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, 1996
Commission File Number 001-10109
BECKMAN INSTRUMENTS, INC.
2500 Harbor Boulevard, Fullerton, California 92834
(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. (X)
Aggregate market value of voting stock held by non-affiliates of
the registrant as of January 31, 1997: $1,143,263,549.
Common Stock, $.10 par value, outstanding as of January 31, 1997:
28,943,381 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, 1996 Part I and Part II
Proxy Statement for the 1997 Annual
Meeting of Stockholders to be held on
April 3, 1997 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
and test kits that make laboratories more efficient by
simplifying and automating chemistry and biology based analytical
procedures. 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 1996 approximately
63 percent of total sales were for diagnostic applications,
principally in hospital laboratories, while approximately 37
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. Approximately 50% 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 subsidiary
of SmithKline Beckman until 1989 when it was divested as part of
a transaction involving the merger of SmithKline Beckman and
Beecham Group p.l.c. ("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 processing and measurement.
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,
physicians' offices 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 1996 the worldwide market for the types of products the
Company provides was about $6 billion. Slightly over one-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
1996 1995 1994
---- ---- ----
Separation Processes 22 26 28
Automated General Chemistry
for Clinical Diagnostics 38 41 40
Special Chemistry Applications
for Clinical Diagnostics 25 19 20
Synthesis and Sample Preparation/Handling
DNA Synthesizers
DNA synthesizers automate the process of making synthetic
oligonucleotides from organic chemicals. The Beckman Oligo
Series 1000 DNA Synthesizers include a single user one-column
system and a multi-user eight column system. Both systems reduce
the time required for synthesis and inform the user of synthesis
progress by providing reaction and reagents status throughout the
process. In 1995 the Company introduced its UltraFAST synthesis
chemistry in a packaging which is also compatible with certain
competitive DNA synthesizers. Oligo systems sell in the $18,000
to $30,000 price range.
Biorobotic 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
workstations handle multiple samples in parallel and may be
equipped with a photometer for detection purposes. The second
generation Biomek 2000 workstation includes an easy-to-use
Windows*-based BioWorks(TM) operating system that can be easily
programmed to automate complex and repetitive tasks, including
sample preparation for DNA sequencing and automated screening of
chemical libraries for new pharmaceutical drugs. Several new
applications and tools were added to the Biomek during 1996,
including a kit to produce samples of pure DNA from plasmids and
a high density replication tool to speed up certain processes by
using new 384-well microtitre plates. Biomek systems range in
price from $40,000 to over $80,000. (*Windows is a trademark of
Microsoft Corporation.)
In December 1996 the Company acquired the laboratory
robotics division of Sagian Inc. of Indianapolis, Indiana. By
combining Sagian's scheduling software and robotics with its own
biorobotics systems, the Company enhanced its ability to serve
the pharmaceutical industry's need for high-throughput screening
(HTS) of candidate compounds for new drugs. Such systems
typically sell for $200,000 to $400,000.
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, which can exceed 800,000 times the force of
gravity, 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 unique rotor, tube and adapter
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(R) family of centrifuges being introduced by the
Company provides a revolutionary high-torque drive system which
accelerates and brakes in half the time of conventional high-
speed drives, thereby significantly reducing the time required to
process typical samples. 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) Nouveau HPLC manufactured by Beckman is designed
to address the needs of the pharmaceutical, biotechnology, food,
beverage and agricultural industries as well as those of life
science researchers in academia. The system is modular, allowing
it to be configured for a wide range of applications. Beckman's
HPLC systems typically sell for $20,000 to $50,000.
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 discrimination power
of traditional electrophoresis with the speed of HPLC. With
several detection options, the result is an automated system for
high speed, high sensitivity separation of a wide variety of
compounds. In 1995 a new laser source for fluorescence detection
and several new chemistry kits were introduced by the Company to
expand the range of applications for capillary electrophoresis in
DNA, protein and pharmaceutical analysis. P/ACE systems typically
sell for $40,000 to $60,000.
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.
Protein Separation and DNA Sequencing
In 1995 the Company formed a marketing and service alliance
with BioSepra Inc. (BioSepra), a biochromatography systems
manufacturer, which expands the Company's biotechnology product
line with systems that provide high speed, high resolution
separation of biomolecules. To further broaden these product
lines, in October 1996 the Company completed its acquisition of
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.
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. In 1995, the DU(R) 640B, a flexible and affordable
bio-spectrophotometer system, was introduced to address the
specific needs in molecular biology laboratories and
biotechnology companies. 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 by scintillation counting. Beckman
manufactures scintillation counters that incorporate
sophisticated software and system features that combine accurate
measurement with user convenience. The systems sell in the
$16,000 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 line was developed in response to changes in
reimbursement policies for hospital and clinical laboratories
that required them to be more efficient. The SYNCHRON 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 CX(R)3 analyzer,
determines the concentration of eight of the most commonly
measured analytes. The SYNCHRON CX3 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 CX4CE, CX5CE, and CX7 are computer enhanced
models offering bi-directional communications with laboratory
information systems. The SYNCHRON series was further extended in
1995 by the 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 stand alone electrolyte analyzer, the
SYNCHRON EL-ISE(R), that provides automated analysis of patient
electrolyte concentrations such as sodium, potassium, chloride,
calcium and lithium. Beckman also offers a family of low cost
instruments that perform glucose, blood urea nitrogen or
creatinine analysis.
Special Chemistry Applications For Clinical Diagnostics
Immunochemistry Systems
The IMMAGE(TM) immunochemistry system, introduced at the
1996 International MEDICA Trade Show, represents an improved
technology, high throughput analyzer for specific proteins,
various immunologic markers and therapeutic drugs. This system
provides automated random access testing which allows the
operator to mix samples at random, eliminating the need to
analyze in batches. The system is expected to sell for $70,000
to $90,000.
The IMMAGE(TM) system builds on the extensive installed base
of our current immunochemistry analyzer, the ARRAY(R) 360 protein
and therapeutic drug monitoring system. The ARRAY 360 was the
world's first computer enhanced, positive sample identification,
bi-directional immunochemistry analyzer for determination of
specific proteins and therapeutic drugs.
In January 1996, the Company acquired Hybritech Incorporated
("Hybritech"), a San Diego based life sciences and diagnostics
company. The acquisition expanded the Company's capabilities for
the development and manufacture of high sensitivity immunoassays,
including cancer tests. Chief among these products is a test for
prostate specific antigen (PSA), utilized as an aid in the
detection (in conjunction with digital rectal examination) and
monitoring of prostate cancer. Currently this is the only FDA
approved test for such detection. Additionally, during 1996 the
Company obtained clearance to use its Ostase(R) assay for the
management of postmenopausal osteoporosis, making it the first
blood test cleared for such use.
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.
In 1995 the Company introduced the first capillary
electrophoresis system specifically designed for the clinical
laboratory, the Paragon CZE(TM) 2000. This system is designed to
fully automate the manual and somewhat tedious conventional
electrophoresis analysis of serum protein electrophoresis (SPE)
and immunofixation electrophoresis (IFE). Positioned to
complement the Paragon gels and the Appraise, the Paragon CZE
2000 is targeted at high volume electrophoresis labs worldwide.
Point of Care - Rapid Test Products
The Company also produces single use self-contained
diagnostic test kits for use in physicians' offices, clinics,
hospitals and other medical settings. The Hemoccult(R) product
line is used as an aid in screening for gastrointestinal disease,
most importantly colorectal cancer. In 1994 the Company
introduced the FlexSure(R) HP test kit, a test used as an aid in
the diagnosis of H.pylori infection which is associated with
several gastrointestinal diseases, including peptic ulcers and
gastric cancer. A convenient whole blood version of the
FlexSure(R) HP was launched in 1996. Under terms of a 1995
agreement, Abbott Laboratories began worldwide marketing and
distribution of the H.pylori test manufactured by the Company
under the name FlexPack HP. In addition, through its Hybritech
subsidiary, the Company markets the ICON(R) test kits featuring a
high sensitivity pregnancy test widely used by health care
practitioners.
Competition
The markets for the Company's products are highly
competitive, with many companies participating in one or more
portions of the market. Competitors in the clinical laboratory
market include Bayer Diagnostics, Dade International, Inc.,
Hitachi LTD./Boehringer Mannheim GmbH collaboration, Hoechst
Corporation (Behring Diagnostics Division), Johnson & Johnson and
Abbott Laboratories. Competitors focused more directly on life
sciences include Amersham International plc, Bio-Rad
Laboratories, Inc., The Perkin-Elmer Corporation, Pharmacia
Biotech AB, and Sorvall Products LP. 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, product bundling to
meet multiple instrument needs, 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 and Development
The Company's new products originate from four sources:
internal research and development ("R&D") 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 R&D teams are skilled in optics, chemistry,
electronics, software, mechanical and other engineering
disciplines, 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,
advanced electrophoresis technologies, automated sample
processing and information technologies
The Company's R&D expenditures for fiscal years 1996, 1995,
and 1994 were $108.4 million, $91.7 million and $91.5 million,
respectively. Management intends to maintain the level of the
Company's R&D spending in approximately the same relative range
of investment.
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, 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 to its customers, principally those
used 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 R&D efforts, the Company has an active patent
protection program which includes more than 500 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, when
fully implemented, require regulatory review and approval of
quality assurance protocols for the Company's clinical reagent
products. 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 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 and service
subsidiaries have also been certified, including those located in
Australia, Austria, Canada, France, Germany, Italy, The
Netherlands, Poland, 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.
Medicare reimbursement of inpatient capital costs incurred
by a hospital (to the extent of Medicare utilization) is in a 10-
year transition period begun in 1991 from the "capital cost pass-
through" payment methodology to a "prospective DRG based capital"
payment methodology. 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 1987 soil and groundwater contamination was discovered on
property in Irvine, California (the "property") formerly owned by
the Company. In 1988 The Prudential Insurance Company of America
("Prudential"), which purchased the property from the Company,
filed suit against the Company in U.S. District Court in
California for recovery of costs and other alleged damages with
respect to the soil and groundwater contamination. 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.
Soil and groundwater remediation have been in process since
1988. 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 and Prudential continued to operate a
groundwater treatment system throughout 1996.
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 6,100 persons throughout the world, including
approximately 4,500 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 11 Business Segment Information
of the Consolidated Financial Statements of the Company's Annual
Report to Stockholders for the year ended December 31, 1996.
Item 2. Properties
The Company's primary instrument assembly and manufacturing
facilities are located in Fullerton, Brea, and Palo Alto,
California. Component manufacturing support facilities for parts
and electronic subassemblies are located in Fullerton and
Porterville, California. An additional manufacturing facility is
located in Galway, Ireland. Reagents are manufactured in
Carlsbad, San Diego and Palo Alto, 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. A
portion of the Company's laboratory robotics operations (Sagian)
are conducted in leased facilities in Indianapolis, Indiana and
some of its DNA sequencing activities are performed in leased
facilities in Foster City, California.
All U.S. manufacturing facilities, including land and
buildings, are owned by the Company with the exception of
Allendale, Foster City, Indianapolis, San Diego 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 component production facilities for the Company also include
plastics molding 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, Frankfurt, Germany
and Paris, France. 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 1995 a lawsuit was filed against
the Company 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. 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 discovery is in progress. The
Company does not believe that any liability resulting from this
lawsuit will have a material adverse effect on its operations or
financial position.
Through its Hybritech acquisition the Company obtained a
patent, referred to as the Tandem Patent, that generates
significant royalty income. The Tandem Patent is involved in an
interference action in the U.S. Patent and Trademark Office with
a patent application owned by La Jolla Cancer Research Foundation
(the "Foundation"). If the Foundation wins the interference, the
Company would lose the Tandem Patent and the royalty income, and
a new patent would issue to the Foundation covering those
products. The Company believes it has the stronger case and will
prevail and does not expect this matter to have a material
adverse effect on its operations or financial position.
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 subsequently 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 was conducted in 1995, resulting in
a jury verdict in favor of Prudential. The Court subsequently
granted Forest City's motion for a new trial which Prudential has
appealed. The appeal is not expected to be heard for some time
because of the appellate court's backlog. Although the outcome
of this 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, since 1992 five 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 (relating to a former Company manufacturing site) 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 material effect on the Company's
operations or financial position. These suits are currently in
the discovery phase. Preliminary settlement overtures were
received from the plaintiffs in 1996 but the parties remain far
apart.
(* 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), Ford v. Motorola, Inc. et al (filed June
1994), and Wilkins v. Motorola, Inc., et. al. (filed July 1995).)
As previously reported, the public prosecutor in Palermo
(Sicily), Italy is investigating the activities of officials at a
local government hospital and laboratory as well as
representatives of the principal worldwide companies marketing
diagnostic equipment in Palermo, including the Company's Italian
subsidiary (the "Subsidiary"). The inquiry focuses on past
leasing practices for placement of diagnostic equipment which
were common industry-wide practices throughout Italy, but now are
alleged to be improper.
The Company believes the prosecutor's evidence is weak and
insufficient to support a criminal conviction against certain
identified employees (the Subsidiary is not a defendant). The
Court has appointed economic experts to evaluate and present a
comprehensive economic report on the leasing practices of the
industry. Although it is very difficult to evaluate the
political climate in Italy and the activities of the Italian
public prosecutors, 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.
Executive Officers of the Company
The following is a list of the executive officers of the
Company as of February 7, 1997, 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, 63, Chairman Mr. Rosso has been Chief
of the Board and Chief Executive Officer of the
Executive Officer Company since 1988 and
Chairman of the Board since
1989. He served as the
Company's 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 American
Health Properties, Inc. He 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, 55, Director, Mr. Wareham has been President
President, and Chief Operating and Chief Operating Officer of
Officer the Company since 1993. He
served as the Company's Vice
President, Diagnostic Systems
Group from 1984 to 1993. Prior
thereto, he had been President
of Norden Laboratories, Inc.,
a wholly owned subsidiary of
SmithKline Beckman engaged in
developing, manufacturing and
marketing veterinary
pharmaceuticals and vaccines.
Mr. Wareham first joined
SmithKline Corporation, a
predecessor of SmithKline
Beckman, in 1968. He is a
director of the Little Rapids
Corporation and the Health
Industry Manufacturers
Association. Mr. Wareham has
been a director of the Company
since 1993.
Dennis K. Wilson, 61, Vice Mr. Wilson has been Vice
President, Finance and Chief President, Finance and Chief
Financial Officer Financial Officer of the
Company since 1993. He served
as 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, 46, Vice Mr. Glover has been Vice
President and Controller President and Controller of
the Company since 1993. From
1989 until assuming his
current position, he was Vice
President, Controller -
Diagnostic Systems Group. Mr.
Glover joined the Company in
1983, serving in several
management positions,
including a two-year term at
Allergan, Inc., then a Company
affiliate. Prior to 1983, he
held management positions with
KPMG Peat Marwick and another
Fortune 500 Company.
Fidencio M. Mares, 50, Vice Mr. Mares was named Vice
President, Human Resources President, Human Resources of
the Company in 1995. Prior
thereto he had been President
of The Gas Company of Hawaii.
Before that he was Senior Vice
President of Administration
and Human Resources for
Pacific Resources, Inc.,
Corporate Wage and Salary
Manager and Corporate Human
Resources Services Manager for
Getty Oil Company/Texaco,
Inc., and held various human
resources managerial positions
at Southern California Edison.
William H. May, 54, 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.
Bruce A. Tatarian, 48, Vice Mr. Tatarian was named Vice
President, Field Operations - President, Field Operations -
Emerging Markets Emerging Markets of the
Company in 1995. He had been
Vice President, Bioresearch
Commercial Operations
International of the Company
since 1994. Prior thereto, he
had been Vice President,
Marketing Operations for the
Bioanalytical Systems Group
since 1991. From 1990 to 1991
he had been Vice President -
Manager, Analytical Business
Unit. 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, 66, Vice Mr. Torrellas was named Vice
President, Field Operations - President, Field Operations -
North America/Europe North America/Europe, of the
Company in 1995. He had been
Vice President, Diagnostic
Commercial Operations of the
Company since 1994. Prior
thereto, he had been Vice
President, International
Operations for the Diagnostic
Systems Group since 1985. Mr.
Torrellas first joined the
Company in 1977. He is a
director of The World Trade
Center Association of Orange
County and of the California
Manufacturing Technology
Center. He is also a member
of the Board of Visitors of
the University of California
at Irvine, College of
Medicine.
Albert R. Ziegler, 58, Vice Mr. Ziegler has been Vice
President, Diagnostics President, Diagnostics
Development Center Development Center of the
Company since 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, 40, Treasurer Mr. Glyer has been Treasurer
of the Company since 1993. In
1995 he additionally assumed
the position of Director,
Corporate Business
Development. 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 section entitled "QUARTERLY
INFORMATION (Unaudited)" of the Company's Annual Report to
stockholders for the year ended December 31, 1996. During 1996
the Company paid four consecutive quarterly dividends of $.13 per
share of common stock, for a total of $.52 per share for the
year. During 1995 the Company paid four consecutive quarterly
dividends of $.11 per share of common stock, for a total of $.44
per share for the year. Under the terms of the Company's
revolving credit agreement, which expires on September 30, 1999,
aggregate dividend payments are limited to the sum of $45 million
and 30% of the consolidated cumulative net earnings of the
Company from June 30, 1992. To date this limitation has not had
an impact on the Company's dividends and is not expected to have
an impact in the foreseeable future. In addition, as of January
31, 1997, there were approximately 8,642 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
"SELECTED FINANCIAL INFORMATION" of the Company's Annual Report
to Stockholders for the year ended December 31, 1996.
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, 1996.
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 INFORMATION (Unaudited)" of the Company's Annual Report
to Stockholders for the year ended December 31, 1996.
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
None.
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 3, 1997 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 3, 1997 entitled "EXECUTIVE
COMPENSATION", excluding those sections entitled "Organization
and Compensation Committee Report on Executive Compensation" and
"Performance Graph".
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 3, 1997 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 3, 1997 entitled
"BOARD OF DIRECTORS INFORMATION, Compensation Committee
Interlocks and Insider Participation."
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 (incorporated by
reference to Exhibit 3.2 of the Company's Annual
Report to the Securities and Exchange Commission
on form 10-K for the fiscal year ended December
31, 1994, File No. 001-10109).
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).
4.5 Amendment 1995-1 to the Company's Savings
and Investment Plan, adopted December 20,
1995, filed in connection with the Form S-8
Registration Statement filed with the Securities
and Exchange Commission on September 1, 1992 and
Amendment No. 1 thereto filed December 17, 1992,
File No. 33-51506 (incorporated by reference to
Exhibit 4.5 of the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K
for the fiscal year ended December 31, 1995, File
No. 001-10109).
4.6 Amendment 1996-1 to the Company's Savings
and Investment Plan, adopted December 5,
1996, filed in connection with the Form S-8
Registration Statement filed with the Securities
and Exchange Commission on September 1, 1992 and
Amendment No. 1 thereto filed December 17, 1992,
File No. 33-51506.
4.7 Senior Indenture between the Company and The
First National Bank of Chicago as Trustee, dated
as of May 15, 1996, filed in connection with
the Form S-3 Registration Statement filed with the
Securities and Exchange Commission on April 5,
1996, File No. 333-02317 (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 June 30, 1996, File No. 001-10109).
4.8 7.05% Debentures Due June 1, 2026, filed in
connection with the Form S-3 Registration
Statement filed with the Securities and Exchange
Commission on April 5, 1996, File No. 333-02317
(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 June 30, 1996, 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 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).
10.3 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).
10.4 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).
10.5 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).
10.6 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).
10.7 Trust Agreement between the Company and
The First National Bank of Chicago, as Trustee,
for assistance in meeting stock-based obligations
of the Company, dated as of May 31, 1995
(incorporated by reference to Exhibit 10.7 of the
Company's Annual Report to the Securities and
Exchange Commission on Form 10-K/A for the fiscal
year ended December 31, 1995, File No. 001-10109).
* 10.8 The Company's Executive Incentive Plan,
adopted by the Company in 1996 (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 March
31, 1996, File No. 001-10109).
* 10.9 Amendment No. 1 to the Company's
Executive Incentive Plan, adopted in 1996.
* 10.10 The Company's Executive Incentive Plan,
adopted by the Company in 1995 (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 June 30, 1995, File No. 001-10109).
* 10.11 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).
* 10.12 Amendment 1996-1 to the Company's Incentive
Compensation Plan of 1990, dated October
11, 1996, filed in connection with the Form S-8
Registration Statement filed with the Securities
and Exchange Commission on August 5, 1993, File
No. 33-66990 (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, 1996,
File No. 001-10109).
* 10.13 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).
* 10.14 Restricted Stock Agreement and Election
(Cycle Two - Economic Value Added Incentive Plan),
adopted by the Company in 1995 (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
September 30, 1995, File No. 001-10109).
* 10.15 Restricted Stock Agreement and Election
(Cycle Three - Economic Value Added Incentive
Plan), adopted by the Company in 1996.
* 10.16 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).
* 10.17 Amendment 1995-1 to the Company's Supplemental
Pension Plan, adopted by the Company in 1995,
effective as of October 1, 1993.
* 10.18 Amendment 1996-1 to the Company's Supplemental
Pension Plan, dated as of December 9, 1996.
* 10.19 Amendment 1996-1 to the Company's Stock
Option Plan for Non-Employee Directors, dated
October 11, 1996 and effective November 1, 1996
(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, 1996, File No. 001-10109).
* 10.20 The Company's Stock Option Plan for Non-
Employee Directors, amended and restated as of
November 1, 1996, filed in connection with the
Form S-8 Registration Statements filed with the
Securities and Exchange Commission on November 6,
1989, File No. 33-31862, and on August 5, 1993,
File No. 33-66988.
* 10.21 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).
* 10.22 Agreement Regarding Retirement Benefits of
Arthur A. Torrellas, adopted December 1, 1993
and 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).
* 10.23 Amendment to the December 1, 1993 Agreement
Regarding Retirement Benefits of Arthur A.
Torrellas, dated as of May 30, 1995, between
the Company and Arthur A. Torrellas (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 June 30, 1995, File No. 001-10109).
* 10.24 Second Amendment to the December 1, 1993 Agreement
Regarding Retirement Benefits of Arthur A.
Torrellas, dated as of December 16, 1996,
between the Company and Arthur A. Torrellas.
* 10.25 Agreement Regarding Retirement Benefits of
Albert Ziegler, dated June 16, 1995, between
the Company and Albert Ziegler (incorporated by
reference to exhibit 10.22 of the Company's Annual
Report to the Securities and Exchange Commission
on Form 10-K/A for the fiscal year ended December
31, 1995, File No. 001-10109).
* 10.26 Agreement Regarding Retirement Benefits of
Fidencio M. Mares, adopted and dated April 30,
1996, between the Company and Fidencio M. Mares
(incorporated by reference to Exhibit 10.3 of the
Company's Quarterly Report to the Securities and
Exchange Commission on Form 10-Q for the quarterly
period ended June 30, 1996, File No. 001-10109).
* 10.27 Beckman Instruments, Inc. Deferred Directors'
Fee Program, adopted by the Company November 30,
1994 (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, 1994, File No. 001-10109).
* 10.28 Amendment 1996-1 to the Company's Deferred
Directors' Fee Program, dated October 11,
1996 and effective November 1, 1996 (incorporated
by reference to Exhibit 10.3 of the Company's
Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarterly period
ended September 30, 1996, File No. 001-10109).
10.29 The Company's Employees' Stock Purchase Plan,
amended and restated as of November 1, 1996,
filed in connection with the Form S-8 Registration
Statement filed with the Securities and Exchange
Commission on December 19, 1995, File No. 33-65155.
10.30 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).
10.31 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).
10.32 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).
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, 1996.
13. WORDS ON NUMBERS Section of the Company's Annual
Report to Stockholders for the year ended December
31, 1996.
21. Subsidiaries.
23. Consent of KPMG Peat Marwick LLP,
February 12, 1997.
27. Financial Data Schedule.
(b) Reports on Form 8-K During Fourth Quarter ended
December 31, 1996.
No Reports on Form 8-K were filed during the quarter ended
December 31, 1996.
<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 17, 1997
are incorporated by reference to the section entitled "WORDS ON
NUMBERS" of the Company's Annual Report to Stockholders for the
year ended December 31, 1996.
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, 1996 is
set forth in Note 12 Supplementary Information of the "NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS" of the Company's Annual Report
to Stockholders for the year ended December 31, 1996. 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 6, 1997 By /s/ 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
/s/Louis T. Rosso Executive Officer)
Louis T. Rosso February 6, 1997
President,
Chief Operating Officer
/s/John P. Wareham and Director
John P. Wareham February 6, 1997
Vice President, Finance
and Chief Financial Officer
/s/D. K. Wilson (Principal Financial Officer)
Dennis K. Wilson February 6, 1997
Vice President and
Controller (Principal
/s/James T. Glover Accounting Officer)
James T. Glover February 6, 1997
/s/Earnest H. Clark, Jr. Director February 6, 1997
Earnest H. Clark, Jr.
/s/Hugh K. Coble Director February 6, 1997
Hugh K. Coble
<PAGE>
Signature Title Date
--------- ----- ----
___________________ Director February _, 1997
Carolyne K. Davis, Ph.D.
/s/Dennis C. Fill Director February 6, 1997
Dennis C. Fill
/s/Charles A. Haggerty Director February 6, 1997
Charles A. Haggerty
/s/Gavin Herbert Director February 6, 1997
Gavin S. Herbert
/s/William N. Kelley Director February 6, 1997
William N. Kelley, M.D.
/s/Francis P. Lucier Director February 6, 1997
Francis P. Lucier
/s/C. Roderick O'Neil Director February 6, 1997
C. Roderick O'Neil
/s/Betty Woods Director February 6, 1997
Betty Woods
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- -------
4.6 Amendment 1996-1 to the Company's Savings and
Investment Plan, adopted December 5, 1996,
filed in connection with the Form S-8
Registration Statement filed with the
Securities and Exchange Commission on September
1, 1992 and Amendment No. 1 thereto filed
December 17, 1992, File No. 33-51506.
10.9 Amendment No. 1 to the Company's Executive
Incentive Plan, adopted in 1996.
10.15 Restricted Stock Agreement and Election (Cycle
Three - Economic Value Added Incentive Plan),
adopted by the Company in 1996.
10.17 Amendment 1995-1 to the Company's Supplemental
Pension Plan, adopted by the Company in 1995,
effective as of October 1, 1993.
10.18 Amendment 1996-1 to the Company's Supplemental
Pension Plan, dated as of December 9, 1996.
10.20 The Company's Stock Option Plan for Non-Employee
Directors, amended and restated as of November
1, 1996, filed in connection with the Form S-8
Registration Statements filed with the
Securities and Exchange Commission on November
6, 1989, File No. 33-31862, and on August 5,
1993, File No. 33-66988.
10.24 Second Amendment to the December 1, 1993 Agreement
Regarding Retirement Benefits of Arthur A.
Torrellas, dated as of December 16, 1996,
between the Company and Arthur A. Torrellas.
10.29 The Company's Employees' Stock Purchase Plan,
amended and restated as of November 1, 1996,
filed in connection with the Form S-8
Registration Statement filed with the
Securities and Exchange Commission on December
19, 1995, File No. 33-65155.
13. WORDS ON NUMBERS Section of the Company's Annual
Report to Stockholders for the year ended December
31, 1996.
21. Subsidiaries.
23. Consent of KPMG Peat Marwick LLP, February 12, 1997.
27. Financial Data Schedule.
EXHIBIT 4.6
AMENDMENT 1996-1
BECKMAN INSTRUMENTS, INC.
SAVINGS AND INVESTMENT PLAN
WHEREAS, Beckman Instruments, Inc. ("Company") maintains the
Beckman Instruments, Inc. Savings and Investment Plan ("Plan"); and
WHEREAS, the Company has the right to amend the Plan; and
WHEREAS, the Company recently acquired Hybritech Incorporated
("Hybritech"), and now wishes to merge The Hybritech Incorporated
Employee Savings Plan ("Hybritech Plan") with the Plan;
NOW, THEREFORE, the Hybritech Plan and the Plan are hereby
merged, with the Plan to be the survivor of the merger; and
FURTHERMORE, the merger shall be effective on the date
determined by the officers of the Company; and
WHEREAS, the Company wishes to amend the Plan to permit
crediting of service performed by individuals who become employees of
the Company, or a Related Company as a result of an acquisition by
the Company;
WHEREAS, the Company desires to amend the Plan to provide rules
concerning the eligibility of employees having service with a foreign
subsidiary of the Company; and
WHEREAS, the Company desires to amend the Plan to set forth the
Company's previously-existing intention with respect to coverage of
individuals who are not classified by the Company as employees; and
WHEREAS, the Company desires to amend the Plan to provide that
it is governed by ERISA Section 404(c); and
WHEREAS, the Company desires to amend the Plan to conform to new
SEC Rule 16b-3 requirements for exemption from liability of certain
securities transactions by participants in the Plan who are officers
subject to Section 16 of the Securities Exchange Act of 1934;
NOW, THEREFORE, the Plan is amended as follows, effective as set
forth below:
1. The definition of "Covered Employee" in Section 1.2 is
amended by adding the following to the end of the section:
"Effective October 1, 1996, individuals who are employed by
a foreign subsidiary of the Company are not considered
'Covered Employees,' even if such individuals are assigned
to work in the United States or Puerto Rico on a temporary
basis. Individuals who are not classified by the Company
as Employees (including but not limited to individuals
classified by the Company as independent contractors and
consultants) and individuals who are classified by the
Company as employees of an entity other than the Company or
a Company Affiliate, are not considered Covered Employees
under this Plan, even if the classification by the Company
is determined to be erroneous. The foregoing sentence sets
forth a clarification of the intention of the Company
regarding participation in this Plan, and the foregoing
sentence is therefore applicable in interpreting the Plan
for any Plan Year, including Plan Years prior to the
addition of such sentence to the Plan."
2. Section 2.2 is amended by adding the following to the end
of the section, effective October 1, 1996:
"For all purposes of the Plan, a Participant (whether or
not a United States citizen), who was an Eligible Employee
on October 1, 1996, shall continue to be treated as a
Covered Employee and an Eligible Employee if, after he
becomes a Participant, he is employed by a foreign
subsidiary of the Company. The preceding sentence shall
not apply to any individual who was not a Participant on
October 1, 1996, even if such an individual subsequently
becomes a Participant. If an individual who was not a
Participant on October 1, 1996 (but who subsequently
becomes a Participant) becomes covered under another plan
of the Company or a foreign subsidiary (other than the
Beckman Instruments, Inc. Pension Plan), such individual
shall cease to participate in this Plan."
3. The following new Section 7.10 is hereby added to the Plan,
effective immediately:
"7.10 Section 404(c) Provisions.
a. This Plan is intended to
constitute a plan described in Section
404(c) of ERISA, and the regulations
thereunder. As a result, with respect
to elections described in this Plan and
any other exercise of control by a
Participant or his or her Beneficiary
over assets in the Participant's
Accounts, such Participant or
Beneficiary shall be solely responsible
for such actions, and neither the
Trustee, the Committee, the Company,
nor any other person or entity which is
otherwise a Fiduciary shall be liable
for any loss or liability which results
from such Participant's or
Beneficiary's exercise of control.
b. The Committee shall provide
to each Participant or his or her
Beneficiary the information described
in Section 2530.404c-1(b)(2)(i)(B)(1)
of the Department of Labor Regulations.
Upon request by a Participant or his or
her Beneficiary, the Committee shall
provide the information described in
Section 2530.404c-1(b)(2)(i)(B)(2) of
the Department of Labor Regulations.
c. The Committee shall take such
actions and establish such procedures
as it deems necessary to ensure the
confidentiality of information relating
to the purchase, sale, and holding of
Company stock, and the exercise of
voting, tender and similar rights with
respect to such stock by a Participant
or his or her Beneficiary.
Notwithstanding the foregoing, such
information may be disclosed to the
extent necessary to comply with
applicable state and federal laws.
d. In the event of a tender or
exchange offer with respect to the
Company, or in the event of a contested
election with respect to the Board, the
Company shall, at its own expense,
appoint an independent Fiduciary to
carry out the Committee's
administrative functions with respect
to the Company stock. Such independent
Fiduciary shall not be an "affiliate"
of the Company as such term is defined
in Section 2530.404c-1(e)(3) of the
Department of Labor Regulations.
e. The Committee may take such
other actions or implement such other
procedures as it deems necessary or
desirable in order that the Plan comply
with Section 404(c) of ERISA."
4. Effective November 1, 1996, Section 9.13 of the Plan is
amended to read as follows:
"9.13 Rule 16b-3 Provisions.
a. This Section 9.13 shall only apply to
Participants who are officers or directors
subject to the prohibitions of Section 16 of the
Securities and Exchange Act of 1934 ('SEC
Section 16'). The provisions of this Section
9.13 relate to 17 C.F.R. 240.16b-3 (hereinafter
known as Rule 16b-3), promulgated under SEC
Section 16.
b. Notwithstanding any other provision of
the Plan to the contrary, the Committee may (but
need not) provide that, except as provided in
Rule 16b-3, (1) no election of a Stock Fund Sale
shall be made unless the election is made at
least six months following the election of the
most recent Stock Fund Purchase; (2) no election
of a Stock Fund Purchase shall be made unless the
election is made at least six months following
the election of the most recent Stock Fund Sale.
For this purpose, a Stock Fund Sale is either (1)
the reallocation of the investment of a
Participant's existing Account balances so that
amounts in the Beckman Stock Fund are transferred
to one or more other Investment Funds or (2)
reduction in the Beckman Stock Fund balances due
to a distribution, withdrawal or loan to a
Participant pursuant to Article VI of Section
9.12. A Stock Fund Purchase is a reallocation of
the investment of a Participant's existing
Account balances so that there is a transfer from
one or more Investment Funds to the Beckman Stock
Fund. However, a transaction shall not be a
Stock Fund Sale or a Stock Fund Purchase unless
it is at the volition of the Participant, is not
required to be made available to the Participant
pursuant to the Code and is not made in
connection with the Participant's death,
disability, retirement or termination of
employment.
c. The Committee may (but need not) adopt
such rules and/or take such actions or implement
such measures and/or limitations as it deems
desirable in order to comply with Rule 16b-3,
including without limitation, rules that (1)
exclude Participants subject to this Section
9.13 from making telephonic instructions and (2)
provide that in-service withdrawals and loans
may be made from all Investment Funds (excluding
the Beckman Stock Fund), on a pro rata basis if
the election of the in-service withdrawal or
loan is made within six months of an election of
a Stock Fund Purchase. Neither the Company, the
Board, the Committee, the Investment Manager,
the Trustee nor the Plan shall have any
liability to any Participant in the event any
Participant has any liability under SEC Section
16 due to any rule so adopted, the failure to
adopt any rule, any Plan provision (or lack
thereof), or any transaction under the Plan."
5. The Plan is hereby amended by adding the following Appendix
C, effective October 1, 1996:
"APPENDIX C - CREDITING OF SERVICE WITH PREDECESSOR EMPLOYERS.
The purpose of this Appendix C is to set forth conditions
under which service of an individual with an entity or
business unit which is acquired by the Company shall be
counted for purposes of eligibility and vesting under this
Plan, notwithstanding the fact that such service was
performed with the entity or business unit prior to its
acquisition by the Company. An entity or business unit
which is acquired by the Company shall be referred to in
this Appendix C as a 'Prior Employer.' Service with a
Prior Employer shall not be credited for any purpose under
this Plan, unless the Prior Employer is included in
Section 2 of this Appendix C. Under no circumstances will
a contribution to the Plan be made on account of service
with a Prior Employer prior to the date of Company
acquisition. The Committee may amend Section 2 by adding
additional Prior Employers. Any such changes shall be
considered an amendment to the Plan, but approval of the
Board of Directors shall not be required for such
amendment. In determining whether a Prior Employer shall
be added to Section 2, the Committee is not acting in a
fiduciary capacity.
The following entities are Prior Employers for which
service prior to date of Company acquisition shall be
counted for purposes of eligibility and vesting under this
Plan:
Approximate Date of
Prior Employer Acquisition by Company
-------------- ----------------------
Porton Instruments, Inc. May 31, 1991
Hybritech Incorporated January 1, 1996
Genomyx October 21, 1996"
6. The Plan is hereby amended to reflect the merger with
Hybritech Plan by adding the following Appendix D:
"APPENDIX D
SPECIAL PROVISIONS FOR FORMER PARTICIPANTS IN THE
HYBRITECH INCORPORATED EMPLOYEE SAVINGS PLAN
1. Plan Merger. Effective as of the date specified
by the officers of the Company, the Hybritech Incorporated Employee
Savings Plan ('Hybritech Plan') merged with the Plan. The Plan is
the survivor of the merger. This Appendix D sets forth certain
provisions applicable to the account balances transferred from the
Hybritech Plan to this Plan as a result of the merger.
2. Vesting, Service and Investments. Each
Participant in the Hybritech Plan who has not previously forfeited
the unvested portion of his account shall, upon the merger, become
fully vested in his Pre-1991 Accounts and Post-1990 Accounts, as
defined below. Years of Vesting Service and Years of Eligibility
Service shall include service under the Hybritech Plan.
Participant's investments in the Hybritech Plan shall be transferred
to the Plan's investments as follows:
From Hybritech Investment Fund To Plan Investment Fund
------------------------------- -----------------------
Stable Income Interest Income
Diversified Balanced
U.S. Stock Market Index
Aggressive Stock Equity
Lilly Common Stock Interest Income
3. Hybritech Plan Accounts. Accounts which were
formerly held in the Hybritech Plan prior to the merger are referred
to in this Appendix D as follows:
a. 'Pre-1991 Accounts,' which consist of the
following:
(1) 'Salary Deferral Account.' The
amounts allocated to the Participant's Salary Deferral
Account under the Hybritech Plan as of December 31, 1990
and the earnings thereon through the date of Plan merger;
(2) 'Company Contributions Account.'
The amounts allocated to the Participant's Company
Contributions Account under the Hybritech Plan as of
December 31, 1990 and the earnings thereon through the date
of Plan merger;
(3) 'Deductible Contributions
Account.' The amounts allocated to the Participant's
Deductible Contributions Account under the Hybritech Plan
as of December 31, 1990 and the earnings thereon through
the date of Plan merger;
(4) 'Non-deductible Contributions
Account.' The amounts allocated to the Participant's Non-
deductible Contributions Account under the Hybritech Plan
as of December 31, 1990 and the earnings thereon through
the date of Plan merger; and
(5) 'Rollover Contributions Account.'
The amounts allocated to the Participant's Rollover
Contributions Account under the Hybritech Plan as of
December 31, 1990 and the earnings thereon through the date
of Plan merger.
b. 'Post-1990 Accounts,' which consist of the
following:
(1) 'Salary Reduction Account.' The
amounts allocated to the Participant as Salary Reduction
Contributions to the Hybritech Plan after December 31, 1990
and before the date of the merger, and the earnings thereon
through the date of Plan merger;
(2) 'Employer Profit-Sharing Account.'
The Employer Contributions allocated to the Participant
under the Hybritech Plan after December 31, 1990 and before
the date of merger, and the earnings thereon through the
date of Plan merger; and
(3) 'ESOP Account.' The amounts
allocated to the Participant's ESOP Account under the
Hybritech Plan prior to the date of the merger, and the
earnings thereon through the date of Plan merger.
The Plan shall separately account for the Accounts
described above.
4. Withdrawals. The following provision shall apply
to withdrawals from the Hybritech Plan Accounts (references below to
Type I through Type V Withdrawals and to termination withdrawals are
references to the withdrawals described in Article VI of the Plan):
a. Type I Withdrawals. Deductible
Contributions Accounts are withdrawable as a Type I Withdrawal, to
the extent such contributions were made prior to 1987.
b. Type II Withdrawals. Non-deductible
Contributions Accounts are withdrawable as a Type II Withdrawal to
the same extent as After-Tax Savings Accounts under the Plan.
Rollover Contributions Accounts are withdrawable as a Type II
Withdrawal to the same extent as Rollover Accounts under the Plan.
Company Contributions Accounts, Employer Profit Sharing Contributions
Accounts and ESOP Accounts are withdrawable as a Type II Withdrawal
to the same extent as Company Matching Accounts under the Plan.
Deductible Contribution Accounts are withdrawable as Type II
Withdrawals.
c. Type IV Withdrawals. Non-deductible
Contributions Accounts are withdrawable as a Type IV Withdrawal to
the same extent as After-Tax Savings Accounts under the Plan.
Rollover Contributions Accounts are withdrawable as a Type IV
Withdrawal to the same extent as Rollover Accounts under the Plan.
Company Contributions Accounts, Employer Profit-Sharing Contributions
Accounts and ESOP Accounts are withdrawable as a Type IV Withdrawal
to the same extent as Company Matching Accounts under the Plan.
Salary Deferral Accounts and Salary Reduction Accounts are
withdrawable as a Type IV Withdrawal to the same extent as Before-Tax
Savings Accounts under the Plan; provided, however, that before
withdrawing any portion of his Before-Tax Savings Account, Salary
Deferral Account or Salary Reduction Contributions Account, a
Participant must withdraw the entire balance of his Deductible
Contributions Account. Deductible Contributions Accounts are
withdrawable as Type IV Withdrawals.
d. Type V Withdrawals. A Participant may
withdraw his Salary Reduction Contributions Account and his Salary
Deferral Contributions Account as a Type V Withdrawal to the same
extent as Before-Tax Savings Accounts under the Plan.
e. Termination Withdrawals.
(1) All of a Participant's Hybritech Plan
Accounts may be withdrawn as Termination Withdrawals under the
provisions set forth in Article VI of the Plan. Furthermore, with
respect to the Pre-1991 Accounts and Post-1990 Accounts of any
Participant (1) whose employment with the Company terminates after
the Participant reaches age 65 or a result of Disability; and (2)
whose total vested account balance in the Plan exceeds $3,500, the
following distribution options shall be available in addition to the
lump sum distribution normally offered under the Plan:
(i) Installment payments over a period
(not to exceed twenty years) elected by the Participant. The amount
of each installment shall be determined by dividing the Participant's
account balance at the time the installment payment is calculated by
the total number of remaining installment payments. Thus, for
example, if a Participant elects installments over ten years, the
first installment would be one-tenth of the Participant's account
balance, the next annual installment would be one-ninth of the
account balance as of the date of the second installment, and so on.
The amount of each payment under this option will fluctuate with the
investment performance of the Participant's Accounts subsequent to
the time payments commence. Accordingly, neither the amount nor
duration of payments under this option is guaranteed.
(ii) Periodic Payments. Payments under
this option will be substantially equal annual payments based upon
the life expectancy of the Participant or the joint life expectancies
of the Participant and his Beneficiary. Payments under this option
may be made in monthly, quarterly, semi-annual, or annual payments.
A Participant who elects this option may subsequently elect
acceleration of all remaining annual payments into a single lump sum
payment. The amount of each payment under this option will fluctuate
with the investment performance of the Participant's Accounts
subsequent to the time payments commence. Accordingly, neither the
amount nor duration of payments under this option is guaranteed.
(iii) Combination of Lump Sum and
Installments. The Participant may specify a dollar amount to be paid
as an initial lump sum, with the remaining balance to be paid as
installments according to the provisions set forth above for
installment payments. The amount of each payment under this option
will fluctuate with the investment performance of the Participant's
Accounts subsequent to the time payments commence. Accordingly,
neither the amount nor duration of payments under this option is
guaranteed.
(iv) Partial Distribution. The
Participant may elect to receive a partial lump sum distribution of
any specified dollar amount or percentage of his or her balance. A
Participant who elects this option shall be entitled to elect payment
of the remaining amount at any subsequent date. The amount of each
payment under this option will fluctuate with the investment
performance of the Participant's Accounts subsequent to the time
payments commence. Accordingly, neither the amount nor duration of
payments under this option is guaranteed.
Any distribution options elected under this Appendix D
must conform to the provisions of Section 401(a)(9) of the Code and
the Regulations promulgated thereunder, which are hereby incorporated
by reference. To the extent applicable, the provisions of Section
6.9(b) shall apply.
(2) With respect only to the amount
credited as of the date of Plan merger to the Pre-1991 Accounts of a
Participant whose total account balance exceeds $3,500, the following
life annuity distribution options are available in addition to a lump
sum distribution. The amount credited as of the date of Plan merger
to a Participant's Pre-1991 Accounts shall be referred to as the
'Annuity-Eligible Amount.'
The life annuity is in the amount which is
payable by using the portion of the Participant's Pre-1991 Accounts
up to the Annuity-Eligible Amount to purchase an annuity contract
from an insurance company selected by the Committee. The amount of
the annuity payments will be determined according to the value of the
Participant's Annuity-Eligible Amount and the annuity contract with
the insurance company. The forms of annuity available shall be a
single life annuity which provides for payments during the life of
the Participant, with no payments after the Participant dies, and a
Qualified Joint and Survivor Annuity, as defined below. The
automatic form of benefit payments for the Annuity-Eligible Amount
for a Participant whose total vested account exceeds $3,500 shall be
the Qualified Joint and Survivor Annuity. A Participant described in
the previous sentence is a 'Pre-1991 Participant.' Upon the death
(prior to commencement of benefits) of a Pre-1991 Participant who has
a Spouse at the time of death, the Spouse's death benefit shall be
provided in the form of a Qualified Preretirement Survivor Annuity,
unless the Spouse waives the Qualified Preretirement Survivor
Annuity. The Participant may waive the automatic form of benefit
(with the consent of the Participant's spouse, if any) according to
the waiver rules set forth in Section 5 of this Appendix D.
f. Ordering Rule for Withdrawals; Loans. All
withdrawals shall first be made from a Participant's Post-1990
Accounts, and then from the contributions made on the Participant's
behalf after the merger, and then from the Participant's Pre-1991
Accounts. No portion of a Participant's Pre-1991 Accounts shall be
used to secure a loan. No portion of a Participant's Pre-1991
Accounts shall be available as a loan, and all of a Participant's Pre-
1991 Accounts shall be excluded in calculating the loan amounts
available under the Plan.
5. QJSA and QPSA Requirements for Pre-1991 Accounts.
a. QJSA Notice. The Committee shall provide
each Pre-1991 Participant, within a reasonable period prior to the
commencement of benefits, a written explanation of: (i) the terms
and conditions of a Qualified Joint and Survivor Annuity; (ii) the
Participant's right to make and the effect of an election to waive
the Qualified Joint and Survivor Annuity form of benefit; (iii) the
rights of a Participant's Spouse; and (iv) the right to make, and the
effect of, a revocation of a previous election to waive the Qualified
Joint and Survivor Annuity.
b. QJSA Waiver. A Pre-1991 Participant may
waive a Qualified Joint and Survivor Annuity pursuant to a Qualified
Election within the 90-day period ending on the date benefit payments
will commence.
c. QPSA Notice.
(1) The Committee shall provide each Pre-
1991 Participant within the period beginning on the first day of the
Plan Year in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the
Participant attains age 35, a written explanation of the Qualified
Preretirement Survivor Annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the
requirements of above applicable to a Qualified Joint and Survivor
Annuity.
(2) If a Pre-1991 Participant enters the
Plan after he has attained age 32, the Committee shall provide notice
no later than the end of the three year period commencing with the
first day of the first Plan Year for which the individual is a
Participant.
(3) If a Pre-1991 Participant has a Break
in Employment prior to age 32, the Committee shall provide notice at
the time of such Break in Employment or within one year after such
Break in Employment.
d. QPSA Waiver. A Pre-1991 Participant may
waive a Qualified Preretirement Survivor Annuity pursuant to a
Qualified Election within the Election Period.
e. Definitions.
(1) Election Period: The period which
begins on the first day of the Plan Year in which the Participant
attains age 35 and ends on the date of Participant's death. If a
Participant has a Break in Employment prior to the first day of the
Plan Year in which age 35 is attained, with respect to his accounts
as of the Break in Employment, the Election Period shall begin on the
date the Break in Employment occurs.
(2) Earliest Retirement Age: The earliest
date on which, under the Plan, the Participant could elect to receive
retirement benefits.
(3) Qualified Election: A written waiver
of a Qualified Joint and Survivor Annuity or a Qualified
Preretirement Survivor Annuity, consented to by the Participant's
Spouse, which consent must be witnessed by a Plan representative or
notary public. Such consent must acknowledge any specific non-spouse
beneficiary, including any class of beneficiaries or any contingent
beneficiaries. If the Participant establishes to the satisfaction of
a Plan representative that such written consent may not be obtained
because there is no Spouse or the Spouse cannot be located, a waiver
will be deemed a Qualified Election. A written consent will be valid
only as to the Spouse who signs the consent and not as to any other
Spouse. Notwithstanding the above in the case of a waiver which is
not signed by a Spouse but is deemed a Qualified Election, the
election shall be valid only as to the designated Spouse and not as
to any other Spouse. Revocation of a prior waiver may be made by a
Participant without the consent of the Spouse at any time before the
commencement of benefits. The number of revocations shall not be
limited. Any new waiver or change of Beneficiary will require a new
spousal consent. Any Spouse's consent shall be irrevocable. A
partial or total distribution may not be made after the annuity
starting date, regardless of the present value of the non-forfeitable
accrued benefit, without a consent in the form of a Qualified
Election.
(4) Qualified Joint and Survivor Annuity:
An annuity for the life of the Participant with a survivor annuity
for the life of the Spouse which is not less than 50% and not more
than 100% of the amount of the annuity which is payable during the
joint lives of the Participant and the Spouse and which is the amount
of benefit which can be purchased with the Participant's vested Pre-
1991 Account. In the case of an unmarried Participant, a Qualified
Joint and Survivor Annuity shall mean an annuity for the life of the
Participant.
(5) Qualified Preretirement Survivor
Annuity: An annuity for the life of the surviving Spouse and which
is the amount of benefit which can be purchased with the
Participant's vested Pre-1991 Account. Following the Participant's
death, the Spouse may elect a lump sum distribution. The surviving
Spouse shall have the right to direct that payments under the
Qualified Preretirement Survivor Annuity commence within a reasonable
time after the Participant's death.
(6) Spouse (surviving Spouse): The Spouse
or surviving Spouse of the Participant, provided that a former spouse
will be treated as the Spouse or surviving Spouse to the extent
provided under a qualified domestic relations order as described in
Section 414(p) of the Code.
f. No Loans From Pre-1991 Accounts.
No portion of a Pre-1991 Account may be borrowed
from the Plan, and no portion of a Pre-1991 Account may serve as
security for a loan from the Plan. The loan amounts available under
Section 9.12 shall be calculated by disregarding a Participant's Pre-
1991 Account."
IN WITNESS WHEREOF, this Amendment 1996-1 is hereby adopted this
9 day of December, 1996.
BECKMAN INSTRUMENTS, INC.
By /s/ Fidencio M. Mares
Fidencio M. Mares
Its Vice President - Human Resources
EXHIBIT 10.9
BECKMAN INSTRUMENTS, INC.
EXECUTIVE INCENTIVE PLAN OF 1996
AMENDMENT NO. 1
EXECUTIVE PERFORMANCE MULTIPLIER
FOR INDIVIDUAL INCENTIVE AWARD DETERMINATION
Performance Multiplier to be
Overall EXCEL Performance Level Applied to Award Guideline
- ------------------------------- ----------------------------
Exceptional 125% to 150%
Exceeds Expectations 110% to 125%
Meets Expectations 90% to 110%
Expectations Partially Met/ 0 to 90%
Improvement Needed
- -----------------------------------------------------------------
- -----------------------------------------------------------------
Overall EXCEL Performance Level
3.5 or higher ----------------------- Exceptional
2.6 to 3.49 ------------------------- Exceeds Expectations
1.7 to 2.59 ------------------------- Meets Expectations
1.69 or below ----------------------- Expectations Partially Met/
Improvement Needed
- -----------------------------------------------------------------
EXHIBIT 10.15
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 THREE - ECONOMIC VALUED 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 Three Beginning
FY95 ("Cycle Three Incentive"), with the Committee administering
the Plan approving a Restricted Stock Award Alternative to any
cash payment of the Cycle Three Incentive.
C. Employee has requested that any award determined
pursuant to the Cycle Three 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 Three 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 to receive Restricted Stock, the
amount of which is determined under subparagraph (b) below,
is effective only if received by the Company on or before
August 1, 1996 and no Termination of Employment has occurred
between the date of this election and the date of issuance
of the Restricted Stock;
(b) This election to receive Restricted Stock in lieu
of cash payment is made for the full amount of any award
under the Cycle Three 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 Three Incentive cycle; and
(c) Amounts which would otherwise result in fractional
shares will be paid in cash on the regular Cycle Three
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 Three 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 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 cancelled and replaced by substitute
shares of Restricted Stock of the successor corporation, or (iv)
such shares of 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 the Cycle Three
Incentive Plan with restriced stock award alternative, the
Incentive Compensation Plan of 1990 as amended and restated May
6, 1992, the 1996 prospectus appendix for the Incentive
Compensation Plan of 1990, 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 10.17
AMENDMENT 1995-1
TO
BECKMAN INSTRUMENTS, INC.
SUPPLEMENTAL PENSION PLAN
WHEREAS, Beckman Instruments, Inc. (the "Company")
maintains the Beckman Instruments, Inc. Supplemental Pension Plan
(the "Supplemental Plan"); and
WHEREAS, the Company may amend the Supplemental Plan
pursuant to a resolution of the Board of Directors of the
Company; and
WHEREAS, the Company desires to amend the Supplemental
Plan to provide that the actuarial basis for computing lump sum
distributions be the same as that used under the Beckman
Instruments, Inc. Pension Plan retroactive to participants
terminating on or after October 1, 1993.
NOW, THEREFORE, the Company hereby adopts this
Amendment 1995-1, effective as of October 1, 1993 as follows:
The last sentence of Section 4(a) is deleted in its
entirety and replaced with the following:
"For purposes of this paragraph (a), the term actuarial
equivalent shall have the same meaning as specified under the
Pension Plan."
IN WITNESS WHEREOF, the Company has adopted this
Amendment 1995-1 as of the date first above written.
BECKMAN INSTRUMENTS, INC.
By: /s/Fidencio Mares
Fidencio Mares
Its: Vice President, Human Resources
EXHIBIT 10.18
AMENDMENT 1996-1
BECKMAN INSTRUMENTS, INC.
SUPPLEMENTAL PENSION PLAN
WHEREAS, Beckman Instruments, Inc. ("Company") maintains the
Beckman Instruments, Inc. Supplemental Pension Plan (the
"Supplemental Plan"); and
WHEREAS, the Company has the right to amend the Supplemental
Plan; and
WHEREAS, the Company desires to amend the Supplemental Plan in
order to supplement the monthly pension benefit payable to a
participant in the Beckman Instruments, Inc. Pension Plan (the
"Pension Plan") to the extent that such benefit is reduced because of
an election made by the participant to defer compensation pursuant to
a deferred compensation plan maintained by the Company which has the
effect of reducing the amount of the participant's compensation taken
into account under the Pension Plan;
NOW, THEREFORE, the Company hereby adopts this Amendment 1996-1,
effective as of January 1, 1997 as follows:
1. The third sentence of Section 3 of the Supplemental Plan is
hereby amended by inserting "or written deferred compensation plan"
immediately following "written bonus program".
IN WITNESS WHEREOF, this Amendment 1996-1 is hereby adopted this
9th day of December, 1996.
BECKMAN INSTRUMENTS, INC.
By /s/Fidencio M. Mares
Fidencio M. Mares
Its: Vice President - Human Resources
EXHIBIT 10.20
BECKMAN INSTRUMENTS, INC.
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(Restated November 1, 1996)
1. Purpose.
This Stock Option Plan for Non-Employee Directors (the
"Plan") is intended to attract and retain the services of
experienced and knowledgeable independent directors of Beckman
Instruments, Inc. (the "Company") for the benefit of the Company
and its stockholders and to provide additional incentive for such
directors to continue to work for the best interests of the
Company and its stockholders.
2. Stock Subject to the Plan.
There are reserved for issuance upon the exercise of options
granted under the Plan 100,000 shares of Common Stock of the
Company (the "Common Stock"). Such shares may be authorized and
unissued shares of the Common Stock or previously outstanding
shares of Common Stock then held in the Company's treasury. If
any option granted under the Plan shall expire or terminate for
any reason without having been exercised in full, the shares
subject thereto shall again be available for the purposes of
issuance upon the exercise of options granted under the Plan.
3. Administration.
The Plan shall be administered by the Board of Directors of
the Company (the "Board"). Subject to the express provisions of
the Plan, the Board shall have plenary authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of the
option grants or agreements (which shall comply with and be
subject to the terms and conditions of the Plan) and to make all
other determinations necessary or advisable for the
administration of the Plan. The Board's determinations of the
matters referred to in this Paragraph 3 shall be conclusive.
4. Eligibility.
Each director of the Company who is not otherwise an
employee of the Company, a parent corporation, or a subsidiary of
either the Company or a parent corporation, and who has not been
an employee of the Company, a parent corporation, or a subsidiary
of either the Company or a parent corporation for a period of at
least one year prior to the date of the grant of an option under
the Plan shall automatically be granted on the date of each
annual meeting of the stockholders of the corporation an option
for 1,000 shares of Common Stock (subject to adjustment as
provided in Paragraph 7). "Parent corporation" means any
corporation in an unbroken chain of corporations ending with the
Company if each of the corporations other than the Company 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. "Subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Company, or a parent
corporation as applicable, 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.
Only non-qualified stock options (options which do not
qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended) shall be granted under
the Plan.
5. Option Grants.
(a) The purchase price of the Common Stock under each option
granted under the Plan shall be 100% of the fair market value of
the stock at the time such option is granted. Such fair market
value shall be taken as the average of the high and low sales
prices of the Common Stock on the New York Stock Exchange on the
date of grant of the option.
(b) Options shall become fully exercisable six months after
the date of grant. No option shall be exercisable during such
six-month period. The term of each option shall be ten years
from the date of grant thereof, or such shorter period as is
prescribed in Paragraphs 5(d) and 5(e). Except as provided in
Paragraphs 5(d) and 5(e), no option may be exercised at any time
unless the holder thereof is then a director of the Company.
Upon exercise, the option price is to be paid in full in
cash or, at the discretion of the Board, in Common Stock owned by
the optionee having a market value on the date of the exercise
equal to the aggregate option price, or, at the discretion of the
Board, in a combination of cash and stock. Upon exercise of an
option, the Company shall have the right to retain or sell
without notice sufficient shares of stock to cover government
withholding taxes or deductions, if any, as described in
Paragraph 9. For purposes of this paragraph, the market value of
shares tendered to exercise an option shall be the average of the
high and low sales prices of the Common Stock on the New York
Stock Exchange on the exercise date; if the Common Stock is not
traded on the exercise date, the fair market value on such date
shall be determined under Treasury Regulation section 20.2031-2.
(c) In the event that an optionee shall cease to be a
director of the Company during the six month period following the
date of grant of the option, the option shall forthwith terminate
on the date the optionee ceases to serve as a director.
(d) In the event that the optionee shall cease to serve as a
director (unless the option shall have been previously terminated
pursuant to the provisions of Paragraph 5(c)) the optionee may
exercise the option at any time prior to the earlier of (i) the
expiration of the term of the option or (ii) the first
anniversary of the date of termination.
Nothing in the Plan or in any option granted pursuant to the
Plan shall confer on any individual any right to continue as a
director of the Company or interfere in any way with the right of
the Company to terminate the optionee's service as a director at
any time.
(e) In the event of the death of a director to whom an
option has been granted under the Plan, the option theretofore
granted to such director (unless the option shall have been
previously terminated pursuant to the provisions of Paragraph
5(c)) may be exercised by a legatee or legatees of the optionee
under his or her last will or by the director's personal
representatives or distributees at any time prior to the earlier
of (i) the expiration of the term of the option or (ii) the first
anniversary of the date of death, to the extent of the remaining
shares covered by his or her option whether or not such shares
had become purchasable by such individual at the date of death.
In the event that an individual to whom an option has been
granted under the Plan dies after such individual has ceased to
be a director, the option theretofore granted to the optionee (if
not previously terminated pursuant to the provisions of Paragraph
5(c)) may be exercised by a legatee or legatees of the optionee
under his or her last will, or by the optionee's personal
representatives or distributees, at any time during the term that
the option could have been exercised by the optionee under
Paragraph 5(d).
6. Transferability and Stockholder Rights of Holders of Options.
No option granted under the Plan shall be transferable
otherwise than by will or by the laws of descent and
distribution, and an option may be exercised, during the lifetime
of the holder thereof, only by the optionee. The optionee shall
have none of the rights of a stockholder until the shares subject
thereto shall have been registered in the name of the person or
persons exercising such option on the transfer books of the
Company upon such exercise.
7. Adjustments upon Changes in Capitalization.
Notwithstanding any other provision of the Plan, the number
and class of shares subject to the options and the option prices
of the options covered thereby shall be proportionately adjusted
in the event of changes in the outstanding Common Stock by reason
of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, split-ups,
split-offs, spin-offs, liquidations or other similar changes in
capitalization, or any distribution to common stockholders other
than cash dividends and, in the event of any such change in the
outstanding Common Stock, the aggregate number and class of
shares available under the Plan and the number of shares as to
which options may be granted shall be appropriately adjusted by
the Board.
8. Amendment and Termination.
Unless the Plan shall theretofore have been terminated as
hereinafter provided, the Plan shall terminate on, and no awards
of options shall be made after, December 31, 2001; provided,
however, that such termination shall have no effect on options
granted prior thereto. The Plan may be terminated, modified or
amended by the stockholders of the Company. The Board of
Directors of the Company may also terminate the Plan or modify or
amend the Plan in such respects as it shall deem advisable in
order to conform to any change in any law or regulation
applicable thereto, or in other respects which shall not change
(i) the total number of shares as to which options may be
granted, (ii) the class of persons eligible to receive options
under the Plan, (iii) the manner of determining the option
prices, (iv) the period during which options may be granted or
exercised, (v) the provisions relating to the administration of
the Plan by the directors of the Company, or (vi) any provision
requiring stockholder approval under any provision of law or any
requirement of the stock exchange on which shares of Common Stock
are then trading.
9. Withholding.
Upon the transfer of the Common Stock as a result of the
exercise of an option, the Company shall have the right to retain
or sell without notice sufficient shares of stock (taken at the
average of the high and low sales prices of such stock on the New
York Stock Exchange on such date or dates as may be determined by
the Board, but not more than five business days prior to the date
on which such shares would otherwise have been delivered) to
cover the amount of any tax required by any government to be
withheld or otherwise deducted and paid with respect to such
payment, remitting any balance to the optionee; provided,
however, that the optionee shall have the right to provide the
Company with the funds to enable it to pay such tax.
10. Effectiveness of the Plan.
The Plan shall become effective on the date the Plan is
approved by the vote of the holders of a majority of the shares
of Common Stock present, or represented, and entitled to vote at
a meeting of the stockholders within twelve months after the date
of adoption of the Plan by the Board of Directors.
11. Plan Construction.
It is the intent of the Company that transactions in and
affecting options granted under this Plan satisfy any then
applicable requirements of Rule 16b-3 so that directors (unless
they otherwise agree) will be entitled to the benefits of Rule
16b-3 or other exemptive rules under Section 16 of the Securities
and Exchange Act of 1934 in respect of those transactions and
will not be subjected to avoidable liability thereunder. If any
provision of this Plan or of any option would otherwise frustrate
or conflict with the intent expressed above, that provision to
the extent possible shall be interpreted as to avoid such
conflict. If the conflict remains irreconcilable, the Board may
disregard the provisions if it concludes that to do so furthers
the interest of the Company and is consistent with the purposes
of this Plan as to such persons in the circumstances.
EXHIBIT 10.24
SECOND AMENDMENT TO THE DECEMBER 1, 1993 AGREEMENT
REGARDING RETIREMENT BENEFITS OF ARTHUR A. TORRELLAS
WHEREAS, Arthur A. Torrellas (Executive") has been
employed by Beckman Instruments, Inc. ("Company") for
approximately 19 years; and
WHEREAS, the Executive and the Company entered into the
Agreement Regarding Retirement Benefits of Arthur A.
Torrellas as of December 1, 1993 and executed on December
20, 1993 ("the Agreement") and subsequently entered into a
First Amendment to the Agreement as of May 30, 1995 so that
the Executive will continue to remain employed by and
provide unique worldwide field operations experience to the
Company.
WHEREAS, the Executive and the Company wish to amend
the Agreement and the First Amendment so that the Executive
will continue to remain employed by and provide unique
worldwide field operations experience to the Company beyond
December 31, 1996.
NOW, THEREFORE, this Second Amendment to the Agreement
between the Executive and the Company is hereby adopted as
of December 16, 1996 and amends the Agreement as follows:
1. All reference to October 31, 1995 in the Agreement is
changed to July 31, 1997 except for paragraph 2 entitled
Voluntary Termination Before or After October 31, 1995
which is deleted and the following inserted.
2. Voluntary Termination. The
increase referred to in paragraph 1 does not
apply if Executive, before December 31, 1996
or after July 31, 1997, voluntarily
terminates employment (retires). The benefit
payable under such circumstances would be the
benefit normally payable from the Pension
Plan and the Supplemental Plan. If the
Executive voluntarily terminates employment
(retires) after December 31, 1996, but before
July 31, 1997, the Executive would receive
the increase referred to in paragraph 1.
2. All other terms and provisions of the Agreement
shall remain the same.
This Amendment to the Agreement is entered into as of
December 16, 1996.
EXECUTIVE
By: /s/Arthur a. Torrellas
Arthur A. Torrellas
COMPANY
BECKMAN INSTRUMENTS, INC.
By: /s/John P. Wareham
John P. Wareham
Its: President and Chief Operating Officer
EXHIBIT 10.29
BECKMAN INSTRUMENTS, INC.
EMPLOYEES' STOCK PURCHASE PLAN
(Amended and Restated as of November 1, 1996)
1. Purpose
The purpose of the Beckman Employees' Stock Purchase Plan is
to furnish to eligible employees an incentive to advance the best
interests of the Company by providing a method whereby they
voluntarily may purchase stock of Beckman Instruments, Inc. at a
favorable price and upon favorable terms.
2. Eligibility
(a) General statement; "Eligible Employees". Subject to the
exceptions and limitations stated in subparagraph (b) and any
applicable local law, all regular full-time employees, as defined
in subparagraph (c), of Beckman Instruments, Inc., a Delaware
corporation, (the "Company") are "Eligible Employees" who may
participate in the plan, and, in addition, all regular full-time
employees of any present or future subsidiary of the Company to
which the plan may be extended on a nondiscriminatory basis by
Company management, shall be "Eligible Employees" who may
participate in the plan.
(b) Exceptions and limitations. The exceptions and
limitations referred to in subparagraph (a) are the following:
(i) no employee shall be eligible to participate in the plan
unless prior to the date of grant (as defined in subparagraph
4(a)) he or she has completed at least one full calendar month of
continuous full-time employment, (ii) no employee shall be
eligible to participate to the extent that suspension is required
pursuant to Section 401(k) of the Internal Revenue Code of 1986,
as amended (the "Code"), because of a hardship withdrawal from a
401(k) plan, and (iii) no option shall be granted to an employee
if such employee immediately after the option is granted, owns
stock possessing five percent or more of the total combined
voting power or value of all classes of stock of the Company or
of a subsidiary company.
(c) Regular full-time employees defined. The term "regular
full-time employees" means all employees of the Company and, as
the case may be, of a subsidiary of the Company who are regularly
employed for continuous full-time employment. A person is not a
regular full-time employee if his or her customary employment is
less than 20 hours per week.
3. Stock subject to the plan
Subject to the provisions of paragraph 10 (relating to
adjustment upon changes in stock), a number of shares of the
Company's $.10 par value common stock ("common stock") in an
amount equal to 1.25% of the total number of issued and
outstanding shares of such common stock as of May 6, 1992 (the
"1.25% Limit") shall become available for issuance under the plan
on July 1, 1992, and thereafter, a number of shares of common
stock in an amount equal to the 1.25% Limit shall become
available for issuance under the plan each calendar year
(commencing with the calendar year beginning on January 1, 1993).
In addition, any unused portion of the shares of such common
stock remaining from those reserved in 1991 for issuance under
the plan and any unused portion of the 1.25% Limit for any
calendar year shall remain available for issuance under the plan.
Such shares of the Company's common stock may be unissued shares
or reacquired shares or shares bought on the market for purposes
of the plan.
4. Grant of options
(a) General statement; "date of grant"; "option period";
"date of exercise". Following the effective date of the plan and
continuing while the plan remains in force, the Company will
offer options under the plan to all eligible employees, subject,
however, to the limitation stated in subparagraph 6(e) which
limits the rights of eligible employees who withdraw from the
plan. Options shall become effective each January 1 and each
July 1 (each of which dates hereinafter is referred to as "date
of grant"). The term of each option is six months ("the option
period") ending June 30 and December 31 in each year (each of
which dates hereinafter is referred to as "date of exercise").
(b) Election to participate; payroll deduction
authorization. An eligible employee may participate in the plan
only by means of payroll deduction. Each eligible employee who
elects to participate in the plan shall deliver to the Company,
prior to the beginning of the payroll period from which payroll
deductions will be made for the option period commencing on such
date of grant, a payroll deduction authorization by a method or
on a form acceptable to the Company whereby notice is given of
the employee's election to participate in the plan as of the next
following date of grant, and whereby the employee designates a
stated amount to be deducted from his or her compensation on each
pay day and paid into the plan for that employee's account. The
total amount of a participant's payroll deductions may not exceed
either of the following: (i) 10% per option period of the amount
of "eligible compensation" (as defined in subparagraph (d)) from
which the deduction is made, or (ii) an amount which will result
in noncompliance with either the $25,000 per calendar year or the
maximum number of shares per option period limitations stated in
subparagraph (e).
An option under the plan shall be deemed to have been
granted automatically on the next following date of grant to each
eligible employee who delivers to the Company a payroll deduction
authorization within the time and in the form and manner stated
in this subparagraph.
(c) Continuing grant of options; changes in options. Each
eligible employee who is a participant in the plan automatically
and without any act on his or her part shall be continued as a
participant in the plan as long as he or she remains eligible or,
as the case may be, until such employee withdraws from the plan.
An option under the plan shall be granted automatically on each
date of grant to each eligible employee who remains a participant
in the plan.
Any eligible employee who is a participant in the plan may
change the extent of his or her participation by delivering to
the Company prior to the beginning of the payroll period from
which payroll deductions will be made for the option period
commencing on such date of grant, an amended payroll deduction
authorization by a method or on a form acceptable to the Company
which designates the change in the stated amount to be deducted
from his or her eligible compensation commencing on the next
following date of grant. After commencement of the option
period, a participant in the plan may decrease the extent of his
or her participation to as low as 1% effective at the beginning
of any month during the option period by delivering an amended
payroll deduction authorization, by a method or on a form
acceptable to the Company, prior to the first payroll period of
any such month.
(d) "Eligible compensation" defined. The term "eligible
compensation" includes the following: regular earnings, overtime,
sick pay, shift differential, shift premium, vacation pay,
incentive compensation, bonuses subject to formal programs,
variable pay subject to formal programs, call-in pay, patent
payments and holiday pay. Eligible compensation also includes
any amounts contributed to a plan qualifying under Sections
401(k), 125 and 129 of the Code as salary reduction
contributions. Any other form of compensation is excluded from
eligible compensation, including but not limited to the
following: prizes, awards, housing allowances, stock option
exercises, stock appreciation rights, restricted stock exercises,
performance awards, auto allowances, loss of company car, tuition
reimbursement, article payments, tax reimbursement, Christmas
gift, special awards, non-recurring bonuses, move-related
payments, forms of imputed income, and Share Value Plan payments.
The Organization and Compensation Committee of the Board of
Directors of the Company (the "Committee") may include
compensation components within the definition of eligible
compensation as it deems desirable.
(e) $25,000 and maximum number of shares limitations. No
employee shall be permitted to purchase stock under the plan or
under any other employee stock purchase plan of the Company or of
any of its subsidiaries or related corporations at a rate which
exceeds $25,000 in fair market value of stock (determined at the
time the option is granted) for each calendar year in which any
such option granted to such employee is outstanding at any time.
In addition, no employee shall be permitted to purchase in excess
of 4,000 shares per option period (subject to adjustment in
accordance with paragraph 10). To the extent payroll deductions
are made which would result in a participant exceeding either of
these limitations, the Company shall refund to the participant
the excess amounts deducted promptly following such
determination.
5. Exercise of options
(a) General statement. Each eligible employee who is a
participant in the plan automatically and without any act on his
or her part will be deemed to have exercised his or her option on
each date of exercise to the extent that the balance then in such
employee's account under the plan is sufficient to purchase at
the "option price" (as defined in subparagraph (b)) whole and
fractional shares of the stock subject to the plan.
Notwithstanding the above, if the total number of shares
purchasable pursuant to options granted in any option period
exceeds the number of shares available for issuance as determined
under paragraph 3 above, each participant's option shall be
exercisable only for the number of shares equal to his or her pro
rata portion of the remaining number of shares so available.
Such pro rata portion shall be determined by multiplying the
number of shares purchasable pursuant to each participant's
option by a fraction the numerator of which is the number of
shares remaining available for issuance and the denominator of
which is the number of shares purchasable pursuant to outstanding
options issued in the option period. Following such adjustment,
the Company shall, at the Committee's discretion, either refund
to the participant any remaining balance in a participant's
account or carry any remaining balance forward in such account to
apply toward the purchase price of shares on the next date of
exercise.
(b) "Option price" defined. The option price per share to
be paid by each optionee on each exercise of his or her option
shall be a sum equal to 90% of the fair market value of the stock
subject to the plan on the date of exercise or on the date of
grant, whichever amount is lesser. Fair market value of the
stock on the date of exercise or, as the case may be, on the date
of grant shall be the official closing price of such stock on
such date on the New York Stock Exchange; and if no sale of the
stock shall have been made on said exchange on such date, then
fair market value on such date shall be the official closing
price of the stock on said exchange on the next preceding date on
which there was a sale.
(c) Delivery of share certificates. As soon as practicable
following the date of exercise, the Company will deliver a
certificate issued in the optionee's name with respect to which
the option was exercised and for which the option price has been
paid. The Company will deliver such certificate to the optionee;
however, in the event the Company makes available an alternate
arrangement for delivery to a book entry service, the Committee
in its discretion may either require or permit the optionee to
elect that such certificate be delivered to such book entry
service. No interest or right under the plan shall be created by
delivery of such certificate to a book entry service. In the
event the Company is required to obtain from any commission or
agency authority to issue any such certificate, the Company will
seek to obtain such authority. Inability of the Company to
obtain from any such commission or agency authority which counsel
for the Company deems necessary for the lawful issuance of any
such certificate shall relieve the Company from liability to any
participant in the plan except to return to the participant the
amount of the balance in his or her account.
6. Withdrawal from the plan
(a) General statement. Any participant may withdraw from
the plan at any time during an option period or immediately
following an exercise of an option. A participant who wishes to
withdraw from the plan must deliver to the Company a notice of
withdrawal by a method or on a form acceptable to the Company.
(b) Withdrawal during an option period. For a participant
withdrawing during an option period, the Company, promptly
following the time when the notice of withdrawal is received,
will refund to the participant the amount of the balance in his
or her account under the plan; and thereupon, automatically and
without any further act on the participant's part, such
participant's payroll deduction authorization, interest in the
plan, and interest in his or her option under the plan shall
terminate.
(c) Withdrawal immediately following an exercise of an
option. For a participant withdrawing immediately following an
exercise of an option, and before any payroll deductions have
been made for the next following option period, such
participant's payroll deduction authorization and interest in the
plan shall terminate automatically and without any further act on
the participant's part and the participant shall be deemed to
have withdrawn effective on the date of grant following such
exercise.
(d) Withdrawal resulting from loss of eligibility. If a
participant for any reason becomes ineligible for participation
in the plan, the participant automatically and without any act on
his or her part shall be deemed to have withdrawn from the plan
as of the date when he or she became ineligible to participate.
The Company promptly will refund to the participant the amount of
the balance of his or her account under the plan, and as of the
date when the participant became ineligible to participate, the
participant's payroll deduction authorization, interest in the
plan, and interest in his or her option under the plan shall
terminate. A participant shall become ineligible at the time
when he or she no longer can comply with the requirements for
eligibility stated in paragraph 2 or any requirements imposed by
applicable local law.
(e) Limitation upon participation following withdrawal. A
participant who withdraws effective on a date of grant as stated
in subparagraph (c) may participate commencing on the next
following date of grant, unless otherwise ineligible or
prohibited by operation of law, rule or regulation. In all other
instances, a participant who withdraws from the plan, either by
his or her election to withdraw as stated in subparagraph (b), or
by loss of eligibility to participate as stated in subparagraph
(d), shall not be eligible for participation in the plan for the
option period next following the option period during which he or
she withdrew, or, if applicable, for any option period or part of
an option period during which a participant has been prohibited
or suspended from participation by operation of law, rule or
regulation; but thereafter if eligible he or she again may
participate. The limitation stated in this subparagraph (e)
shall not be applicable in the case of a participant who
withdraws from the plan or becomes ineligible to participate in
the plan by reason of his or her entering the military service of
the United States.
7. Termination of employment
(a) Termination of employment other than by retirement or
death. If the employment of a participant terminates other than
by retirement or death, the participant automatically and without
any act on his or her part shall be deemed to have withdrawn from
the plan on the day following the effective date of termination
of his or her employment. The Company promptly will refund to
the participant the amount of the balance in his or her account
under the plan, and thereupon the participant's interest in the
plan shall terminate.
(b) Termination by retirement. If, on or after the day that
is three months before the date of exercise, a participant
retires or early retires (as such terms are defined in the then
current retirement plan for Company employees), such participant
may, at his or her election, by a method or on a form acceptable
to the Company, either (i) provide notice to the Company on or
before his or her retirement date of exercise of his or her
outstanding option in which event the Company shall retain the
balance in such participant's account during the then current
option period and then apply the balance in such account under
the plan to purchase at the option price shares of the Company's
stock, or (ii) provide notice to the Company requesting payment
of the balance in such account, in which event the Company
promptly shall make payment, and thereupon the participant's
interest in the plan and in his or her outstanding option under
the plan shall terminate. If the participant elects to exercise
his or her option, the date of exercise for the purpose of
computing the amount of the purchase price of the Company's stock
shall be the end of the then current option period.
If a participant retires prior to the day that is three
months before the date of exercise, the Company promptly will
refund the amount in the participant's account, and thereupon the
participant's interest in the plan and in his or her outstanding
option under the plan shall terminate.
(c) Termination by death. If the employment of a
participant is terminated by death, the Company promptly will pay
the balance of the participant's account under the plan to the
person whom the participant has named beneficiary to receive the
benefits of the Company's basic group life insurance plan, or to
the participant's estate if he or she has not named any such
beneficiary, and thereupon the participant's interest in the plan
and in his or her option under the plan shall terminate.
8. Restriction upon assignment
An option granted under the plan shall not be transferable.
An option may not be exercised to any extent except by the
optionee. The Company will not recognize and shall be under no
duty to recognize any assignment or purported assignment by an
optionee of his or her option or of any rights under his or her
option. (The effect of death upon the rights of an optionee is
stated in subparagraph 7(c).)
9. No rights of stockholder until certificate issued
With respect to shares subject to an option, an optionee
shall not be deemed to be a stockholder of the Company and he or
she shall not have any of the rights or privileges of such a
stockholder. An optionee shall have the rights and privileges of
a stockholder of the Company when, but not until, a certificate
for shares has been issued to the participant following exercise
of his or her option or recorded to the participant's account
with a book entry service.
10. Changes in stock; adjustments
Whenever any change is made in the stock subject to the
plan, or subject to options outstanding under the plan (through
merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, combination of shares, exchange of shares,
change in corporate structure, or otherwise), appropriate action
will be taken by the Board of Directors to adjust accordingly the
number of shares subject to the plan and the number and option
price of shares subject to options outstanding under the plan.
11. Use of funds; no interest paid.
All funds received or held by the Company under the plan
will be included in the general funds of the Company and may be
used for any corporate purpose.
No interest will be paid to any participant or credited to
his or her account under the plan.
12. Amendment of the plan.
The Board of Directors may amend or suspend the plan at any
time and from time to time subject to the limitation that
approval by the vote of the holders of more than 50% of the
outstanding shares of the Company entitled to vote shall be
required to amend the plan (i) to change the number of shares
reserved for option under the plan, (ii) to decrease the option
price below a price computed in the manner stated in subparagraph
5(b), or (iii) in any manner which requires stockholder approval
under any provision of law or under any requirement of the stock
exchange on which shares are then trading.
13. Administration by Committee; rules and regulations
The plan shall be administered by the Committee (as such
term is previously defined), none of whom shall be eligible to
participate in the plan.
The Committee shall have the power to make, amend, and
repeal rules and regulations and establish such procedures as it
deems appropriate for the interpretation and administration of
the plan. The Committee may construe the plan, correct defects,
supply omissions and reconcile inconsistencies to the extent
necessary to effectuate the plan, provided that such does not
conflict with the plan, and such action shall be conclusive.
14. Effective date; term; early termination
The plan shall become effective July l, l989, and shall
remain in force until December 31, 2001, unless it is sooner
terminated effective at the close of business on June 30 or
December 3l of any year by a resolution adopted by the Company's
Board of Directors pursuant to authority which hereby expressly
is reserved. Termination of the plan by action of the Board of
Directors shall not diminish the rights of any optionee nor
impair the obligations of the Company under any outstanding
option; and the obligation of the Company to any participant with
respect to an outstanding option shall be the same as though he
or she had elected not to participate in the plan following the
date as of which it was terminated by action of the Board of
Directors.
15. Plan construction.
It is the intent of the Company that transactions in and
affecting options in the case of participants who are or may be
subject to the prohibitions of Section 16 of the Securities and
Exchange Act of 1934 ("SEC Section 16") satisfy any then
applicable requirements of 17 C.F.R. 240.16b-3 (hereinafter known
as Rule 16b-3) so that such persons (unless they otherwise agree)
will be entitled to the exemptive relief of Rule 16b-3 in respect
of those transactions and will not be subjected to avoidable
liability thereunder. Accordingly, this plan shall be deemed to
contain, and such options shall contain, and the shares issued
upon exercise thereof shall be subject to, such additional
conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from SEC Section 16 with
respect to plan transactions. If any provision of this Plan or
of any option would otherwise frustrate or conflict with the
intent expressed above, that provision to the extent possible
shall be interpreted as to avoid such conflict. If the conflict
remains irreconcilable, the Committee may disregard the
provisions if it concludes that to do so furthers the interest of
the Company and is consistent with the purposes of this plan as
to such persons in the circumstances.
EXHIBIT 13
WORDS ON NUMBERS
Section of the Company's
Annual Report to Stockholders
for the year ended
December 31, 1996
<PAGE>
SELECTED FINANCIAL INFORMATION
Dollars in millions, except amounts per share
<TABLE>
<CAPTION>
Years Ended December 31, 1996 1995 1994 1993 1992
Summary of Operations
<S> <C> <C> <C> <C> <C>
Sales $1,028.0 $ 930.1 $ 888.6 $ 875.7 $ 908.8
Operating income (1) $ 122.5 $ 110.8 $ 98.9 $ 85.6 $ 87.2
Net earnings before
special charges $ 74.7 $ 66.1 $ 56.9 $ 46.9 $ 43.8
Special charges
Restructuring charge,
net of tax benefit - (17.2) (9.6) (73.0) -
Environmental charge,
net of tax benefit - - - (7.5) -
Changes in accounting
principles - - (5.1) (4.0) -
-------- ------- --------- -------- -------
Net earnings $ 74.7 $ 48.9 $ 42.2 $ (37.6) $ 43.8
======== ======= ========= ======== =======
Net earnings per share
before special charges $ 2.58 $ 2.29 $ 2.03 $ 1.69 $ 1.53
Net earnings (loss) per
share $ 2.58 $ 1.70 $ 1.50 $ (1.35) $ 1.53
Dividends paid per share of
common stock $ 0.52 $ 0.44 $ 0.40 $ 0.36 $ 0.30
Shares outstanding
(millions) 28.0 28.3 28.0 27.8 28.6
Weighted average common
shares and common share
equivalents (millions) 28.9 28.8 28.1 27.8 28.7
Other Information
Total Assets $ 960.1 $ 907.8 $ 829.1 $ 820.0 $ 738.4
Long-term debt, less
current maturities $ 176.6 $ 162.7 $ 117.3 $ 113.7 $ 59.5
Working capital $ 300.1 $ 282.1 $ 243.2 $ 221.2 $ 227.3
Return on average equity
(percent) 20.0 14.7 14.2 (11.9) 12.5
Capital expenditures $ 117.4 $ 110.0 $ 98.7 $ 92.8 $ 91.4
Depreciation expense $ 85.8 $ 77.6 $ 69.1 $ 62.3 $ 63.9
Number of employees 6,079 5,702 5,963 6,689 6,980
</TABLE>
(1)Excludes pretax special charges. Special charges include pretax
restructuring charges of $27.7, $11.3 and $114.7 in 1995, 1994
and 1993, respectively, and a pretax environmental charge of
$12.5 in 1993. Including these special charges, the Company
reported operating income (loss) of $83.1 in 1995, $87.6 in 1994
and $(29.1) in 1993.
<PAGE>
FINANCIAL REVIEW
In millions, except amounts per share
Results Of Operations
The following table sets forth, for the periods indicated, the
results of operations as a percentage of sales and on a comparative
basis:
<TABLE>
<CAPTION>
% % % 1996 1995
Years ended of of of compared compared
December 31, 1996 Sales 1995 Sales 1994 Sales to 1995(2) to 1994(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales
Diagnostics $ 652.0 63.4 $558.5 60.0 $530.2 59.7 $93.5 $ 28.3
Life sciences 376.0 36.6 371.6 40.0 358.4 40.3 4.4 13.2
-------- ----- ------ ----- ------ ----- ----- ------
Total Sales $1,028.0 100.0 $930.1 100.0 $888.6 100.0 $97.9 $ 41.5
======== ===== ====== ===== ====== ===== ===== ======
Gross profit $ 550.2 53.5 $502.9 54.1 $472.3 53.2 $47.3 $ 30.6
Marketing,
general and
administrative 319.3 31.1 300.4 32.3 281.9 31.8 18.9 18.5
Research and
development 108.4 10.5 91.7 9.9 91.5 10.3 16.7 0.2
-------- ----- ------ ----- ------ ----- ------ -------
Operating
income(1) 122.5 11.9 110.8 11.9 98.9 11.1 11.7 11.9
Net nonoperating
expense 11.0 1.0 10.7 1.1 12.7 1.4 0.3 (2.0)
-------- ----- ------ ----- ------ ----- ------ -------
Earnings before
income taxes(1) 111.5 10.9 100.1 10.8 86.2 9.7 11.4 13.9
Income tax
provision 36.8 3.6 34.0 3.7 29.3 3.3 2.8 4.7
-------- ----- ------ ----- ------ ----- ------ -------
Net
earnings(1) $ 74.7 7.3 $ 66.1 7.1 $ 56.9 6.4 $ 8.6 $ 9.2
======== ===== ====== ===== ====== ===== ====== =======
Net earnings
including
special
charges $ 74.7 $ 48.9 $ 42.2 $ 25.8 $ 6.7
Net earnings
per share
before
special
charges $ 2.58 $ 2.29 $ 2.03 $ 0.29 $ 0.26
Net earnings
per share $ 2.58 $ 1.70 $ 1.50 $ 0.88 $ 0.20
Dividends
paid per
share of
common
stock $ 0.52 $ 0.44 $ 0.40 $ 0.08 $ 0.04
</TABLE>
(1) Amounts exclude special charges. Special charges include
restructuring charges of $27.7, 3.0% of sales, and $11.3, 1.3% of
sales, in 1995 and 1994, respectively. Including the restructuring
charge, operating income was $83.1, 8.9% of sales, and $87.6, 9.8% of
sales, in 1995 and 1994, respectively. Including special charges, the
Company reported earnings before income taxes of $72.4, 7.8% of sales,
and $74.9, 8.4% of sales, in 1995 and 1994, respectively. 1994 also
includes a special charge for the cumulative effect of a change in
accounting principle of $5.1, net of tax benefit.
(2) Decreases from the comparative period are designated by ().
<PAGE>
Redirected Business Strategy and Reorganization
The restructure charges recorded in 1995 and 1994 were for facility
moves and transition costs that were anticipated and directly
associated with the Company's 1993 restructuring plan but could not be
recognized in the establishment of the original restructuring reserve
under generally accepted accounting principles.
1996 compared to 1995
Sales growth of 11%, 13% in constant currency, over the prior year
was attributable to increased market share in diagnostics products,
primarily in the North American and European markets; increased market
share in life sciences products, primarily in non-European
international markets; continued success from the Company's SmithKline
Diagnostics subsidiary's HEMOCCULT product; and, sales from Hybritech
products (Hybritech was acquired effective January 2, 1996).
International sales represented approximately 50% of total sales.
The gross profit percentage decrease resulted from changes in
product mix, unfavorable foreign currency fluctuations and competitive
pricing pressures.
The increase in operating costs was due to a higher rate of
investment in research and development costs related to Hybritech
products.
1995 compared to 1994
Sales grew 5% over the prior year although the Company experienced
relatively flat market conditions. The sales growth was attributable
to sales from the Company's SmithKline Diagnostics subsidiary's
HEMOCCULT product (the license for which was acquired in 1995);
increased market share in diagnostics products, primarily in the North
American and non-European international markets; and, increased market
share in life sciences products, primarily in non-European
international markets. Sales were also favorably impacted by 2% from
foreign currency fluctuations. International sales represented
approximately 53% of total sales.
Gross profit increased from greater sales volume and the effect of
cost containment initiatives resulting from the Company's
restructuring.
Net nonoperating expense decreased primarily from gains recognized
from foreign currency hedging activities.
Financial Condition
Liquidity and Capital Resources
Net cash provided by operating activities in 1996 was $139.1
compared to $60.2 in 1995 and $111.1 in 1994. Contributing to the
increase in 1996 was an increase in accounts payable, accrued expenses
and accrued income taxes. Also contributing to the increase in
operating cash flow was $25.3 received upon the sale of a portion of
the Company's sales-type lease receivables. Net cash used by
investing activities was $114.6 in 1996, an increase of $1.6 resulting
from 1996 acquisitions net of decreased purchases of short-term equity
investments compared to 1995. Investing activities are primarily
expenditures for property, plant and equipment, which totaled $117.4
in 1996, compared to $110.0 in 1995 and $98.7 in 1994. Included in
capital expenditures are expenditures for customer leased equipment of
$72.7, $68.9 and $74.5 in 1996, 1995 and 1994, respectively. Of the
capital expenditures for customer leased equipment, $24.9 in 1996,
$39.0 in 1995, and $51.3 in 1994 represent an increase in the gross
amount of customer leases. The Company plans to invest at
approximately the same level in 1997 and intends to finance this
capital spending primarily through cash provided by operating
activities.
In June 1996, the Company issued $100.0 of debentures (See Note 5
"Debt"). The net proceeds received of $98.5 were used to repay
amounts then outstanding under the Company's commercial paper program.
The Company is authorized, through 1998, to acquire common stock to
meet the needs of the Company's existing stock-related employee
benefit plans. Under this program, Beckman repurchased 991,543 shares
of its common stock during 1996.
The Company maintains a $150.0 revolving credit agreement expiring
on September 30, 1999. As of December 31, 1996, there were no
borrowings against the line. See further discussion in Note 5 "Debt."
The Company also has the ability to issue, until June 1998, up to
$100.0 of additional debt under a Form S-3 Registration Statement
filed with the SEC which was declared effective on April 16, 1996.
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.
Acquisition Activities
In December 1996 the Company acquired the assets and assumed the
liabilities of the laboratory robotics division of Sagian Inc. of
Indianapolis, Indiana. By combining Sagian's scheduling software and
robotics with its own biorobotics systems, the Company enhanced its
ability to serve the pharmaceutical industry's need for high-
throughput screening (HTS) of candidate compounds for new drugs. The
acquisition was accounted for as a purchase.
Effective January 2, 1996, the Company acquired the assets and
assumed the liabilities of Hybritech Incorporated, a San Diego-based
life sciences and diagnostics company. The acquisition expanded the
Company's ability to develop and manufacture high sensitivity
immunoassays, including cancer tests. The acquisition was 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 complements the Company's
biotechnology business. The acquisition was completed on October 21,
1996 and was accounted for as a purchase.
The purchase prices of the acquisitions and results of operations
were not material to the Company individually or in the aggregate.
Business Climate
The diagnostics and life sciences markets continue to be unfavorably
impacted by the European recession and cost containment initiatives in
several European governmental and health care systems. The life
sciences market also continues to be affected by reductions of
pharmaceutical capital spending in response to the consolidation of
companies and constraints on research and development spending. While
these markets are highly competitive, sales growth has been obtained
through continued market penetration. 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.
Inflation increases the cost of goods and services used by the
Company. Competitive and regulatory conditions in many markets
restrict the Company's ability 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.
The Company derives approximately 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 and pricing
pressures.
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. See further
discussion in Note 9 "Commitments and Contingencies."
Litigation
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 these matters will have a material adverse effect on its
operations or financial position. See further discussion of these matters
in Note 9 "Commitments and Contingencies."
<PAGE>
CONSOLIDATED BALANCE SHEETS
In millions
<TABLE>
<CAPTION>
December 31, 1996 1995
Assets
Current assets
<S> <C> <C>
Cash and equivalents $ 34.6 $ 26.2
Short-term investments 8.1 8.2
Trade receivables and other 309.5 288.8
Inventories 190.4 166.2
Deferred income taxes 21.4 29.4
Other current assets 15.4 14.5
------ ------
Total current assets 579.4 533.3
Property, plant and equipment, net 263.5 252.1
Deferred income taxes 50.8 59.8
Other assets 66.4 62.6
------ ------
Total assets $960.1 $907.8
====== ======
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ 19.4 $ 15.8
Accounts payable 45.6 50.6
Accrued compensation 47.4 40.4
Other accrued expenses 115.2 99.5
Income taxes 51.7 44.9
------ ------
Total current liabilities 279.3 251.2
Long-term debt, less current
maturities 176.6 162.7
Other liabilities 105.3 146.0
------ ------
Total liabilities 561.2 559.9
------ ------
Stockholders' equity
Preferred stock, $0.10 par value;
authorized 10.0 shares;
none issued - -
Common stock, $0.10 par value;
authorized 75.0 shares;
shares issued 29.1 at 1996
and 1995; share outstanding
28.0 at 1996 and 28.3 at 1995 2.9 2.9
Additional paid-in capital 128.9 129.0
Foreign currency translation
adjustment 3.9 8.4
Retained earnings 300.0 240.0
Minimum pension liability - (9.9)
Treasury stock, at cost (36.8) (22.5)
------ ------
Total stockholders' equity 398.9 347.9
------ ------
Commitments and contingencies
Total liabilities
and stockholders' equity $960.1 $907.8
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
In millions, except amounts per share
<TABLE>
<CAPTION>
Years ended December 31, 1996 1995 1994
<S> <C> <C> <C>
Sales $1,028.0 $930.1 $888.6
Operating costs and expenses
Cost of sales 477.8 427.2 416.3
Marketing, general and
administrative 319.3 300.4 281.9
Research and development 108.4 91.7 91.5
Restructuring charge - 27.7 11.3
------- ------ ------
905.5 847.0 801.0
------- ------ ------
Operating income 122.5 83.1 87.6
Nonoperating income (expense)
Interest income 5.8 5.3 5.1
Interest expense (18.1) (13.4) (13.2)
Other, net 1.3 (2.6) (4.6)
------- ------ ------
(11.0) (10.7) (12.7)
------- ------ ------
Earnings before income taxes 111.5 72.4 74.9
Income taxes 36.8 23.5 27.6
------- ------ ------
Net earnings before cumulative
effect of change in accounting
principle 74.7 48.9 47.3
Cumulative effect of change in
accounting principle - accounting
for postemployment benefits (net
of tax benefit of $3.0) - - (5.1)
------- ------ ------
Net earnings $ 74.7 $ 48.9 $ 42.2
======= ====== ======
Weighted average common shares
and common share
equivalents 28.9 28.8 28.1
Net earnings per share before
cumulative effect of change in
accounting principle $ 2.58 $ 1.70 $ 1.68
Cumulative effect of change in
accounting principle - - (0.18)
------- ------ ------
Net earnings per share $ 2.58 $ 1.70 $ 1.50
======= ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
In millions
<TABLE>
<CAPTION>
Foreign
Additional Currency Minimum
Common Paid-in Translation Retained Pension Treasury
Stock Capital Adjustment Earnings Liability Stock
----- --------- ----------- -------- --------- --------
Balances, December
<S> <C> <C> <C> <C> <C> <C>
31, 1993 $ 2.9 $129.6 $(1.1) $172.4 - $ (28.3)
Net earnings 42.2
Foreign currency
translation
adjustments 9.7
Dividends to
stockholders (11.2)
Purchases of
treasury stock (14.6)
Vesting of
restricted stock 0.1
Employee stock
purchases 0.3 15.0
---- ------ ----- ------ ----- ------
Balances, December
31, 1994 $ 2.9 $130.0 $8.6 $203.4 - $(27.9)
Net earnings 48.9
Foreign currency
translation
adjustments (0.2)
Dividends to
stockholders (12.3)
Purchases of
treasury stock (13.3)
Vesting of
restricted stock 0.1
Employee stock
purchases (1.1) 18.7
Minimum pension
liability (9.9)
---- ----- ----- ----- ---- ----
Balances, December
31, 1995 $ 2.9 $129.0 $8.4 $240.0 $(9.9) $(22.5)
Net earnings 74.7
Foreign currency
translation
adjustments (4.5)
Dividends to
stockholders (14.7)
Purchases of
treasury stock (35.9)
Employee stock
purchases (0.1) 21.6
Minimum pension
liability 9.9
----- ------ ---- ------ ---- ------
Balances, December
31, 1996 $ 2.9 $128.9 $3.9 $300.0 - $(36.8)
=====- ====== ==== ====== ==== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
In millions
<TABLE>
<CAPTION>
Years ended December 31, 1996 1995 1994
Cash Flows from Operating
Activities
<S> <C> <C> <C>
Net earnings $ 74.7 $ 48.9 $ 42.2
Adjustments to reconcile net
earnings to net cash provided
by operating activities
Depreciation and amortization 87.8 79.1 70.1
Net deferred income taxes 11.3 10.2 6.9
Changes in assets and
liabilities
Trade receivables and other (26.1) (23.7) (7.0)
Inventories (26.4) (15.7) 15.8
Accounts payable and accrued
expenses 30.7 0.7 5.9
Restructuring reserve (10.6) (12.9) (42.1)
Accrued income taxes 7.0 (8.8) 6.3
Other (9.3) (17.6) 13.0
----- ----- -----
Net cash provided by
operating activities 139.1 60.2 111.1
----- ----- -----
Cash Flows from Investing
Activities
Additions to property, plant and
equipment (110.5) (103.2) (97.4)
Net disposals of property, plant
and equipment 18.7 13.2 17.1
Sales (purchases) of short-term
investments 0.2 (7.5) 21.2
Investments and acquisitions (23.0) (15.5) (1.5)
------ ----- -----
Net cash used by investing
activities (114.6) (113.0) (60.6)
------ ----- -----
Cash Flows from Financing
Activities
Dividends to stockholders (14.7) (12.3) (11.2)
Proceeds from issuance of stock 21.5 17.6 15.3
Purchases of treasury stock (35.9) (13.3) (14.6)
Notes payable borrowings
(reductions) (2.4) 2.8 (21.9)
Long-term debt borrowings 128.3 43.4 4.9
Long-term debt reductions (113.0) (3.5) (1.9)
Other - 0.1 (1.4)
----- ---- ----
Net cash provided (used) by
financing activities (16.2) 34.8 (30.8)
----- ---- ----
Effect of exchange rates on cash
and equivalents 0.1 - 0.3
----- ---- ----
Increase (decrease) in cash and
equivalents 8.4 (18.0) 20.0
Cash and equivalents-beginning
of year 26.2 44.2 24.2
------ ------ ------
Cash and equivalents-end of year $ 34.6 $ 26.2 $ 44.2
====== ====== ======
Supplemental Disclosures of Cash
Flow Information
Cash payments for income taxes $ 13.0 $ 22.0 $ 11.8
Cash payments for interest 18.3 12.0 14.5
Noncash Investing and
Financing Activities
Conversion of notes receivable 8.1 - -
Minimum pension liability (9.9) 9.9 -
Purchase of equipment under
capital lease obligation $ 6.9 $ 6.8 $ 1.3
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 consolidated 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.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
Financial Instruments
The carrying value of cash and cash equivalents, trade receivables
and other, other current assets, investments, notes payable, accounts
payable, and amounts included in other accrued expenses meeting the
definition of a financial instrument, approximate their fair value at
December 31, 1996. The carrying value of the Company's debt, $180.9,
and derivative instruments, $1.2, also approximate their fair value at
December 31, 1996.
Market values of the Company's financial instruments, other than
debt and derivative instruments, are based upon management estimates.
Market values of the Company's debt and derivative instruments are
determined by quotes from financial institutions.
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 earnings in "other, net".
The Company experienced net foreign currency gains (losses) of $2.2 in
1996, $2.3 in 1995, and $(4.5) in 1994.
Revenue Recognition
In general, revenue is recognized when a 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 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
The Company uses the asset and liability method of accounting for
income taxes. Under the asset and liability method, 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.
Stock Compensation
Typically, the Company issues options with a grant price equal to
the fair value of the Company's common stock. Accordingly, no
compensation cost has been recognized for its stock option or stock
purchase plans. The Company discloses in Note 7 "Employee Benefits"
the effect on the Company's earnings as if compensation cost was
recorded as the estimated value of the stock option granted.
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. Gains and losses on hedges of foreign net
asset positions are included in stockholders' equity, under the
caption "Foreign currency translation adjustment." Gains and losses
on interest rate swaps accounted for as hedges are recognized over the
term of the swap as a reduction or increase in "interest expense."
Earnings Per Share
Net earnings per share is calculated using the weighted average
number of common shares outstanding during the period, including the
effect of common share equivalents. Common share equivalents are
comprised of the dilutive effect of outstanding stock options.
Common share equivalents reduced net earnings per share by $0.08 in
1996 and $0.04 in 1995. The effect of common share equivalents was
not included prior to 1995 as the dilutive effect was not significant.
Primary earnings per share approximates fully diluted earnings per
share for each period presented.
Cash and Equivalents
The Company considers cash and equivalents to include cash in banks,
time deposits and investments having an original maturity of three
months or less.
Short-Term Investments
Short-term investments are principally comprised of investments with
original maturities in excess of three months but less than one year.
Investments
The Company periodically makes investments in unaffiliated companies
through debt and equity securities. The investments are considered
available-for-sale and carried at current fair value with unrealized
gains or losses reported as a separate component of stockholders'
equity, if necessary. Investments in which the Company is able to
exercise significant influence and/or owns a 20% to 50% equity
interest are accounted for using the equity method. Investments are
included in "other assets."
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. Buildings are depreciated over 20 to 40 years,
machinery and equipment over 3 to 10 years and instruments subject to
lease over the lease term but not in excess of 7 years. Leasehold
improvements are amortized over the lesser of the life of the asset or
the term of the lease but not in excess of 20 years.
Reclassifications
Certain amounts from the prior years have been reclassified to
conform to the current presentation.
2. REDIRECTED BUSINESS STRATEGY AND REORGANIZATION
The Company incurred restructuring charges of approximately $27.7 in
1995 and $11.3 in 1994. The 1995 and 1994 restructuring charges
include costs for facility moves and transition costs which were
anticipated and directly associated with the 1993 restructuring plan
but could not be recognized in establishment of the original
restructuring reserve under generally accepted accounting principles.
At December 31, 1996 and 1995, the Company's remaining obligations
relating to the restructuring charges were $2.6 and $13.2,
respectively, and are included in "other accrued expenses".
3. COMPOSITION OF CERTAIN FINANCIAL STATEMENT CAPTIONS
<TABLE>
<CAPTION>
1996 1995
---- ----
Trade receivables and other
<S> <C> <C>
Trade receivables $295.3 $270.3
Other receivables 20.7 21.5
Current portion of lease receivables 3.1 6.1
Less allowance for doubtful
receivables (9.6) (9.1)
------ ------
$309.5 $288.8
====== ======
Inventories
Finished products $123.8 $117.7
Raw materials, parts and assemblies 53.0 40.5
Work in process 13.6 8.0
------ ------
$190.4 $166.2
====== ======
Property, plant and equipment, net
Land $ 9.1 $ 10.5
Buildings 144.1 142.0
Machinery and equipment 239.1 218.0
Instruments subject to lease(a) 281.6 256.7
------ ------
673.9 627.2
Less accumulated depreciation
Building, machinery and equipment (236.4) (224.2)
Instruments subject to lease(a) (174.0) (150.9)
------ ------
$263.5 $252.1
====== ======
Other accrued expenses
Restructure reserve $ 2.6 $ 13.2
Royalties 7.7 0.7
Unrealized service income 36.9 35.6
Insurance 23.1 23.9
Accrued warranty and installation
costs 4.5 4.7
Other 40.4 21.4
------ ------
$115.2 $ 99.5
====== ======
</TABLE>
(a) Includes instruments leased to customers under three-to five-year
cancelable operating leases.
4. Acquisitions
In December 1996 the Company acquired the assets and assumed the
liabilities of the laboratory robotics division of Sagian Inc. of
Indianapolis, Indiana. By combining Sagian's scheduling software and
robotics with its own biorobotics systems, the Company enhanced its
ability to serve the pharmaceutical industry's need for high-
throughput screening (HTS) of candidate compounds for new drugs. The
acquisition was accounted for as a purchase.
Effective January 2, 1996, the Company acquired the assets and
assumed the liabilities of Hybritech Incorporated, a San Diego-based
life sciences and diagnostics company. The acquisition expanded the
Company's ability to develop and manufacture high sensitivity
immunoassays, including cancer tests. The acquisition was 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 complements the Company's
biotechnology business. Through December 31, 1995, the Company
invested approximately $8.1 in convertible notes receivable and a less
than 20% ownership of Genomyx common stock. On October 21, 1996, the
Company acquired the remaining shares of Genomyx voting common stock
for cash and conversion of the $8.1 convertible note. The acquisition
was accounted for as a purchase.
The purchase prices of the acquisitions and results of operations
were not material to the Company individually or in the aggregate.
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 current market rates;
therefore, the carrying value of the notes approximates the market
value. At December 31, 1996 approximately $116.0 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 $20.0 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.
In June 1996, the Company issued $100.0 of debentures bearing an
interest rate of 7.05% per annum due June 1, 2026. Interest is
payable semi-annually in June and December. The debentures were
recorded net of discount and issuance costs of approximately $1.5
which are being amortized to interest expense over the term of the
debentures. The debentures may be repaid on June 1, 2006 at the
option of the holders of the debentures, at 100% of their principal
amount, together with accrued interest to June 1, 2006, in accordance
with the terms of the debenture agreement. The debentures may be
redeemed, in whole or in part, at the option of the Company at any
time after June 1, 2006 at a redemption price equal to the greater of
the principal amount of the debentures or the sum of the present
values of the remaining scheduled payments of principal and interest
thereon discounted to the redemption date on a semiannual basis at a
comparable treasury issue rate plus 0.1%.
The Company has a $150.0 revolving credit agreement (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. As of December 31, 1996, there were
no borrowings against the credit line.
Long-term debt consisted of the following at December 31:
<TABLE>
<CAPTION>
Average
Rate of
Interest 1996 1995
-------- ---- ----
<S> <C> <C> <C>
Debentures 7.05% $100.0 $ -
Senior notes, unsecured 7.4% 50.0 50.0
Commercial paper 5.5% - 92.0
Other long-term debt 4.9% 30.9 23.6
------ ------
180.9 165.6
Less current maturities 4.3 2.9
------ ------
Long-term debt, less
current maturities $176.6 $162.7
====== ======
</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.
Other long-term debt at December 31, 1996 and 1995 consists
principally of $22.1 and $16.8 of yen denominated senior notes. Of
the 1996 balance, $6.2 matures in 1998, $8.8 matures in 1999 and $7.1
matures in 2002. Capitalized leases of $8.8 in 1996 and $6.8 in 1995
are also included in other long-term debt.
Certain of the Company's borrowing agreements contain covenants
that the Company must comply with, for example: minimum consolidated
net worth, several specified ratios, and the limitation on the sale or
mortgage of certain assets. At December 31, 1996, the Company was in
compliance with all such covenants.
The aggregate maturities of long-term debt for the five years
subsequent to December 31, 1996 are $4.3 in 1997, $9.5 in 1998, $9.9
in 1999, $50.1 in 2000, $0.0 in 2001 and $107.1 thereafter.
6. Income Taxes
The components of earnings before income taxes were:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
U.S. $ 42.5 $21.2 $30.5
Non-U.S. 69.0 51.2 44.4
------ ----- -----
$111.5 $72.4 $74.9
====== ===== =====
</TABLE>
The provision (benefit) for income taxes consisted of the
following:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Current
<S> <C> <C> <C>
U.S. federal $ 9.6 $ 5.1 $ 6.1
Non-U.S. 12.4 7.7 9.5
U.S. state and Puerto Rico 4.0 (0.6) 3.0
----- ----- -----
Total current 26.0 12.2 18.6
---- ---- ----
Deferred
U.S. federal 9.0 4.3 7.8
Non-U.S. 1.8 7.0 1.2
----- ----- -----
Total deferred, net 10.8 11.3 9.0
----- ----- -----
Total $36.8 $23.5 $27.6
===== ===== =====
</TABLE>
The reconciliations of the U.S. federal statutory tax rate to the
consolidated effective tax rate is as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 35.0%
State taxes, net of U.S.
tax benefit 0.4 0.8 0.5
Ireland and Puerto Rico
income (6.8) (13.6) (8.0)
Non-U.S. taxes 5.0 10.9 9.3
Foreign income taxed in
the U.S., net of
credits (2.8) 0.4 (1.6)
Other 2.2 (1.0) 1.6
---- ---- ----
Effective tax rate 33.0% 32.5% 36.8%
==== ==== ====
</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 $7.6 in 1996, $9.8 in 1995, and $6.0 in 1994. 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>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Restructuring costs $ 3.0 $13.2 $14.5
International
transactions 1.3 (4.7) (2.2)
Accelerated depreciation (0.5) 0.4 (0.5)
Accrued expenses 3.3 (0.6) 2.4
Pension costs 6.9 1.7 (5.3)
Postretirement
medical costs (1.7) (0.5) (1.1)
Other (1.5) 1.8 1.2
----- ----- -----
Total $10.8 $11.3 $ 9.0
===== ===== =====
</TABLE>
The tax effect of temporary differences which give rise to
significant portions of deferred tax assets and liabilities consists
of the following at December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
Deferred tax assets
<S> <C> <C>
Receivables $ 0.6 $ 0.9
Inventories 2.9 3.3
Capitalized expenses 1.0 1.6
Intercompany transactions 0.3 2.6
Pension costs 2.4 11.1
Accrued expenses 19.9 22.1
Restructuring costs 0.6 4.0
Environmental costs 5.0 5.1
Postretirement benefits 26.5 24.7
Other 31.1 31.0
----- -----
90.3 106.4
Less: Valuation allowance (14.5) (14.5)
----- -----
Total deferred tax assets 75.8 91.9
Deferred tax liabilities
Depreciation 2.3 1.6
Other 1.3 1.1
----- -----
Net deferred tax asset $ 72.2 $ 89.2
====== ======
</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 net deferred tax asset at December 31, 1996.
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.
At December 31, 1996 and 1995 the Company recorded a valuation
allowance of $14.5 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 $112.2 of unremitted earnings of certain non-U.S.
subsidiaries because such earnings are or will be reinvested in
operations or will be offset by credits for foreign income taxes paid.
All income tax liability issues between the Company and its former
parent SmithKline Beckman have been resolved in accordance with a tax
agreement between the two companies. Such resolution did not have a
material effect on the Company's consolidated financial position or
operating results.
7. Employee Benefits
Incentive Compensation 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 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 typically
vest over three years and 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, 1997, 731,720 shares
remain available for grant under this plan.
The following is a summary of the Company's option activity, including
weighted average option information (in thousands, except per option
information):
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Exercise Exercise Exercise
Price Per Price Per Price Per
Options Option Options Option Options Option
------- ------ ------- ------ ------- ------
Outstanding
at beginning
<S> <C> <C> <C> <C> <C> <C>
of year 2,634 $22.83 2,689 $21.39 2,326 $19.38
Granted 447 $40.72 418 $29.33 773 $26.44
Exercised (372) $19.97 (424) $19.57 (354) $18.52
Cancelled (37) $37.12 (49) $27.20 (56) $25.75
----- ----- -----
Outstanding
at end of
year 2,672 $26.03 2,634 $22.83 2,689 $21.39
===== ====== ===== ====== ===== ======
</TABLE>
<TABLE>
<CAPTION>
Remaining
Range of Outstanding Exercisee Contractural Exercisable Exercise
Exercise at December Price Per Life at December Price Per
Prices 31, 1996 Option (Years) 31, 1996 (1) Option
------ -------- ------ ------- ------------ ------
$16.50 to
<C> <C> <C> <C> <C> <C>
$22.50 1,223 $19.71 4.4 1,223 $19.71
$26.38 to
$28.88 645 $26.44 7.2 546 $26.42
$29.25 to
$35.13 383 $29.34 8.3 142 $29.33
$40.56 to
$40.75 421 $40.75 9.3 - -
----- -----
$16.50 to
$40.75 2,672 $26.03 6.4 1,911 $22.34
===== =====
</TABLE>
(1) Options exercisable at December 31, 1995 and 1994 (in thousands)
were 1,705 and 1,671, respectively.
The following represents pro forma information as if the Company
recorded compensation cost using the fair value of the issued
compensation instrument (the results may not be indicative of the
actual effect on net income in future years):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Net earnings as reported $74.7 $48.9
Assumed stock compensation cost 2.6 0.9
----- -----
Pro forma net earnings $72.1 $48.0
===== =====
Earnings per share as reported $2.58 $1.70
Pro forma earnings per share $2.49 $1.67
</TABLE>
The Company uses the Black-Scholes valuation model for estimating
the fair value of its compensation instruments. The following
represents the estimated fair value of options granted and the
assumptions used for calculation:
<TABLE>
<CAPTION>
1996 1995
Estimated fair value per option
<S> <C> <C>
granted $14.56 $11.29
Average exercise price per option
granted $40.72 $29.33
Stock volatility 18.0% 20.6%
Risk-free interest rate 6.7% 7.2%
Annual rate of forfeiture 3.0% 3.0%
Option term - years 10.0 10.0
Stock dividend yield 1.5% 1.5%
</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.
Employee purchases are settled at six month intervals as of June 30
and December 31. The difference between the purchase price and fair
value is not material. Employees purchased 175,257 shares in 1996.
At December 31, 1996, 916,122 shares remain available for use in
the plan.
Treasury Stock
The Company is authorized to purchase on the open market up to
1,000,000 shares of the Company's common stock each year through
December 1998. Treasury shares have been, and are expected to
continue to be, reissued to satisfy the Company's obligations under
existing employee benefit plans. At December 31, 1996, 1,124,345
shares remain in treasury of which 1,026,652 are held by the Benefit
Equity Fund having a market value of $39.4 at December 31, 1996.
In January 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 is funded by
existing shares in treasury as well as from additional shares the
Company purchases 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
and a net expense of $5.1 (net of tax benefit of $3.0) as the
cumulative effect of the accounting change. Additional accruals for
postemployment benefits, subsequent to adopting SFAS 112, were
approximately $0.8 in 1996 and 1995, and $0.7 in 1994.
8. Retirement Benefits
Pension Plans
The Company has pension benefits covering substantially all of its
employees. Consolidated pension expense was $18.3 in 1996, $13.3 in
1995, and $17.8 in 1994.
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>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost $ 10.8 $ 7.1 $ 10.2
Interest cost 25.7 24.0 24.4
Actual return on
plan assets (23.2) (23.8) (23.0)
Net amortization
and deferral 1.0 1.2 2.2
------ ------ ------
Total $ 14.3 $ 8.5 $ 13.8
====== ====== ======
</TABLE>
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. The funded status of the Company's
pension liabilities and assets and amounts recognized in the Company's
consolidated financial statements with respect to the U.S. plan were:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Vested benefit obligation $312.2 $314.6
------ ------
Accumulated benefit obligation $314.2 $316.9
Projected compensation increases 45.0 41.9
------ ------
Projected benefit obligation 359.2 358.8
Plan assets at fair market value (314.1) (273.4)
------ ------
Projected benefit obligation
in excess of plan assets 45.1 85.4
Unrecognized transition obligation (1.9) (2.4)
Unrecognized net loss (35.6) (54.5)
Unrecognized prior service cost (7.3) (8.2)
Required minimum pension liability
(unfunded accumulated benefits) - 24.5
------ ------
Accrued pension cost
in other liabilities $ 0.3 $ 44.8
====== ======
Assumptions used in calculations
Expected long-term rate of return 9.8% 9.8%
Discount rate 7.8% 7.0%
Average rate of increase in compensation 4.3% 4.3%
</TABLE>
In accordance with the provisions of Statement of Financial
Accounting Standards No. 87, "Employers' Accounting for Pensions," the
Company recorded, as shown in the above table, an additional minimum
liability during 1995 representing the excess of the accumulated
benefit obligation over the fair value of plan assets and accrued
pension cost. The liability was offset by an intangible asset up to
the amount of unrecognized prior service cost, with the remaining
balance reported as a reduction to stockholders' equity, net of tax.
The minimum pension liability was not required at December 31, 1996.
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 exceed accrued
liabilities and vested benefits. Pension expense for plans outside of
the U.S. was $4.0 in 1996, $4.8 in 1995, and $4.0 in 1994.
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 $4.5 in 1996,
$3.6 in 1995, and $3.8 in 1994. Employees generally become fully
vested with respect to Company contributions after three years of
service with the Company.
Health Care and Life Insurance 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.
The net periodic cost for postretirement health care and life
insurance benefits includes the following:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost $1.4 $1.0 $2.0
Interest cost 2.8 3.0 4.9
---- ---- ----
Total $4.2 $4.0 $6.9
==== ==== ====
</TABLE>
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:
<TABLE>
<CAPTION>
1996 1995
---- ----
Accumulated postretirement benefit
obligations
<S> <C> <C>
Retirees $27.2 $33.3
Fully eligible active plan
participants 2.2 2.0
Other active plan participants 17.3 19.3
----- -----
Total obligation 46.7 54.6
Plan assets - -
----- -----
Accumulated postretirement benefit
obligation in excess of plan assets 46.7 54.6
Unrecognized net gain 17.8 6.5
----- -----
Accrued postretirement benefit
liability $64.5 $61.1
===== =====
</TABLE>
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
Assumptions used in
calculations
<S> <C> <C> <C>
Healthcare cost trend rate 8.0% 8.0% 8.0%
Healthcare cost trend rate
at end of eight years 5.5% 5.5% 5.5%
Discount rate 7.8% 7.0% 9.0%
</TABLE>
An assumed 1% increase in the healthcare cost trend rate for each year
would have resulted in an increase in the net periodic pension cost to
$5.1 in 1996, $4.7 in 1995 and $8.1 in 1994 and an accumulated post
retirement benefit obligation of $71.5 in 1996 and $67.9 in 1995.
Employees outside the U.S. generally receive similar benefits from
government-sponsored plans.
9. 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. The Company is indemnified by SmithKline Beecham p.l.c. 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.
The Company continues to operate a groundwater treatment system on
previously owned land in Irvine, California. Areas of soil
contamination remain on the property that may require remediation in
the future. Also related to this property is a pending lawsuit,
alleging damages caused by the pollution of the property, against the
party who purchased the property from the Company. Although the
Company is not a defendant in the suit, it is obligated to contribute
to any resolution of the matter. The Company believes it has
established adequate reserves for ongoing remediation and the outcome
of the litigation, and that any liability beyond that provided for
will not have a material adverse effect on the Company's operations or
financial position.
Litigation
In 1995, a lawsuit was filed against the Company 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 seeks monetary damages of not less
than $150.0. The Company believes that the plaintiffs' claims are
without merit and that the Company has good and sufficient defenses to
each such claim.
Since 1992 five 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.
Local authorities in Palermo (Sicily), Italy are investigating the
activities of officials at a local government hospital and laboratory
as well as representatives of the principal worldwide companies
marketing diagnostics equipment in Italy, including the Company's
Italian subsidiary. The inquiry focuses on past leasing practices for
placement of diagnostics equipment which were common industrywide
practices throughout Italy, but now are alleged to be improper. The
Company believes the evidence in the case is weak and insufficient to
support a criminal conviction.
Through its Hybritech acquisition (see note 4 "Acquisitions"), the
Company obtained a patent, referred to as the Tandem Patent, that
generates royalty income. The Tandem Patent is involved in an
interference action in the U.S. Patent and Trademark Office with a
patent application owned by La Jolla Cancer Research Foundation (the
"Foundation"). If the Foundation wins the interference, the Company
would lose the Tandem Patent and the royalty income, and a new patent
would be issued to the Foundation covering those products. The
Company believes it has the stronger case and expects to prevail.
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 any such lawsuits, or the matters described
above, will have a material adverse effect on its operations or
financial position.
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 $32.9 in 1996, $32.4 in 1995, and
$27.3 in 1994.
Minimum annual rentals payable under non-cancelable operating
leases aggregate $46.4, which is payable $13.8 in 1997, $10.0 in
1998, $5.7 in 1999, $3.7 in 2000, $2.9 in 2001, and $10.3 thereafter.
Other
In February of 1997, the Board of Directors declared a quarterly
dividend of $0.15 per share, which approximates $4.2 in total. This
dividend is payable March 13, 1997 to stockholders of record on
February 21, 1997.
10. Derivatives
The Company manufactures its products principally in the United
States, but generates approximately 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. Typically, 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, 1996, the Company had foreign currency
swaps totaling $89.8 expiring at various dates through March 1997.
At December 31, 1995, the Company had foreign currency swaps totaling
$111.2.
The Company uses purchased foreign currency options, forward
contracts and complex options, consisting of purchased options and
call spreads, to hedge anticipated transactions with its foreign
customers. Anticipated transactions represent estimated minimum
probable sales, denominated in foreign currencies, not in excess of
one year from the balance sheet date. Anticipated transactions are
estimated based upon historical, budgeted and forecasted operations
at the Company's international subsidiaries. The hedge instruments
mature at various dates with resulting gains or losses recognized at
the maturity date, which approximate the transaction date. The
contract values are summarized as follows at December 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Purchased Options $28.5 $46.0
Forward Contracts 63.6 36.0
Complex Options - 32.3
</TABLE>
The Company occasionally uses purchased foreign currency
contracts to hedge the market risk of a subsidiary's net asset
position. At December 31, 1996 and 1995, the Company had $3.5 and
$9.4 purchased foreign currency options related to net asset
positions, expiring in the first quarter of 1997 and 1996,
respectively. The purchased foreign currency options resulted in
favorable foreign currency translation adjustments of $1.2 at
December 31, 1996 and 1995.
In 1996, the Company purchased foreign currency call options
totaling $45.9 at December 31, 1996 which did not qualify for hedge
accounting treatment. The call options were purchased to create
synthetic puts when combined with forward contracts. The call
options mature at various dates throughout 1997 with resulting gains
recognized at maturity. The contracts' average value during the
period approximated the year end value.
In December 1996, the Company entered into a $50.0 interest rate
swap on its $100.0 debenture in which the Company receives a fixed
interest rate of 6.1% and pays a floating interest rate equal to the
three-month LIBOR less 27 basis points (5.2% at December 31, 1996).
The interest rate swap is accounted for as a hedge.
The Company is exposed to credit risk in the event of non-
performance of the counterparties to its foreign currency contracts 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.
The disclosed derivatives are indicative of the volume and types of
instruments used throughout the year.
Unrealized gains or losses on derivative instruments were not
material at December 31, 1996.
11. 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>
1996 1995 1994
---- ---- ----
Geographic areas
Sales
<S> <C> <C> <C>
United States-domestic $ 738.5 $ 606.1 $ 588.2
United States-export 36.0 28.9 24.2
Europe 318.6 312.9 292.9
Asia and other areas 163.1 160.2 153.8
Transfers between areas (228.2) (178.0) (170.5)
-------- ------- -------
Total sales $1,028.0 $ 930.1 $ 888.6
======== ======= =======
Operating income
United States before
research and
development $ 180.1 $ 137.2 $ 147.7
Research and
development (a) (108.4) (91.7) (91.5)
------- ------- -------
United States 71.7 45.5 56.2
Europe 45.4 28.2 22.5
Asia and other areas 5.4 9.4 8.9
------- ------- -------
Total operating
income (b) $ 122.5 $ 83.1 $ 87.6
======= ======= =======
Identifiable assets
United States $ 503.3 $ 446.3 $ 381.8
Europe 243.1 228.8 213.0
Asia and other areas 94.0 89.4 88.8
Corporate 119.7 143.3 145.5
------- ------- -------
Total assets $ 960.1 $ 907.8 $ 829.1
======= ======= =======
</TABLE>
(a) The Company's principal research and development efforts are
performed in the United States.
(b) Includes restructuring charges of $27.7 and $11.3 in 1995 and
1994, respectively.
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, 1996 trade
receivables and other by geographic area were United States $120.9,
Europe $135.8 and Asia and other areas $52.8. At December 31, 1995
trade receivables and other by geographic area were United States
$92.9, Europe $141.6 and Asia and other areas $54.3.
12. Supplementary Information
Allowance for Doubtful Accounts
<TABLE>
<CAPTION>
Balance at Additions Balance
Beginning Charged to Cost at End of
of Period and Expenses Deductions Period
<s <C> <C> <C> <C> <C> <C>
December 31, 1996 $ 9.1 $2.2 (a) $ 1.1 (b) $ 9.6
0.6 (d)
December 31, 1995 10.4 0.7 (a) 2.8 (b) 9.1
(0.8)(d)
December 31, 1994 11.9 0.7 (a) 2.6 (b) 10.4
0.1 (c) (0.3)(d)
</TABLE>
(a) Provision charged to earnings.
(b) Accounts written-off.
(c) Collection of accounts previously written-off.
(d) Adjustments from translating at current exchange rates.
___________________________________________________
QUARTERLY INFORMATION (Unaudited)
In millions, except amounts per share
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------
1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $224.8 $205.0 $265.2 $230.6 $252.8 $229.9 $285.2 $264.6
Cost of sales 104.9 97.2 123.6 108.0 117.8 106.9 131.5 115.1
Marketing,
general and
administrative 73.7 65.2 83.3 73.8 77.7 73.1 84.6 88.3
Research and
development 24.7 22.1 27.3 22.0 26.1 22.9 30.3 24.7
Restructuring
charge - 3.1 - 3.4 - 4.1 - 17.1
Operating income 21.5 17.4 31.0 23.4 31.2 22.9 38.8 19.4
Earnings before
income taxes 20.5 15.6 28.3 20.9 27.9 21.0 34.8 14.9
Net earnings $ 13.7 $ 10.3 $ 19.0 $ 13.8 $ 18.7 $ 13.9 $ 23.3 $ 10.9
Net earnings per
share $ 0.47 $ 0.36 $ 0.65 $ 0.48 $ 0.65 $ 0.48 $ 0.81 $ 0.38
Dividends per $ 0.13 $ 0.11 $ 0.13 $ 0.11 $ 0.13 $ 0.11 $ 0.13 $ 0.11
share
Stock price -
High $39 1/8 $31 1/2 $41 1/8 $30 5/8 $39 7/8 $30 5/8 $39 1/4 $35 7/8
Stock price -
Low $33 1/2 $27 $35 1/8 $26 1/2 $32 $26 7/8 $35 $30 1/8
</TABLE>
<PAGE>
REPORT BY MANAGEMENT
The consolidated financial statements and related information
for the years ended December 31, 1996, 1995 and 1994 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 four 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
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, 1996
and 1995, and the related consolidated statements of earnings,
stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1996. 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, 1996 and 1995, and the results of their operations and
their cash flows for each of the years in the three-year period
ended December 31, 1996 in conformity with generally accepted
accounting principles.
As discussed in Note 7 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.
/s/ KPMG PEAT MARWICK
Orange County, California
January 17, 1997
<PAGE>
Other Information
Annual Meeting
The annual meeting of stockholders will be held on April 3,
1997 at the Company's headquarters in Fullerton, California.
Each stockholder of record will receive formal notice of the meeting
together with the proxy statement and proxy card. The record date
for the 1997 Annual Meeting was February 4, 1997.
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.
Michael J. Whelan, Director
Office of Investor Relations, M/S A-37-C
2500 Harbor Boulevard
Fullerton, California, 92834-3100
Telephone: 714-773-7620
FAX: 714-773-8111
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.
Stock Symbol
Beckman's stock is traded on the New York Stock Exchange under
the stock symbol BEC.
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: 212-324-1644
Select 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 (Hong Kong), Ltd.
Beckman Instruments (Ireland), Inc.
Beckman Instruments (Japan), Ltd.
Beckman Instruments (United Kingdom), Ltd.
Beckman Instruments International S.A.
Hybritech Incorporated
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
Hybritech Incorporated 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 Instruments (Hong Kong) Ltd. Hong Kong
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 23
The Board of Directors
Beckman Instruments, Inc.:
We consent to incorporation by reference in the registration statements
(No. 333-02317) on Form S-3 and (Nos. 33-31573, 33-31862, 33-41519,
33-51506, 33-55778, 33-66990, 33-66988, and 33-65155) on Form S-8 of Beckman
Instruments, Inc. of our report dated January 17, 1997, relating to the
consolidated balance sheets of Beckman Instruments, Inc. and subsidiaries
as of December 31, 1996 and 1995, and the related consolidated statements
of earnings, stockholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 1996, which report appears
in the December 31, 1996 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.
/s/ KPMG Peat Marwick LLP
Orange County, California
February 12, 1997
<TABLE> <S> <C>
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This schedule contains summary financial information extracted from the
Consolidated Balance Sheet and the Consolidated Statement of
Earnings and is qualified in its entirety by reference to such financial
statements.
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