FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
(X)Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
OR
( )Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 001-10109
BECKMAN INSTRUMENTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-104-0600
(State of Incorporation) (I.R.S. Employer
Identification No.)
2500 Harbor Boulevard, Fullerton, California 92834
(Address of principal executive offices) (Zip Code)
(714) 871-4848
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( ).
APPLICABLE ONLY TO CORPORATE ISSUERS:
Outstanding shares of common stock, $0.10 par value, as of
July 9, 1997: 28,337,367 shares.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of
Earnings for the three and six month periods
ended June 30, 1997 and 1996
Condensed Consolidated Balance Sheets
as of June 30, 1997 and December 31, 1996
Condensed Consolidated Statements of
Cash Flows for the six month periods
ended June 30, 1997 and 1996
Notes to Condensed Consolidated
Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of
Security-Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
BECKMAN INSTRUMENTS, INC.
SECOND QUARTER REPORT
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in Millions, Except Amounts Per Share)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $270.6 $265.2 $502.5 $490.0
Operating costs and expenses:
Cost of sales 130.7 123.6 240.3 228.5
Selling, general and
administrative 79.7 83.3 154.5 157.0
Research and development 28.6 27.3 52.6 52.0
------ ------ ------ ------
239.0 234.2 447.4 437.5
------ ------ ------ ------
Operating income 31.6 31.0 55.1 52.5
Nonoperating expense:
Interest income (0.3) (1.4) (2.2) (2.7)
Interest expense 4.3 4.5 7.1 7.6
Other, net (2.1) (0.4) (1.8) (1.2)
------ ------ ------ ------
1.9 2.7 3.1 3.7
------ ------ ------ ------
Earnings before income taxes 29.7 28.3 52.0 48.8
Income tax provision 8.9 9.3 15.6 16.1
------ ------ ------ ------
Net earnings $ 20.8 $ 19.0 $ 36.4 $ 32.7
====== ====== ====== ======
Weighted average common shares and
common share equivalents - 28,698 29,034 28,788 29,147
(thousands)
Net earnings per share $ 0.72 $ 0.65 $ 1.26 $ 1.12
Dividends declared per share $ 0.15 $ 0.13 $ 0.30 $ 0.26
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN INSTRUMENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
Unaudited
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
Assets
Current assets:
Cash and equivalents $ 17.3 $ 34.6
Short-term investments 0.4 8.1
Trade receivables and other 330.7 309.5
Inventories 211.7 190.4
Deferred income taxes 22.0 21.4
Other current assets 18.0 15.4
------- ------
Total current assets 600.1 579.4
Property, plant and equipment, net 295.0 263.5
Deferred income taxes 50.6 50.8
Other assets 69.9 66.4
------- ------
Total assets $1,015.6 $960.1
======== ======
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 28.1 $ 19.4
Accounts payable and accrued expenses 196.2 208.2
Income taxes 67.9 51.7
------- ------
Total current liabilities 292.2 279.3
Long-term debt, less current maturities 252.4 176.6
Other liabilities 84.5 105.3
------- ------
Total liabilities 629.1 561.2
Stockholders' equity 386.5 398.9
------- ------
Total liabilities and
stockholders' equity $1,015.6 $960.1
======== ======
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN INSTRUMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Millions)
Unaudited
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
---- ----
<S> <C> <C>
Cash Flows from Operating Activities
Net earnings $ 36.4 $ 32.7
Adjustments to reconcile net earnings to
net cash provided (used) by operating activities:
Depreciation and amortization 45.7 41.3
Net deferred income taxes (1.0) 0.1
Changes in assets and liabilities
(net of acquisitions):
Trade receivables and other (18.8) ( 2.0)
Inventories (4.0) (33.0)
Accounts payable and accrued expenses (21.2) 5.4
Restructuring reserve (0.8) ( 5.5)
Accrued income taxes 16.2 7.0
Other (27.6) (25.9)
------ ------
Net cash provided
by operating activities 24.9 20.1
------ ------
Cash Flows from Investing Activities
Additions to property, plant and equipment (42.6) (47.5)
Net disposals of property, plant
and equipment 6.8 5.4
Purchases of short-term investments 7.6 (1.5)
Investments 0.3 (1.0)
Acquisition of product lines (35.0) -
------ ------
Net cash used by investing activities (62.9) (44.6)
------ ------
Cash Flows from Financing Activities
Dividends to stockholders (8.4) (7.4)
Proceeds from issuance of stock 11.6 10.6
Purchase of treasury stock (40.6) (27.3)
Notes payable borrowings, net 5.2 5.6
Long-term debt borrowings 52.5 107.7
Long-term debt reductions - (80.5)
Other - 0.1
Net cash provided ------ ------
by financing activities 20.3 8.8
Effect of exchange rates on cash
and equivalents 0.4 0.2
------ ------
Decrease in cash and equivalents (17.3) (15.5)
Cash and equivalents -- beginning of period 34.6 26.2
------ ------
Cash and equivalents -- end of period $ 17.3 $ 10.7
====== ======
Supplemental Disclosures of
Cash Flow Information
Cash paid during the period for:
Interest $ 6.0 $ 8.4
Income taxes $ 12.1 $ 8.5
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN INSTRUMENTS, INC.
Notes To
Condensed Consolidated Financial Statements
(Dollars in Millions, Except Amounts Per Share)
1 Report by Management
In the opinion of the Company, the accompanying unaudited
condensed consolidated financial statements reflect all
adjustments, consisting only of normal recurring accruals,
necessary for a fair presentation of the results for the periods.
The statements are prepared in accordance with the requirements
of Form 10-Q. They do not include all disclosures required by
generally accepted accounting principles or those made in the
Annual Report on Form 10-K for 1996 which is on file with the
Securities and Exchange Commission.
The results of operations for the period ended June 30, 1997 are
not necessarily indicative of the results to be expected for the
year ending December 31, 1997.
2 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 sales and expenses during the reporting
period. Actual results could differ from those estimates.
3 Stock-Based Compensation
The Company implemented Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS 123) in 1996.
As permitted by SFAS 123, the Company continues to follow the guidance
of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Consequently, compensation related to stock options
is the difference between the grant price and the fair market value of the
underlying common shares at the grant date. Generally, the Company issues
stock options with a grant price equal to the fair market value of the
Company's common shares. The Company provides proforma disclosures as
required by SFAS 123 for its Annual Report on Form 10-K.
4 Net Earnings Per Share
The net earnings per share includes the effect of common share
equivalents. Common share equivalents represent the dilutive effect
of outstanding stock options. The following table summarizes the
impact of the dilutive effect of common share equivalents on net
earnings per share:
<TABLE>
<CAPTION>
Six Months ended June 30, 1997 1996
---- ----
Net Net
Earnings Earnings
Shares Per Share Shares Per Share
------ --------- ------ ---------
<S> <C> <C> <C> <C>
Weighted average shares of common
stock outstanding 27.8 $ 1.31 28.2 $ 1.16
Common share equivalents 1.0 (0.05) 0.9 (0.04)
---- ------ ---- ------
Weighted average common and common
share equivalents 28.8 $ 1.26 29.1 $ 1.12
==== ====== ==== ======
</TABLE>
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards No. 128 (SFAS
128), "Earnings Per Share." SFAS 128 simplifies the computation of
earnings per share ("EPS") currently required in Accounting Principles
Board (APB) Opinion No. 15, "Earnings Per Share," by replacing primary
and fully diluted EPS with basic and diluted EPS. Under SFAS 128,
basic EPS is calculated by dividing net earnings by the weighted-
average common shares outstanding during the period. Diluted EPS
reflects the potential dilution to basic EPS that could occur upon
conversion or exercise of securities, options, or other such items, to
common shares using the treasury stock method based upon the weighted-average
fair value of the Company's common shares during the period. SFAS 128 is
required to be adopted by the Company in its year-end 1997 Annual Report.
Had the Company been required to adopt SFAS 128 currently, the second
quarter basic EPS for 1997 and 1996, would have been $0.75 and $0.68
respectively, and diluted EPS would have equaled the current and historically
reported net (primary) earnings per share.
5 Inventories
Inventories are comprised of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
Finished products $126.3 $123.8
Raw materials, parts and assemblies 72.0 53.0
Work in-process 13.4 13.6
------ ------
$211.7 $190.4
====== ======
</TABLE>
6 Acquisition
On April 30, 1997, the Company consummated an agreement to purchase
the Access immunoassay product line, including the related manufacturing
facility, from Sanofi Diagnostics Pasteur. The acquisition also
established an ongoing alliance in immunochemistry between Beckman and
Sanofi Diagnostic Pasteur. The acquisition purchase price was not
material to the Company and the transaction has been accounted for as a
purchase.
7 Contingencies
As previously reported, although not a named defendant, the Company is
obligated to contribute to any resolution of a lawsuit filed by one of
the previous owners and developers of property in Irvine, California
formerly owned by the Company. The Company was recently informed that
the lawsuit was settled. The Company is currently disputing its portion
of the settlement and believes that any additional liability beyond
that provided for will not have a material adverse effect on the
Company's operations or financial position.
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.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
(Dollars in millions, except per share amounts)
Second quarter earnings and earnings per share were $20.8 and $0.72,
representing an increase of 9% and 11% over the comparable period in
the prior year. Earnings and earnings per share in the first six
months were $36.4 and $1.26, representing an increase of 11% and 12.5%
over the comparable period in the prior year.
We experienced sales growth of 2%, 6% in constant currency, over the
second quarter of the prior year and 3%, 5% in constant currency, over
the first six months of the prior year. Sales growth resulted from
our ability to penetrate selected markets. Sales attributable to sales-type
leases for the second quarter were consistent with the comparable
quarter in 1996. However, we placed more instruments with customers
using operating-type leases versus sales-type leases in the six month
period ended June 30, 1997, when compared to the prior year. This
caused a 1% decrease in sales attributable to sales-type leases, as
revenues are recognized over the lease term for operating-type leases
and at inception, for sales-type leases.
Gross profit as a percentage of sales decreased slightly for the
second quarter and for the six months ended June 30, 1997. This was
due to unfavorable foreign currency fluctuations and pricing pressures
from market competition.
As a result of our ability to manage operating costs and expenses and
non-operating expenses, while at the same time to grow sales, earnings
before income taxes increased. In the second quarter, earnings before
income taxes increased $1.4 or 5% over the prior year. For the half
year, earnings before income taxes increased $3.2 or 7%.
Financial Condition
In the first six months of 1997, net cash provided by operating
activities was $24.9 compared with $20.1 for the comparable period in
the prior year. Increased net earnings and depreciation, offset by
fluctuations in trade receivables, accounts payable, accrued expenses
and inventory levels contributed to the increase.
Net cash used by investing activities for the first six months of 1997
increased $18.3 from the comparable period in 1996, to $62.9. The
acquisition of the Access immunoassay product line was the main
contributor to this increase. This increase was offset by decreases
in the purchases of property, plant and equipment, as well as proceeds
from the sale of short term investments that did not occur in the prior
year.
Net cash provided by financing activities increased $11.5 for the
first six months of 1997 when compared to the same period in the prior
year. This was caused by an increase in net borrowings to fund
operations offset by an increase in the purchase of treasury stock.
At June 30, 1997 the ratio of debt-to-capital was 42% compared to 33%
at December 31, 1996. The increase was driven by our continuing
process to repurchase Company shares. Additionally, the purchase of the
Access immunoassay product line, contributed to the increase. The ratio
of current assets to current liabilities at June 30, 1997 of 2.1 is
comparable to December 31, 1996.
On June 5, 1997, the Company paid a quarterly cash dividend of $0.15
per share of common stock for a total of $4.3.
Business Climate
The European recession and cost containment initiatives in several
European governmental and health care systems continue to unfavorably
impact both the diagnostics and the life sciences markets.
Delays in pharmaceutical capital spending due to company
consolidations and constraints on research and development spending,
continue to affect the life sciences market.
Consequently, sales in the short term may be affected by cost
containment initiatives in both the U.S. and European health care
systems.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes In Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
4.1 Amendment 1996-2 to the Company's
Savings and Investment Plan,
adopted effective December 3, 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.
4.2 Amendment 1997-1 to the Company's
Savings and Investment Plan,
adopted June 9, 1997, 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.
4.3 Amendment 1997-2 to the Company's
Savings and Investment Plan,
adopted June 9, 1997, 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.
10.1 The Company's Annual Incentive Plan for 1997,
adopted by the Company in 1997.
10.2 Form of Restricted Stock Agreement, effective
as of January 3, 1997, between the Company and
certain of its Executive Officers and certain
other key employees.
11. Statement re Computation of Per Share Earnings:
This information is set forth in Note 4 Net
Earnings Per Share of the Condensed Consolidated
Financial Statements included in Part I herein.
15. Independent Accountants' Review Report,
July 16, 1997
27. Financial Data Schedule
b) Reports on Form 8-K
None.
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
BECKMAN INSTRUMENTS, INC.
(Registrant)
Date: July 17, 1997 by WILLIAM H. MAY
William H. May
Vice President, General
Counsel and Secretary
Date: July 17, 1997 by D. K. WILSON
Dennis K. Wilson
Vice President, Finance and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
FORM 10-Q, FIRST QUARTER, 1997
Exhibit
Number Description
- ------- -----------
4.1 Amendment 1996-2 to the Company's Savings and
Investment Plan, adopted effective December 3,
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.
4.2 Amendment 1997-1 to the Company's Savings and
Investment Plan, adopted June 9, 1997, 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.
4.3 Amendment 1997-2 to the Company's Savings and
Investment Plan, adopted June 9, 1997, 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.
10.1 The Company's Annual Incentive Plan for 1997,
adopted by the Company in 1997.
10.2 Form of Restricted Stock Agreement, dated as
of January 3, 1997, between the Company and
certain of its Executive Officers and certain
other key employees.
11. Statement re Computation of Per Share Earnings:
This information is set forth in Note 4 Net
Earnings Per Share of the Condensed Consolidated
Financial Statements included in Part I herein.
15. Independent Accountants' Review Report, July 16, 1997
27. Financial Data Schedule
EXHIBIT 10.1
BECKMAN INSTRUMENTS, INC.
FY '97 ANNUAL INCENTIVE PLAN (AIP)
Eligibility
Participation in the Annual Incentive Plan (AIP) is limited to
key senior executives designated by the Chief Executive Officer
and Chief Operating Officer under requirements established by the
Organization and Compensation Committee of the Board of
Directors. By copy of this document, you have been approved for
participation in the plan for Fiscal year 1997.
Plan Elements
Your incentive award opportunity is directly linked to four
financial measures deemed critical to the company's strategy for
growth and increased profitability, plus there is an individual
performance compensation which focuses on your achievements as
measured through the EXCEL performance management process. The
benchmark financial measures are:
1) Growth in Earnings per Share (EPS)
2) Growth in Company Sales
3) Pretax margin, and
4) Growth in Economic Value Added (EVA)
Because of its importance, a threshold level of EPS growth must be
attained before there is incentive award eligibility for any of the four
financial measures and individual performance. Achievement of this gate
opens up each element of the plan on a stand-alone basis.
Range of Awards
Depending upon the level of company performance achieved for the
four financial measures listed above and the employee's
performance as measured through EXCEL, the resulting incentive
award will range from a minimum of 13% to a maximum of 75% of the
employee's annual base earnings. The incentive award range for
the Chief Executive Officer and the Chief Operating Officer is
19% to 115%. No incentive award will be paid if the company
fails to achieve at least two-thirds of the targeted growth in
earnings per share.
Plan Administration
The AIP is administered on behalf of the company by the Board
Organization and Compensation Committee. This responsibility
includes interpretation of the plan and the sole and absolute
discretion to establish plan provisions, performance measures,
performance targets, specific award levels and participation
eligibility. All Committee interpretations, determinations, and
actions will be final, conclusive and binding on all participants.
General Provisions
1) All financial results will be measured on an "as reported"
basis with no adjustment for any effect of currency
fluctuations.
2) To be eligible for an AIP incentive award, a participant
must be in active pay status at the end of the measurement
period. Partial payments may be considered, at the full
discretion of the Organization and Compensation Committee,
for retirees as defined by the company's pension plan, who
leave before the end of the fiscal year.
3) The Committee may determine in its sole and absolute
discretion, the status and incentive award level for any
participant whose responsibilities are changed, and of any
key employee who becomes eligible to participate in the plan
after the beginning of the performance period.
4) The Committee at any time and from time to time may
terminate, suspend, modify or amend the plan. Nothing in
this plan or any award granted shall confer on a participant
any right to continue in the employ of the company or
interfere in any way with the right of the company to
terminate any employment.
*The acronym EVA for economic value added is attributed to Stern
Stewart & Co.
EXHIBIT 10.2
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933.
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement") is made
and entered into as of the ___ day of ________, 1997, between
Beckman Instruments, Inc., a Delaware corporation (the
"Company"), and ______________, an employee of the Company or a
Subsidiary of the Company ("Employee").
WITNESSETH
WHEREAS, 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;
WHEREAS, the Plan provides for the issuance of shares of the
Company's Common Stock, subject to certain restrictions thereon; and
WHEREAS, pursuant to the Plan, the Organization and
Compensation Committee of the Company's Board of Directors (the
"Committee") has determined that it would be in the best
interests of the Company and its stockholders to grant to the
Employee effective as of January 3, 1997 (the "Award Date"), a
Restricted Stock award ("Restricted Stock Award" or "Award") upon
the terms and conditions hereinafter set forth;
WHEREAS, the Organization and Compensation Committee
established the performance goals which are required to trigger
the lapse of restrictions, in January 1997 at which time the
outcome of such performance goals was substantially uncertain and
remains uncertain at this time;
NOW, THEREFORE, in consideration of past services rendered
to the Company and/or its Subsidiaries and the mutual promises
and covenants made herein and the mutual benefits to be derived
herefrom, the parties hereto agree as follows:
1. Definitions.
Wherever the following terms are used in this Agreement they
shall have the meanings specified below, unless the context
clearly indicates otherwise.
1.1 "Change of Control" shall have the meaning stated
herein and 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 of this Agreement, 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 composing 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 was 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 (A) 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 (B) 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.
1.2 "Common Stock" means common stock of the Company, par
value $.10 per Share.
1.3 "Restricted Stock" means Common Stock of the Company
awarded under this Agreement and subject to the Restrictions
imposed hereunder.
1.4 "Restrictions" means the Transferability Restrictions
and Vesting Restrictions.
1.5 "Retirement" means "Early Retirement," "Normal
Retirement" or "Late Retirement" as such terms are defined under
the provisions of the Beckman Instruments, Inc. Pension Plan or
other applicable retirement policy or plan as determined by the
Committee in its sole discretion without regard to whether
Employee commences to receive retirement benefits under such
plan.
1.6 "Secretary" means the Secretary of the Company.
1.7 "Share" or "Shares" means shares of Common Stock of the
Company.
1.8 "Subsidiary" means 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.
1.9 "Termination of Employment" means 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.
1.10 "Total Disability" shall mean that the Employee (1) has
terminated employment with the Company and all its Subsidiaries,
and (2) at the date of such termination, is disabled within the
meaning of Section 22(e)(3) of the Code. Employee must furnish
proof of disability in such form and manner, and at such times,
as the Company may require. A consideration of disability
hereunder does not mean or imply that Employee qualifies for any
disability-related benefits under any other plan or program of
the Company or any Subsidiary, and each such other plan or
program is or may be governed by separate requirements which
differ from those applied herein.
1.11 "Transferability Restrictions" means the restrictions
on sale or other transfer imposed upon the Restricted Stock under
this Agreement.
1.12 "Treasurer" shall mean the Treasurer of the Company.
1.13 "Vesting Restrictions" means the risk of forfeiture
imposed upon the Restricted Stock under this Agreement.
2. Grant of Award.
2.1 Issuance of Restricted Stock. Subject to the terms of
this Agreement, the Company hereby grants to the Employee this
Award with respect to an aggregate of ______ Shares (subject to
adjustment as described in Section 7) of Restricted Stock.
2.2 Consideration to Company. As partial consideration for
the grant 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 for (i) a period of one year
from the Award Date or (ii) the period which commences on the
Award Date and ends on the date that the Restrictions first lapse
under Section 4.1(a), whichever period is less. Nothing
contained 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 constitute any contract or agreement of
employment. In addition, nothing contained in this Agreement or
in the Plan shall interfere in any way with the right of the
Company to (i) terminate the employment of the Employee at any
time for any reason whatsoever, with or without cause, or (ii) reduce
the compensation or other benefits received by the Employee from
the rate in existence on the Award Date.
3. Restrictions.
3.1 Forfeiture of Restricted Stock. All Shares of
Restricted Stock set forth in Section 2.1 shall be forfeited
immediately upon a Termination of Employment for any reason,
except to the extent any Vesting Restrictions have lapsed as
provided in Sections 4.1 and 4.2 below.
3.2 Legend. The Company shall issue a certificate or
certificates for the Shares of Restricted Stock, registered in
the name of the Employee, which certificate(s) shall be held in
accordance with Section 5. Certificates representing Shares of
Restricted Stock shall, until all Restrictions lapse and new
certificates are issued pursuant to Section 6 below, 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."
3.3 Restricted Stock Not Transferable. Prior to the lapse
of Transferability Restrictions, 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
thereof shall be null and void and of no effect; provided,
however, that this Section 3.3 shall not prevent transfers by
will or by the applicable laws of descent and distribution.
3.4 Rights as Stockholder. Except as otherwise provided
herein, the holder of the Restricted Stock shall have the voting
rights of a stockholder with respect to the Restricted Stock;
provided, however, there is no right to accrue or to receive
dividends or other distributions paid or made with respect to the
Restricted Stock until all Restrictions have lapsed.
4. Removal of Restrictions.
4.1 Conditions for Removal.
(a) The Restrictions shall lapse with respect to 50%
of the number of Shares of Restricted Stock set forth in Section
2.1 as of the last day of any 30-consecutive calendar day period
during which the average of the closing prices per share of the
Common Stock (as reported on the principal securities exchange
(the "Exchange") on which the Common Stock is then trading) on
all trading days in such period is at least an amount determined
by the Organization and Compensation Committee of the Board of
Directors that is significantly higher than the stock price on
the award date, provided, however, that such 30-consecutive
calendar day period must end no later than December 31, 1998.
Furthermore, if no shares of Common Stock of the Company trade on
any Exchange business days during which securities are normally
traded, then the 30-consecutive calendar day period shall be
extended by that number of Exchange business days on which the
Company's Common Stock is not traded. Notwithstanding the
preceding, if there is a Termination of Employment of Employee
for any reason prior to the lapse of Restrictions under this
Section 4.1(a), all Shares of Restricted Stock set forth in
Section 2.1(a) shall be immediately forfeited. In addition, if
the Restrictions fail to lapse in accordance with this Section
4.1(a) by December 31, 1998, then all of the Shares of Restricted
Stock set forth in Section 2.1 shall be immediately forfeited.
(b) If the Restrictions lapse with respect to 50% of
the number of Shares set forth in Section 2.1 in accordance with
Section 4.1(a), the Restrictions may lapse with respect to the
remaining 50% of the Shares set forth in Section 2.1 in
accordance with this Section 4.1(b). The Vesting Restrictions
applicable to the remaining 50% of the Shares of Restricted Stock
shall lapse as of the earlier of (i) the date which is 365 days
from the date of removal of the Restrictions under Section 4.1(a)
or (ii) the date that Employee is eligible for Retirement. The
Transferability Restrictions applicable to the remaining 50% of
the Shares of Restricted Stock shall lapse as of the date that is
365 days from the date of removal of the Restrictions under
Section 4.1(a). Notwithstanding the two preceding sentences, if
there is a Termination of Employment for any reason other than
death or Total Disability prior to the lapse of the Vesting
Restrictions under this Section 4.1(b), the Shares of Restricted
Stock described in this Section 4.1(b) shall be forfeited. In
the event of Employee's Termination of Employment by reason of
death or Total Disability during the 365 day period described in
this Section 4.1(b), all Shares of Restricted Stock which are
then subject to Restrictions shall immediately become vested and
transferable.
4.2 Change of Control. Notwithstanding anything else
contained herein to the contrary, in the event that a Change of
Control occurs while the Employee is employed by the Company or
one of its Subsidiaries and before any forfeiture of Shares of
Restricted Stock has occurred, all Restrictions on the Restricted
Stock shall be removed that are remaining on the effective date
of the Change of Control.
5. 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 Sections 7 or 8, until the Restrictions
shall have been removed. In no event shall Employee retain
physical custody of any certificates representing Restricted Stock.
6. Delivery of Certificates; Payment of Taxes.
The Company shall cause new certificates to be issued and
delivered to Employee or Employee's legal representative, free
from the legend provided for in Section 3.2, as soon as
practicable after: (a) Restrictions are removed with regard to
50% of the number of Shares of Restricted Stock in accordance
with Section 4.1(a), if the Treasurer receives a written request
for issuance and delivery of new certificates by Employee or
Employee's legal representative; and (b) after the removal of
Restrictions with regard to the remaining 50% of the number of
Shares of Restricted Stock in accordance with Section 4.1(b) or
4.2. Notwithstanding the foregoing, no such new certificate
shall be delivered to Employee or Employee's legal representative
unless and until Employee or Employee's legal representative
shall have paid to the Company (or other employer corporation) in
cash the full amount of all federal, state or local withholding
or other employment taxes applicable to the taxable income of
Employee resulting from the removal of Restrictions. In
addition, notwithstanding the foregoing, no such new certificate
shall be delivered to Employee or Employee's legal representative
until the Committee has certified in writing that the average
closing price requirement set forth in Section 4.1(a) has been satisfied.
7. 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 organization,
merger, consolidation, acquisition of property or stock,
separation or liquidation, that for some period of time prior to
such event with respect to any such Shares of Restricted Stock
that are still subject to Restrictions: (i) all Restrictions on such
Shares of Restricted Stock shall terminate or expire, (ii) obligations
of the Company in relation to such Shares of Restricted Stock shall
be assumed by such successor corporation, (iii) such Shares of Restricted
Stock shall be canceled and replaced by substitute shares of Restricted
Stock of the successor corporation or (iv) such 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.
8. 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 7, for the expiration of the Restrictions on the shares
of Restricted Stock underlying the distribution of the new or
additional shares or securities.
9. Miscellaneous.
9.1 Administration. The Award and this Agreement are
subject to, and the Company and the Employee agree to be bound
by, all of the terms and conditions of the Plan. 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.
9.2 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; and
(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; and
(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 lapse of such reasonable period of time as the
Committee may from time to time establish for reasons of
administrative convenience.
9.3 Notices. Any notice, except written request to the
Treasurer pursuant to Section 6, to be given under the terms of
this Agreement to the Company shall be addressed to the Company
in care of its Secretary and any notice to be given to the
Employee shall be addressed to the Employee at the address given
beneath his or her signature hereto. Written requests to the
Treasurer pursuant to Section 6 shall be addressed to the Company
in care of its Treasurer. By a notice given pursuant to this
Section, either party may hereafter designate a different address
for notices to be given. 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/her status and address by
written notice under this Section. Any notice shall have been
deemed duly given when enclosed in a properly sealed envelope
addressed as aforesaid, deposited (with postage prepaid) in a
post office or branch post office regularly maintained by the
United States Postal Service.
9.4 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 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.
9.5 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 duly executed by
the parties hereto as of the day and year first written above.
BECKMAN INSTRUMENTS, INC.
By /s/FIDENCIO M. MARES
Fidencio M. Mares
Its: Vice President-Human Resources
EMPLOYEE:
_______________________________
(Signature)
_______________________________
(Name: Typed or Printed)
_______________________________
(Address)
_______________________________
(City, State, Zip Code)
EXHIBIT 15
KPMG Peat Marwick LLP
Certified Public Accountants
Orange County Office
Center Tower
650 Town Center Drive
Costa Mesa, CA 92626
Independent Accountants' Review Report
The Stockholders and Board of Directors
Beckman Instruments, Inc.:
We have reviewed the condensed consolidated balance sheet of
Beckman Instruments, Inc. and subsidiaries as of June 30, 1997,
and the related condensed consolidated statements of earnings and
cash flows for the three-month and six-month periods ended June 30,
1997 and 1996. These condensed consolidated financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material
modifications that should be made to the condensed consolidated
financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Beckman
Instruments, Inc. and subsidiaries as of December 31, 1996, and
the related consolidated statements of earnings, stockholders'
equity and cash flows for the year then ended (not presented herein);
and in our report dated January 17, 1997, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1996, is fairly stated, in all
material respects, in relation to the consolidated balance sheet
from which it has been derived.
(KPMG Peat Marwick LLP)
Orange County, California
July 16, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement of
Earnings and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 17
<SECURITIES> 0
<RECEIVABLES> 338
<ALLOWANCES> 7
<INVENTORY> 212
<CURRENT-ASSETS> 600
<PP&E> 738
<DEPRECIATION> 443
<TOTAL-ASSETS> 1016
<CURRENT-LIABILITIES> 292
<BONDS> 252
0
0
<COMMON> 3
<OTHER-SE> 384
<TOTAL-LIABILITY-AND-EQUITY> 1016
<SALES> 502
<TOTAL-REVENUES> 502
<CGS> 240
<TOTAL-COSTS> 240
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> 52
<INCOME-TAX> 16
<INCOME-CONTINUING> 36
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.26
</TABLE>
Exhibit 4.1
AMENDMENT 1996-2
BECKMAN INSTRUMENTS, INC.
SAVINGS AND INVESTMENT PLAN
WHEREAS, Beckman Instruments, Inc. (the "Company") maintains the
Beckman Instruments, Inc. Savings and Investment Plan (the "Plan"); and
WHEREAS, the Company recently acquired the assets of Sagian
Incorporated (excluding the Camile product line) ("Sagian"); and
WHEREAS, the Company's Corporate Benefits Committee
("Committee") now wishes to amend the Plan to clarify certain
provisions with respect to former Sagian employees who are now or
may become employed by the Company; and
WHEREAS, the Committee has the right to amend the Plan as
provided under Appendix C of the Plan;
NOW, THEREFORE, Appendix C of the Plan is hereby amended by
restating the table contained therein as follows:
Approximate Date of
"Prior Employer Acquisition by Company
--------------- ----------------------
Porton Instruments, Inc. May 31, 1991
Hybritech Incorporated January 1, 1996
Genomyx Corporation October 21, 1996
Sagian Incorporated December 3, 1996"
IN WITNESS WHEREOF, this Amendment 1996-2 is hereby adopted
effective December 3, 1996.
BECKMAN INSTRUMENTS, INC.
CORPORATE BENEFITS COMMITTEE
By /s/FIDENCIO M. MARES
Fidencio M. Mares
Its Vice President - Human Resources, and
Chairman, Corporate Benefits Committee
Exhibit 4.2
AMENDMENT 1997-1
BECKMAN INSTRUMENTS, INC.
SAVINGS AND INVESTMENT PLAN
WHEREAS, Beckman Instruments, Inc. (the "Company") maintains the
Beckman Instruments, Inc. Savings and Investment Plan (the "Plan"); and
WHEREAS, the Company recently acquired the ACCESS product
line of Sanofi Diagnostics Pasteur, Inc. ("Sanofi"), and now
wishes to amend the Plan to clarify certain provisions with
respect to former Sanofi employees who are now or may become
employed by the Company; and
WHEREAS, the Company has the right to amend the Plan; and
NOW, THEREFORE, the Plan is hereby amended by adding the
following Appendix E thereto:
"APPENDIX E
SPECIAL PROVISIONS FOR FORMER PARTICIPANTS IN THE
SANOFI SAVINGS AND INVESTMENT PLAN
1. Covered Employees Subject to this Appendix. Each
Covered Employee who was an employee of Sanofi Diagnostics
Pasteur, Inc. ("Sanofi") immediately prior to the Company's
acquisition of the ACCESS product line from Sanofi (the
"Acquisition") is subject to the provisions of this Appendix E (a
"Former Sanofi Employee").
2. Plan Loans. Pursuant to the terms of the
Acquisition, certain Former Sanofi Employees may rollover their
account balances under the Sanofi, Inc. Savings and Investment
Plan (the "Sanofi Plan") to the Plan, subject to Section 3.6 of
the Plan. Upon such a rollover, if the Former Sanofi Employee
has a loan or loans outstanding under the Sanofi Plan, such
loan(s) shall become a Plan loan(s), subject to the provisions of
Section 9.12 of the Plan (each a "Former Sanofi Loan").
Notwithstanding any other provision of the Plan to the contrary,
a Former Sanofi Employee may, at any one time, have more than one
Former Sanofi Loan outstanding under the Plan. However, no
Participant may receive a loan under Section 9.12 of the Plan
until all outstanding Former Sanofi Loans have been paid in full.
Former Sanofi Loans may be prepaid only if all Former Sanofi
Loans will be paid in full upon receipt of such payment (partial
prepayments are not permitted and full prepayment of one Former
Sanofi Loan is not permitted if any other Former Sanofi Loan
remains outstanding)."
IN WITNESS WHEREOF, this Amendment 1997-1 is hereby adopted
this 9 day of June, 1997.
BECKMAN INSTRUMENTS, INC.
By /s/FIDENCIO M. MARES
Fidencio M. Mares
Its Vice President - Human Resources
Exhibit 4.3
AMENDMENT 1997-2
BECKMAN INSTRUMENTS, INC.
SAVINGS AND INVESTMENT PLAN
WHEREAS, Beckman Instruments, Inc. (the "Company") maintains the
Beckman Instruments, Inc. Savings and Investment Plan (the "Plan"); and
WHEREAS, the Company recently acquired the ACCESS product
line of Sanofi Diagnostics Pasteur, Inc. ("Sanofi"); and
WHEREAS, the Company's Corporate Benefits Committee
("Committee") now wishes to amend the Plan to clarify certain
provisions with respect to former Sanofi employees who are now or
may become employed by the Company; and
WHEREAS, the Committee has the right to amend the Plan as
provided under Appendix C of the Plan;
NOW, THEREFORE, Appendix C of the Plan is hereby amended by
restating the table contained therein as follows:
Approximate Date of
"Prior Employer Acquisition by Company
--------------- ----------------------
Porton Instruments, Inc. May 31, 1991
Hybritech Incorporated January 1, 1996
Genomyx Corporation October 21, 1996
Sagian Incorporated December 3, 1996
Sanofi Diagnostics Pasteur, Inc. May 1, 1997"
IN WITNESS WHEREOF, this Amendment 1997-2 is hereby adopted
this 9 day of June, 1997.
BECKMAN INSTRUMENTS, INC.
CORPORATE BENEFITS COMMITTEE
By /s/FIDENCIO M. MARES
Fidencio M. Mares
Its Vice President - Human Resources, and
Chairman, Corporate Benefits Committee
