive
Compensation Plans of 1988 and 1990:
<TABLE>
<CAPTION>
Number of Price Per
Shares Share Amount
---------- ---------------- -------
<S> <C> <C> <C>
Options outstanding
at December 31, 1991 1,703,022 $13.88 - $19.00 $31.0
Granted 486,100 18.75 - 20.00 9.7
Exercised (70,594) 16.50 - 19.00 (1.2)
Cancelled (49,261) 16.50 - 20.00 (0.9)
---------- ---------------- -------
Options outstanding
at December 31, 1992 2,069,267 13.88 - 20.00 38.6
Granted 438,000 22.50 9.9
Exercised (163,825) 13.88 - 20.00 (3.0)
Cancelled (17,395) 18.38 - 22.50 (0.4)
---------- ---------------- -------
Options outstanding
at December 31, 1993 2,326,047 13.88 - 22.50 45.1
Granted 773,200 26.38 - 28.88 20.4
Exercised (353,534) 16.50 - 22.00 (6.6)
Cancelled (57,414) 18.88 - 28.00 (2.1)
---------- ---------------- -------
Options outstanding
at December 31, 1994 (a) 2,688,299 $13.88 - $28.88 $56.8
========== =============== =======
(a) At December 31, 1994 1,670,934 shares were exercisable under these
plans.
</TABLE>
Stock Purchase Plan
The Company's stock purchase plan allows all U.S. employees and
employees of certain subsidiaries outside of the U.S. to purchase the
Company's common stock at favorable prices and upon favorable terms.
Subsequent to stockholder approval in 1992, amendments were adopted to
extend the expiration of the plan to December 31, 2001, and in each
calendar year commencing in 1992, to reserve additional shares of common
stock for use in the plan based upon the number of common shares issued
and outstanding as of the annual stockholders' meeting. Employees
purchased 216,265 shares in 1994. At December 31, 1994, 582,143 shares
remain available for use in the plan.
Treasury Stock
The Board of Directors approved a stock repurchase program whereby
the Company was authorized to purchase on the open market 3,000,000
shares of the Company's common stock through December 1993 of which
2,969,000 were purchased. In addition, the Company may purchase
1,000,000 shares per year through 1995. In total 5,000,000 shares have
been authorized for purchase. The shares have been, and will continue to
be, reissued to satisfy the Company's obligations under existing employee
benefit plans. Through December 1994, the Company had purchased
3,469,223 shares of its common stock for $78.0. At December 31, 1994,
1,119,500 shares remain in treasury of which 1,033,848 are held by the
Benefit Equity Fund.
In February 1993, the Company created the Benefit Equity Fund (BEF),
a trust for prefunding future stock-related obligations of employee
benefit plans. The BEF does not change these plans or the amounts of
stock expected to be issued for these plans. The BEF will be funded by
existing shares in treasury as well as from additional shares the Company
will purchase on the open market over time. While shares in the BEF are
not considered outstanding for the calculation of earnings per share, the
shares within the BEF are voted by the participants of the Stock Purchase
Plan.
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 required 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 million and a net expense of $5.1 million
(net of tax benefit of $3.0) as the cumulative effect of the accounting
change. Postemployment benefit expense, subsequent to adopting SFAS 112,
was approximately $0.7 in 1994.
9. STOCKHOLDERS' EQUITY
Changes in stockholders' equity were as follows:
<TABLE>
<CAPTION>
Foreign
Additional Currency
Common Paid-in Translation Retained Treasury
Stock Capital Adjustment Earnings Stock
---------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1991 $2.9 $128.9 $ 30.6 $184.8 $ (4.2)
Net earnings 43.8
Foreign currency translation
adjustments (13.2)
Dividend to stockholders (8.5)
Purchase of treasury stock (27.8)
Vesting of restricted stock 0.4
Employee stock purchase 1.2 18.5
---------------------------------------------------
Balances, December 31, 1992 2.9 130.5 17.4 220.1 (13.5)
Net loss (37.6)
Foreign currency translation
adjustments (18.5)
Dividend to stockholders (10.1)
Purchase of treasury stock (28.3)
Vesting of restricted stock 0.2
Employee stock purchase (1.1) 13.5
---------------------------------------------------
Balances, December 31, 1993 2.9 129.6 (1.1) 172.4 (28.3)
Net earnings 42.2
Foreign currency translation
adjustments 9.7
Dividend to stockholders (11.2)
Purchase of treasury stock (14.6)
Vesting of restricted stock 0.1
Employee stock purchase 0.3 15.0
---------------------------------------------------
Balances, December 31, 1994 $2.9 $130.0 $ 8.6 $203.4 $(27.9)
===================================================
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
Environmental
The Company is subject to federal, state, local and foreign
environmental laws and regulations. The Company believes that its
operations comply in all material respects with applicable federal, state
and local environmental laws and regulations. Although the Company
continues to make expenditures for environmental protection, it does not
anticipate any significant expenditures in order to comply with such laws
and regulations which would have a material impact on the Company's
operations or financial position.
In 1983, the Company discovered organic chemicals in the groundwater
near a waste storage pond at a Company facility in Porterville,
California. SmithKline, the Company's former controlling stockholder,
agreed to indemnify the Company with respect to this matter for any costs
incurred by the Company in excess of applicable insurance, eliminating
any impact on the Company's earnings or financial position. SmithKline
Beecham p.l.c., the surviving entity of the merger between SmithKline
Beckman and Beecham Group p.l.c., assumed the obligations of SmithKline
Beckman in this respect.
The Company is also 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. In 1993, the Company increased its existing reserves
for soil and groundwater remediation and for resolution of the 1991
lawsuit by $12.5.
During 1994, the County formally acknowledged completion of
remediation of a major portion of the soil, although there remain some
areas of soil contamination that may require further remediation. The
Company also operated a groundwater treatment system throughout 1994.
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.
Litigation
Local authorities in Palermo (Sicily), Italy are investigating the
activities of officials at a local government hospital and laboratory.
In addition to staff members in charge of the laboratory for the Palermo
hospital, a number of representatives of the principal worldwide
companies marketing diagnostic equipment in Italy were taken into
temporary custody as part of the investigation. Included were three
employees of the Company's Italian subsidiary (the "Subsidiary"). The
investigation, which is still underway, also obtained documents from the
Subsidiary and from other major diagnostic companies. The inquiry of the
Subsidiary focuses on past leasing practices for placement of diagnostic
equipment which were common industrywide practices throughout Italy, but
now are alleged to be improper. Recently, new inquiries to the
Subsidiary have been initiated by the prosecutor from the region of
Florence. At the present time the Company does not expect this matter to
have a material adverse effect on its operations or financial position.
In addition, the Company and its subsidiaries are involved in a
number of lawsuits which the Company considers normal in view of its size
and the nature of its business. The Company does not believe that any
liability resulting from such lawsuits will have a material adverse
effect on the results of operations or financial position of the Company.
Lease Commitments
The Company leases certain facilities, equipment and automobiles.
Certain of the leases provide for payment of taxes, insurance and other
charges by the lessee. Rent expense was $27.3 in 1994, $34.5 in 1993 and
$28.5 in 1992.
Minimum annual rentals payable under noncancelable operating leases
with a remaining term of more than one year at December 31, 1994,
aggregate $23.9 and for each of the next five years are $8.2 in 1995,
$6.0 in 1996, $3.6 in 1997, $2.1 in 1998, $1.2 in 1999 and $2.8 in 2000
and beyond.
Other
During 1993 the Company received proceeds of $40.0 from factoring
trade receivables. The Company is contingently liable for the possible
uncollected portion of the factored receivables, if any, which was $1.1
at December 31, 1993. No factored receivables were outstanding at
December 31, 1994.
11. DERIVATIVES
The Company manufactures its products principally in the United
States but generates more than half of its revenues from sales made
outside the U.S. by its international subsidiaries utilizing the
subsidiary's local currency, exposing the Company to the risk of foreign
currency fluctuations. Also, as the Company is a net borrower, it is
exposed to the risk of fluctuating interest rates. The Company utilizes
derivative instruments in an effort to mitigate these risks. The Company
does not hold or issue financial instruments for trading purposes.
Various foreign currency contracts are used to hedge firm
commitments denominated in foreign currencies and to mitigate the impact
of changes in foreign currency exchange rates on the Company's
operations. At December 31, 1994, the Company had foreign currency swaps
totaling $81.1 and purchased foreign currency options of $46.1 expiring
at various dates through May 1995. At December 31, 1993, the Company had
foreign currency swaps totaling $51.5, written foreign currency options
of $4.4, purchased foreign currency options of $7.4 expiring at various
dates through March 1994 and commitments to sell forward various
currencies totaling $4.8 through March 1994. The market value of foreign
currency contracts at December 31, 1994 and 1993 was an unrealized loss
of $0.3 and $0.1, respectively.
The Company uses complex options, consisting of purchased options
and call spreads, to hedge anticipated transactions with its
international subsidiaries. Anticipated transactions are estimated based
upon historical, budgeted and forecasted operations at the Company's
international subsidiaries. The Company did not have complex options
outstanding at December 31, 1994. At December 31, 1993, the Company had
$96.0 of complex options outstanding with a market value that would have
resulted in an unrealized gain of $0.9.
The Company enters into interest rate swap contracts to reduce the
impact of changes in interest rates on its net borrowings. Depending on
the terms of the Company's debt, in some interest rate swap contracts, the
Company pays a floating rate and receives a fixed rate from the
counterparties, while in other contracts the Company pays a fixed rate
and receives a floating rate. The Company had no interest rate swap
contracts outstanding at December 31, 1994, but had outstanding contracts
with commercial banks having a total notional principal amount of $35.0
at December 31, 1993. The value the Company would have had to pay to
terminate the swap agreements at December 31, 1993 was $1.3.
Market values of foreign currency contracts and complex options are
determined by solicitation of dealer quotes. Market values of interest
rate swap contracts are determined by quotes from financial institutions
who are counterparties to the interest rate swaps.
The Company is exposed to credit risk in the event of non-
performance of the counterparties to its foreign currency contacts,
complex options and interest rate swap agreements, which the Company
believes is remote. Nevertheless, the Company monitors its counterparty
credit risk and utilizes netting agreements and internal policies to
mitigate its risk.
12. BUSINESS SEGMENT INFORMATION
Industry Segment
The Company is engaged primarily in the design, manufacture and sale
of laboratory instrument systems and related products.
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Geographic areas
Sales
United States-domestic $ 588.2 $ 581.2 $ 586.8
United States-export 24.2 24.1 20.2
Europe 292.9 303.6 357.8
Asia and other areas 153.8 144.7 134.7
Transfers between areas (170.5) (177.9) (190.7)
-------- -------- --------
Total sales $ 888.6 $ 875.7 $ 908.8
======== ======== ========
Operating income (loss)
United States before
research, development
and engineering $ 147.7 $ 68.8 $ 121.8
Research, development
and engineering(a) (91.5) (93.3) (85.9)
-------- -------- --------
United States 56.2 (24.5) 35.9
Europe 22.5 (9.2) 41.9
Asia and other areas 8.9 4.6 9.4
-------- -------- --------
Total operating income (loss) $ 87.6 $ (29.1) $ 87.2
======== ======== ========
Identifiable assets
United States $ 381.8 $ 370.5 $ 372.3
Europe 213.0 205.6 246.6
Asia and other areas 88.8 92.2 61.6
Corporate 145.5 151.7 57.9
-------- -------- --------
Total assets $ 829.1 $ 820.0 $ 738.4
======== ======== ========
(a) The Company's principal research, development and engineering efforts
are performed in the United States.
</TABLE>
Identifiable assets are those assets used by the operations in each
geographic location. Corporate assets consist primarily of cash and
equivalents, short-term investments, deferred tax assets, lease receivables
and fixed assets of a corporate nature. Asia and other areas include primarily
operations in Japan, Canada and Latin America. Inter-area sales are made at
terms that allow for a reasonable profit to the seller. At December 31, 1994
trade receivables by geographic area were United States $84.1, Europe $131.2
(including certain countries where normal trade terms are substantially longer
than U.S. terms) and Asia and other areas $50.6. At December 31, 1993 trade
receivables by geographic area were United States $71.5, Europe $128.4 and
Asia and other areas $52.2.
13. SUPPLEMENTARY INFORMATION
Allowance for doubtful accounts
<TABLE>
<CAPTION>
Additions
Balance at Charged to Balance
Beginning Cost and at End
of Period Expenses Deductions of Period
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
December 31, 1994 $11.9 $0.7 (a) $ 2.6 (b) $10.4
0.1 (c) (0.3) (d)
========== ========== ========== ==========
December 31, 1993 $12.1 $2.4 (a) $ 2.0 (b) $11.9
0.6 (d)
========== ========== ========== ==========
December 31, 1992 $12.1 $1.6 (a) $ 1.5 (b) $12.1
0.4 (c) 0.5 (d)
========== ========== ========== ==========
(a) Provision charged to earnings.
(b) Accounts written off.
(c) Collection of accounts previously written off.
(d) Adjustments from translating at current exchange rates.
</TABLE>
<PAGE>
REPORT BY MANAGEMENT
The consolidated financial statements and related information for the
years ended December 31, 1994, 1993 and 1992 were prepared by management in
accordance with generally accepted accounting principles. Financial data
included in other sections of this Annual Report are consistent with that
in the consolidated financial statements.
Management maintains a system of internal accounting controls which is
designed to provide reasonable assurance, at appropriate costs, that its
financial and related records fairly reflect transactions, that proper
accountability for assets exists, and that established policies and
procedures are followed. A professional staff of internal auditors reviews
compliance with corporate policies. Among these policies is an ethics
policy, which requires employees to maintain high standards in conducting
the Company's affairs, and requires management level employees to submit
certificates of compliance annually. Management continually monitors the
system of internal accounting controls for compliance and believes the
system is appropriate to accomplish its objectives.
The Company's independent auditors examine the Company's consolidated
financial statements in accordance with generally accepted auditing
standards. Their report expresses an independent opinion on the fairness
of the Company's reported operating results and financial position. In
performing this audit, the auditors consider the Company's internal control
structure and perform such other tests and auditing procedures as they deem
necessary.
The Board of Directors, through its Audit Committee, reviews both
internal and external audit results and internal controls. The Audit
Committee consists of five outside Directors and meets periodically with
management, internal auditors and the independent auditors to review the
scope and results of their examinations. Both the independent auditors and
the internal auditors have free access to this Committee, with and without
management being present, to discuss the results of their audits.
LOUIS T. ROSSO D.K. WILSON
Louis T. Rosso Dennis K. Wilson
Chairman and Vice President, Finance
Chief Executive Officer and Chief Financial Officer
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Beckman Instruments, Inc.:
We have audited the accompanying consolidated balance sheets of
Beckman Instruments, Inc. and subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of operations and cash flows
for each of the years in the three-year period ended December 31, 1994.
These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Beckman Instruments, Inc. and subsidiaries as of December 31, 1994 and
1993, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 1994 in conformity
with generally accepted accounting principles.
As discussed in Note 1, Note 7 and Note 8 to the consolidated
financial statements, the Company adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards
No. 112, "Employers' Accounting for Postemployment Benefits," in 1994 and
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," and Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," in
1993.
KPMG PEAT MARWICK LLP
Orange County, California
January 19, 1995
<PAGE>
FIVE-YEAR FINANCIAL AND STATISTICAL DATA
<TABLE>
<CAPTION>
Years Ended December 31, 1994 1993 1992 1991 1990
- -------------------------------------- ------ ------ ------ ------ ------
Dollars in millions,
except amounts per share
<S> <C> <C> <C> <C> <C>
Summary of Operations
Sales $888.6 $875.7 $908.8 $857.9 $815.2
Cost of sales 416.3 418.3 440.9 417.7 396.7
Marketing, administrative and general 281.9 278.5 294.8 283.1 266.3
Research, development and engineering 91.5 93.3 85.9 82.2 80.6
Restructuring charge 11.3 114.7 - - -
Operating income (loss) 87.6 (29.1) 87.2 74.9 71.6
Nonoperating expense, net 12.7 24.8 16.5 11.1 10.2
Earnings (loss) before income taxes 74.9 (53.9) 70.7 63.8 61.4
Net earnings (loss) before
accounting changes 47.3 (33.6) 43.8 38.1 36.2
Net earnings (loss) 42.2 (37.6) 43.8 38.1 36.2
Average number of shares
outstanding (millions) 28.1 27.8 28.7 29.0 28.7
Return on average stockholders' equity 14.2% (11.9)% 12.5% 11.4% 12.2%
Net earnings (loss) per share
before accounting changes $ 1.68 $(1.21) $ 1.53 $ 1.32 $ 1.26
Net earnings (loss) per share 1.50 (1.35) 1.53 1.32 1.26
Dividends paid per share of
common stock 0.40 0.36 0.30 0.28 0.28
Financial Position at December 31
Current assets $512.0 $544.5 $508.6 $491.7 $465.3
Current liabilities 268.8 323.3 281.3 264.4 246.8
Working capital 243.2 221.2 227.3 227.3 218.5
Property, plant and equipment, net 232.6 216.8 213.0 203.0 203.1
Total assets 829.1 820.0 738.4 712.2 681.0
Long-term debt 117.3 113.7 59.5 59.0 64.6
Stockholders' equity 317.0 275.5 357.4 343.0 325.6
Shares outstanding (millions) 28.0 27.8 28.6 28.9 29.0
Other Statistics
Capital expenditures $ 98.7 $ 92.8 $ 91.4 $ 69.7 $ 70.0
Research, development and
engineering expense 91.5 93.3 85.9 82.2 80.6
Depreciation expense 69.1 62.3 63.9 55.5 47.2
Number of employees 5,880 6,581 6,879 6,883 7,054
</TABLE>
QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
Dollars in millions,
except amounts per share March 31 June 30 Sept.30 Dec.31 Total
-------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
1994 Quarter Ended
Sales $198.6 $222.2 $217.8 $250.0 $888.6
Cost of sales 95.1 105.2 103.0 113.0 416.3
Marketing, administrative
and general 63.4 69.2 65.7 83.6 281.9
Research, development
and engineering 21.6 22.9 23.9 23.1 91.5
Restructuring 1.2 1.1 4.8 4.2 11.3
Operating income 17.3 23.8 20.4 26.1 87.6
Earnings before income taxes 15.0 20.0 17.4 22.5 74.9
Net earnings before
accounting changes 9.8 13.0 11.3 13.2 47.3
Net earnings 4.7 13.0 11.3 13.2 42.2
Net earnings per share
before accounting changes 0.35 0.46 0.40 0.47 1.68
Net earnings per share 0.17 0.46 0.40 0.47 1.50
1993 Quarter Ended
Sales $201.7 $221.8 $215.6 $236.6 $875.7
Cost of sales 97.1 106.7 103.9 110.6 418.3
Marketing, administrative
and general 63.3 72.1 66.1 77.0 278.5
Research, development
and engineering 22.4 22.9 23.2 24.8 93.3
Restructuring charge - - - 114.7 114.7
Operating income (loss) 18.9 20.1 22.4 (90.5) (29.1)
Earnings (loss) before
income taxes 16.0 18.2 18.0 (106.1) (53.9)
Net earnings (loss) before
accounting changes 10.2 11.7 11.5 (67.0) (33.6)
Net earnings (loss) 6.2 11.7 11.5 (67.0) (37.6)
Net earnings (loss) per share
before accounting changes 0.36 0.42 0.42 (2.41) (1.21)
Net earnings (loss) per share 0.22 0.42 0.42 (2.41) (1.35)
</TABLE>
STOCK PRICES AND OTHER INFORMATION
Stock Exchanges and Prices
The Company's common stock is listed on the New York Stock Exchange.
Its ticker symbol is BEC. The following presents a summary of the price
range for the common stock as reported on the New York Stock Exchange
Composite Tape for the periods ended December 31, 1994 and 1993,
respectively.
<TABLE>
<CAPTION>
1994
Quarter 1st 2nd 3rd 4th
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
High 28 3/4 27 32 1/2 30 3/8
Low 25 23 24 3/4 27 3/8
</TABLE>
<TABLE>
<CAPTION>
1993
Quarter 1st 2nd 3rd 4th
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
High 25 1/2 23 5/8 26 3/8 28 1/4
Low 21 7/8 20 1/2 19 5/8 25
</TABLE>
Dividends
The Company paid cash dividends to stockholders of $0.40 per share in
1994, $0.36 per share in 1993 and $0.30 per share in 1992. The Company
intends to continue paying cash dividends of at least the current per share
amount, subject to future business conditions, requirements of the
operations and financial condition of the Company. In February 1995 the
Board of Directors declared a first quarter dividend of $0.11 per share.
This dividend is payable March 2, 1995 to stockholders of record on
February 10, 1995.
Annual Meeting
The annual meeting of stockholders will be held on April 6, 1995 at
the Company's headquarters in Fullerton, California. Formal notice of the
meeting together with the proxy statement and form of proxy will be mailed
to each stockholder of record on February 6, 1995.
Form 10-K Annual Report Available to Stockholders
A copy of Beckman's Form 10-K annual report filed with the Securities
and Exchange Commission may be obtained without charge by writing to the
Company as follows:
Beckman Instruments, Inc.
Jay Steffenhagen, Vice President
Office of Investor Relations, M/S A-36-C
2500 Harbor Boulevard
Fullerton, California, 92634-3100
Telephone: 714-773-7764
FAX: 714-773-8543
There are no accounting differences between the financial statements
presented in this Annual Report and the Form 10-K report, but the Form 10-K
report does provide certain supplemental information as required by
Securities and Exchange Commission regulations.
Transfer Agent, Registrar and Dividend Disbursing Agent
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, New Jersey 07303-2500
Telephone: 201-324-0498
Significant Subsidiaries
Beckman Analytical S.p.A.
Beckman Eurocenter S.A.
Beckman Instruments (Australia) Pty. Ltd.
Beckman Instruments (Canada), Inc.
Beckman Instruments (Naguabo), Inc.
Beckman Instruments Espana S.A.
Beckman Instruments France S.A.
Beckman Instruments G.m.b.H.
Beckman Instruments (Ireland), Inc.
Beckman Instruments (Japan), Ltd.
Beckman Instruments (United Kingdom), Ltd.
Beckman Instruments International S.A.
SmithKline Diagnostics, Inc.
Exhibit 21
SUBSIDIARIES
The following table lists current subsidiaries of the Company whose results
are included in the Company's combined financial statements. The list of
subsidiaries does not include certain subsidiaries which, when considered
in the aggregate, do not constitute a significant subsidiary of the
Company.
Jurisdiction
Name of Company of Incorporation
- ----------------- -------------------
Beckman Instruments (Australia) Pty. Ltd. Australia
Beckman Instruments (Naguabo) Inc. California
Beckman Instruments (Canada) Inc. Canada
SmithKline Diagnostics, Inc. Delaware
Beckman Instruments (United Kingdom) Ltd. England
Beckman Instruments France S.A. France
Beckman Instruments G.m.b.H. Germany
Beckman Eurocenter S.A. Germany
Beckman Analytical S.p.A. Italy
Beckman Instruments (Japan) Ltd. Japan
Beckman Instruments (Ireland) Inc. Panama
Beckman Instruments Espana S.A. Spain
Beckman Instruments International S.A. Switzerland
Exhibit 24
The Board of Directors
Beckman Instruments, Inc.:
We consent to incorporation by reference in the registration
statements (nos. 33-31573, 33-31862, 33-41519, 33-51506, 33-55778,
33-66990 and 33-66988) on Form S-8 of Beckman Instruments, Inc. of
our report dated January 19, 1995, relating to the consolidated
balance sheets of Beckman Instruments, Inc. and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements
of operations and cash flows for each of the years in the three-
year period ended December 31, 1994, which report appears in the
December 31, 1994 annual report on Form 10-K of Beckman
Instruments, Inc.
Our report refers to the adoption of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No.
112, "Employers' Accounting for Postemployment Benefits", in 1994
and Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", and Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", in 1993.
KPMG PEAT MARWICK LLP
Orange County, California
February 3, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 44
<SECURITIES> 1
<RECEIVABLES> 276
<ALLOWANCES> 10
<INVENTORY> 151
<CURRENT-ASSETS> 512
<PP&E> 579
<DEPRECIATION> 347
<TOTAL-ASSETS> 829
<CURRENT-LIABILITIES> 269
<BONDS> 117
<COMMON> 3
0
0
<OTHER-SE> 314
<TOTAL-LIABILITY-AND-EQUITY> 829
<SALES> 742
<TOTAL-REVENUES> 889
<CGS> 314
<TOTAL-COSTS> 416
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (1)
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 75
<INCOME-TAX> 28
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<EPS-PRIMARY> 1.50
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</TABLE>
