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 March 31, 1998
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 COULTER, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-104-0600
(State of Incorporation) (I.R.S. Employer
Identification No.)
4300 N. Harbor Boulevard, P.O. Box 3100, Fullerton, California 92834-3100
(Address of principal executive offices) (Zip Code)
(714) 871-4848
(Registrant's telephone number including area code)
Beckman Instruments, Inc.
2500 Harbor Boulevard, Fullerton, California 92834-3100
(Former Name, Former Address and Former Fiscal year,
if Changed Since Last Report)
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
April 14, 1998: 28,489,675 shares.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements Page
Condensed Consolidated Statements of Operations
for the three month periods ended March 31,
1998 and March 31, 1997 3
Condensed Consolidated Balance Sheets as of
March 31, 1998 and March 31, 1997 4
Condensed Consolidated Statements of Cash Flows
for the three month periods ended March 31,
1998 and March 31, 1997 5
Notes to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes In Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of
Security-Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 16
<PAGE>
BECKMAN COULTER, INC.
FIRST QUARTER REPORT
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in Millions, Except Amounts Per Share)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Sales $399.4 $231.9
Operating costs and expenses:
Cost of sales 229.8 109.6
Marketing, general and administrative 119.7 74.8
Research and development 41.6 24.0
------ -----
391.1 208.4
------ -----
Operating income 8.3 23.5
Nonoperating (income) expense:
Interest income (3.2) (1.9)
Interest expense 26.2 2.8
Other, net (2.3) 0.3
------ -----
20.7 1.2
------ -----
(Loss) earnings before income taxes (12.4) 22.3
Income tax (benefit)expense (4.0) 6.7
------ -----
Net (loss) earnings $ (8.4) $ 15.6
====== =====
Weighted average number of shares
outstanding -(in thousands) 27,704 27,908
Basic (loss) earnings per share $(0.30) $ 0.56
Weighted average number of shares and
dilutive shares outstanding - (in
thousands) 27,704 28,861
Diluted (loss) earnings per share $(0.30) $ 0.54
Dividends declared per share $ 0.15 $ 0.15
</TABLE>
See accompanying notes to condensed consolidated financial
statements.
<PAGE>
BECKMAN COULTER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in Millions, Except Amounts Per Share)
Unaudited
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
Assets
<S> <C> <C>
Current assets:
Cash and equivalents $ 31.2 $ 33.5
Trade receivables and other 495.8 524.6
Inventories 339.8 332.3
Deferred income taxes 54.1 53.0
Other current assets 35.2 33.3
-------- --------
Total current assets 956.1 976.7
Property, plant and equipment, net 389.2 410.9
Intangibles, less accumulated amortization
of $14.9 in 1998 and $10.6 in 1997 439.8 444.9
Goodwill, less accumulated amortization of
$9.3 in 1998 and $6.0 in 1997 400.5 402.8
Other assets 89.7 95.7
------- -------
Total assets $2,275.3 $2,331.0
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable and current maturities of
long-term debt $ 83.0 $ 68.9
Accounts payable, accrued expenses and
other liabilities 637.6 756.4
Income taxes 62.4 69.6
-------- --------
Total current liabilities 783.0 894.9
Long-term debt, less current maturities 1,248.7 1,181.3
Other liabilities 175.8 173.0
-------- --------
Total liabilities 2,207.5 2,249.2
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 1998
and 1997;
Shares outstanding 27.8 at 1998 and 27.6 2.9 2.9
at 1997
Additional paid-in capital 126.9 126.6
Retained earnings 6.3 19.0
Accumulated other comprehensive loss (19.6) (13.8)
Treasury stock, at cost (48.7) (52.9)
-------- --------
Total stockholders' equity 67.8 81.8
-------- --------
Total liabilities and stockholders'
equity $2,275.3 $2,331.0
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN COULTER, INC.
FIRST QUARTER REPORT
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in Millions)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities
Net (loss) earnings $ (8.4) $ 15.6
Adjustments to reconcile net (loss)
earnings to netcash (used) provided
by operating activities:
Depreciation and amortization 29.3 21.4
Net deferred income taxes (0.7) (0.4)
Proceeds from sale of sales type
lease receivables 31.5 -
Changes in assets and liabilities:
Trade receivables and other 18.1 19.1
Inventories (5.9) (11.0)
Accounts payable and accrued expenses (102.4) (22.1)
Restructuring reserve (2.9) (0.5)
Accrued income taxes (7.2) 15.1
Other (22.0) (11.5)
------ ------
Net cash (used) provided by
operating activities (70.6) 25.7
------ ------
Cash Flows from Investing Activities
Additions to property, plant and equipment (18.3) (19.4)
Net disposals of property, plant
and equipment (0.6) 3.5
Sales of short-term investments - 3.9
Sales (purchases) of long-term investments 9.7 (0.5)
------ ------
Net cash used by investing activities (9.2) (12.5)
------ ------
Cash Flows from Financing Activities
Dividends to stockholders (4.3) (4.2)
Proceeds from issuance of stock 3.8 3.7
Purchase of treasury stock - (12.4)
Notes payable borrowings, net 8.6 4.4
Long-term debt borrowings 447.2 0.1
Long-term debt reductions (377.6) -
------ ------
Net cash provided (used) by
financing activities 77.7 (8.4)
------ ------
Effect of exchange rates on cash
and equivalents (0.2) 0.3
------ ------
(Decrease) increase in cash and equivalents (2.3) 5.1
Cash and equivalents -- beginning of period 33.5 34.6
------ ------
Cash and equivalents -- end of period $ 31.2 $ 39.7
====== ======
Supplemental Disclosures of Cash Flow
Information
Cash paid during the period for:
Interest $ 27.3 $ 10.9
Income taxes $ 11.1 $ 3.8
Noncash investing and financing activities:
Purchase of equipment under capital
lease obligation $ 2.4 $ 2.5
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
BECKMAN COULTER, INC.
First Quarter 1998 Report
Notes To
Condensed Consolidated Financial Statements
Unaudited
1 Report by Management
In the opinion of Beckman Coulter, Inc. (formerly known as
Beckman Instruments, Inc. and hereafter referred to as "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 of Beckman
Instruments, Inc. on Form 10-K for 1997 which is on file with the
Securities and Exchange Commission.
The results of operations for the period ended March 31, 1998 are
not necessarily indicative of the results to be expected for the
year ending December 31, 1998.
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 Acquisition
On October 31, 1997, the Company acquired all of the outstanding
capital stock of Coulter Corporation for $850.2 million, net of
Coulter's cash on hand of $24.8 million at the date of
acquisition. Coulter is the leading manufacturer of in-vitro
diagnostic systems for blood cell analysis. Details of the
transaction and the accounting effects were disclosed in the
Company's annual report for the year ended December 31, 1997.
The first quarter 1998 results include only January and February
Coulter sales outside the United States as reporting of Coulter
international sales has been lagged by one month to be consistent
with the rest of the Company.
4 Comprehensive Income (Loss)
The Company adopted Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" (SFAS 130), in the
first quarter 1998. SFAS 130 establishes standards for the
reporting and display of comprehensive income. Components of
comprehensive income include net earnings (loss) and foreign
currency translation adjustments. Comprehensive loss was $5.8
million for the three months ended March 31, 1998 and
comprehensive income was $4.7 million for the three months ended
March 31, 1997. The adoption of SFAS 130 required additional
disclosure but did not have a material effect on the Company's
financial position or results of operations.
5 Net Earnings (Loss) Per Share
The Company adopted Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" (SFAS 128) in the fourth quarter of
1997. SFAS 128 simplifies the computation of earnings per share
("EPS") previously required in Accounting Principles Board (APB)
Opinion No. 15, "Earnings Per Share," by replacing primary and
fully diluted EPS with basic and diluted EPS. Earnings Per Share
for the three months ended March 31, 1997, have been restated in
accordance with SFAS 128. The following table summaries the
computation of EPS (in millions, except amounts per share):
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
Net Per Net Per
Loss Shares Share Earnings Shares Share
Amount Amount
<S> <C> <C> <C> <C> <C> <C>
Basic EPS
Net (Loss)
earnings $(8.4) 27.7 $(0.30) $ 15.6 27.9 $ 0.56
Effect of dilutive
stock options 1.0 (0.02)
----- ----- ------ ------ ----- -----
Diluted EPS
Net (Loss)
earnings $(8.4) 27.7 $(0.30) $ 15.6 28.9 $ 0.54
</TABLE>
Under generally accepted accounting principles, as the Company
was in a net loss position in the current quarter, 1.2 million
common share equivalents were not used to compute diluted loss
per share, as the effect was antidilutive.
6 Sale of Receivables
In March 1998, the Company sold $31.9 million of sales type lease
receivables, net of allowances, for cash proceeds of $31.5
million. Under the provisions of Statement of Financial
Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities"
(SFAS 125), the transaction was accounted for as a sale and as a
result the related receivables have been excluded from the
accompanying Consolidated Balance Sheets. The sale is subject to
certain recourse provisions and as such the Company established a
reserve for potential losses. Proceeds from the transaction were
used to reduce outstanding borrowings.
7 Inventories
Inventories are comprised of the following (in millions):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Finished products $216.4 $206.5
Raw materials, parts and
assemblies 100.6 99.1
Work in-process 22.8 26.7
------ ------
$339.8 $332.3
====== ======
</TABLE>
8. Provision for Restructuring Operations
The Company recorded a restructuring charge of $59.4 million,
$36.4 million after taxes or $1.32 per share, in the fourth
quarter of 1997. This provision is for severance related costs
and facility consolidation. The following table details the
activity within the accrued liability in the first quarter of
1998 (in millions):
<TABLE>
<CAPTION>
Facility
consolidation
and asset related
Personnel write-offs Total
<S> <C> <C> <C>
Balance at December 31, 1997
Consolidation of sales, general
administrative and
technical functions $26.5 $13.2 $39.7
Changes in
manufacturing operations 3.0 3.9 6.9
----- ----- -----
Total Accrued Liability 29.5 17.1 46.6
First Quarter 1998 Activity
Consolidation of sales, general
administrative and
technical functions 0.4 2.5 2.9
Changes in
manufacturing operations - - -
----- ----- -----
Total First Quarter Activity 0.4 2.5 2.9
Balance at March 31, 1998
Consolidation of sales, general
administrative and
technical functions 26.1 10.7 36.8
Changes in
manufacturing operations 3.0 3.9 6.9
----- ----- -----
Balance at March 31, 1998 $29.1 $14.6 $43.7
</TABLE>
9. Long-term debt
In March, the Company issued $160.0 million of 7.10% Senior Notes
due 2003 and $240.0 million of 7.45% Senior Notes due 2008. The
net proceeds of $394.3 million were used to pay down existing
debt balances and for operating purposes.
10. Contingencies
As previously reported, in January, 1996, Coulter Corporation,
then unrelated to the Company, notified Hematronix, a competitive
reagent manufacturer, that Hematronix was selling certain
reagents and controls that infringed upon certain of Coulter's
patents. In response, in April, 1996, Hematronix filed a
complaint against Coulter in the United States District Court for
the Eastern District of California. The complaint sought a
declaratory judgment to invalidate the patents. The complaint
also included antitrust and related business tort claims directed
at Coulter's business and leasing activities, and sought actual,
treble, and punitive damages in an unspecified amount, as well as
injunctive relief. Coulter answered the complaint by denying
violations of the antitrust laws and business tort claims and
counterclaimed that Hematronix willfully infringed the patents at
issue. Trial was scheduled for October, 1998. In March, 1998,
the matter was resolved and the lawsuit was dismissed without
material adverse effect on the Company's earnings or financial
position.
As previously reported, in 1991, Forest City Properties
Corporation and F.C. Irvine, Inc. (collectively, "Forest City"),
filed suit against the Prudential Insurance Co. in the California
Superior Court for the County of Los Angeles alleging breach of
contract and damages caused by pollution of property that Forest
Cities had bought from Prudential. Although the Company was not
a named defendant in the Forest City action, it was obligated to
contribute to any resolution of that action pursuant to a 1990
settlement agreement with Prudential. The trial of the matter
was conducted in 1995, resulting in a jury verdict in favor of
Prudential. The Court granted Forest City's motion for a new
trial, which Prudential appealed. Prior to the Court's
consideration of the appeal, Prudential settled the lawsuit with
Forest City and requested the Company to pay a portion of the
settlement pursuant to the 1990 settlement agreement. The
Company did not agree with Prudential's claims and has negotiated
a settlement for an amount not material to the Company's earnings
or financial position.
The Company and its subsidiaries are involved in a number of
other 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 earnings or financial position.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Beckman Coulter, Inc. (formerly known as Beckman Instruments,
Inc. and hereafter referred to as "the Company")is a world
leader in providing systems that simplify and automate
laboratory processes. The Company designs, manufactures and
services a broad range of laboratory systems consisting of
instruments, reagents and related products that customers use to
conduct basic scientific research, drug discovery research and
diagnostic analysis of patient samples. On October 31, 1997,
the Company acquired Coulter Corporation ("Coulter"). The
acquisition of Coulter represented a significant milestone in
accomplishing the Company's strategy to solidify its position as
a leading provider of laboratory systems, adding Coulter's
leading market position in hematology and number two position in
flow cytometry.
As previously discussed in some detail in the Company's 1997
Annual Report to Stockholders, incorporated by reference in the
Company's Annual Report on Form 10-K for the Fiscal year Ended
December 31, 1997 under the heading "Management's Discussion and
Analysis" (the "10-K MD&A"), the acquisition of Coulter and the
related financing have had numerous consequences that affect the
comparability of the Company's results of operations and
financial position for periods prior to and after the
acquisition. In particular, the acquisition and related
financing are expected to lower the net earnings of the Company
through 1998 as a result of a substantial increase in interest
expense, amortization of intangible assets and goodwill and
various other adjustments resulting from purchase accounting.
As anticipated, the integration and consolidation of Coulter is
requiring substantial management, financial and other resources.
While the Company believes the early results of this effort are
encouraging, the acquisition of Coulter necessarily involves a
number of significant risks, including potential difficulties in
assimilating the technologies, services and products of Coulter
or in achieving the expected synergies and cost reductions, as
well as other unanticipated risks and uncertainties. As a
result, there can be no assurance as to the extent to which the
anticipated benefits with respect to the acquisition will be
realized, or the timing of any such realization.
Operations
Sales growth of 72%, 77% in constant currency, over the first
quarter of the prior year, resulted primarily from the addition
of Coulter operations. These results were depressed due to the
inclusion of only January and February Coulter sales outside the
United States as reporting of Coulter international sales has
been lagged by one month to be consistent with the rest of the
Company. Excluding Coulter, sales grew 5% primarily as a result
of increased market share, partially offset by an unfavorable
change in foreign currency exchange rates which negatively
affected reported international sales by approximately 5%. As
discussed in the 10-K MD&A, the Company derives approximately
50% of its sales from sources outside of the United States, and
appreciation of the U.S. dollar against the Company's major
trading currencies has a negative impact on the Company's
results of operations.
Gross profit as a percentage of sales decreased due to lower
margins for Coulter products, a hardware mix shift associated
with new product introductions and competitive pricing
pressures. An unfavorable change in foreign currency exchange
rates also negatively affected the gross profit. The purchase
accounting treatment for acquired Coulter inventory required
that it be written up to fair value. This had the effect of
increasing cost of sales in the first quarter by $5.7 million as
inventory was delivered to customers.
Marketing, general and administrative expenses as a percentage
of sales decreased to 30.0% from 32.3% for the first quarter of
1997. The improvement was achieved by spreading fixed costs
over a larger sales volume and through the early successes of
Coulter integration objectives. Research and development
expenses as a percentage of sales remained consistent at 10.4%
and 10.3% for the first quarters of 1998 and 1997, respectively.
Operating income decreased $15.2 million over the comparable
quarter in 1997 primarily due to the lower gross profit as a
percentage of sales as discussed above.
Net loss for the first quarter was $8.4 million or $0.30 per
diluted share, compared to net earnings for the first quarter of
1997 of $15.6 million or $0.54 per diluted share. The decrease
is largely the result of decreased operating income as discussed
above and increased interest expense as a result of larger
outstanding borrowings due to funding of the Coulter
acquisition.
Financial Condition
As discussed in greater detail in the 10-K MD&A, the Company is
highly leveraged, with a debt-to-capital ratio of 95.2% at March
31, 1998. Among other things, the Company's high level of debt
increases the Company's vulnerability to general adverse
economic and industry conditions, could limit the Company's
ability to obtain additional financing on favorable terms,
exposes the Company to the risk of increased interest rates and
requires the dedication of a substantial portion of the
Company's cash flow from operations to the payment of principal
and interest on its indebtedness. In addition, the Company's
agreements with its lenders contain a number of covenants that
significantly restrict the operations of the Company and require
it to comply with specified financial ratios and tests.
As discussed in the 10-K MD&A, the Company is in the process of
executing a plan to reduce its debt and provide additional funds
for the integration of Coulter. As part of this plan, during
the first quarter of fiscal 1998, the Company sold $31.9 million
of sale type lease receivables, net of allowances, for cash
proceeds of $31.5 million. The sale was subject to certain
recourse provisions and, as a result, the Company established a
reserve for potential losses. The proceeds from the sale were
used to reduce outstanding borrowing. The Company is continuing
to evaluate opportunities to provide additional cash flow by
monetizing other assets during 1998 and beyond. The Company
intends to consummate several sale leaseback transactions with
respect to some of its real estate assets. If these sales are
consummated as expected, the Company believes that they will
generate proceeds to the Company of approximately $200 million
during the balance of 1998 and approximately $30 million in
1999, less any costs to complete the transactions. If
completed, these sales are expected to marginally reduce
operating income while decreasing nonoperating expenses,
resulting in a slightly negative impact on the Company's pretax
results.
Net cash used in operating activities for the first three months
of 1998 was $70.6 million. Net cash provided by operating activities
was $25.7 million for the comparable period in 1997. The primary
reasons for this change were a $24.0 million decrease in net earnings,
reduction of trade payables and the payment of $77.7 million in bonus,
severance and related costs which were accrued as part of the purchase
liability at December 31, 1997. This decrease was partially
offset by proceeds of $31.5 million from the sale of sales type
lease receivables. Net cash used in investing activities
decreased to $9.2 million, from $12.5 million in the first
quarter of 1997. Net cash provided by financing activities
increased to $77.7 million, an increase of $86.1 million from
the first quarter of 1997. This was primarily the result of
additional borrowings, net of repayments. In March, the Company
issued $160.0 million of 7.10% Senior Notes due 2003 and $240.0
million of 7.45% Senior Notes due 2008. The net proceeds of
this issuance were used to pay down existing debt balances and
for operating purposes.
The ratio of debt-to-total capital at March 31, 1998 was 95.2%
compared to 93.9% at December 31, 1997. The change is due
mainly to a net increase in borrowings and the net loss reported
for the first quarter. The ratio of current assets to current
liabilities at March 31, 1998 of 1.2 is comparable to the 1.1
ratio at December 31, 1997. Based upon current levels of
operations and anticipated cost savings and future growth, the
Company believes that its cash flow from operations, together
with available borrowings under the credit facility and its
other sources of liquidity will be adequate to meet its
anticipated requirements until the maturity of its credit
facility in 2002. There can be no assurance, however, that the
Company's business will continue to generate cash flow at or
above current levels or that estimated cost savings or growth
can be achieved. The Company's future operating performance and
ability to service or refinance its existing indebtedness,
including the credit facility, will be subject to future
economic conditions and to financial, business and other
factors, many of which are beyond the Company's control.
On March 12, 1998, the Company paid a quarterly cash dividend of
$0.15 per share of common stock for a total of $4.3 million. On
April 2, 1998, the Board of Directors declared a $0.15 per share
dividend payable on June 4, 1998 to stockholders of record on
May 15, 1998.
Business Climate
The general U.S. economic environment is showing signs of improvement
in both the life science and diagnostic markets.
The Asia Pacific market, including Japan, continues to be
affected by the prevailing economic conditions which are
suppressing investment in the research and development market
segments.
In general, the European diagnostics and life sciences markets continue to
be unfavorably impacted by cost containment initiatives as part
of governmental fiscal management policies. These policies are
driven by the requirements for the impending European monetary
union.
Forward Looking Statements
This 10-Q report contains forward-looking statements, including
statements regarding, among other items, (i) the Company's
business strategy; (ii) anticipated trends in the Company's
business and its plans to consummate sale leaseback
transactions; (iii) the Company's liquidity requirements and
capital resources; (iv) anticipated synergies; and (v) future
cost reductions. These forward-looking statements are based
largely on the Company's expectations and are subject to a
number of risks and uncertainties, certain of which are beyond
the Company's control. These risks and uncertainties include,
but are not limited to, (i) the complexity and uncertainty
regarding development of new high-technology products; (ii) the
loss of market share through aggressive competition in the
clinical diagnostics and life sciences markets; (iii) the
Company's dependence on capital spending policies and government
funding; (iv) the effect of potential health-care reforms; (v)
fluctuations in foreign exchange rates and interest rates; (vi)
reliance on patents and other intellectual property; (vii)
difficulties, delays or failure in effectively integrating
worldwide operations; and (viii) other factors that cannot be
identified at this time.
Although the Company believes that it has the product offerings
and resources required to achieve its objectives, actual results
could differ materially from those anticipated by these forward-
looking statements as there can be no assurance that events
anticipated by these forward-looking statements will in fact
transpire as anticipated.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported, in January, 1996, Coulter,
then unrelated to Beckman, notified Hematronix, a
competitive reagent manufacturer, that Hematronix was
selling certain reagents and controls that infringed
upon certain of Coulter's patents. In response, in
April, 1996, Hematronix filed a complaint against
Coulter in the United States District Court for the
Eastern District of California. The complaint sought a
declaratory judgment to invalidate the patents. The
complaint also included antitrust and related business
tort claims directed at Coulter's business and leasing
activities, and sought actual, treble, and punitive
damages in an unspecified amount, as well as injunctive
relief. Coulter answered the complaint by denying
violations of the antitrust laws and business tort
claims and counterclaimed that Hematronix willfully
infringed the patents at issue. Trial was scheduled
for October, 1998. In March, 1998, the matter was
resolved and the lawsuit was dismissed without material
adverse effect on the Company's earnings or financial
position.
As previously reported, in 1991, Forest City
Properties Corporation and F.C. Irvine, Inc.
(collectively "Forest City"), filed suit against
Prudential Insurance Company in the California Superior
Court for the County of Los Angeles alleging breach of
contract and damages caused by pollution of property
that Forest Cities had bought from Prudential.
Although the Company was not a named defendant in the
Forest City action, it was obligated to contribute to
any resolution of that action pursuant to a 1990
settlement agreement with Prudential. The trial of the
matter was conducted in 1995, resulting in a jury
verdict in favor of Prudential. The Court granted
Forest City's motion for a new trial, which Prudential
appealed. Prior to the Court's consideration of the
appeal, Prudential settled the lawsuit with Forest City
and requested Beckman to pay a portion of the
settlement pursuant to the 1990 settlement agreement.
Beckman did not agree with Prudential's claims and
negotiated a settlement for an amount not material to
the Company's earnings or financial position.
Item 2. Changes In Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
The annual meeting of the Stockholders of the
Company (the "Annual Meeting") was held on April 2,
1998. Four members of the Board of Directors whose
terms expired at the 1998 Annual Meeting were elected
to new terms expiring at the 2001 Annual Meeting. The
number of shares voting were as follows:
Votes For Votes Withheld
--------- --------------
Carolyne K. Davis 24,551,355 422,951
Dennis C. Fill 24,553,417 420,889
Charles A. Haggerty 24,551,946 422,360
William N. Kelley 24,553,500 420,806
Francis P. Lucier, whose term expired at the 1999
Annual Meeting, has retired. Van B. Honeycutt has been
elected by the Board to fill Mr. Lucier's position
among the class of directors with terms expiring in
1999.
The remaining members of the Board of Directors
who will continue in office and the year in which their
terms expire are: Term expiring in 1999: Hugh K.
Coble, John P. Wareham, and Betty Woods; Term expiring
in 2000: Peter B. Dervan, Gavin S. Herbert, C.
Roderick O'Neil, and Louis T. Rosso.
A proposed amendment to the Company's Third
Restated Certificate of Incorporation, which had been
approved by the Board of Directors at its August 7,
1997 meeting, was presented to the Stockholders at the
Annual Meeting. The amendment proposed to change the
Corporation Name to Beckman Coulter, Inc. The number
of shares voting on the proposed amendments were as
follows:
For Against Abstain
--- ------- -------
24,850,168 42,512 81,626
A proposal to approve the Company's 1998 Incentive
Compensation Plan (the "1998 Plan") also was presented
to and approved by the Stockholders at the Annual
Meeting. The proposed plan, which was adopted by the
Board of Directors at its regular meeting on February
5, 1998, replaces a plan approved by the Stockholders
in 1990 and last amended at the 1997 Annual Meeting.
For the 1998 Plan, the Company requested an initial
2,000,000 shares reserved under the 1998 Plan as well
as continuation of the formula used in the 1990 Plan
for granting incentive stock options. The number of
shares voting on the proposed amendments were as
follows:
For Against Abstain
--- ------- -------
15,149,601 6,863,344 134,614
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
3. Fourth Restated Certificate of Incorporation dated
April 2, 1998
10.1. Amendment No. 1 dated April 3, 1998 to the
Credit Agreement by and among the Company, as borrower,
the Initial Lenders and the Issuing Banks named therein,
and Citicorp USA,Inc. as Agent dated October 31, 1997
10.2. Amendment No. 1998-1, adopted and effective
as of April 2, 1998 to the Company's 1998 Incentive
Compensation Plan
10.3. 1998 Annual Incentive Plan (AIP)
11. Statement re Computation of Per Share Earnings:
This information is set forth in Note 5, Net Earnings (Loss)
Per Share, of the Condensed Consolidated Financial
Statements included in Part I herein.
15. Independent Accountants' Review Report, April 17, 1998
27. Summary Financial Information for the three month
period ended March 31, 1998
27.1 Restated Summary Financial Information for the
three month period ending March 31, 1997
27.2 Restated Summary Financial Information for the
period ending December 31, 1996
27.3 Restated Summary Financial Information for the
period ending December 31, 1995
b) Reports on Form 8-K
1. Item 5. Other Events. Summary of the Acquisition
of Coulter Corporation and Related Financial Information,
February 20, 1998
2. Item 5. Other Events. Beckman Coulter, Inc.
Restructures Acquisition Debt, February 26, 1998
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BECKMAN COULTER, INC.
(Registrant)
Date: May 13, 1998 by WILLIAM H. MAY
William H. May
Vice President,General
Counsel and Secretary
Date: May 13, 1998 by JAMES T. GLOVER
James T. Glover
Vice President and
Controller
<PAGE>
EXHIBIT INDEX
FORM 10-Q, THIRD QUARTER, 1997
Exhibit
Number Description
- ------- -----------
3. Fourth Restated Certificate of Incorporation dated
April 2, 1998
10.1. Amendment No. 1 dated April 3, 1998 to the Credit
Agreement by and among the Company, as borrower,
the Initial lenders and the Issuing Banks named therein,
and Citicorp USA, Inc. as Agent dated October 31, 1997
10.2. Amendment No. 1998-1, adopted and effective as of
April 2, 1998 to the Company's 1998 Incentive Compensation Plan
10.3. 1998 Annual Incentive Plan (AIP)
11. Statement re Computation of Per Share Earnings:
This information is set forth in Note 5, Net Earnings (Loss)
Per Share, of the Condensed Consolidated Financial
Statements included in Part I herein.
15. Independent Accountants' Review Report, April 17, 1998
27. Summary Financial Information for the three month
period ended March 31, 1998
27.1. Restated Summary Financial Information for the
three month period ending March 31, 1997
27.2. Restated Summary Financial Information for the
period ending December 31, 1996
27.3. Restated Summary Financial Information for the
period ending December 31, 1995
EXHIBIT 3
FOURTH RESTATED CERTIFICATE OF INCORPORATION
OF
BECKMAN INSTRUMENTS, INC.
*****
BECKMAN INSTRUMENTS, INC. (the "Corporation"), a corporation
organized and existing under and by virtue of the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
1. The corporation was originally incorporated on July 11,
1988, under the name of BII DELAWARE INC. Pursuant to an
Agreement and Plan of Merger filed on July 28, 1988, the name of
the Corporation was changed to
BECKMAN INSTRUMENTS, INC.
2. A Third Restated Certificate of Incorporation as of June
11, 1992 restates and integrates and further amends the Second
Restated Certificate of Incorporation of the Corporation to amend
Article 7 to delete the clause which prohibits a director from
serving beyond the age of 70 years.
3. This Fourth Restated Certificate of Incorporation amends
the Third Restated Certificate of Incorporation to change the
name of the Corporation to:
BECKMAN COULTER, INC.
4. The text of the Certificate of Incorporation as amended
is set forth in full and reads as follows:
1. The name of the corporation is Beckman Coulter, Inc.
2. The address of its registered office in the State of Delaware is
The Prentice-Hall Corporation System, Inc., 1013 Centre Road, in the City
of Wilmington, County of New Castle, Delaware 19805. The name of its
registered agent at such address is The Prentice-Hall Corporation System,
Inc.
3. The nature of the business or purposes to be conducted or
promoted is:
To engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
4. The aggregate number of shares which the corporation shall have
authority to issue is 85,000,000, to be divided into (a) 75,000,000 shares
of Common Stock, par value $.10 per share, and (b) 10,000,000 shares of
Preferred Stock, par value $.10 per share.
The Board of Directors is hereby empowered to cause the Preferred
Stock to be issued from time to time for such consideration as it may from
time to time fix, and to cause such Preferred Stock to be issued in series
with such voting powers and such designations, preferences and relative,
participating, optional or other special rights as designated by the Board
of Directors in the resolution providing for the issue of such series.
Shares of Preferred Stock of any one series shall be identical in all
respects.
5. The corporation is to have perpetual existence.
6. In furtherance and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized to make, alter or
repeal the bylaws of the corporation.
7. The directors of the corporation shall be divided into three
classes, as nearly equal in number as reasonably possible, with the
directors in each class to hold office until their successors are elected
and qualified. At each annual meeting of stockholders of the corporation,
the successors to the class of directors whose term shall then expire
shall be elected to hold office for a three year term. If the number of
directors is changed, any increase or decrease shall be apportioned among
the classes so as to maintain the number of directors in each class as
nearly equal as possible, and any additional directors of any class
elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten
the term of any incumbent director. A director shall hold office until
the annual meeting for the year in which his or her term expires and
until his or her successor shall be elected and shall qualify,
subject, however, to prior death, resignation, retirement,
disqualification or removal from office.
Notwithstanding the foregoing, no person shall be elected or serve
as a director if such person is in a management position with or a
director of a direct competitor of the Company.
Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the corporation shall
have the right, voting separately by class or series, to elect directors
at an annual or special meeting of stockholders, the election, term of
office, filling of vacancies and other features of such directorships
shall be governed by the terms of this Certificate of Incorporation
or the resolution or resolutions adopted by the Board of Directors
pursuant to Paragraph 4 hereof, and such directors so elected shall not
be divided into classes pursuant to this Paragraph 7 unless expressly
provided by such terms.
Meetings of stockholders may be held within or without the State of
Delaware, as the bylaws may provide. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside the
State of Delaware at such place or places as may be designated from time
to time by the board of directors or in the bylaws of the corporation.
Elections of directors need not be by written ballot unless the
bylaws of the corporation shall so provide.
8. Subject to the rights, if any, of the holders of shares of
Preferred Stock then outstanding, any or all of the directors of the
corporation may be removed from office by the stockholders at any annual
or special meeting of stockholders of the corporation, the notice of which
shall state that the removal of a director or directors is among the
purposes of the meeting, but only for cause, by the affirmative vote of at
least 66-2/3% of the outstanding shares of Common Stock of the
corporation.
9. Newly created directorships resulting from any increase in the
number of directors or any vacancy on the Board of Directors resulting
from death, resignation, disqualification, removal or other cause shall be
filled solely by the affirmative vote of a majority of the remaining
directors then in office, even though less than a quorum, or by a sole
remaining director. Any director elected in accordance with the preceding
sentence shall hold office for the remainder of the full term of the class
of directors in which the new directorship was created or the vacancy
occurred and until such director's successor shall have been elected and
qualified. No decrease in the number of directors constituting the Board
of Directors shall shorten the term of any incumbent director.
10. The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in
the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this
reservation.
11. Any action required or permitted to be taken at any annual or
special meeting of stockholders may be taken only upon the vote of the
stockholders at an annual or special meeting duly called and may not be
taken by written consent of the stockholders.
12. Special meetings of the stockholders of the corporation for any
purpose or purposes may be called at any time by the Board of Directors,
the Chairman of the Board of Directors or the President of the
corporation. Special meetings of the stockholders of the corporation may
not be called by any other person or persons.
13. A director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit.
14. (a) Each person who was or is made a party or is threatened
to be made a party to or is involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of whom
he or she is the legal representative, is or was a director or officer
of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the
basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while
serving as a director, officer, employee or agent, shall be indemnified
and held harmless by the corporation to the fullest extent authorized
by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than said law permitted the corporation to provide
prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; provided, however, that,
except as provided in subparagraph (b) hereof, the corporation shall
indemnify any such person seeking indemnification in connection with
a proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the board of
directors of the corporation. The right to indemnification conferred in
this Paragraph 14 shall be a contract right and shall include the right to
be paid by the corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that,
if the Delaware General Corporation Law requires, the payment of such
expenses incurred by a director or officer in his or her capacity as
a director or officer (and not in any other capacity in which service
was or is rendered by such person while a director or officer, including,
without limitation, service to an employee benefit plan) in advance of the
final disposition of a proceeding, shall be made upon delivery to the
corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined
that such director or officer is not entitled to be indemnified under this
Paragraph 14 or otherwise. The corporation may, by action of its board of
directors, provide indemnification to employees and agents of the
corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
(b) If a claim under subparagraph (a) of this Paragraph 14 is
not paid in full by the corporation within thirty days after a written
claim has been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount
of the claim and, if successful in whole or in part, the claimant shall be
entitled to be paid also the expense of prosecuting such claim. It shall
be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in advance of its
final disposition where the required undertaking, if any is required, has
been tendered to the corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
corporation. Neither the failure of the corporation (including its board
of directors, independent legal counsel, or its stockholders) to have made
a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he
or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the
corporation (including its board of directors, independent legal
counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable
standard of conduct.
(c) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final disposition
conferred in this Paragraph 14 shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute,
provision of the certificate of incorporation, bylaw, agreement, vote
of stockholders or disinterested directors or otherwise.
(d) The corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or
other enterprise against any such expense, liability or loss, whether or
not the corporation would have the power to indemnify such person against
such expense, liability or loss under the Delaware General Corporation Law.
15. At an annual meeting of stockholders, only such business shall
be conducted, and only such proposals shall be acted upon, as shall have
been brought before the annual meeting (a) by, or at the direction of, a
majority of the directors, or (b) by any stockholder of the corporation who
complies with the notice procedures set forth in this Paragraph 15. For a
proposal to be properly brought before an annual meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the corporation. To be timely, a stockholder's notice must be
delivered to, or mailed and received at, the principal executive offices of
the corporation not less than 60 days prior to the scheduled annual
meeting, regardless of any postponements, deferrals or adjournments of that
meeting to a later date; provided, however, that if less than 70 days'
notice or prior public disclosure of the date of the scheduled annual
meeting is given or made, notice by the stockholder, to be timely, must be
so delivered or received not later than the close of business on the tenth
day following the earlier of the day on which such notice of the date of
the scheduled annual meeting was mailed or the day on which such public
disclosure was made. A stockholder's notice to the Secretary shall set
forth as to each matter the stockholder proposes to bring before the annual
meeting (a) a brief description of the proposal desired to be brought
before the annual meeting and the reasons for conducting such business at
the annual meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business and any
other stockholders known by such stockholder to be supporting such
proposal, (c) the class and number of shares of the corporation's stock
which are beneficially owned by the stockholder on the date of such
stockholder notice and by any other stockholders known by such stockholder
to be supporting such proposal on the date of such stockholder notice, and
(d) any financial interest of the stockholder in such proposal.
The presiding officer of the annual meeting shall determine and
declare at the annual meeting whether the stockholder proposal was made
in accordance with the terms of this Paragraph 15. If the presiding
officer determines that a stockholder proposal was not made in accordance
with the terms of this Paragraph 15, he or she shall so declare at the
annual meeting and any such proposal shall not be acted upon at the annual
meeting.
This provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers, directors and
committees of the Board of Directors, but, in connection with such reports,
no new business shall be acted upon at such annual meeting unless stated,
filed and received as herein provided.
16. Subject to the rights, if any, of the holders of shares of
Preferred Stock then outstanding only persons who are nominated in
accordance with the following procedures shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors
of the corporation may be made at a meeting of stockholders by or at the
direction of the Board of Directors by any nominating committee or person
appointed by the Board or by any stockholder of the corporation entitled to
vote for the election of directors at the meeting who complies with the
notice procedures set forth in this Paragraph 16. Such nominations, other
than those made by or at the direction of the Board, shall be made pursuant
to timely notice in writing to the Secretary of the corporation. To be
timely, a stockholder's notice must be delivered to, or mailed and received
at, the principal executive offices of the corporation not less than 60
days prior to the scheduled annual meeting, regardless of any
postponements, deferrals or adjournments of that meeting to a later date;
provided, however, that if less than 70 days' notice or prior public
disclosure of the date of the scheduled annual meeting is given or made,
notice by the stockholder, to be timely, must be so delivered or received
not later than the close of business on the tenth day following the
earlier of the day on which such notice of the date of the scheduled annual
meeting was mailed or the day on which such public disclosure was made. A
stockholder's notice to the Secretary shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or reelection
as a director, (i) the name, age, business address and residence address of
the person, (ii) the principal occupation or employment of the person,
(iii) the class and number of shares of capital stock of the corporation
which are beneficially owned by the person and (iv) any other information
relating to the person that is required to be disclosed in solicitations
for proxies for election of directors pursuant to Rule 14a under the
Securities Exchange Act of 1934, as amended; and (b) as to the stockholder
giving the notice (i) the name and address, as they appear on the
corporation's books, of the stockholder and (ii) the class and number of
shares of the corporation's stock which are beneficially owned by the
stockholder on the date of such stockholder notice. The corporation may
require any proposed nominee to furnish such other information as may
reasonably be required by the corporation to determine the eligibility of
such proposed nominee to serve as director of the corporation.
The presiding officer of the annual meeting shall determine and
declare at the annual meeting whether the nomination was made in accordance
with the terms of this Paragraph 16. If the presiding officer determines
that a nomination was not made in accordance with the terms of this
Paragraph 16, he or she shall so declare at the annual meeting and any such
defective nomination shall be disregarded.
17. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of at least 66-2/3% of
the outstanding shares of Common Stock of the corporation shall be required
to amend or repeal Paragraphs 7, 8, 9, 11, 12 or 17 of this Certificate of
Incorporation or to adopt any provision inconsistent therewith.
5. This Fourth Restated Certificate of Incorporation was
duly adopted by a vote of stockholders at the annual meeting of
stockholders held April 2, 1998 in accordance with the provisions
of Sections 242 and 245 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, BECKMAN INSTRUMENTS, INC. has caused
this Fourth Restated Certificate of Incorporation to be signed by
Louis T. Rosso, its Chief Executive Officer, and attested by
William H. May, its Secretary, dated April 2, 1998.
ATTEST: BECKMAN INSTRUMENTS, INC.
By: WILLIAM H. MAY By: LOUIS T. ROSSO
Secretary Chief Executive Officer
EXHIBIT 10.1
EXECUTION COPY
AMENDMENT NO. 1 TO
CREDIT AGREEMENT
This AMENDMENT NO. 1 TO CREDIT AGREEMENT, dated as of
April 3, 1998, is entered into by and among Beckman Instruments,
Inc., a Delaware corporation (the "Borrower"), the banks,
financial institutions and other institutional lenders party to
the Credit Agreement referred to below (each a "Lender Party",
and, collectively, the "Lender Parties") whose signatures appear
below, Citicorp USA, Inc., a Delaware corporation, as agent for
such Lender Parties (the "Agent"), and Citicorp Securities, Inc.,
a Delaware corporation, as arranger (the "Arranger").
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lender Parties, the Agent and
the Arranger have entered into a Credit Agreement dated as of
October 31, 1997 (such Credit Agreement, as amended, supplemented
or otherwise modified through the date hereof, being hereinafter
referred to as the "Credit Agreement"). Capitalized terms not
otherwise defined in this Amendment have the same meanings as
specified in the Credit Agreement.
(2) Subject to the terms and conditions noted below,
the Borrower and the Required Lenders have agreed to amend the
Credit Agreement as hereinafter set forth.
NOW THEREFORE, the Borrower and the Required Lenders
hereby agree as follows:
SECTION 1. Amendments to Credit Agreement. The Credit
Agreement is, effective as of the date hereof and subject to the
satisfaction of the conditions precedent set forth in Section 2,
hereby amended as follows:
(a) The definition of "Net Cash Proceeds" in Section
1.01 thereof is hereby amended by inserting in clause (i) of the
second sentence thereof after the phrase "or Equipment for Resale
or leases, bailment arrangements or rental agreements with
respect thereto", the following phrase:
"(with the exception of any Net Cash Proceeds from the
sale by the Borrower or any Guarantor Subsidiary of any
Equipment for Resale in accordance with Section
5.02(d)(v)(A) hereof)".
(b) Section 2.06(b)(iv) thereof is hereby deleted in
its entirety and replaced by the following:
"(iv) [Intentionally Deleted]."
(c) Section 5.02(a)(xv) thereof is hereby deleted in
its entirety and replaced by the following Section:
"(xv) any Liens arising as a result of a sale of
assets by the Borrower or any Subsidiary of the
Borrower pursuant to Section 5.02(d)(v) or
(vi), provided that (A) in the case of clause (B) of
Section 5.02(d)(v) and Section 5.02(d)(vi), such Liens
shall cover only the assets sold and the proceeds
thereof, and (B) in the case of clause (A) of
Section 5.02(d)(v), such Liens shall only cover
the assets sold and the proceeds thereof and any
leases, bailment arrangements, rental agreements or
other contracts covering such assets or any services,
materials or supplies furnished in connection therewith;".
(d) Section 5.02(d)(v) thereof is hereby deleted in
its entirety and replaced by the following Section:
"(v) (A) the sale by the Borrower or any Guarantor
Subsidiary of any Equipment for Resale for cash in an
amount not less than the net book value thereof, provided
that such property is simultaneously leased back to the
Borrower or such Guarantor Subsidiary (pursuant to a
lease that is not a Capitalized Lease) by the buyer thereof,
and (B) the sale or securitization by the Borrower or any
Guarantor Subsidiary of customer leases and other
receivables for cash in an amount not less than the
fair market value thereof (after taking into account
customary reserves for losses, yield protection, fees
and similar matters);".
(e) Section 5.04(a) thereof is hereby amended by
deleting the table appearing in the middle of such Section and
inserting in lieu thereof the following table:
"Fiscal Quarter Ending Amount
---------------------- ------
December 31, 1997 $69,000,000
March 31, 1998 $69,000,000
June 30, 1998 $84,000,000
September 30, 1998 $99,000,000
December 31, 1998 $134,000,000
March 31, 1999 $149,000,000
June 30, 1999 $174,000,000
September 30, 1999 $199,000,000
December 31, 1999 $234,000,000;".
SECTION 2. Conditions of Effectiveness. This
Amendment shall become effective as of the date first above
written when, and only when, the Agent shall have received
counterparts of this Amendment executed by the Borrower and the
Required Lenders (or as to any of the Lender Parties, advice
satisfactory to the Agent that such Lender party has executed
this Amendment) and counterparts of the consent attached hereto
(the "Consent") executed by each Guarantor Subsidiary. Section 1
hereof shall become effective when, and only when, the Agent
shall have additionally received all of the following documents,
in form and substance satisfactory to the Agent and insufficient
copies for each Lender party:
(a) Certified copies of (i) the resolutions of the Board of
Directors of (A) the Borrower approving this Amendment and the matters
contemplated hereby and (B) each Guarantor Subsidiary evidencing
approval of the Consent and the matters contemplated hereby and thereby
and (ii) all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to this Amendment, the
Consent and the matters contemplated hereby and thereby.
(b) A certificate of the Secretary or an Assistant Secretary of
the Borrower and each Guarantor Subsidiary certifying the names and true
signatures of the officers of the Borrower and each Guarantor Subsidiary
authorized to sign this Amendment and the Consent and the other
documents to be delivered hereunder and thereunder.
(c) A favorable opinion of corporate counsel for the Borrower,
to the effect that this Amendment has been duly authorized, executed and
delivered by the Borrower and a favorable opinion of corporate counsel
for the Guarantor Subsidiaries to the effect that the Consent has been
duly authorized, executed and delivered by each Guarantor Subsidiary.
(d) A certificate signed by a duly authorized officer
of the Borrower stating that:
(i) The representations and warranties contained in each
Loan Document are correct on and as of the date of such
certificate as though made on and as of such date other than any
such representations or warranties that, by their terms, refer to
a date other than the date of such certificate; and
(ii) No event has occurred and is continuing that
constitutes a Default.
SECTION 3. Reference to and Effect on the Loan
Documents. (a) On and after the effectiveness of this Amendment,
each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof" or words of like import referring to the
Credit Agreement, and each reference in the Notes and each of the
other Loan Documents to "the Credit Agreement", "thereunder",
"thereof" or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement,
as amended by this Amendment.
(b) The Credit Agreement, as specifically amended by
this Amendment, is and shall continue to be in full force and
effect and is hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate
as a waiver of any right, power or remedy of any Lender Party or
the Agent under any of the Loan Documents, nor constitute a
waiver of any provision of any of the Loan Documents.
SECTION 4. Costs, Expenses. The Borrower agrees to
pay on demand all costs and expenses of the Agent in connection
with the preparation, execution, delivery and administration,
modification and amendment of this Amendment and the other
instruments and documents to be delivered hereunder (including,
without limitation, the reasonable fees and expenses of counsel
for the Agent) in accordance with the terms of Section 8.04 of
the Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed shall be deemed to be a original and all of which taken
together shall constitute but one and the same agreement.
Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a
manually executed counterpart of this Amendment.
SECTION 6. Governing Law. This Amendment shall be
governed by, and construed in accordance with, the laws of the
State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
BECKMAN INSTRUMENTS, INC.,
As Borrower
By /s/ PAUL GLYER
Paul Glyer
Title: Treasurer
EXHIBIT 10.2
AMENDMENT 1998-1
BECKMAN COULTER, INC.
1998 INCENTIVE COMPENSATION PLAN
WHEREAS, Beckman Coulter, Inc. (the "Company")
maintains the Beckman Coulter, Inc. 1998 Incentive
Compensation Plan (the "1998 Plan");
WHEREAS the Board of Directors has the authority to
amend the 1998 Plan and approved an amendment thereto in
order to assure that its intent with regard to adjustments
of exercise price of an outstanding award is stated in the
1998 Plan;
NOW, THEREFORE, the 1998 Plan is amended, effective as
of April 2, 1998, as follows:
1. Section 4.3(d) is amended to read as follows:
"(d) adjust the exercisability, term (subject to
other limits) or vesting schedule of any or all
outstanding awards, adjust the number of Common Shares
subject to any award, change previously imposed terms
and conditions, in the circumstances referenced in
clause (b) above or in other circumstances or upon the
occurrence of other events (including events of a
personal nature) as deemed appropriate by the
Administrator, by amendment of an outstanding award, by
substitution of an outstanding award, by waiver or by
other legally valid means (which may result, among
other changes, in a greater or lesser number of shares
subject to the award, or a shorter or longer vesting or
exercise period), in each case subject to Sections 3, 8
and 9; provided that without stockholder approval, the
Administrator shall not reduce by amendment the
exercise price of an outstanding award;"
2. Section 4.3(e) is amended to read as follows:
"(e) authorize (subject to Sections 8, 9, and 11)
the adjustments, conversion, succession or substitution
of one or more outstanding awards upon the occurrence
of an event of the type described in Section 8 or in
other circumstances or upon the occurrence of other
similar events as deemed appropriate by the
Administrator; and/or"
IN WITNESS WHEREOF, the Company has caused its duly
authorized officer to execute this Amendment to the 1998
Plan on this 20th day of April, 1998.
BECKMAN COULTER, INC.
By: /s/ FIDENCIO M. MARES
Fidencio M. Mares
Its: Vice President, Human Resources
Exhibit 10.3
Beckman
1998 ANNUAL INCENTIVE PLAN (AIP)
WHO PARTICIPATES:
Key executives designated by the Chairman of the Board and the
President based on qualifying factors established by the
Organization and Compensation Committee (the Committee) of the
Board of Directors.
FUNDING THE AIP:
The company must achieve a minimum of (minimum amount) EPS for
any funding of AIP awards, regardless of any other financial or
non-financial results or individual performance.
WHAT IS MEASURED - THE AIP COMPONENTS:
There are four financial measurements, as well as the individual
performance evaluation, which comprise the 1998 AIP award
opportunity. The financial metrics have been selected because
they directly align with the company's overall goals and
objectives:
- Earnings Per Share (EPS)
- Company Sales
- Pre-tax Margin
- Debt/EBITDA
The individual performance evaluation is linked to the
achievement of your essential work outcomes established and
measured through the EXCEL management process.
INDIVIDUAL AIP AWARD DETERMINATION:
Individual incentive awards are determined by adding the
percentages earned based on the level of achievement for
financial measurements and your individual performance
evaluation. A pro rata incentive award percentage is calculated
for gradations between achievement levels for financial results.
The sum of the percentages is multiplied by your annual base pay
as of December 31, 1998 to arrive at your award amount. For
participants with an individual performance rating of
"Expectations partially Met/Improvement Needed", the total
incentive award for financial results may be reduced by up to
100%.
AIP ADMINISTRATION GUIDELINES:
The Committee administers the AIP on behalf of the company. 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.
AIP TERMS AND CONDITIONS:
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 award, a participant must be in active pay
status continuously through the last company-scheduled workday of the
year. Partial payments may be considered, at the full discretion of the
Committee, for retirees as defined by the company's retirement plan, who
leave before the end of the plan 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.
Exhibit 15
Independent Auditors' Review Report
The Stockholders and Board of Directors
Beckman Coulter, Inc:
We have reviewed the condensed consolidated balance sheet of
Beckman Coulter, Inc. and subsidiaries as of March 31, 1998,
and the related condensed consolidated statements of
operations and cash flows for the three-month periods ended
March 31, 1998 and 1997. 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 Coulter, Inc. (formerly known as Beckman
Instruments, Inc.) and subsidiaries as of December 31, 1997,
and the related consolidated statements of operations,
stockholders' equity and cash flows for the year then ended
(not presented herein); and in our report dated January 23,
1998, 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, 1997, 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
April 17, 1998
<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
Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 31
<SECURITIES> 0
<RECEIVABLES> 513
<ALLOWANCES> 17
<INVENTORY> 340
<CURRENT-ASSETS> 956
<PP&E> 887
<DEPRECIATION> 498
<TOTAL-ASSETS> 2275
<CURRENT-LIABILITIES> 783
<BONDS> 1249
0
0
<COMMON> 3
<OTHER-SE> 65
<TOTAL-LIABILITY-AND-EQUITY> 2275
<SALES> 399
<TOTAL-REVENUES> 399
<CGS> 230
<TOTAL-COSTS> 230
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 26
<INCOME-PRETAX> (12)
<INCOME-TAX> (4)
<INCOME-CONTINUING> (8)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains restated summary financial information extracted from the
Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement
of Operations and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 40
<SECURITIES> 4
<RECEIVABLES> 294
<ALLOWANCES> 9
<INVENTORY> 199
<CURRENT-ASSETS> 565
<PP&E> 664
<DEPRECIATION> 409
<TOTAL-ASSETS> 937
<CURRENT-LIABILITIES> 276
<BONDS> 176
0
0
<COMMON> 3
<OTHER-SE> 388
<TOTAL-LIABILITY-AND-EQUITY> 937
<SALES> 232
<TOTAL-REVENUES> 232
<CGS> 110
<TOTAL-COSTS> 110
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> 22
<INCOME-TAX> 6
<INCOME-CONTINUING> 16
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16
<EPS-PRIMARY> .56
<EPS-DILUTED> .54
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains restated summary financial information extracted from the
Consolidated Balance Sheet and the Consolidated Statement of Operations and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 35
<SECURITIES> 8
<RECEIVABLES> 320
<ALLOWANCES> 10
<INVENTORY> 190
<CURRENT-ASSETS> 579
<PP&E> 674
<DEPRECIATION> 410
<TOTAL-ASSETS> 960
<CURRENT-LIABILITIES> 279
<BONDS> 177
0
0
<COMMON> 3
<OTHER-SE> 396
<TOTAL-LIABILITY-AND-EQUITY> 960
<SALES> 872
<TOTAL-REVENUES> 1028
<CGS> 377
<TOTAL-COSTS> 478
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 18
<INCOME-PRETAX> 112
<INCOME-TAX> 37
<INCOME-CONTINUING> 75
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75
<EPS-PRIMARY> 2.66
<EPS-DILUTED> 2.58
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains restated summary financial information extracted from the
Consolidated Balance Sheet and the Consolidated Statement of Operations and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 26
<SECURITIES> 8
<RECEIVABLES> 298
<ALLOWANCES> 9
<INVENTORY> 166
<CURRENT-ASSETS> 533
<PP&E> 627
<DEPRECIATION> 375
<TOTAL-ASSETS> 908
<CURRENT-LIABILITIES> 251
<BONDS> 163
0
0
<COMMON> 3
<OTHER-SE> 345
<TOTAL-LIABILITY-AND-EQUITY> 908
<SALES> 776
<TOTAL-REVENUES> 930
<CGS> 328
<TOTAL-COSTS> 427
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 72
<INCOME-TAX> 24
<INCOME-CONTINUING> 49
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49
<EPS-PRIMARY> 1.74
<EPS-DILUTED> 1.70
</TABLE>
