FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995
OR
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 001-10109
BECKMAN INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-104-0600
(State of Incorporation) (I.R.S. Employer Identification No.)
2500 Harbor Boulevard, Fullerton, California 92634
(Address of principal executive offices) (Zip Code)
(714) 871-4848
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes (X) No ( ).
APPLICABLE ONLY TO CORPORATE ISSUERS:
Outstanding shares of common stock, $0.10 par value, as of October 19, 1995:
28,862,421 shares.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Statements of Earnings
for the three and nine month periods ended
September 30, 1995 and 1994 3
Condensed Consolidated Balance Sheets
as of September 30, 1995 and December 31, 1994 4
Condensed Consolidated Statements of Cash Flows
for the nine month periods ended September 30,
1995 and 1994 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes In Securities 13
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security-Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
<PAGE>
BECKMAN INSTRUMENTS
THIRD QUARTER REPORT
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in Millions, Except Amounts Per Share)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales $229.9 $217.8 $665.5 $638.6
Operating costs and expenses:
Cost of sales 106.9 103.0 312.1 303.3
Marketing, administrative and general 73.1 65.7 212.1 198.3
Research, development and engineering 22.9 23.9 67.0 68.4
Restructuring charge 4.1 4.8 10.6 7.1
------ ------ ------ ------
207.0 197.4 601.8 577.1
------ ------ ------ ------
Operating income 22.9 20.4 63.7 61.5
Nonoperating income (expense):
Interest income 1.7 1.2 4.1 3.5
Interest expense (3.8) (3.5) (9.6) (9.5)
Other, net 0.2 (0.7) (0.7) (3.1)
------ ------ ------ ------
(1.9) (3.0) (6.2) (9.1)
------ ------ ------ ------
Earnings before income taxes 21.0 17.4 57.5 52.4
Income tax provision 7.1 6.1 19.5 18.3
------ ------ ------ ------
Net earnings before cumulative effect of
change in accounting principles 13.9 11.3 38.0 34.1
Cumulative effect of change in
accounting principles:
Accounting for postemployment benefits
(net of tax benefit of $3.0) - - - (5.1)
------ ------ ------ ------
Net earnings $ 13.9 $ 11.3 $ 38.0 $ 29.0
====== ====== ====== ======
Weighted average common shares and common
share equivalents - (thousands) 28,691 28,175 28,730 28,030
Net earnings per share before cumulative
effect of change in accounting principles$ 0.48 $ 0.40 $ 1.32 $ 1.21
Cumulative effect of change in
accounting principles:
Accounting for postemployment benefits
(net of tax benefit of $3.0) - - - (0.18)
------ ------ ------ ------
Net earnings per share $ 0.48 $ 0.40 $ 1.32 $ 1.03
====== ====== ====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN INSTRUMENTS,INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
Unaudited
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ -----------
<S> <C> <C>
Assets
Current assets:
Cash and equivalents $ 17.9 $ 44.2
Short-term investments 8.6 0.7
Trade receivables 269.6 265.9
Inventories 172.6 150.7
Deferred income taxes 38.6 37.8
Other current assets 20.9 12.7
------ ------
Total current assets 528.2 512.0
Property, plant and equipment, net 243.8 232.6
Deferred income taxes 57.8 56.6
Other assets 46.0 27.9
------ ------
Total assets $875.8 $829.1
====== ======
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 17.4 $ 12.2
Accounts payable and accrued expenses 175.5 202.9
Income taxes 60.3 53.7
------ ------
Total current liabilities 253.2 268.8
Long-term debt, less current maturities 159.7 117.3
Other liabilities 118.1 126.0
------ ------
Total liabilities 531.0 512.1
Stockholders' equity 344.8 317.0
------ ------
Total liabilities and stockholders' equity $875.8 $829.1
====== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN INSTRUMENTS,INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
Unaudited
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
---- ----
<S> <C> <C>
Cash Flows from Operating Activities
Net earnings $ 38.0 $ 29.0
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 55.9 51.5
Deferred income taxes (1.7) (1.7)
Changes in assets and liabilities:
Trade receivables (1.8) 12.3
Inventories (21.1) 4.5
Accounts payable and accrued expenses (10.3) -
Restructuring reserve (17.7) (29.9)
Income taxes 6.6 9.7
Other (35.6) 5.1
------ ------
Net cash provided
by operating activities 12.3 80.5
------ ------
Cash Flows from Investing Activities
Additions to property, plant and equipment (70.4) (66.5)
Net disposals of property, plant and equipment 9.3 13.0
Sale (purchase) of short-term investments (7.8) 21.7
------ ------
Net cash used by investing activities (68.9) (31.8)
------ ------
Cash Flows from Financing Activities
Dividends to stockholders (9.3) (8.4)
Proceeds from issuance of stock 11.6 9.9
Purchase of treasury stock (12.3) (0.4)
Notes payable borrowings 11.4 2.3
Notes payable reductions (9.5) (30.2)
Long-term debt borrowings 39.7 4.2
Long-term debt reductions - (3.3)
Other (1.3) (0.6)
------ ------
Net cash provided (used)
by financing activities 30.3 (26.5)
Effect of exchange rates on cash and equivalents - 0.6
------ ------
Increase (decrease) in cash and equivalents (26.3) 22.8
Cash and equivalents -- beginning of period 44.2 24.2
------ ------
Cash and equivalents -- end of period $ 17.9 $ 47.0
====== ======
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest $ 6.5 $ 9.4
Income taxes $ 14.9 $ 7.9
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN INSTRUMENTS, INC.
Notes To
Condensed Consolidated Financial Statements
(Dollars in Millions, Except Amounts Per Share)
1 Report by Management
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation of the results
for the periods. The statements are prepared in accordance with the
requirements of Form 10-Q and do not include all disclosures required by
generally accepted accounting principles or those made in the Annual Report on
Form 10-K for 1994 which is on file with the Securities and Exchange
Commission.
The results of operations for the three and nine month periods ended September
30, 1995 are not necessarily indicative of the results to be expected for the
year ending December 31, 1995.
2 Earnings Per Share
In 1995, earnings per share is computed including common share equivalents.
Common share equivalents represent the dilutive effect of outstanding stock
options. Common share equivalents were excluded in periods prior to 1995 as
they were less than three percent dilutive. Primary earnings per share
approximates fully diluted earnings per share. Earnings per share are
calculated as follows:
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
September 30, 1995 September 30, 1994
Earnings Earnings
(In thousands,except amounts per share) Shares Per Share Shares Per Share
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Weighted average shares of
common stock outstanding 28,076 $0.49 28,175 $0.40
Common share equivalents 615 (0.01) * *
------ ------ ------ ------
Weighted average common and
common share equivalents 28,691 $0.48 28,175 $0.40
====== ====== ====== ======
</TABLE>
*Less than 3% dilutive
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1995 September 30, 1994
Earnings Earnings
(In thousands,except amounts per share) Shares Per Share Shares Per Share
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Weighted average shares of
common stock outstanding 28,074 $1.35 28,030 $1.03
Common share equivalents 656 (0.03) * *
------ ------ ------ ------
Weighted average common and
common share equivalents 28,730 $1.32 28,030 $1.03
====== ====== ====== ======
</TABLE>
*Less than 3% dilutive
3 Inventories
Inventories are comprised of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Finished products $119.2 $104.1
Raw materials, parts
and assemblies 44.9 41.3
Work in-process 8.5 5.3
------ ------
$172.6 $150.7
====== ======
</TABLE>
4 Investments
In September 1995, the Company agreed to acquire Hybritech Inc., a San Diego-
based life sciences and diagnostic company, effective January 2, 1996. The
acquisition will expand the Company's capabilities for the development and
manufacture of high sensitivity immunoassays, including cancer tests. The
acquisition will be accounted for as a purchase.
In May 1995, the Company agreed to acquire Genomyx Corporation of Foster
City, California. Genomyx is a developer and manufacturer of advanced DNA
sequencing products and is expected to complement the Company's biotechnology
business. The acquisition will be accounted for as a step-acquisition.
In March 1995, the Company formed a marketing and service alliance with
BioSepra Inc. (BioSepra), a biochromatography systems manufacturer, to
offer systems for high speed, high resolution separation of biomolecules.
The Company paid $3.0 million for the exclusive rights to market and sell
certain of BioSepra's products.
Also in March 1995, the Company made a $5.0 million investment in Sepracor
Inc. (Sepracor), receiving exchangeable preferred stock and certain rights
in regard to the disposition of Sepracor's shares of its subsidiary, BioSepra.
5 Change in Accounting Principles
Postemployment benefits
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 112 ("SFAS 112") "Employers' Accounting for
Postemployment Benefits". This statement requires the Company to recognize
an obligation for postemployment benefits provided to former or inactive
employees, their beneficiaries and covered dependents after employment
but before retirement. Accordingly, the Company recognized a transition
obligation of $8.1 million and a net expense of $5.1 million (net of tax
benefit of $3.0) as the cumulative effect of the accounting change.
6 Contingencies
Environmental
As previously reported in our 1995 second quarter report on Form 10-Q,
the Company is obligated to contribute to any resolution of a lawsuit
filed in 1991 concerning property the Company sold in 1984. The Company's
obligation arises from its 1990 settlement of earlier litigation between the
Company and the original purchaser. A verdict was rendered in July 1995 in
favor of the original purchaser. No damages or other compensation of any
kind were awarded to the plaintiffs. The plaintiffs have filed a motion
for a new trial and are expected to file an appeal if unsuccessful
in securing a new trial.
Litigation
In September 1995, the Company was served with a lawsuit filed in the
Superior Court of Orange County, California by two of its former employees
alleging breach of contract relating to the commercial development of certain
technology. The plaintiffs seek monetary damages of not less than $150
million and a declaratory judgment terminating certain exclusive licenses
entered into between the plaintiffs and the Company. The Company
believes that the plaintiff's claims are without merit and that the Company
has good and sufficient defenses to each such claim.
As previously reported in our 1994 annual report on Form 10-K, the public
prosecutor in Palermo (Sicily), Italy is investigating the past activities
of officials at a local government hospital and laboratory and representatives
of the principal worldwide companies marketing diagnostic equipment in
Palermo, including the Company's Italian subsidiary (the "Subsidiary"). The
inquiry of the Subsidiary focuses on past leasing practices for the placement
of diagnostic equipment which were common industrywide practices throughout
Italy, but now are alleged to be improper. Recently a court hearing was
scheduled for November 7, 1995 (postponement not uncommon in Italy) in
Palermo for the prosecutor to present evidence of alleged improper conduct
by representatives of these diagnostic companies (including two individuals
from the Subsidiary). The lodging of any formal charges will depend on the
results of the hearing.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in millions, except per share amounts)
Operations
Sales for the third quarter and nine month period ended September 30, 1995
were $229.9 and $665.5, an increase of $12.1 and $26.9 as compared with the
same periods from the prior year. Excluding the impact of changes in foreign
currency exchange rates, third quarter sales were higher by 2% and the nine
months remained comparable to the same period in 1994. Sales for the North
American diagnostic and bioresearch business increased over the prior year.
The international diagnostic and bioresearch markets continue to be impacted
by the European recession and cost containment initiatives in several European
health care systems. The weakness in the international markets, particularly
in Europe, is expected to continue.
Operating income for the third quarter and nine months ended September 30,
1995 before restructuring charges were $27.0 and $74.3, representing an
increase of 7.1% and 8.3% over the same periods in 1994. Cost of sales for
the third quarter and nine months increased over the same periods in the prior
year, but are comparable as a percent of sales. Marketing, general and
administrative expenses in the third quarter and first nine months of 1995
increased, compared to the same period last year, primarily as a result of
increased marketing efforts and foreign currency fluctuations. Research and
development expenses were comparable to the third quarter and first nine
months of last year. After giving effect to its 1995 restructuring charges,
the Company reported operating income of $22.9 and $63.7 for the third quarter
and nine months ended September 30, 1995.
The reorganization and restructuring plan announced in the fourth quarter of
1993 has resulted in year-to-date 1995 savings of about $34 which are mainly
attributable to the reduction of more than 1,100 personnel from 1993. The
Company anticipates savings from the restructuring program to be $45 in 1995,
but not incremental to earnings due to certain transition costs, general
salary and cost increases, as well as fluctuating foreign currencies.
Nonoperating expenses decreased by $1.1 for the third quarter and $2.9 for the
first nine months compared to prior year as a result of foreign currency
exchange gains.
Earnings before income taxes for the third quarter and first nine months
compared to the same period of the prior year, excluding the restructuring
charge, increased by $2.9 and $8.6. Including the restructuring charge, 1995
earnings before taxes were $21.0 for the quarter and $57.5 for the nine
months. The effective tax rate decreased to 34% from 35% in the prior year as
a result of increased income in lower tax rate jurisdictions. Net earnings
for the third quarter and first nine months of 1995 before restructuring
charges and change in accounting principles increased to $16.5 and $44.9 or
$0.58 and $1.57 per share ($0.59 and $1.60 per share before the dilutive
effect of common share equivalents), compared to $14.4 and $38.7, or $0.51 and
$1.38 per share for the prior year.
In the first quarter of 1994, the Company adopted Statement of Financial
Accounting Standards No. 112 ("SFAS 112") "Employers' Accounting for
Postemployment Benefits". This statement requires the Company to recognize a
prior service obligation resulting from the Company's commitment to provide
benefits to former or inactive employees, their beneficiaries and covered
dependents after employment but before retirement. Adoption of SFAS 112
resulted in the Company recording an after tax charge of $5.1 in the first
quarter of 1994.
Net earnings for the third quarter and first nine months of 1995 were $13.9
and $38.0, or $0.48 and $1.32 per share ($0.49 and $1.35 per share before the
dilutive effect of common share equivalents) compared to $11.3 and $29.0 or
$0.40 and $1.03 per share in 1994.
The following tables summarize the impact of the dilutive effect of common
share equivalents, restructuring charges and the cumulative effect of change
in accounting principles on net earnings and earnings per share.
<TABLE>
<CAPTION>
Quarter Ended September 30, 1995 1994
- -------------------------- ----------------- ------------------
Per Per
Shares Amt Share Shares Amt Share
<S> <C> <C> <C> <C> <C> <C>
Net earnings before
restructuring charge and
cumulative effect of change
in accounting principles 28,076 $16.5 $0.59 28,175 $14.4 $0.51
Common share equivalents 615 - (0.01) * - -
------ ----- ----- ------ ----- -----
Net earnings before restructuring
charge and cumulative effect of
change in accounting principles 28,691 16.5 0.58 28,175 14.4 0.51
Restructuring charge, net of tax
benefit 28,691 (2.6) (0.10) 28,175 (3.1) (0.11)
Cumulative effect of change in
accounting principles 28,691 - - 28,175 - -
----- ---- ----- -----
Net earnings 28,691 $13.9 $0.48 28,175 $11.3 $0.40
====== ===== ==== ====== ===== =====
</TABLE>
* Less than 3% dilutive
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1995 1994
- ------------------------------- --------------------- ---------------------
Per Per
Shares Amt Share Shares Amt Share
<S> <C> <C> <C> <C> <C> <C>
Net earnings before
restructuring charge and
cumulative effect of change
in accounting principles 28,074 $44.9 $1.60 28,030 $38.7 $1.38
Common share equivalents 656 - (0.03) * - -
------ ----- ----- ------ ----- -----
Net earnings before restructuring
charge and cumulative effect of
change in accounting principles 28,730 44.9 1.57 28,030 38.7 1.38
Restructuring charge, net of tax
benefit 28,730 (6.9) (0.25) 28,030 (4.6) (0.17)
Cumulative effect of change in
accounting principles 28,730 - - 28,030 (5.1) (0.18)
----- ----- ----- -----
Net earnings 28,730 $38.0 $1.32 28,030 $29.0 $1.03
====== ===== ===== ====== ===== =====
</TABLE>
* Less than 3% dilutive
Financial Condition
For the nine months ended September 30, 1995, the Company had negative cash
flow from operating and investing activities of $56.6. This represents a
decrease in cash flows of $105.3 from the same period in 1994. Contributing to
the decrease was increased pension plan funding, incentive compensation
payments and investments compared to 1994.
The ratio of debt to capitalization at September 30, 1995 was 33.9% compared
to 29.0% at December 31, 1994. The ratio of current assets to current
liabilities at September 30, 1995 of 2.1 is slightly higher than December 31,
1994. The Company believes it has adequate financial resources to meet
expected cash flow requirements for the foreseeable future.
On September 1, 1995, the Company paid a quarterly cash dividend of $0.11 per
share of common stock for a total of $3.1. On October 4, 1995, the Board of
Directors declared a $0.11 per share dividend payable on November 30, 1995 to
shareholders of record on November 10, 1995.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
In September, 1995, the Company was served with a lawsuit filed in the
Superior Court of Orange County, California by two of its former employees
alleging breach of contract relating to the commercial development of certain
technology (Cercek v. Beckman Instruments, Inc.). The plaintiffs seek monetary
damages of not less than $150 million and a declaratory judgment terminating
certain exclusive licenses entered into between the plaintiffs and the
Company. The Company believes that the plaintiffs' claims are without merit
and that the Company has good and sufficient defenses to each such claim. The
Company has retained counsel to defend it and is preparing its defense.
As previously reported in our second quarter report on Form 10-Q, the Company
is obligated to contribute to any resolution of a lawsuit filed by Forest City
Properties Corporation and FC Irvine, Inc. (collectively, "Forest City")
against The Prudential Insurance Company of America ("Prudential") in 1991
concerning property in Irvine, California formerly owned by the Company. The
Company's obligation arises from its 1990 settlement of earlier litigation
between the Company and Prudential concerning the same property.
The trial of this matter was conducted before a jury in Los Angeles County
Superior Court, California in May, June and July, 1995. The case was
submitted to the jury on July 13, 1995. A verdict was rendered by the jury in
favor of Prudential on or about July 28, 1995. No damages or other
compensation of any kind were awarded the plaintiffs. The plaintiffs have
filed a motion for a new trial which is scheduled for hearing in late October,
1995. The plaintiffs are expected to file an appeal if unsuccessful in
securing a new trial.
As previously reported in our 1994 annual report on Form 10-K, the public
prosecutor in Palermo (Sicily), Italy is investigating the past activities of
officials at a local government hospital and laboratory and representatives of
the principal worldwide companies marketing diagnostic equipment in Palermo,
including the Company's Italian subsidiary (the "Subsidiary"). The inquiry of
the Subsidiary focuses on past leasing practices for the placement of
diagnostic equipment which were common industrywide practices throughout
Italy, but now are alleged to be improper.
Recently a court hearing was scheduled for November 7, 1995 (postponement not
uncommon in Italy) in Palermo for the prosecutor to present evidence of
alleged improper conduct by representatives of these diagnostic companies
(including two individuals from the Subsidiary). The lodging of any formal
charges will depend on the results of the hearing. The Subsidiary's Italian
attorney is reviewing documents received from the Palermo prosecutor.
As previously reported in our first quarter report on Form 10-Q, 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. In July 1995
the Company, and a number of other defendants, including Motorola, Inc.,
Siemens Corporation, and the cities of Phoenix and Scottsdale, were served
with another toxic tort action in Maricopa County Superior Court, Arizona
(Wilkins v. Motorola, Inc., et. al.) by a number of residents of the
Phoenix/Scottsdale area.
The suit 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 groundwater
contamination in an area in Scottsdale, Arizona close to a former Company
manufacturing facility. 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.
Item 2. Changes In Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10. Restricted Stock Agreement and Election (Cycle Two -
Economic Value Added Incentive Plan), adopted by the
Company in 1995.
11. Statement re Computation of Per Share Earnings: This
information is set forth in Note 2 Earnings Per Share
of the Condensed Consolidated Financial Statements
included in Part I herein.
15. Independent Accountants' Review Report,
October 20, 1995
27. Financial Data Schedule
b) Reports on Form 8-K
None.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BECKMAN INSTRUMENTS, INC.
(Registrant)
Date: October 25, 1995 by WILLIAM H. MAY
-----------------------
William H. May
Vice President, General
Counsel and Secretary
Date: October 25, 1995 by DENNIS K. WILSON
-----------------------
Dennis K. Wilson
Vice President, Finance
and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
FORM 10-Q, THIRD QUARTER, 1995
Exhibit
Number Description
----------- -------------------------------------------
10. Restricted Stock Agreement and Election (Cycle Two -
Economic Value Added Incentive Plan), adopted by the
Company in 1995.
11. Statement re Computation of Per Share Earnings: This
information is set forth in Note 2 Earnings Per Share
of the Condensed Consolidated Financial Statements
included in Part I herein.
15. Independent Accountants' Review Report,
October 20, 1995
27. Financial Data Schedule
<PAGE>
Exhibit 10
THIS DOCUMENT CONSTITUTES PART OF
A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933.
BECKMAN INSTRUMENTS, INC.
RESTRICTED STOCK AGREEMENT AND ELECTION
(CYCLE TWO - ECONOMIC VALUE ADDED INCENTIVE PLAN)
This Restricted Stock Agreement and Election ("Agreement") is entered into
between Beckman Instruments, Inc., a Delaware corporation (the "Company"), and
_________________________________, an employee of the Company or a Subsidiary
of the Company ("Employee").
RECITALS
A. The Company has established the Beckman Instruments, Inc. Incentive
Compensation Plan of 1990 as amended (the "Plan"), the terms of which are
hereby incorporated by reference and made a part of this Agreement, which
provides for the issuance of shares of the Company's Common Stock, $.10 par
value, subject to certain restrictions thereon;
B. The Company has established the Beckman Instruments, Inc. Economic Value
Added Incentive Plan Cycle Two Beginning FY94 ("Cycle Two Incentive"), with
the Committee administering the Plan approving a Restricted Stock Award
Alternative to any cash payment of the Cycle Two Incentive.
C. Employee has requested that any award determined pursuant to the Cycle
Two Incentive, and the additional premium amount determined pursuant to the
Restricted Stock Award Alternative, be made in the form of the Company's
Common Stock issued under the Plan subject to certain restrictions; and
D. The Committee administering the Plan has determined that it would be to
the advantage and best interest of the Company and its stockholders to issue
the Restricted Stock under the Plan and the terms and conditions provided for
herein to Employee in consideration of past services to the Company or its
Subsidiaries, has accepted Employee's request, has advised the Company
thereof, and has instructed the undersigned officer to cause said Restricted
Stock to be issued;
THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 - Definitions.
Whenever the following terms are used in this Agreement they shall have the
meaning specified below unless the context clearly indicates to the contrary.
"Board" means the Board of Directors of the Company.
"Change of Control" shall be deemed to occur if any of the following events
occur: (A) any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934 as amended (the "Exchange Act"), other
than an employee benefit plan of the Company, or a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding voting
securities; (B) individuals who, as of the date hereof, constitute the Board
of the Company (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of the directors of the Company, as such terms are used in Rule 14a-
11 of Regulation 14A promulgated under the Exchange Act) shall be considered
as though such person were a member of the Incumbent Board of the Company; (C)
the stockholders of the Company approve a merger or consolidation with any
other corporation, other than (1) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of another entity) more than 80% of the combined voting
power of the voting securities of the Company or such other entity outstanding
immediately after such merger or consolidation, or (2) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires 20% or more of the combined
voting power of the Company's then outstanding voting securities; or (D) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets. Notwithstanding the preceding
sentence, a Change of Control shall not be deemed to have occurred if the
"person" described in the preceding sentence is an underwriting syndicate
which has acquired the ownership of 20% or more of the combined voting power
of the Company's then outstanding voting securities solely in connection with
a public offering of the Company's securities.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Organization and Compensation Committee of the
Company's Board of Directors.
"Restricted Stock" shall mean Common Stock of the Company, $.10 par value,
issued under the Plan and the terms of this Agreement and subject to the
Restrictions imposed hereunder.
"Restriction Period" means the twenty-four (24) month period beginning on
the date of issuance of Restricted Stock hereunder and ending on the date that
is twenty-four (24) months from the date the Restricted Stock is issued.
"Restrictions" shall mean the restrictions on sale, transfer or other
disposition and the exposure to forfeiture imposed upon the Restricted Stock
under this Agreement.
"Retirement" means Termination of Employment of Employee due to "Early
Retirement", "Normal Retirement" or "Late Retirement" as such terms are
defined under the provisions of the Beckman Instruments, Inc. Pension Plan, or
if such plan is not applicable to Employee then under the applicable
retirement policy or plan or as determined by the Committee in its discretion.
"Secretary" shall mean the Secretary of the Company.
"Subsidiary" shall mean any corporation in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain then owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
"Termination of Employment" shall mean that the employee-employer
relationship between Employee and the Company or a Subsidiary has ended for
any reason, but excluding any termination where there is a simultaneous
reemployment by the Company or a Subsidiary.
"Total Disability" shall mean that Employee has satisfied the criteria for
determination of disability (without regard to any age requirement) for
extended basic life insurance under the Company's life insurance program;
provided, however, that such determination shall in no way be construed to
mean or imply that Employee is otherwise eligible for extended basic life
insurance.
"Treasurer" shall mean the Treasurer of the Company.
ARTICLE II
ELECTION FOR RESTRICTED STOCK IN LIEU OF CASH
Section 2.1 - Election
Employee hereby irrevocably elects to receive the award, if any, determined
pursuant to the Cycle Two Incentive and the premium described in Section
2.2(b) below, in the form of whole shares of Restricted Stock under a grant
from the Plan subject to the provisions of the Plan and the terms and
conditions herein, in lieu of a cash payment.
Section 2.2 - Acknowledgements
With regard to the election in Section 2.1 above, Employee acknowledges and
agrees as follows:
(a) This election, irrevocable once made, is not effective
unless received by the Company on or before August 1, 1995;
(b) This election to receive Restricted Stock in lieu of
cash payment is made for the full amount of any award under the
Cycle Two Incentive and such amount will be increased by and shall
include a thirty-three and one-third percent (33-1/3%) premium. Such
sum shall then be converted into whole shares of Restricted Stock based
on the closing price of Beckman stock on the last trading day of the
two-year Cycle Two Incentive cycle; and
(c) Amounts which would otherwise result in fractional shares will be paid
in cash on the regular Cycle Two Incentive payment date.
ARTICLE III
ISSUANCE OF RESTRICTED STOCK
Section 3.1 - Issuance of Restricted Stock
In consideration of Employee's agreement to remain in the employ of the
Company or a Subsidiary and for other good and valuable consideration, the
Company agrees to issue to Employee the number of shares of Restricted Stock,
determined pursuant to Section 2.2(b) above and set forth in Schedule A, upon
the terms and conditions set forth in this Agreement. Schedule A shall be
distributed to Employee on or about the regular payment date for the Cycle Two
Incentive. The date of issuance of the Restricted Stock shall be the date
shown on Schedule A.
Section 3.2 - Consideration to Company
As partial consideration for the issuance of Restricted Stock by the
Company, Employee agrees to render faithful and efficient services to the
Company or a Subsidiary with such duties and responsibilities as the Company
shall from time to time prescribe. Nothing in this Agreement or in the Plan
shall confer upon Employee any right to continue in the employ of the Company
or any Subsidiary or shall interfere with or restrict in any way the rights of
the Company and its Subsidiaries, which are hereby expressly reserved, to
terminate employment of Employee at any time for any reason, with or without
cause .
ARTICLE IV
RESTRICTIONS
Section 4.1 - Forfeiture of Restricted Stock
(a) All shares of Restricted Stock shall be forfeited to the Company
immediately upon a voluntary Termination of Employment or an Early Retirement
occurring within twenty-four (24) months from the date of issuance; provided,
however, that where Employee terminates employment due to Early Retirement and
has made a prior Code Section 83(b) election, no forfeiture shall occur but
Restrictions on sale, transfer or other disposition pursuant to Sections 4.2
and 5.2 will remain in effect for any remainder of the Restriction Period.
(b) Notwithstanding Section 4.1(a) above, no shares shall be forfeited to
the Company in the event of a Termination of Employment due to Normal or Late
Retirement, Total Disability, or death. In the event of an involuntary
Termination of Employment, for cause or otherwise, no shares shall be
forfeited but the restrictions on sale, transfer or other disposition pursuant
to Sections 4.2 and 5.2 shall remain in effect for any remainder of the
Restriction Period.
Section 4.2 - Legend
Certificates representing shares of Restricted Stock issued pursuant to this
Agreement shall, until all restrictions lapse and new certificates are issued
pursuant to Section 4.3, bear the following legend:
"The shares represented by this certificate are subject
to reacquisition by Beckman Instruments, Inc., and such
shares may not be sold or otherwise transferred except
pursuant to the provisions of the Restricted Stock
Agreement by and between Beckman Instruments, Inc. and
the registered owner of such shares."
Section 4.3 - Lapse of Restrictions
(a) If no forfeiture pursuant to Section 4.1(a) has occurred, the
Restrictions shall lapse with respect to 100% of the shares of Restricted
Stock on the date which is twenty-four (24) months from the date the
Restricted Stock is issued.
(b) Notwithstanding subsection 4.3(a) above, all Restrictions will lapse
with respect to 100% of the shares of Restricted Stock in the following
events: (i) A Termination of Employment by death, Normal or Late Retirement
(but not Early Retirement) or Total Disability; (ii) Death or Total Disability
of Employee during the Restriction Period where during the Restriction Period
Employee had terminated employment due to Early Retirement and had made a
prior Code Section 83(b) election or where an involuntary Termination of
Employment had previously occurred during the Restriction Period; or (iii) A
Change of Control of the Company or other occurrence of events as described in
Sections 4.4 or 4.5 below if the Committee deems the lapse of Restrictions
appropriate.
(c) As soon as practicable, the Company shall, upon the lapse of the
Restrictions, cause new certificates to be issued and delivered to Employee or
his or her legal representative, free from the legend provided for in Section
4.2. Notwithstanding the foregoing, no such new certificate shall be delivered
to Employee or his or her legal representative unless and until Employee or
such legal representative shall have paid to the Company (or other employer
corporation), in cash, the full amount of all federal, state or local income
tax withholdings and other employment taxes applicable to the taxable income
of Employee resulting from the lapse of Restrictions.
Section 4.4 - Merger, Consolidation, Exchange, Acquisition,
Liquidation or Dissolution
In the event that the Company is succeeded by another corporation in a
reorganization, merger, consolidation, acquisition of property or stock,
separation or liquidation, the Board or the Committee may, in its absolute
discretion and on such terms and conditions as it deems appropriate, provide,
by a resolution adopted prior to the occurrence of the reorganization, merger,
consolidation, acquisition of property or stock, separation, or liquidation,
that (i) for some period of time prior to such event, all Restrictions on such
shares of Restricted Stock shall lapse or expire, (ii) obligations of the
Company in relation to such shares of Restricted Stock shall be assumed by
such successor corporation, (iii) such shares of Restricted Stock shall be
canceled and replaced by substitute shares of Restricted Stock of the
successor corporation, or (iv) such sharesof Restricted Stock shall be
forfeited to the Company in consideration for a cash payment in an amount to
be determined by the Committee.
Section 4.5 - Restrictions on New Shares
In the event that the outstanding shares of the Company's Common Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company or of another corporation pursuant to a merger of
the Company into another corporation, or the exchange of all or substantially
all of the assets of the Company for the securities of another corporation, or
the acquisition by another corporation of 80% or more of the Company's then
outstanding voting stock, or the liquidation or dissolution of the Company, or
a stock split-up or stock dividend, such new or additional or different shares
or securities which are attributable to Employee in his or her capacity as the
owner of the Restricted Stock, shall be considered to be Restricted Stock and
shall be subject to all of the Restrictions, unless the Committee provides,
pursuant to Section 4.4 or Section 4.3(b), for the expiration of the
Restrictions on the shares of Restricted Stock underlying the distribution of
the new or additional shares or securities.
ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and this Agreement
and to adopt such rules for the administration, interpretation and application
of the Plan as are consistent therewith and to interpret or revoke any such
rules. Any dispute or disagreement which shall arise under or as a result of
or pursuant to this Agreement or the grant or issuance of Restricted Stock
shall be determined by the Committee in its sole discretion. All actions taken
and all interpretations and determinations made by the Committee in good faith
shall be final, binding and conclusive upon Employee, the Company and all
other interested persons. No member of the Committee shall be personally
liable for any action, determination, or interpretation made in good faith
with respect to the Plan or the Restricted Stock.
Section 5.2 - Restricted Stock Not Transferable
Neither the Restricted Stock nor any interest or right therein or part
thereof shall be liable for the debts, contracts, or engagements of Employee
or his or her successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy) and any attempted disposition
of such Restricted Stock, interest or right therein or part thereof, shall be
null and void and of no effect; provided, however, that this Section 5.2 shall
not prevent transfers by will or by the applicable laws of descent and
distribution.
Section 5.3 - Conditions to Issuance of Stock Certificates
The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock pursuant to this Agreement prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on which
such class of stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Committee shall, in its absolute
discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The compliance with all other requirements, including but not limited to
the payment or withholding of income, employment or other taxes, as
legally required or which the Committee shall, in its absolute
discretion, determine to be necessary or advisable.
(e) The lapse of such reasonable period of time as the Committee may from
time to time establish for reasons of administrative convenience.
Section 5.4 - Escrow
The Treasurer or such other escrow holder as the Committee may appoint shall
retain physical custody of the certificates representing the Restricted Stock,
including shares of Restricted Stock issued pursuant to Section 4.5, until all
of the Restrictions expire or shall have been removed; provided, however, that
in no event shall Employee retain physical custody of any certificates
representing Restricted Stock issued to him or her.
Section 5.5 - Notices
Any notice required or permitted hereunder shall be effective when addressed
to the Company in care of its Secretary at 2500 Harbor Boulevard, Fullerton,
CA. 92634-3100, or to the Employee at the Employee's last known address shown
on Company records, as the case may be, and deposited, postage prepaid and
registered or certified, in the United States mail. Either party may, by
notice to the other given in the above-described manner, change such party's
address for future notices. Any notice which is required to be given to
Employee shall, if Employee is then deceased, be given to Employee's personal
representative if such representative has previously informed the Company of
his or her status and address by written notice in the manner described in
this Section.
Section 5.6 - Rights as Stockholder
Except as otherwise provided herein, Employee shall have all
the rights of a stockholder with respect to the Restricted Stock,
including the right to vote the Restricted Stock and the right to
receive all dividends or other distributions paid or made with respect to
the Restricted Stock.
Section 5.7 - Entire Agreement; Modification
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any and all other written or oral agreements, understandings,
representations or proposals which may have been made prior to or concurrently
with the execution of the Agreement. No modification or amendment of this
Agreement or any additional agreement concerning Restricted Stock will take
effect unless it is approved by the Committee and is in writing and signed by
Employee and the Vice President of Human Resources. Any modification,
amendment, or additional agreement must expressly state the intention of the
parties to modify or supplement the terms of this Agreement.
Section 5.8 - Receipt of Documents
Employee acknowledges the receipt of Cycle Two Incentive plan with
restricted stock award alternative, the Incentive Compensation Plan of 1990 as
amended and restated May 6, 1992, Plan prospectus appendix, and tax
information. Employee acknowledges that he has been encouraged to seek tax and
securities counsel before making the election herein.
Section 5.9 - Titles
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
EMPLOYEE BECKMAN INSTRUMENTS, INC.
____________________________ By ______________________________
Vice President - Human Resources
Date:_______________________
Exhibit 15
KPMG Peat Marwick LLP
Certified Public Accountants
Orange County Office
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
Independent Accountants' Review Report
The Stockholders and Board of Directors
Beckman Instruments, Inc:
We have reviewed the condensed consolidated balance sheet of Beckman
Instruments, Inc. and subsidiaries as of September 30, 1995, and the related
condensed consolidated statements of earnings and cash flows for the
three-month and nine-month periods ended September 30, 1995 and 1994.
These condensed consolidated financial statements are the responsibility of
the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an option.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Beckman Instruments, Inc. and
subsidiaries as of December 31, 1994, and the related consolidated statements
of operations and cash flows for the year then ended (not presented herein);
and in our report dated January 19, 1995, we expressed an unqualified opinion
on those consolidated financial statements. In our opinion, the information
set forth in the accompanying condensed consolidated balance sheet from which
it has been derived.
As discussed in Note 5 to the condensed consolidated financial statements,
the Company changed its method of accounting for postemployment benefits in
1994.
(KPMG Peat Marwick LLP)
Orange County, California
October 20, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet and the Condensed Consolidated
Statement of Earnings and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
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