-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, opUQ7bnIxfyvt+MEeaWayWQURKnJtdOk+pD18QnXa3NGxiTZ+hrxopwMs7kgjeH4 phgoWNomUcjg5e5O8K3pqA== 0000840467-94-000002.txt : 19940210 0000840467-94-000002.hdr.sgml : 19940210 ACCESSION NUMBER: 0000840467-94-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19940208 FILED AS OF DATE: 19940209 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BECKMAN INSTRUMENTS INC CENTRAL INDEX KEY: 0000840467 STANDARD INDUSTRIAL CLASSIFICATION: 3826 IRS NUMBER: 951040600 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 001-10109 FILM NUMBER: 94505366 BUSINESS ADDRESS: STREET 1: 2500 HARBOR BLVD CITY: FULLERTON STATE: CA ZIP: 92634 BUSINESS PHONE: 7148714848 10-K 1 FORM 10-K FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1993 Commission File Number 001-10109 BECKMAN INSTRUMENTS, INC. 2500 Harbor Boulevard, Fullerton, California 92634 (714) 871-4848 (Principal Executive Offices) State of Incorporation: Delaware I.R.S. Employer Identification No.: 95-104-0600 Securities registered pursuant to Section 12(b) of the Act: Title of each class: Common Stock, $.10 par value Name of each exchange on which registered: New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ). Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K. ( ) Aggregate market value of voting stock held by non-affiliates of the registrant as of January 24, 1994: $813,141,504. Common Stock, $.10 par value, outstanding as of January 24, 1994: 29,040,768 shares. Documents incorporated by reference in this report: Documents incorporated Form 10-K part number Annual Report to stockholders for the fiscal year ended December 31, 1993 Part I and Part II Proxy Statement for the 1994 Annual Meeting of Stockholders to be held on March 30, 1994 Part III BECKMAN INSTRUMENTS, INC. PART I Item 1. Business Beckman Instruments, Inc. ("Beckman" or "the Company") is one of the world's leading manufacturers of instrument systems that make laboratories more efficient by simplifying and automating biologically based processes. The Company designs, manufactures, markets and services a broad range of laboratory instrument systems, reagents and related products, which customers typically use to conduct basic scientific research, new product research and development or diagnostic analysis of patient samples. In 1993 about 60 percent of total sales were for diagnostic applications, principally in hospital laboratories, while about 40 percent of sales were for life sciences applications in universities, medical schools and research institutes, or new product research and development in pharmaceutical and biotechnology companies. About half of reported sales were to customers outside the United States. Background The Company was founded in 1934 by Dr. Arnold O. Beckman to manufacture analytical instruments and became a publicly traded corporation in 1952, subsequently being listed on the New York Stock Exchange in 1955. In 1968 the Company expanded its laboratory instrument focus to include health care applications in clinical diagnostics. Beckman was acquired by SmithKline Corporation to form SmithKline Beckman Corporation ("SmithKline Beckman") in 1982 and the Company was operated as a wholly owned subsidiary of SmithKline Beckman until November 4, 1988. At that time approximately 16% of Beckman's common stock was sold in a public offering and the stock was listed on the New York Stock Exchange. On July 26, 1989, SmithKline Beckman distributed the remainder of its Beckman common stock as a tax free dividend to the stockholders of SmithKline Beckman. This was part of a transaction involving the merger of SmithKline Beckman and Beecham Group p.l.c., a public limited company organized under the laws of the United Kingdom ("Beecham"). Since that time Beckman has operated as a fully independent publicly owned company. Simplification and Automation of Laboratory Processes The Company's primary expertise and activity is the integration of chemical, biological, engineering and software sciences into complete systems that simplify and automate biologically focused laboratory processes and the distribution and support of those systems around the world. These laboratory processes can generally be grouped into four categories: Synthesis and Sample Preparation/Handling - Synthesizing compounds useful in subsequent analysis and scientific investigation or placing material into a proper container, with necessary pretreatment, dilution, measurement, weighing and identification. Separation - Isolating materials of interest from extraneous material or separating mixtures into individual constituents, often in preparation for subsequent processes. Detection, Measurement and Characterization - Determining the identity, structure, or quantity of specific analytes (compounds or molecules of interest) present in sample specimens. Data Processing - Acquiring, reporting, analyzing, archiving or calculating the results of laboratory analysis. Beckman's experience, knowledge and ability in simplifying and automating these processes for biological laboratories forms a technological continuum that extends across the Company. From this common technical base comes a range of products that are configured to meet specific needs of academic research, pharmaceutical and biotechnology companies, hospitals and reference laboratories (large central laboratories to which hospitals and physicians refer specialized tests). By serving several customer groups with differing needs related through common science, the Company has the opportunity to broadly apply its technology. There is a corresponding scientific and technical continuum reflected in customer laboratories. Virtually all new analytical methods and tests originate in academic research in universities and medical schools. If the utility of a new method or test is demonstrated by fundamental research, it often will then be used by pharmaceutical investigators, biotechnology companies, teaching hospitals or specialized clinical laboratories in an investigatory mode. In some cases these new techniques eventually emerge in routine, high volume clinical testing at hospitals and reference labs. Generally instruments used at each stage from research to routine clinical applications employ the same fundamental processes but may differ in operating features such as number of tests performed per hour and degree of automation. Markets Beckman's products facilitate a wide range of laboratory processes in facilities concerned with cells, sub-cellular particles, biochemical compounds and analysis of patient samples. In 1993 the worldwide market for the types of products the Company provides was about $5.9 billion. Slightly over half of this market was in clinical diagnostic applications, with the remaining portion of the market in more general purpose life science applications. Other similar or related product categories not currently offered by the Company represent an additional market potential which is estimated to be approximately $10 billion. The size and growth of markets for the Company's products are influenced by technological innovation in bioanalytical practice, government funding for basic and disease related research (for example, heart disease, AIDS and cancer), research and development spending by biotechnology and pharmaceutical companies, health care spending and physician practice. Products The Company offers a wide range of instrument systems and related products, including consumables, accessories, and support services, which can be grouped into categories by type of laboratory process or application: Synthesis and Sample Preparation/Handling Separation Processes Detection, Measurement and Characterization Data Processing Automated General Chemistry for Clinical Diagnostics Special Chemistry Applications for Clinical Diagnostics PRODUCT SALES AS A PERCENT OF TOTAL PRODUCT SALES FOR CATEGORIES REPRESENTING MORE THAN 10 PERCENT OF SALES 1993 1992 1991 ____ ____ ____ Separation Processes 27 28 29 Automated General Chemistry for Clinical Diagnostics 40 39 39 Special Chemistry Applications for Clinical Diagnostics 20 21 20 Synthesis and Sample Preparation/Handling DNA Synthesizers DNA synthesizers automate the process of making synthetic oligonucleotides from organic chemicals. The Beckman Oligo 1000 significantly reduces the time required for synthesis and informs the user of synthesis progress by providing reaction and reagents status throughout the process. The system's ease-of-use is enhanced by convenient chemicals packaging that minimize reagent preparation and replacement. Oligo 1000 systems sell in the $18,000 price range. Robotic Workstation The Biomek(R) automated laboratory workstations perform complex operations involving liquids, including dispensing measured samples, adding reagents, diluting, mixing and transferring small volumes between reaction vessels. The systems handle multiple samples in parallel and may be equipped with a photometer for detection purposes. Biomek systems range in price from $35,000 to over $80,000. Separation Processes Centrifuges Centrifuges separate liquid sample mixtures on the basis of density (weight per unit volume) differences between the mixture's components. Samples are put into tubes which are placed in rotors and spun at speeds varying from a few thousand to 120,000 revolutions per minute ("rpm"). The resulting centrifugal forces cause sample components to separate according to their density. Centrifuges are used for the nondestructive separation of protein and DNA fractions, cellular components and other materials of interest in modern biology and biotechnology. In addition to efficiency (low power consumption), reliability and an environmentally friendly design (e.g., without freon) on many models, Beckman centrifuges are distinguished from those of competitors by the wide variety of rotor designs available to meet the precise needs of customer applications, including the separation of blood cells from serum, an important use in clinical diagnostic laboratories. Beckman manufactures a broad line of centrifuges with varying speed characteristics ranging from "low speed" (few thousand rpm) to "high speed" (10,000 to 35,000 rpm) to "ultracentrifuges" (35,000 to 120,000 rpm) and sample capacities ranging from microliters (one millionth of a liter) to liters. Prices of these units vary from about $2,000 for a small low speed centrifuge to over $50,000 for an ultracentrifuge and over $100,000 for an analytical ultracentrifuge. High Performance Liquid Chromatographs ("HPLC") HPLC systems rely upon the difference in the rates of passage of the components in a chemical mixture through a tubular column filled with chemically active material. HPLC systems are powerful separation devices for biologically active compounds, since they are generally non-destructive, sensitive and capable of resolving very complex mixtures of similar compounds. The System Gold(R) HPLC manufactured by Beckman, which is designed to be particularly useful in life sciences laboratories, consists of several instrument modules that are used in various combinations, consumables, accessories and software tailored to specific applications, such as drug metabolism assays. Beckman's HPLC systems typically sell for $20,000 to $55,000. Protein Sequencers Beckman manufactures and sells protein sequencer systems and related chemicals. Protein sequencing is used to determine the primary structure, i.e., the amino acid sequence, of a protein. Protein sequencer systems sell in the range of $90,000 to $130,000. Electrophoresis Electrophoresis systems separate mixtures of proteins, DNA, and other molecules principally on the basis of differences in mass and electrical charge. The P/ACE(TM) capillary electrophoresis product line represents a powerful extension of electrophoresis technology by combining the speed of traditional electrophoresis with the discrimination powers of chromatography. The result is an automated system for high speed, high sensitivity separation of proteins, nucleic acids and other biological materials. P/ACE systems typically sell for $40,000 to $60,000. Detection and Measurement Spectrophotometer Systems Spectrophotometers detect and measure the presence of compounds in liquid mixtures by sensing the absorption of specific wavelengths of light as that light passes through the sample. Some Beckman spectrophotometers have the capability of measuring changes in absorption during biological reactions. These spectrophotometers, in conjunction with Beckman software, automatically control the time, temperature and wavelength of the measurement while computing and recording the results of the experiment. Depending on the specific model, accessories or software, Beckman spectrophotometers sell in the $9,000 to $25,000 range. Nuclear Counters Radioactive "labeling," which is the substitution or addition of a radioactive atom into a compound of interest, is a powerful and accepted method for tracing the path of a biochemical in a living system. A labeled compound which is fed to or injected into a test animal or plant can then be traced to specific tissue or waste product by detecting the presence of the radioactive label. Scintillation counters can be used for this purpose. Beckman scintillation counters are distinguished by sophisticated software and system features that combine accurate measurement with user convenience. They typically sell in the $15,000 to $30,000 range. Data Processing In addition to the software associated directly with Beckman's instrument systems, the Company produces computer software programs to aid in the data processing functions of analytical laboratories. These systems control laboratory instruments, direct data acquisition from the instruments, and compute, store and report the results in formats needed for internal purposes and satisfaction of regulatory requirements. Beckman's data management systems are characterized by several features, including the capability to operate on a variety of manufacturers' computers and applications flexibility which lets customers configure the system to meet their individual needs. These systems vary greatly in cost depending upon the customer's requirements, but typically range from $50,000 to $250,000. Automated General Chemistry for Clinical Diagnostics Automated general chemistry systems automatically detect and quantify various chemical substances of clinical interest (analytes) in human blood, urine and other body fluids. Beckman offers several general chemistry systems with a range of capabilities to meet specific customer requirements, principally for use in medium to large hospital laboratories, but also with some application in reference laboratories. SYNCHRON(R) Systems The Company's SYNCHRON(R) line of automated general chemistry systems is a family of modular automated diagnostic instruments and the reagents, standards and other consumable products required to perform commonly requested diagnostic tests. The SYNCHRON analyzer series includes the SYNCHRON AS(R) system, originally introduced as the ASTRA(R), which is an automated "stat" (immediate test) routine multi-channel analyzer. The original system, since extended, determines the concentration of eight of the most commonly measured analytes. In response to changes in reimbursement policies for hospitals and clinical laboratories, which required them to be more efficient, the Company developed a newer series of instrument systems, the SYNCHRON CX(R) line. The SYNCHRON CX systems have been designed as compatible modules which may be used independently or in various combinations with each other, to meet the specific needs of individual customers. The smallest of these modules, the SYNCHRON CX3 analyzer, is an upgrade of the ASTRA analyzer offering improved software, easier operation and reduced reagent consumption. The SYNCHRON CX4CE, CX5CE and CX7 are enhanced models with industry leading, innovative software features. The CX(R)4CE clinical system has up to 24 customer selected "on-board" types of tests available, drawn from a menu of over 60 different types of tests. The extensive menu includes immunoproteins, therapeutic drugs and a complete listing of general chemistries. Drawing from the same menu, the CX(R)5CE has 28 "on-board" types of tests and the CX(R)7 has 32 "on-board" types of tests. These systems all enhance productivity by providing bi-directional communication with laboratory information systems. SYNCHRON systems range in price from $56,000 to over $185,000 and are sold principally based on their ability to improve laboratory efficiency. Other Automated Clinical Chemistry Products The Company has a family of electrolyte analyzers that provide automated analysis of patient electrolyte concentrations such as sodium, potassium, and chloride. These analyzers include the E4A, E2A, LABLYTE(R) and SYNCHRON EL-ISE(R) series and range in price from $6,000 to $20,000. Beckman also offers a family of low cost instruments that perform manual analyses of glucose, blood urea nitrogen and creatinine. Special Chemistry Applications For Clinical Diagnostics Immunochemistry Systems The Array(R) 360 Protein and Therapeutic Drug Monitoring Systems combine automated instrumentation and advanced software that significantly enhance the efficiency of protein and drug analysis. The Array provides automated random access testing which allows the operator to mix samples at random, eliminating the need to run identical analytes in batches. At the customer's option, it can incorporate a computer enhancement that allows automatic reading of bar-coded sample tubes for positive sample identification and bi- directional communication with the laboratory's information system. Array systems sell in the $45,000 to $55,000 price range. Electrophoresis For Clinical Diagnostics The Appraise(R) densitometer and the Paragon(R) Electrophoresis Systems allow the Company to offer a full range of electrophoresis products that provide specialized protein analysis for clinical laboratories. Paragon reagent kits are used in the diagnosis of diabetes, cardiac, liver and other diseases. The Appraise densitometer can be used in conjunction with Paragon kits. It ranges in price from $17,000 to $24,000. Other Special Chemistry Products The Company also produces a series of single use, self- contained diagnostic test "kits" for use in physicians' offices and group practices. For example, the Hemoccult(R) disposable fecal occult blood testing kit is used in the diagnosis of gastrointestinal disease. Competition The markets for the Company's products are highly competitive, with hundreds of companies participating in one or more portions of the market. There are a number of competitors which sell both life sciences and diagnostic products, including the Hitachi Ltd./ Boehringer Mannheim GmbH collaboration, E.I. du Pont de Nemours & Co. Inc., Bio-Rad Laboratories, Inc. and LKB Pharmacia AB. Additional competitors focused more directly on life sciences include Hewlett-Packard Co., Millipore Corporation, and The Perkin-Elmer Corporation. Additional competitors in the clinical laboratory market include Abbott Laboratories, Eastman Kodak Company, Hoechst Corporation (Behring Diagnostics Division), and Bayer Diagnostics. Competitors include divisions or subsidiaries of corporations with substantial resources. In addition the Company competes with several companies that sell reagents for laboratory instruments that are manufactured by Beckman and others. The Company competes primarily on the basis of improved laboratory productivity, product quality and technology, service and price. Discounting is used as a competitive tool when necessary. Management believes that its extensive installed instrument base provides the Company with a competitive advantage in obtaining both instrument and after-market follow-on business. Research, Development and Engineering The Company's new products originate from four sources: internal research, development and engineering ("RD&E") programs; external collaborative efforts with individuals in academic institutions and technology companies; devices or techniques that are generated in customers' laboratories; and business acquisitions. The Company's RD&E teams are skilled in optics, chemistry, electronics, mechanical and other engineering disciplines and software, in addition to a broad range of biological and chemical sciences. Research studies are usually conducted in conjunction with individuals in academic institutions or other outside scientists. Development programs focus on production of new generations of existing product lines, such as the SYNCHRON(R) analyzers, as well as new product categories not currently offered by the Company. Other areas of pursuit include innovative approaches to immunochemistry, molecular biology and advanced electrophoresis technologies, such as capillary electrophoresis. The Company's RD&E expenditures for fiscal years 1993, 1992, and 1991 were $93.3 million, $85.9 million and $82.2 million, respectively. Management intends to maintain the present level of the Company's investment in RD&E spending. Sales and Service The Company has sales in over 120 countries and maintains its own marketing, service and sales forces throughout the world. While nearly all of the Company's products are distributed by Beckman sales groups throughout the world, the Company employs independent distributors to serve those markets that are more efficiently reached through such channels. Beckman's sales force is technically educated and trained in the operation and application of the Company's products. The sales force is supported by a staff of scientists and technical specialists in each product line and in each major scientific discipline served by the Company's products. In addition to direct sales of its instruments, the Company leases certain instruments, principally those sold for clinical diagnostic applications in hospitals. Beckman provides accessory products, consumables and service for its instruments worldwide. Service offices and inventory depots are associated with sales offices, subsidiaries and dealer locations. The Company considers its reputation for service responsiveness and competence to be an important competitive asset. Patents and Trademarks To complement and protect the innovations created by the Company's RD&E efforts, the Company has an active patent protection program which includes nearly 600 active U.S. patents and patent applications. The Company also files important corresponding applications in principal foreign countries. The Company has taken an aggressive posture in protecting its patent rights; however, no one patent is considered essential to the success of the business. The Company's primary trademark is "Beckman", with the trade name also being Beckman or Beckman Instruments, Inc. The Company vigorously protects its primary trademark, which is used on the Company's products and is recognized throughout the worldwide scientific and diagnostic community. The Company owns and uses secondary trademarks on various products, but none of these secondary trademarks is considered of primary importance to the business. Government Regulations Certain of the Company's products are subject to regulations of the U.S. Food and Drug Administration (the "FDA") which require such products to be manufactured in accordance with "good manufacturing practices". Such laws and regulations also require that such products be safe and effective and that the labeling of those products conform with specific requirements. Testing is conducted to demonstrate performance claims and to provide other necessary assurances. Clinical systems and reagents must be reviewed by the FDA before sale and, in some instances, are subject to product standards, other special controls or a formal FDA premarket approval process. Implementation in 1994 of federal regulations under the Clinical Laboratory Improvement Amendments of 1988 will require FDA review and approval of quality assurance protocols for the Company's clinical reagent products. While adding to the overall regulatory review process, this is not expected to materially affect the sale of the Company's products. Certain of the Company's products are subject to comparable regulations in foreign countries. In January 1993 the European Community (EC) countries began implementation of their plan for a new unified EC market with reduced trade barriers and harmonized regulations. The EC adopted a significant international quality standard, the International Organization for Standardization Series 9000 Quality Standards ("ISO 9000"). The Company's manufacturing operations in its Brea, Carlsbad, Fullerton, Palo Alto, Paso Robles and Porterville, California; Allendale, New Jersey; Sharon Hill, Pennsylvania; Naguabo, Puerto Rico and Galway, Ireland facilities have been certified as complying with the requirements of ISO 9000. Many of the Company's international sales subsidiaries have also been certified, including those located in Australia, Canada, France, Germany, Italy, The Netherlands, South Africa, Spain, Sweden, Switzerland and the United Kingdom. The design of the Company's products and the potential market for their use may be directly or indirectly affected by U.S. and foreign regulations concerning reimbursement for clinical testing services. The configuration of new products, such as the SYNCHRON(R) series of clinical analyzers, reflects the Company's response to the changes in hospital capital spending patterns such as those engendered by the Medicare Diagnostic Related Groups ("DRGs"). Under the DRG system, a hospital is reimbursed a fixed sum for the services rendered in treating a patient, regardless of the actual cost of the services provided. Prior to the U.S. Government fiscal year which began October 1, 1991, inpatient capital costs incurred by a hospital were an exception to the DRG system and were reimbursed, to the extent of Medicare utilization, through a supplement to the DRG payment known as "capital cost pass-through." Effective October 1, 1991, the capital cost payment provisions of the Medicare Prospective Payment System were changed to provide for the transition from a "pass- through" payment methodology to a "prospective DRG based capital payment" methodology for all inpatient capital related costs incurred by a hospital. Under this new payment methodology, "low capital costs" hospitals are expected to receive greater capital payments from Medicare than they would have had they remained under the prior capital payment system. "High capital costs" hospitals are paid under a "hold harmless" payment methodology which assures the hospital of certain minimum payment levels for historical capital costs and new capital costs during the ten year transition period to a "fully prospective" payment system for inpatient capital costs. To date, the Company has not experienced, and does not expect to experience in the future, any material financial impact from the change in Medicare's payment for inpatient capital costs. The current health care reform efforts in the United States and in some foreign countries are expected to further alter the methods and financial aspects of doing business in the health care field. The Company is closely following these developments so that it may position itself to take advantage of them. However, the Company cannot predict the effect on its business of these reforms should they occur nor of any other future government regulation. Environmental Matters The Company is subject to federal, state, local and foreign environmental laws and regulations. The Company believes that its operations comply in all material respects with applicable federal, state, and local environmental laws and regulations. Although the Company continues to make expenditures for environmental protection, it does not anticipate any significant expenditures in order to comply with such laws and regulations which would have a material impact on the Company's operations or financial position. In 1983 the Company discovered organic chemicals in the groundwater near a waste storage pond at a Company facility in Porterville, California. SmithKline Beckman, the Company's former controlling stockholder, agreed to indemnify the Company with respect to this matter for any costs incurred by the Company in excess of applicable insurance, eliminating any impact on the Company's earnings or financial position. SmithKline Beecham Corporation, the surviving entity of the 1989 merger between SmithKline Beckman and Beecham, assumed the obligations of SmithKline Beckman in this respect. In 1984 the Company sold approximately 40 acres of land in Irvine, California to The Prudential Insurance Company of America ("Prudential"). In 1988 the Company was sued by Prudential in U.S. District Court in California for recovery of costs and other alleged damages with respect to soil and groundwater contamination allegedly caused by operations on the property. In 1990 the Company entered into an agreement with Prudential for settlement of the lawsuit and for sharing current and future costs of investigation, remediation and other claims. Prudential has since sold the property to Mola Development Corporation which subsequently sold a portion of the property to F.C. Irvine, Inc., each local property developers. This has resulted in additional litigation against the Company and Prudential. See "Legal Proceedings" herein. Investigations conducted on the property have determined that soil and groundwater remediation is required and such remediation is underway. During 1993 the Company made substantial progress in remediating the soil, although there remain some areas of soil contamination that may require further remediation. The Company also operated a groundwater treatment system throughout most of 1993 and in the fourth quarter expanded the capacity of the system. The expanded system is believed to be adequate to remediate the groundwater based upon information available in 1993. In addition a series of test wells were drilled on the property which provided additional information concerning the area of groundwater contamination. The Company believes that it has established adequate reserves for remediation of any remaining soil contamination, operation and maintenance of the expanded treatment system and any necessary additional groundwater investigations. Investigations on the property are continuing and there can be no assurance that further investigation will not reveal additional contamination or result in additional costs. The Company believes that additional remediation costs, if any, beyond those already provided for the contamination discovered by the current investigations will not have a material adverse effect on the Company's operations or financial position. Employee Relations The Company and its subsidiaries presently employ approximately 6,600 persons throughout the world, including approximately 4,600 in the United States. The Company considers that its relations with its employees are generally good. Geographic Area Information Information with respect to the above-captioned item is incorporated by reference to Note 11 Business Segment Information of the Company's Annual Report to stockholders for the year ended December 31, 1993. Item 2. Properties The Company's primary instrument assembly and manufacturing facilities are located in Fullerton, Brea, and Palo Alto, California. Central manufacturing support facilities for parts and electronic subassemblies are located in Porterville and Paso Robles, California. An additional manufacturing facility is located in Galway, Ireland. Reagents are manufactured in Carlsbad, California, Naguabo, Puerto Rico, and Galway, Ireland. The Company's computer software products business is located in Allendale, New Jersey. The Company's facility for the production of Hemoccult(R) test kits and related products is located in Sharon Hill, Pennsylvania. All U.S. manufacturing facilities, including land and buildings, are owned by the Company with the exception of Allendale and Sharon Hill which are leased facilities, and Palo Alto, where the Company has built and owns its buildings on a long-term land lease expiring in 2054. All manufacturing facilities outside the U.S. are leased. The central production facilities for the Company also include plastics fabrication and machine shop capabilities in Fullerton to serve the entire Company. This facility, in conjunction with electronic subassembly work done in Porterville and Paso Robles, supplies the primary parts and subassemblies for the instrument systems to the various instrument assembly locations in California. The Company's principal U.S. distribution locations are in Brea and Fullerton, California and Somerset, New Jersey. In addition, the Company plans to establish a European administration center at a facility in Nyon, Switzerland during the first quarter of 1994. The Company believes that its production facilities meet applicable government environmental, health and safety regulations, and industry standards for maintenance, and that its facilities in general are adequate for its current business. Item 3. Legal Proceedings As previously reported, in 1991 Forest City Properties Corporation and F.C. Irvine, Inc. (collectively, "Forest City"), current owners and developers of a portion of the same real property in Irvine referred to under the caption "Environmental Matters" herein, filed suit against Prudential in the California Superior Court for the County of Los Angeles, alleging breach of contract and damages caused by the pollution of the property. Forest City seeks damages of more than $20 million and additional remediation of the property. Although the Company is not a named defendant in the Forest City action, it may be obligated to contribute to any resolution of that action pursuant to the Company's 1990 settlement agreement with Prudential. See "Environmental Matters" herein. The Company has established a reserve for the resolution of this lawsuit 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. As previously reported, in July 1993 a toxic tort action was filed in Maricopa County Superior Court, Arizona against the Company and a number of other defendants, including Motorola, Inc., Siemens Corporation, the Cities of Phoenix and Scottsdale, and others. Please see the Company's report to the Securities and Exchange Commission on form 10-Q for the quarter ended September 30, 1993 for details. This lawsuit was served on the Company in December 1993 and the Company has undertaken its legal defense of the action. The Company is indemnified by SmithKline Beecham Corporation, the successor of its former controlling stockholder, for any costs incurred in this matter in excess of applicable insurance, and thus the outcome of this litigation, even if unfavorable to the Company, should have no effect on the Company's earnings or financial position. In addition, the Company and its subsidiaries are involved in a number of lawsuits which the Company considers ordinary and routine in view of its size and the nature of its business. The Company does not believe that any ultimate liability resulting from any such lawsuits will have a material adverse effect on the operations or financial position of the Company. See also "Environmental Matters" herein. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of stockholders during the fourth quarter of the fiscal year covered by this report. Executive Officers of the Company The following is a list of the executive officers of the Company as of February 7, 1994, showing their ages, present positions and offices with the Company and their business experience during the past five or more years. Officers are elected by the Board of Directors and serve until the next annual Organization Meeting of the Board. Officers may be removed by the Board at will. There are no family relationships among any of the named individuals, and no individual was selected as an officer pursuant to any arrangement or understanding with any other person. Louis T. Rosso, 60, Chairman of Mr. Rosso was named Chairman of the Board and Chief Executive the Board of the Company in Officer 1989, was named Chief Executive Officer in 1988 and was its President from 1982 until 1993. He also served as a Vice President of SmithKline Beckman from 1982 to 1989. Mr. Rosso first joined the Company in 1959 and was named Corporate Vice President in 1974. He is a director of Allergan, Inc. and of the Beckman Laser Institute and Medical Clinic. He is on the Board of Trustees of St. Jude Medical Center in Fullerton, California and Harvey Mudd College and is a member of the Board of Visitors of the Graduate School of Management of the University of California Irvine. Mr. Rosso has been a director of the Company since 1988. John P. Wareham, 52, Director, Mr. Wareham was named President President, and Chief Operating and Chief Operating Officer of Officer the Company effective October 15, 1993. On December 1, 1993 he was elected to the Board of Directors. Mr. Wareham joined the Company in 1984 as Vice President, Diagnostic Systems Group and served in that capacity until his appointment as President. Prior thereto he had been President of Norden Laboratories, Inc., a wholly owned subsidiary of SmithKline Beckman engaged in developing, manufacturing and marketing veterinary products. Mr. Wareham first joined SmithKline Beckman in 1968. He is a director of the Little Rapids Corporation and The John Henry Foundation. Michael T. O'Neill, 53, Senior Mr. O'Neill was named Senior Vice President, Commercial Vice President, Commercial Operations Operations of the Company effective October 15, 1993. He had been Vice President, Bioanalytical Systems Group since 1989. Prior thereto he had been Vice President, International Operations for the Bioanalytical systems Group since 1985. Mr. O'Neill first joined the Company in 1973. Dennis K. Wilson, 58, Vice Mr. Wilson was named Vice President, Finance and Chief President, Finance and Chief Financial Officer Financial Officer of the Company effective December 24, 1993. He was Vice President, Treasurer of the Company from 1989 until his current appointment. Prior thereto he had been Vice President, Corporate Accounting and Assistant Controller of SmithKline Beckman since 1984. Mr. Wilson first joined the Company in 1969. James T. Glover, 43, Vice Mr. Glover was appointed to his President and Controller present position as Vice President and Controller of the Company in May 1993. From 1989 until assuming his current position, he was Vice President, Controller - Diagnostic Systems Group. Mr. Glover joined the Company in 1983 and prior to that held management positions with KPMG Peat Marwick and R.J. Reynolds, Inc. William H. May, 51, Vice Mr. May has been General President, General Counsel and Counsel and Secretary of the Secretary Company since 1984 and has been Vice President, General Counsel and Secretary of the Company since 1985. Mr. May first joined the Company in 1976. Richard K. Sears, 61, Vice Mr. Sears has been Vice President, Human Resources President, Human Resources of the Company since 1991. Prior thereto he had been President of Haiku/Hawaii, a building material and development company, from 1989 to 1990. Before that he was Vice President - Corporate Administration of the Irvine Company of Newport Beach, California, a major California real estate developer, from 1984 to 1987, and served as the principal of his own consulting practice in the field of planning and general management from 1987 to 1989. Mr. Sears originally joined the Company in 1955 when he served in a number of administrative and management positions for a period of 14 years. Bruce A. Tatarian, 45, Vice Mr. Tatarian was named Vice President, Bioresearch President Bioresearch Commercial Operations Commercial Operations International International of the Company effective January 1, 1994. He was Vice President, Marketing Operations for the Bioanalytical Systems Group from 1991 until his current appointment. Prior thereto he had been Vice President - Manager, Analytical Business Unit from 1990 to 1991. He rejoined the Company in 1989 as Director of Product Planning and Technical Assessment of the Bioanalytical Systems Group. Mr. Tatarian originally joined the Company in 1973 when he served in a number of marketing positions for a period of ten years. Arthur A. Torrellas, 63, Vice Mr. Torrellas was named Vice President, Diagnostic President, Diagnostic Commercial Operations Commercial Operations of the Company effective January 1, 1994. He had been Vice President, International Operations for the Diagnostic Systems Group since 1985. Mr. Torrellas first joined the Company in 1977. Albert R. Ziegler, 55, Vice Mr. Ziegler was named Vice President, Diagnostics President, Diagnostics Development Center Development Center of the Company effective January 1, 1994. He joined the Company in 1986 as Vice President, North America Operations for the Diagnostic Systems Group. Prior thereto he had been President of Branson Ultrasonics Corporation, a manufacturer of industrial ultrasound instruments and a subsidiary of SmithKline Beckman until the divestiture of SmithKline Beckman's industrial instruments businesses in 1984. Mr. Ziegler first joined SmithKline Beckman in 1971. Paul Glyer, 37, Treasurer Mr. Glyer was named Treasurer of the Company effective December 24, 1993. He served as Assistant Treasurer since 1989 when he first joined the Company. George Kilmain, 60, Director, Mr. Kilmain was Vice President, Vice President, Finance and Finance and Chief Financial Chief Financial Officer Officer of the Company from 1984 until December 1993 when he retired. Mr. Kilmain was also a director of the Company from 1988 until he resigned effective December 1, 1993. He first joined the Company in 1961. Roger G. Novesky, 55, Vice Mr. Novesky was Vice President President, Spinco Business Unit and general manager of the Spinco Business Unit of the Company from 1985 until December 1993 when he elected early retirement which will be effective as of the end of February, 1994. Mr. Novesky first joined the Company in 1963. PART II Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters Information with respect to the above-captioned item is incorporated herein by reference to the sections entitled "Stock Exchanges and Prices" and "Dividends" of the Company's Annual Report to stockholders for the year ended December 31, 1993. During 1992 the Company paid a quarterly dividend of $.07 per share of common stock for the first and second quarters and $.08 per share for the third and fourth quarters, for a total of $.30 per share for the year. During 1993 the Company paid four consecutive quarterly dividends of $.09 per share of common stock, for a total of $.36 per share for the year. Information with respect to dividend restrictions is incorporated by reference to Note 5 Debt of the Company's Annual Report to stockholders for the year ended December 31, 1993. In addition, as of January 24, 1994, there were approximately 10,855 holders of record of the Company's common stock. Item 6. Selected Financial Data Information with respect to the above-captioned item is incorporated herein by reference to the section entitled "Five-Year Financial and Statistical Data" of the Company's Annual Report to stockholders for the year ended December 31, 1993. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Information with respect to the above-captioned item is incorporated herein by reference to the section entitled "FINANCIAL REVIEW" of the Company's Annual Report to stockholders for the year ended December 31, 1993. Item 8. Financial Statements and Supplementary Data Information with respect to the above-captioned item is incorporated herein by reference to the consolidated financial statements, including all the notes thereto, and the sections entitled "Report by Management," "Independent Auditors' Report," and "Quarterly Data (Unaudited)" of the Company's Annual Report to stockholders for the year ended December 31, 1993. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure None. PART III Item 10. Directors and Executive Officers of the Registrant Directors - The information with respect to directors required by this Item is incorporated herein by reference to those parts of the Company's Proxy Statement for the Annual Meeting of Stockholders to be held March 30, 1994 entitled "ELECTION OF DIRECTORS" and "Board of Directors Information." Executive Officers - The information with respect to executive officers required by this Item is set forth in Part I of this report. Item 11. Executive Compensation The information with respect to executive compensation required by this Item is incorporated by reference to that part of the Company's Proxy Statement for the Annual Meeting of Stockholders to be held March 30, 1994 entitled "EXECUTIVE COMPENSATION." Item 12. Security Ownership of Certain Beneficial Owners and Management The information with respect to security ownership required by this Item is incorporated by reference to that part of the Company's Proxy Statement for the Annual Meeting of Stockholders to be held March 30, 1994 entitled "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT." Item 13. Certain Relationships and Related Transactions The information with respect to certain relationships and related transactions required by this Item is incorporated by reference to that part of the Company's Proxy Statement for the Annual Meeting of Stockholders to be held March 30, 1994 entitled "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a)(1), (a)(2) Financial Statements and Financial Statement Schedules The financial statements and financial statement schedules filed as part of the report are listed or incorporated by reference in the "Index of Financial Statements and Schedules" following this Part IV. (a)(3) Exhibits Management contracts and compensatory plans or arrangements are identified by *. 3.1 Third Restated Certificate of Incorporation of the Company, June 5, 1992 (incorporated by reference to Exhibit 3.1 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1992, File No. 001-10109). 3.2 Amended and Restated By-Laws of the Company, as of January 27, 1993. 4.1 Specimen Certificate of Common Stock (incorporated by reference to Exhibit 4.1 of Amendment No.1 to the Company's Form S-1 registration statement, File No. 33-24572). 4.2 Rights Agreement between the Company and Morgan Shareholder Services Trust Company, as Rights Agent, dated as of March 28, 1989 (incorporated by reference to Exhibit 4 of the Company's current report on Form 8-K filed with the Securities and Exchange Commission on April 25, 1989, File No. 1-10109). 4.3 First amendment to the Rights Agreement dated as of March 28, 1989 between the Company and First Chicago Trust Company of New York (formerly Morgan Shareholder Services Trust Company), as Rights Agent, dated as of June 24, 1992 (incorporated by reference to Exhibit 1 of the Company's current report on Form 8-K filed with the Securities and Exchange Commission on July 2, 1992, File No. 001-10109). 10.1 Cross-Indemnification Agreement between the Company and SmithKline Beckman Corporation (incorporated by reference to Exhibit 10.1 of Amendment No.1 to the Company's Form S-1 registration statement, File No. 33-24572). 10.2 Tax Sharing Agreement between the Company and SmithKline Beckman Corporation (incorporated by reference to Exhibit 10.2 of Amendment No. 1 to the Company's Form S-1 registration statement, File No. 33-24572). * 10.3 SmithKline Beckman Corporation Supplemental Benefits Plan (incorporated by reference to Exhibit 10(d) of SmithKline Beckman Corporation's Annual Report to the Securities and Exchange Commission on form 10-K for the fiscal year ended December 31, 1987, File No. 1-4077). * 10.4 Beckman Instruments, Inc. Supplemental Pension Plan, adopted by the Company October 24, 1990 (incorporated by reference to Exhibit 10.4 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December, 31 1990, File No. 001-10109). * 10.5 The Company's Incentive Compensation Plan, as amended by the Company's Board of Directors on October 26, 1988 and as amended and restated by the Company's Board of Directors on March 28, 1989 (incorporated by reference to Exhibit 10.16 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December, 31 1989, File No. 001-10109). 10.6 Distribution Agreement, dated as of April 11, 1989, among SmithKline Beckman Corporation the Company and Allergan, Inc. (incorporated by reference to Exhibit 3 to SmithKline Beckman Corporation's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 14, 1989, File No. 1-4077). 10.7 Tax Agreement, dated as of April 11, 1989, between SmithKline Beckman Corporation and the Company (incorporated by reference to Exhibit 4 to SmithKline Beckman Corporation's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 14, 1989, File No. 1-4077). 10.8 Amendment to the Distribution Agreement effective as of June 1, 1989 between SmithKline Beckman Corporation, the Company and Allergan, Inc. (incorporated by reference to Exhibit 10.26 of Amendment No. 2 to the Company's Form S-1 registration statement, File No. 33-28853). * 10.9 The Company's Executive Bonus Plan, adopted by the Company in 1992 (incorporated by reference to Exhibit 10.18 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1992, File No. 001-10109). * 10.10 Form of Change in Control Agreement, dated as of May 1, 1989, between the Company, each of its Executive Officers and certain other key employees (incorporated by reference to Exhibit 10.34 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1989, File No. 001-10109). * 10.11 Form of Restricted Stock Agreement, dated as of September 16, 1991, between the Company, each of its Executive Officers and certain other key employees (incorporated by reference to Exhibit 10.19 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1991, File No. 001-10109). 10.12 Revolving Credit Agreement, dated as of July 2, 1992, among the Company, the lenders named therein and Citicorp USA, Inc. as Agent (incorporated by reference to Exhibit 10.16 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1992, File No. 001-10109). 10.13 First Amendment to Revolving Credit Agreement, dated as of December 31, 1993, among the Company, the lenders named therein and Citicorp USA, Inc. as Agent. 10.14 Note Agreement, dated as of February 5, 1993, among the Company, Nationwide Life Insurance Company and three other insurance companies named therein (incorporated by reference to Exhibit 10.17 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1992, File No. 001-10109). * 10.15 The Company's Executive Bonus Plan, adopted by the Company in 1993. * 10.16 The Company's Stock Option Plan for Non-Employee Directors, as restated with amendments of January 29, 1992, amendments approved by stockholders May 6, 1992 (incorporated by reference to Exhibit 10.19 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1992, File No. 001-10109). * 10.17 The Company's Incentive Compensation Plan of 1990, as restated with amendments of January 29, 1992, amendments approved by stockholders May 6, 1992 (incorporated by reference to Exhibit 10.20 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1992, File No. 001-10109). 10.18 Line of Credit Promissory Note in favor of Mellon Bank, N.A., dated as of October 6, 1993 (incorporated by reference to Exhibit 10.21 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1992, File No. 001-10109). 10.19 Trust Agreement between the Company and Mellon Bank, N.A. as Trustee, for the benefit of Participating Employees, dated as of January 31, 1993 (incorporated by reference to Exhibit 10.22 of the Company's Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 1992, File No. 001-10109). * 10.20 Form of Legended Stock Agreement and Election For Deferral of a Portion of the FY 93 Executive Bonus Plan, between the Company and some of its Executive Officers and other key employees. 10.21 Loan Agreement (Multiple Advance), dated September 30, 1993, between Beckman Instruments (Japan) Limited and the Industrial Bank of Japan, Limited (English translation, including certification as to accuracy; original document executed in Japanese). 10.22 Term Loan Agreement, dated as of September 30, 1993, between Beckman Instruments (Japan) Limited and Citibank, N.A., Tokyo Branch. 10.23 Term Loan Agreement, dated as of December 9, 1993, between Beckman Instruments (Japan) Limited and The Dai-Ichi Kangyo Bank Limited (English translation, including certification as to accuracy; original document executed in Japanese). * 10.24 Agreement Regarding Retirement Benefits of Arthur A. Torrellas, dated December 20, 1993, between the Company and Arthur A. Torrellas. 11. Statement regarding computation of per share earnings: This information is incorporated by reference to Note 1 Summary of Significant Accounting Policies of the Company's Annual Report to stockholders for the year ended December 31, 1993. 13. FINANCIAL REVIEW section of the Company's Annual Report to stockholders for the year ended December 31, 1993. 22. List of principal subsidiaries of the Company. 24. Consent of KPMG Peat Marwick, February 8, 1994. (b) Reports on Form 8-K During Fourth Quarter ended December 31, 1993. No Reports on Form 8-K were filed during the quarter ended December 31, 1993. KPMG Peat Marwick Certified Public Accountants Orange County Office Center Tower 650 Town Center Drive Costa Mesa, CA 92626 The Stockholders and Board of Directors Beckman Instruments, Inc.: Under the date of January 20, 1994 we reported on the consolidated balance sheets of Beckman Instruments, Inc. and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of operations and cash flows for each of the years in the three-year period ended December 31, 1993, as contained in the 1993 annual report to stockholders. These consolidated financial statements and our report thereon are incorporated by reference in the annual report on Form 10-K for the year 1993. In connection with our audits of the aforementioned consolidated financial statements, we also have audited the related supplementary financial schedules as listed in the accompanying index. These supplementary financial schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these supplementary financial schedules based on our audits. In our opinion, such supplementary financial schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. As discussed in Note 1 and Note 7 to the consolidated financial statements, the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, and Statement of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits other Than Pensions, in 1993. KPMG PEAT MARWICK Orange County, California January 20, 1994 Beckman Instruments, Inc. INDEX TO FINANCIAL STATEMENTS AND SCHEDULES The consolidated financial statements of the Company and the related report of KPMG Peat Marwick dated January 20, 1994 are incorporated by reference to the section entitled "FINANCIAL REVIEW" of the Company's Annual Report to stockholders for the year ended December 31, 1993. The supplemental financial schedules for each of the years in the three-year period ended December 31, 1993 that follow this index should be read in conjunction with the financial statements in the Company's 1993 Annual Report to stockholders. Schedules not included in this additional financial data have been omitted because they are not applicable or the required information is presented in the consolidated financial statements or in the notes to the consolidated financial statements. SUPPLEMENTARY FINANCIAL SCHEDULES V Property, plant and equipment VI Accumulated depreciation of property, plant and equipment VIII Allowance for doubtful accounts IX Short-term borrowings X Supplementary income statement information Beckman Instruments, Inc. SCHEDULE V PROPERTY, PLANT AND EQUIPMENT For the years ended December 31, 1993, 1992 and 1991 (Dollars in millions) Balance at Other Balance Beginning Additions Changes at End Classification of Period at Cost Retirements Add(Deduct) of Period December 31, 1993 Land $ 11.9 $ 0.1 $ 1.7 $ - $ 10.3 Buildings 134.6 5.5 4.0 (1.4) (a) 133.1 (1.6) (b) Machinery & Equip. 351.9 87.2 42.6 (14.5) (a) 380.7 (1.3) (b) ______ _____ _____ _______ ______ $498.4 $92.8 $48.3 $(18.8) $524.1 December 31, 1992 Land $ 12.0 $ - $ 0.1 $ - $ 11.9 Buildings 130.0 6.8 1.2 (0.4) (a) 134.6 (0.6) (b) Machinery & Equip. 315.0 84.6 38.1 (9.2) (a) 351.9 (0.4) (b) ______ _____ _____ _______ ______ $457.0 $91.4 $39.4 $(10.6) $498.4 December 31, 1991 Land $ 12.0 $ - $ - $ - $ 12.0 Buildings 129.3 6.1 0.9 (1.1) (a) 130.0 (3.4) (b) Machinery & Equip. 289.2 63.6 41.3 (6.1) (a) 315.0 9.6 (b) ______ _____ _____ _______ ______ $430.5 $69.7 $42.2 $ (1.0) $457.0 (a) Adjustments from translating at current exchange rates. (b) Transfers to/from other accounts. Beckman Instruments, Inc. SCHEDULE VI ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT For the years ended December 31, 1993, 1992 and 1991 (Dollars in millions) Balance at Other Balance Beginning Additions Changes at End Classification of Period at Cost Retirements Add(Deduct) of Period December 31, 1993 Buildings $ 58.1 $ 5.7 $ 2.3 $(0.7) (b)$ 60.8 Machinery & Equip. 227.3 56.6 28.5 (8.1) (b) 246.5 (0.8) (c) ______ _____ _____ _______ ______ $285.4 $62.3 $30.8 $(9.6) $307.3 December 31, 1992 Buildings $ 53.6 $ 5.8 $ 1.1 $(0.2) (b)$ 58.1 Machinery & Equip. 200.4 58.1 24.7 (5.3) (b) 227.3 (1.2) (c) ______ _____ _____ _______ ______ $254.0 $63.9 $25.8 $(6.7) $285.4 December 31, 1991 Buildings $ 49.8 $ 6.5 $ 0.7 $(0.5) (b)$ 53.6 (1.5) (c) Machinery & Equip. 177.6 49.0 30.8 (3.1) (b) 200.4 (1.2) (c) ______ _____ _____ _______ ______ $227.4 $55.5 $31.5 $ 2.6 $254.0 (a) Buildings are depreciated over 15 to 40 years, except for leasehold improvements which are depreciated over the life of the lease. Machinery and equipment are depreciated over 3 to 10 years. (b) Adjustments from translating at current exchange rates. (c) Transfers to/from other accounts. Beckman Instruments, Inc. SCHEDULE VIII ALLOWANCE FOR DOUBTFUL ACCOUNTS For the years ended December 31, 1993, 1992 and 1991 (Dollars in millions) Additions Balance at Charged to Balance Beginning Cost and at End Description of Period Expenses Deductions of Period December 31, 1993 $12.1 $2.4 (a) $2.0 (b) $11.9 0.6 (d) _____ _____ _____ _____ December 31, 1992 $12.1 $1.6 (a) $1.5 (b) $12.1 0.4 (c) 0.5 (d) _____ _____ _____ _____ December 31, 1991 $10.9 $1.2 (a) $0.4 (b) $12.1 0.7 (c) 0.3 (d) _____ _____ _____ _____ (a) Provision charged to earnings. (b) Accounts written off. (c) Collection of accounts previously written off. (d) Adjustments from translating at current exchange rates. Beckman Instruments, Inc. SCHEDULE IX SHORT-TERM BORROWINGS For the years ended December 31, 1993, 1992 and 1991 (Dollars in millions) Category Maximum Average Weighted of Weighted Amount Amount Average Aggregate Balance Average Outstanding Outstanding Interest Rate Short-Term at End Interest During During During Borrowings of Period Rate the Period the Period the Period December 31, 1993 Bank Loans $29.4 6.71% $78.7 $46.1 7.94% Current portion of Long-term Debt 2.3 _____ TOTAL $31.7 December 31, 1992 Bank Loans $41.9 10.55% $55.3 $40.5 11.32% Current portion of Long-term Debt 2.5 _____ TOTAL $44.4 December 31, 1991 Bank Loans $28.0 10.42% $61.8 $42.8 13.11% Current portion of Long-term Debt 2.5 _____ TOTAL $30.5 General terms of short-term borrowings are incorporated by reference to Note 5 Debt of the Company's Annual Report to Stockholders for the year ended December 31, 1993. The average amounts outstanding during the period were computed using month-end balances. The weighted average interest rates during the period were computed by dividing the associated interest expense for the period by the average amounts of short- term borrowing outstanding during the period. Beckman Instruments, Inc. SCHEDULE X SUPPLEMENTARY INCOME STATEMENT INFORMATION For the years ended December 31, 1993, 1992 and 1991 (Dollars in millions) The following amounts have been charged to earnings: Item Description 1993 1992 1991 Maintenance and repairs $ 7.7 $ 9.0 $ 8.8 Depreciation and amortization of intangible assets (1) Taxes, other than payroll and income taxes $10.2 $ 9.6 $ 9.0 Royalties (1) Advertising costs $15.2 $20.0 $17.6 (1) Amount does not meet 1% of total sales and revenues. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BECKMAN INSTRUMENTS, INC. Date: January 28, 1994 By LOUIS T. ROSSO Louis T. Rosso Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date _________ _____ ____ Chairman of the Board and Chief Executive Officer (Principal LOUIS T. ROSSO Executive Officer) January 28, 1994 Louis T. Rosso President, Chief Operating Officer JOHN P. WAREHAM and Director January 27, 1994 John P. Wareham Vice President, Finance and Chief Financial Officer (Principal Financial DENNIS K. WILSON and Accounting Officer) January 27, 1994 Dennis K. Wilson Vice President and JAMES T. GLOVER Controller January 27, 1994 James T. Glover EARNEST H. CLARK, JR. Director January 26, 1994 Earnest H. Clark, Jr. Signature Title Date _________ _____ ____ CAROLYNE K. DAVIS, PH.D. Director January 26, 1994 Carolyne K. Davis, Ph.D. DENNIS C. FILL Director January 26, 1994 Dennis C. Fill GAVIN S. HERBERT Director January 31, 1994 Gavin S. Herbert WILLIAM N. KELLEY, M.D. Director January 26, 1994 William N. Kelley, M.D. FRANCIS P. LUCIER Director January 28, 1994 Francis P. Lucier C. RODERICK O'NEIL Director January 31, 1994 C. Roderick O'Neil DAVID S. TAPPAN, JR. Director January 31, 1994 David S. Tappan, Jr. HENRY WENDT Director January 26, 1994 Henry Wendt INDEX TO EXHIBITS Sequentially Exhibit Numbered Number Exhibit Page _______ _______ ____________ 3.2 Amended and Restated By-Laws, as of January 27, 1993. 10.13 First Amendment to Revolving Credit Agreement, dated as of December 31, 1993, among the Company, the lenders named therein and Citicorp USA, Inc. as Agent. 10.15 The Company's Executive Bonus Plan, adopted by the Company in 1993. 10.20 Form of Legended Stock Agreement and Election For Deferral of a Portion of the FY 93 Executive Bonus Plan, between the Company and some of its Executive Officers and other key employees. 10.21 Loan Agreement (Multiple Advance), dated September 30, 1993, between Beckman Instruments (Japan) Limited and the Industrial Bank of Japan, Limited (English translation, including certification as to accuracy; original document executed in Japanese). 10.22 Term Loan Agreement, dated as of September 30, 1993, between Beckman Instruments (Japan) Limited and Citibank, N.A., Tokyo Branch. 10.23 Term Loan Agreement, dated as of December 9, 1993, between Beckman Instruments (Japan) Limited and The Dai-Ichi Kangyo Bank Limited (English translation, including certification as to accuracy; original document executed in Japanese). 10.24 Agreement Regarding Retirement Benefits of Arthur A. Torrellas, dated December 20, 1993, between the Company and Arthur A. Torrellas. Sequentially Exhibit Numbered Number Exhibit Page _______ _______ ____________ 13. FINANCIAL REVIEW section of the Company's Annual Report to stockholders for the year ended December 31, 1993. 22. List of principal subsidiaries of the Company. 24. Consent of KPMG Peat Marwick, February 8, 1994. EX-3 2 AMENDED AND RESTATED BY-LAWS Exhibit 3.2 BECKMAN INSTRUMENTS, INC. AMENDED AND RESTATED BY-LAWS ARTICLE I Offices Section 1. REGISTERED OFFICE. The registered office shall be The Prentice-Hall Corporation System, Inc., 32 Loockerman Square, Suite L-100, in the city of Dover, County of Kent, State of Delaware, 19901. Section 2. PRINCIPAL OFFICE. The principal office for the transaction of the business of the corporation is hereby fixed and located at 2500 Harbor Boulevard, Fullerton, Orange County, California. ARTICLE II Meetings of Stockholders Section 1. PLACE OF MEETINGS. All annual meetings of stockholders shall be held at the principal office of the corporation, unless from time to time the Board of Directors, pursuant to authority hereby expressly conferred by resolution, fixes a different place where annual meetings of stockholders shall be held. All other meetings of stockholders shall be held at the principal office or at any other place which may be designated by the Board of Directors pursuant to authority hereby expressly granted. Section 2. ANNUAL MEETINGS. The annual meetings of stockholders shall be held on the last Wednesday of March of each year, at 10:00 o'clock A.M. of said day or such other day and time as may be designated by resolution of the Board of Directors; provided, however, that should said day fall upon a legal holiday, then any such annual meeting of stockholders shall be held at the same time and place on the next day thereafter ensuing which is not a legal holiday. At an annual meeting of stockholders, only such business shall be conducted, and only such proposals shall be acted upon, as shall have been brought before the annual meeting (a) by, or at the direction of, a majority of the Directors, or (b) by any stockholder of the corporation who complies with the notice procedures set forth in this section. For a proposal to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the corporation not less than 60 days prior to the scheduled annual meeting, regardless of any postponements, deferrals or adjournments of that meeting to a later date; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the scheduled annual meeting is given or made, notice by the stockholder, to be timely, must be so delivered or received not later than the close of business on the tenth day following the earlier of the day on which such notice of the date of the scheduled annual meeting was mailed or the day on which such public disclosure was made. A stockholder's notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the corporation's books, of the stockholder proposing such business and any other stockholders known by such stockholder to be supporting such proposal, (c) the class and number of shares of the corporation's stock which are beneficially owned by the stockholder on the date of such stockholder notice and by any other stockholders known by such stockholder to be supporting such proposal on the date of such stockholder notice, and (d) any financial interest of the stockholder in such proposal. The presiding officer of the annual meeting shall determine and declare at the annual meeting whether the stockholder proposal was made in accordance with the terms of this section. If the residing officer determines that a stockholder proposal was not made in accordance with the terms of this section, he shall so declare at the annual meeting and any such proposal shall not be acted upon at the annual meeting. This provision shall not prevent the consideration and approval or disapproval at the annual meeting of reports of officers, directors and committees of the Board of Directors, but, in connection with such reports, no new business shall be acted upon at such annual meeting unless stated, filed and received as herein provided. Section 3. NOTICE OF MEETINGS AND ADJOURNED MEETING. Written notice stating the place, date and hour of any meeting shall be given not fewer than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. If a stockholder gives no address, notice shall be deemed to have been given him if sent by mail or other means of written communication addressed to the place where the principal office of the corporation is situated, or if published, at least once in a newspaper of general circulation in the country in which said office is located. When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 4. SPECIAL MEETINGS. Special meetings of the stockholders of the corporation for any purpose or purposes may be called at any time by the Board of Directors, the chairman of the Board of Directors or the president of the corporation. Special meetings of the stockholders of the corporation may not be called by any other person or persons. Except in special cases where other express provision is made by statute, notice of such special meetings shall be given in the same manner as for annual meetings of the stockholders. Notices of any special meetings shall specify, in addition to the place, day and hour of such meeting, the general nature of the business to be transacted. Section 5. VOTING; PROXIES. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place may be specified in the notice of the meeting, or it not so specified, at the place where the meeting is to be held. The list also shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Upon the willful neglect or refusal of the Directors to produce such a list at any meeting for the election of Directors, they shall be ineligible for election to any office at such meeting. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for him by proxy. A stockholder may grant such authority by (a) executing a writing authorizing another person or persons to act for him as proxy, which execution may be accomplished by the stockholder or his authorized officer, director, employee or agent signing such writing or causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature, or (b) authorizing another person or persons to act for him as proxy by transmitting or authorizing the transmission of a telegram, cablegram, or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information upon which they relied. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission created pursuant to the foregoing subsection (b) may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. Each original writing, telegram, cablegram or other means of electronic transmission, or a copy, facsimile telecommunication or other reliable reproduction thereof, shall be filed with the secretary of the corporation not later than the day on which exercised. No proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. Except as otherwise specifically provided by law, the Certificate of Incorporation or these by-laws, the affirmative vote of the majority of shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders. Elections of Directors need not be by written ballot. Except as otherwise specifically provided by law, all other votes may be viva voce or by ballot. Section 6. QUORUM. Except as otherwise provided by the law, the Certificate of Incorporation or these by-laws, the presence, in person or by proxy, of the holders of a majority of the outstanding shares entitled to vote shall constitute a quorum, but in no event shall a quorum consist of less than one-third (1/3) of the shares entitled to vote at a meeting. The stockholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 7. WAIVER OF NOTICE. The transactions of any meeting of stockholders, either annual or special, however called and noticed, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person or by proxy, signs a written waiver of notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting. Section 8. NO ACTION WITHOUT MEETING. Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken only upon the vote of the stockholders at an annual or special meeting duly called and may not be taken by written consent of the stockholders. ARTICLE III Directors Section 1. POWERS. (a) General Powers. The Board of Directors shall have all powers necessary or appropriate to the management of the corporation, and, in addition to the power and authority conferred by these by-laws, may exercise all powers of the corporation and do all such lawful acts and things as are not by statute, these by-laws or the Certificate of Incorporation directed or required to be exercised or done by the stockholders. (b) Specific Powers. Without limiting the general powers conferred by the last preceding clause and the powers conferred by the Certificate of Incorporation and by-laws of the corporation, it is expressly declared that the Board of Directors shall have the following powers: First - To select and remove all the other officers, agents and employees of the corporation, prescribe such powers and duties for them as may not be inconsistent with law, with the Certificate of Incorporation or the by-laws, fix their compensation and require from them security for faithful service. Second - To conduct, manage and control the affairs and business of the corporation, and to make such rules and regulations therefor not inconsistent with law, or with the Certificate of Incorporation or the by- laws, as they may deem best. Third - To change the principal office for the transaction of the business of the corporation from one location to another as provided in Article I, Section 2 hereof; to designate the place and time of annual and other meetings of stockholders as provided in Article II, Section 2 and Article II, Section 4 of these by-laws; and to adopt, make and use a corporate seal, and to prescribe the forms of certificates of stock, and to alter the form of such seal and of such certificates from time to time, as in their judgment they may deem best, provided such seal and such certificates shall at all times comply with the provisions of law. Fourth - To authorize the issuance of shares of stock of the corporation from time to time, upon such terms as may be lawful, in consideration of cash, services rendered, personal property, real property, leases of real property, or a combination thereof, or in the case of shares issued as a dividend against amounts transferred from surplus to stated capital. Fifth - To borrow money and incur indebtedness for the purposes of the corporation, and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. Sixth - To appoint an Executive Committee and other committees, and to delegate to the Executive Committee, to the extent allowed by law, any of the powers and authority of the Board in the management of the business and affairs of the corporation, except the power to declare dividends and to adopt, amend or repeal by-laws. The Board of Directors shall have the power to prescribe the manner in which proceedings of the Executive Committee and other committees shall be conducted. The Executive Committee shall be composed of two or more Directors. Unless the Board of Directors shall otherwise provide: meetings of the Executive Committee may be called by the President, any Vice President who is a member of the Executive Committee, or any two members thereof, upon written notice to the members of the Executive Committee of the time and place of such meeting given in the manner provided for the giving of written notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors; vacancies in the membership of the Executive Committee may be filled by the Board of Directors; a majority of the authorized number of members of the Executive Committee shall constitute a quorum for the transaction of business; and transactions of any meeting of the Executive Committee, however called and noticed or wherever held, after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the members not present signs a written waiver of notice or a consent to holding such meeting or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 2. INDEFINITE NUMBER OF DIRECTORS AUTHORIZED. The authorized number of Directors shall be not less than six nor more than twelve. The exact number of Directors shall be fixed from time to time, within the limits specified in this section, by a resolution duly adopted by the Board of Directors. Section 3. ELECTION AND TERM OF OFFICE. The Directors shall be elected at each annual meeting of the stockholders but, if any such annual meeting is not held or the Directors are not elected thereat, the Directors may be elected at any special meeting of stockholders held for that purpose. The Directors of the corporation shall be divided into three classes, as nearly equal in number as reasonably possible, with the Directors in each class to hold office until their successors are elected and qualified. At each annual meeting of stockholders of the corporation, the successors to the class of Directors whose term shall then expire shall be elected to hold office for a three year term. If the number of Directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of Directors in each class as nearly equal as possible, and any additional Directors of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of Directors shorten the term of any incumbent Director. A Director shall hold office until the annual meeting for the year in which his term expires and until his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement disqualification or removal from office. Notwithstanding the foregoing, no person shall be elected or serve as a Director if such person is in a management position with or a director of a direct competitor of the corporation. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the corporation shall have the right, voting separately by class or series, to elect Directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of the Certificate of Incorporation or the resolution or resolutions adopted by the Board of Directors pursuant to Paragraph 4 of the Certificate of Incorporation, and such Directors so elected shall not be divided into classes pursuant to this section unless expressly provided by such terms. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors. Nominations of persons for election to the Board of Directors of the corporation may be made at a meeting of stockholders by or at the direction of the Board of Directors by any nominating committee or person appointed by the board or by any stockholder of the corporation entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this section. Such nominations, other than those made by or at the direction of the Board, shall be made pursuant to timely notice in writing to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to, or mailed and received at, the principal executive offices of the corporation not less than 60 days prior to the scheduled annual meeting, regardless of any postponement, deferrals or adjournments of that meeting to a later date; provided, however, that if less than 70 days' notice or prior public disclosure of the date of the scheduled annual meeting is given or made, notice by the stockholder, to be timely, must be so delivered or received not later than the close of business on the tenth day following the earlier of the day on which such notice of the date of the scheduled annual meeting was mailed or the day on which such public disclosure was made. A stockholder's notice to the secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or reelection as a Director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class and number of shares of capital stock of the corporation which are beneficially owned by the person and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of Directors pursuant to Rule 14a under the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder giving the notice (i) the name and address, as they appear on the corporation's books, of the stockholder and (ii) the class and number of shares of the corporation's stock which are beneficially owned by the stockholder on the date of such stockholder notice. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as Director of the corporation. The presiding officer of the annual meeting shall determine and declare at the annual meeting whether the nomination was made in accordance with the terms of this section. If the presiding officer determines that a nomination was not made in accordance with the terms of this section, he shall so declare at the annual meeting and any such defective nomination shall be disregarded. Section 4. VACANCIES. Newly created directorships resulting from any increase in the number of Directors or any vacancy on the Board of Directors resulting from death, resignation, disqualification, removal or other cause shall be filled solely by the affirmative vote of a majority of the remaining Directors then in office,even though less than a quorum, or by a sole remaining Director. Any Director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director's successor shall have been elected and qualified. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of any incumbent Director. Section 5. PLACE OF MEETING. Regular meetings of the Board of Directors shall be held at any place within or without the State of Delaware as a majority of the Directors from time to time may designate or by written consent of all members of the Board. In the absence of such designation regular meetings shall be held at the principal office for the transaction of business of the corporation. Special meetings of the Board may be held either at a place so designated or at the principal office. Section 6. ORGANIZATION MEETING. Immediately following each annual meeting of the stockholders the Board of Directors shall hold a regular meeting for the purpose of organization, election of officers, and the transaction of other business. Notice of such organizational meetings is hereby dispensed with. Section 7. MEETINGS. Meetings of the Board of Directors for any purpose or purposes shall be called at any time by the chairman of the Board or the president or, if the president is absent or unable or refuses to act, by any vice president or by any two Directors. Written notice of the time and place of meetings shall be delivered personally to each Director or sent to each Director by mail or by other form of written communication, charges prepaid, addressed to him at his address as it is shown upon the records of the corporation or, if it is not so shown on such records or is not readily ascertainable, at the place in which the meetings of the Directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company in the place in which the principal office of the corporation is located at least forty-eight (48) hours prior to the time of the holding of the meeting. In case such notice is delivered personally as above provided, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such Director. Section 8. NOTICE OF ADJOURNMENT. Notice of the time and place of holding an adjourned meeting need not be given to absent Directors if the time and place be fixed at the meeting adjourned. Section 9. CONSENT OF ABSENTEES; WAIVER OF NOTICE. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the Directors not present signs a written waiver of notice or a consent to holding such meeting or an approval of the minutes thereof. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except when the Director attends meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Section 9.1 ACTION WITHOUT A MEETING. Any action required or permitted to be taken by the Board of Directors, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, individually or collectively consent in writing to such action. Such written consent or consents shall be filed with the minutes of the proceedings of the Board or committee. Such action by written consent shall have the same force and effect as a unanimous vote of the Directors. Section 10. QUORUM. A majority of the total number of Directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the Directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number be required by law or by the Certificate of Incorporation. Section 11. ADJOURNMENT. A quorum of the Directors may adjourn any Directors' meeting to meet again at a stated day and hour; provided, however, that in the absence of a quorum a majority of the Directors present at any Directors' meeting, either regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board. Section 12. FEES AND COMPENSATION. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by resolution of the Board. Section 13. REMOVAL OF DIRECTORS BY STOCKHOLDERS. Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the Directors of the corporation may be removed from office by the stockholders at any annual or special meeting of stockholders of the corporation, the notice of which shall state that the removal of a Director or Directors is among the purposes of the meeting, but only for cause, by the affirmative vote of at least 66-2/3% of the outstanding shares of Common Stock of the corporation. Section 14. RESIGNATIONS. Any Director may resign at any time by submitting his written resignation to the corporation. Such resignation shall take effect at the time of its receipt by the corporation unless another time be fixed in the resignation, in which case it shall become effective at the time so fixed. The acceptance of a resignation shall not be required to make it effective. Section 15. PARTICIPATION BY CONFERENCE TELEPHONE. Directors may participate in regular or special meetings of the Board by telephone or similar communications equipment by means of which all other persons at the meeting can hear each other, and such participation shall constitute presence in person at the meeting. Section 16. AGE LIMITATION. A person shall not hold office as a director following the annual meeting of stockholders held on or after the date of such person's 70th birthday; provided, however, that nothing in this provision shall prohibit directors elected in 1988 from serving two terms if duly nominated and elected. ARTICLE IV Officers Section 1. OFFICERS. The officers of the corporation shall be a president, a vice president, a secretary and a treasurer. The corporation may also have, at the discretion of the Board of Directors, a chairman of the Board, one or more additional vice presidents, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article. One person may hold two or more offices except that the president and secretary shall not be the same person. Section 2. ELECTION. The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article IV, shall be chosen annually by the Board of Directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified. Section 3. SUBORDINATE OFFICERS, ETC. The Board of Directors may appoint such other officers as the business of the corporation require, each of whom shall hold office for such period, shall have such authority and shall perform such duties as are provided in the by-laws or as the Board of Directors may from time to time determine. Section 4. REMOVAL AND RESIGNATION. Any officer may be removed either with or without cause, by the Board of Directors, at any regular or special meeting thereof, or, except in the case of an officer chosen by the Board of Directors pursuant to Section 2 of this Article IV, by any officer upon whom such power of removal may be conferred by the Board of Directors. Any officer may resign at any time by giving written notice to the Board of Directors, the president, or the secretary of the corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 5. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the by-laws for regular appointments to such office. Section 6. DELEGATION OF OFFICE. The Board of Directors may delegate the powers or duties of any officer of the corporation to any other officer or to any Director from time to time. Section 7. CHAIRMAN OF THE BOARD. The Chairman of the Board, if there shall be such an officer, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by the by-laws. Section 8. PRESIDENT. Subject to such supervisory powers, if any, as may be given by the Board of Directors to the Chairman of the Board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. He shall preside at all meetings of the stockholders and, in the absence of the Chairman of the Board,or if there be none, at all meetings of the Board of Directors. He shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed by the Board of Directors or the by- laws. Section 9. VICE PRESIDENT. In the absence or disability of the president, the vice presidents in order of their rank as fixed by the Board of Directors or, if not ranked, the vice president designated by the Board of Directors, shall perform all the duties of the president, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the Board of Directors or the by-laws. Section 10. SECRETARY. The secretary shall keep or cause to be kept, at the principal office or such other place as the Board of Directors may order, a book of minutes of all meetings of Directors and stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice thereof given, the names of those present at Directors' meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal office or at the office of the corporation's transfer agent, a share register, or a duplicate share register, showing the names of the stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. The secretary shall give, or cause to be given, notice of all the meetings of the stockholders and of the Board of Directors required by the by-laws or by law to be given, and he shall keep the seal of the corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the by-laws. Section 11. TREASURER. The treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. Any surplus, including earned surplus, paid-in surplus and surplus arising from a reduction of stated capital, shall be classified according to source and shown in a separate account. The books of account shall at all reasonable times be open to inspection by any Director. The treasurer shall deposit all moneys and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the Board of Directors. He shall disburse the funds of the corporation, shall render to the president and Directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or the by- laws. ARTICLE V Miscellaneous Section l. RECORD DATE. The Board of Directors may fix, in advance, a record date to determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action. Such date shall be not more than sixty (60) nor fewer than ten (10) days before the date of any such meeting, nor more than sixty (60) days prior to any other action. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, the Board of Directors may fix a new record date for the adjourned meeting. Section 2. INSPECTION OF CORPORATE RECORDS. The share register or duplicate share register, the books of account, and minutes of proceedings of the stockholders and Directors and of the executive and other committees of the Directors shall be open to inspection upon the written demand of any stockholder or holder of a voting trust certificate, at any reasonable time, and for a purpose reasonably related to his interests as a stockholder or as the holder of a voting trust certificate and shall be exhibited at any time when required by the demand of ten percent (10%) of the shares represented at any stockholders' meeting. Such inspection may be made in person or by an agent or attorney, and shall include the right to make extracts. Demand of inspection other than at a stockholders' meeting shall be made in writing upon the secretary of the corporation and shall state the purpose of such demand. Section 3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as, from time to time, shall be determined by resolution of the Board of Directors. Section 4. ANNUAL REPORTS. The Board of Directors of the corporation may cause to be sent to the stockholders, not later than one hundred twenty (120) days after the close of the fiscal or calendar year, an annual report in such form as may be deemed appropriate by the Board of Directors. Section 5. EXECUTION OF INSTRUMENTS. The Board of Directors, except as otherwise provided in the by-laws, may authorize any officer or officers, agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances; and, unless so authorized by the Board of Directors, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or to any amount. Section 6. CERTIFICATES OF STOCK. A certificate or certificates for shares of the capital stock of the corporation shall be issued to each stockholder when any such shares are fully paid up. All such certificates shall be signed by the president or a vice president and the secretary or an assistant secretary, or be authenticated by facsimiles of the signatures of the president and secretary or by a facsimile of the signature of the president and the written signature of the secretary or an assistant secretary. Every certificate authenticated by a facsimile of a signature must be countersigned by a transfer agent or transfer clerk, and be registered by an incorporated bank or trust company, either domestic or foreign, as registrar of transfers, before issuance. Certificates for shares may be issued prior to full payment under such restrictions and for such purposes as the Board of Directors or the by-laws may provide; provided, however, that any such certificate so issued prior to full payment shall state the amount remaining unpaid and the terms of payment thereof. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. Section 7. REPRESENTATIONS OF SHARES OF OTHER CORPORATIONS. The president or any vice president and the secretary or assistant secretary of this corporation are authorized to vote, represent and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority herein granted to said officers to vote or represent on behalf of this corporation any and all shares held by this corporation in any other corporation or corporations may be exercised either by such officers in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officers. Section 8. INSPECTION OF BY-LAWS. The corporation shall keep in its principal office for the transaction of business the original or a copy of the by-laws as amended or otherwise altered to date, certified by the secretary, which shall be open to inspection by the stockholders at all reasonable times during office hours. Section 9. TRANSFER OF SHARES. Transfer of shares shall be made on the books of the corporation only upon surrender of the share certificate, fully endorsed and otherwise in proper form for transfer, which certificate shall be canceled at the time of the transfer. No transfer of shares shall be made on the books of this corporation if such transfer is in violation of a lawful restriction noted conspicuously on the certificate. Section 10. LOST, STOLEN OR DESTROYED SHARE CERTIFICATES. The corporation may issue a new certificate of stock or uncertificated shares in place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen, or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares. Section 11. CONSTRUCTION AND DEFINITIONS. Unless the context otherwise requires, the general provisions, rules of construction and definitions contained in the General Corporation Law of the State of Delaware shall govern the construction of these by-laws. Without limiting the generality of the foregoing the masculine gender includes the feminine and neuter, the singular number includes the plural and the plural number includes the singular, and the term "person" includes a corporation as well as a natural person. ARTICLE VI Seal The form of the seal of the corporation, called the corporate seal of the corporation, shall be as impressed [Form of Seal] adjacent hereto. ARTICLE VII Fiscal Year The fiscal year of the corporation shall begin on January 1 and end on December 31. ARTICLE VIII Indemnification of Directors and Officers and Other Persons Section 1. INDEMNIFICATION. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a Director or officer of the corporation or is or was serving at the request of the corporation as a Director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a Director, officer, employee or agent or in any other capacity while serving as a Director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a Director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in Section 2 of this Article VIII, the corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this Article VIII shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a Director or officer in his or her capacity as a Director or officer (and not in any other capacity in which service was or is rendered by such person while a Director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made upon delivery to the corporation of an undertaking, by or on behalf of such Director or officer, to repay all amounts so advanced if it shall ultimately be determined that such Director or officer is not entitled to be indemnified under this Article VIII or otherwise. The right to indemnification conferred in this Article VIII shall include any claim made against the lawful spouse (whether such status is derived by reason of statutory law, common law or otherwise of any applicable jurisdiction in the world) of a Director or officer for claims arising solely out of his or her capacity as the spouse of a Director or officer, including such claims that seek damages recoverable from marital community property, property jointly held by the Director or officer and the spouse, or property transferred from the Director or officer to the spouse; provided, however, that this right shall not include any claim for any actual or alleged Wrongful Act of the spouse and that this right of indemnification shall apply only to actual or alleged Wrongful Acts of a Director or officer. The corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of Directors and officers. Section 2. CLAIM FOR INDEMNIFICATION. If a claim under Section 1 of this Article VIII is not paid in full by the corporation within thirty days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Section 3. RIGHT NOT EXCLUSIVE. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article VIII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, by-law, agreement, vote of stockholders or disinterested Directors or otherwise. Section 4. INSURANCE. The corporation may maintain insurance, at its expense, to protect itself and any Director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. ARTICLE IX Amendments Section 1. AMENDMENTS. (a) By Stockholders. These by-laws may be amended or repealed in whole or in part, and new or additional by-laws may be adopted, by the vote of stockholders entitled to exercise a majority of the voting power of the corporation, except that the vote of stockholders holding more than eighty percent (80%) of the voting power shall be necessary to reduce the authorized number of Directors below five. (b) By the Board of Directors. If the Certificate of Incorporation so provides, these by-laws may be adopted, amended, or repealed by the Board of Directors, provided, however, that no alteration, amendment or repeal of these by- laws that limits indemnification rights or changes the manner or vote required to make such alteration, amendment or repeal, shall be made except by the affirmative vote of stockholders entitled to exercise a majority of the voting power of the corporation. The fact that the power has been so conferred upon the Board of Directors to adopt, amend or repeal these by-laws shall not divest the stockholders of the power nor limit their power to adopt, amend or repeal by-laws. EX-10 3 FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT Exhibit 10.13 FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT This First Amendment to Revolving Credit Agreement (this "Amendment") is made as of December 31, 1993 by and among BECKMAN INSTRUMENTS, INC., a Delaware corporation (the "Borrower"), CITICORP USA, INC. ("CUSA"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("B OF A"), DRESDNER BANK AG, LOS ANGELES AGENCY ("DRESDNER"), MELLON BANK, N.A. ("MELLON"), THE FIRST NATIONAL BANK OF CHICAGO ("FNBC"), (CUSA, B OF A, DRESDNER, MELLON and FNBC being referred to individually as a "Lender" and collectively as the "Lenders"), and CITICORP USA, INC., a Delaware corporation, as agent for the Lenders (in such capacity, the "Agent"). RECITALS A. The Borrower and the Lenders have entered into that certain Revolving Credit Agreement dated as of July 2, 1992 (the "Credit Agreement"). B. The Borrower has requested that the Agent and the Lenders agree to amend the Credit Agreement to modify certain provisions thereof. The Agent and the Lenders are willing to do so upon and subject to the terms and conditions set forth below. AGREEMENT NOW, THEREFORE, the Borrower, the Agent and the Lenders hereby agree as follows: Section 1. Amendment of Credit Agreement. The Credit Agreement is hereby amended as follows: (a) The definition of "Operating Income" set forth in Section 1.01 of the Credit Agreement is hereby amended to read in its entirety as follows: "Operating Income" means, for any accounting period, operating income (or operating deficit, as the case may be) properly attributable to continuing operations (as defined by generally accepted accounting principles) for such period, but shall not include interest income or expense, foreign exchange gains or losses, minority interest adjustments, the effects of disposals of fixed assets, charges for environmental matters (other than maintenance, monitoring, compliance and remediation costs which occur at properties where the Borrower is conducting current operations), if any, unusual or other non-recurring items (including charges associated with restructuring the Borrower's operations) or other events or transactions that are infrequent for the purposes of generally accepted accounting principles, income taxes, charges to implement new accounting standards required by the Financial Accounting Standards Board, and any non- cash charges associated with the write-down of long-term assets including intangibles. (b) Article II of the Credit Agreement is hereby amended by adding thereto the following Section 2.15: SECTION 2.15. Use of Proceeds. The proceeds of any Advance shall be used solely, directly or indirectly, in the Borrower's U.S. operations. In applying the proceeds from any Advance, the Borrower represents that in no event will any portion of the proceeds of any Advance be used to repay the portion of any Indebtedness for Borrowed Money, the proceeds of which were used to previously fund any foreign investment or the working capital needs of any foreign Subsidiary, foreign Affiliate or other foreign entity. The Borrower further represents that in no event will any portion of any Advance be used to fund any foreign investment or the working capital needs of any foreign Subsidiary, foreign Affiliate or other foreign entity. (c) Section 5.02(d) of the Credit Agreement is hereby amended by deleting the reference therein to "$20,000,000" and substituting a reference to "$45,000,000" in its place. Section 3. Recitals, Warranties and Representations. The Borrower makes the following representations and warranties to the Agent and the Lenders, all of which are material and are made to induce the Agent and the Lenders to enter into this Amendment. (a) All representations made by the Borrower in the Credit Agreement were true, accurate and complete in every respect as of the date made and are true, accurate and complete in every material respect as of the date hereof, and do not fail to disclose any material fact necessary to make the representations not misleading. (b) The execution, delivery and performance by the Borrower of this Amendment and the Credit Agreement as amended hereby are within the Borrower's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) the Borrower's charter or by-laws, or (ii) any law, decree, order, judgement or contractual restriction binding on or affecting the Borrower. (c) No authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for the due execution, delivery and performance by the Borrower of this Amendment. (d) Enforceability of Amendment. This Amendment has been duly authorized, executed and delivered by the Borrower and is enforceable against the Borrower in accordance with its terms. Section 4. Ratification of Credit Agreement. Except as specifically amended hereby, all of the provisions of the Credit Agreement shall remain unamended and in full force and effect. The Borrower hereby ratifies, affirms, reaffirms, acknowledges, confirms and agrees that the Credit Agreement, as amended hereby, represents a valid and enforceable obligation of the Borrower. Section 5. Closing Costs. The Borrower shall reimburse or cause to be reimbursed to the Agent the fees and expenses of counsel to the Agent incident to this Amendment. Section 6. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of California. Section 7. Successors and Assigns. The provisions of this Amendment shall be binding upon and inure solely to the benefit of the Agent, the Lenders and the Borrower, and their respective heirs, legal representatives, successors and assigns. Section 8. 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 an original and all of which taken together shall constitute one and the same agreement. Section 9. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. IN WITNESS WHEREOF, this Amendment has been executed as of the day and year first above written. BECKMAN INSTRUMENTS, INC. By: D. K. WILSON Name: Dennis K. Wilson Title: Vice President, Finance and Chief Financial Officer CITICORP USA, INC., as Agent By: BARBARA A. COHEN Name: Barbara A. Cohen Title: Vice President LENDERS CITICORP USA, INC. By: BARBARA A. COHEN Name: Barbara A. Cohen Title: Vice President BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: ROBERT W. TROUTMAN Name: Robert W. Troutman Title: Vice President DRESDNER BANK AG, LOS ANGELES AGENCY By: BARBARA J. READICK Name: Barbara J. Readick Title: Vice President By: DENNIS G. BLANK Name: Dennis G. Blank Title: Asst. Vice President MELLON BANK, N.A. By: EDWIN H. WIEST Name: Edwin H. Wiest Title: First Vice President THE FIRST NATIONAL BANK OF CHICAGO By: L. GENE BEUBE Name: L. Gene Beube Title: Senior Vice President EX-10 4 FY 93 EXECUTIVE BONUS PLAN Exhibit 10.15 FY 93 EXECUTIVE BONUS PLAN Bonus Eligibility The key factors in determining bonus awards are: 1) Growth in company net earnings; 2) Level of budget achievement for operating profit; and 3) Rating for MBO accomplishments. Growth in Company Net Earnings This is viewed as critical to the Company's overall success and a key element in the enhancement of shareholder value. Because of its importance, bonus eligibility under all executive and management bonus plans will be contingent upon the attainment of a threshold (gate) percentage growth in company net earnings over the prior year. Approximately a third of the total bonus opportunity under the plan at target will be based on this measure. Level of Achievement for Operating Profit Bonus eligibility for operating profit results begins at 90% of budget and caps at 125% budget achievement. Payouts for below budget performance apply only where the FY 93 budget represents a meaningful increase over the FY 92 budget for operating profit. Rating for MBO Accomplishments Individual bonus awards may be varied above or below the combined award guideline for company net earnings and operating profit based on the overall evaluation for accomplishment of management objectives (MBOs). The MBO rating is expressed as a percentage (0 to 150%) and applied to the total award guideline for financial results. Bonus Award Guidelines EBP AWARD GUIDELINES Net Earnings Operating Profit ____________________________ __________________________ % Growth Over Award % Budget Award Prior Year Guideline Achievement Guideline ____________________________ __________________________ <13% 0 <90% 0 13% 11% 90% 1.25% >13% 11% 95% 7.5% ____________________________ 99% 12.5% 100% 24.0% No bonus eligibility for __________________________ operating profit results unless 13% or higher growth >100% SEE BELOW in company net earnings is achieved over FY 92. For Exceeding Operating Profit Budget ___________________________________________________________________ % Budget Achievement Operating Profit Award Guideline ___________________________________________________________________ 101%-109% 24% plus 1.5% for each 1% above 100% of budget 110%-125% 45% plus 1.25% for each 1% above 110% of budget ___________________________________________________________________ As a transition rule to bridge the FY 92 and FY 93 bonus plans, the total bonus opportunity for operating profit achievement at 108% and 109% of budget plus the award guideline for company net earnings will be no less than the comparable total award guideline under the FY 92 plan. Bonus Eligibility Measurements Operating Profit _______________________________ Net For For Earnings Achieving Exceeding Growth Budget Budget ___________________________________________________________________ Corporate Total 50% BSG WW/ 50% BSG WW/ Staff Beckman 50% DSG WW 50% DSG WW ___________________________________________________________________ Total BSG Beckman Group WW Group WW ___________________________________________________________________ DSG Functional Total Staff Beckman Group WW Group WW ___________________________________________________________________ DSG Profit Total 70% Profit Center/ Center VP Beckman 30% Group WW Group WW ___________________________________________________________________ Below-budget bonus eligibility to be based on operating profit measurement for achieving budget. Individual Bonus Award Calculation The individual bonus award is calculated by multiplying the total award guideline for financial performance by the MBO percentage rating and applying the result to total base earnings for the period of bonus eligibility (eligible earnings). Individual Rating for Percentage to be MBO Accomplishments Applied to Award Guideline ____________________________ __________________________ Exceptional 130% - 150% Excellent 100% - 120% Good 70% - 90% Acceptable 40% - 60% Unacceptable 0 Example of How the Individual Bonus Award is Calculated Assume that net earnings growth over the prior year is 13% and operating profit budget achievement is 105%. Since the net earnings growth threshold (gate) is met, bonus eligibility applies to both net earnings growth and operating profit results. In this example, the total award guideline before applying the MBO multiplier is 42.5%: 11% for net earnings growth plus 24% + (5x1.5%) or 7.5%, for exceeding operating profit budget by 5%. A 42.5% basic total award guideline is increased to a 51% individual bonus award with an MBO rating of 120% (120%x42.5). Conversely, an MBO rating of 90% reduces the 42.5% basic total award guideline to a 38.3% individual bonus award (90%x42.5%). If total Beckman net earnings growth over the prior year is below the 13% threshold, there will be no bonus eligibility. Administration 1) All financial results will be measured on an "as reported" basis with no adjustment for any effect of currency fluctuations. 2) All intercompany transactions will be excluded in the financial results for determining operating profit budget achievement. 3) Any issues regarding plan interpretation, including financial measurements and results, will be referred for resolution to an Executive Bonus Committee appointed by the Chief Executive Officer. Method and Eligibility for Payment To be eligible for an award under this bonus program, a participant must be in active pay status at the end of the fiscal year. Exceptions may be approved by the Chief Executive Officer for participants who retire in midyear or other special circumstances. The earned bonus attributable to Beckman net earnings may, at the participant's option, be paid in the form of ledgered common stock. Details of this payment alternative are described in the plan insert. Questions? If you have any questions about the Beckman Executive Bonus Plan, ask your supervisor or contact Bill Baldwin, Corporate Director - Compensation and Benefits. Additional Award Guidelines AWARD GUIDELINES Net Earnings Operating Profit ____________________________ __________________________ % Growth Over Award % Budget Award Prior Year Guideline Achievement Guideline ____________________________ __________________________ <13% 0 <90% 0 13% 13% 90% 1.5% >13% 13% 95% 9.0% ____________________________ 99% 15.0% 100% 30.0% No bonus eligibility for __________________________ operating profit results unless 13% or higher growth >100% SEE BELOW in company net earnings is achieved over FY 92. For Exceeding Operating Profit Budget ___________________________________________________________________ % Budget Achievement Operating Profit Award Guideline ___________________________________________________________________ 101%-109% 30% plus 1.5% for each 1% above 100% of budget 110%-125% 48% plus 1.25% for each 1% above 110% of budget ___________________________________________________________________ As a transition rule to bridge the FY 92 and FY 93 bonus plans, the total bonus opportunity for operating profit achievement at 109% of budget plus the award guideline for company net earnings will be no less than the comparable total award guideline under the FY 92 plan. AWARD GUIDELINES Net Earnings Operating Profit ____________________________ __________________________ % Growth Over Award % Budget Award Prior Year Guideline Achievement Guideline ____________________________ __________________________ <13% 0 <90% 0 13% 16% 90% 2.0% >13% 16% 95% 12.0% ____________________________ 99% 20.0% 100% 36.0% No bonus eligibility for __________________________ operating profit results unless 13% or higher growth >100% SEE BELOW in company net earnings is achieved over FY 92. For Exceeding Operating Profit Budget ___________________________________________________________________ % Budget Achievement Operating Profit Award Guideline ___________________________________________________________________ 101%-110% 36% plus 2.6% for each 1% above 100% of budget 111%-125% 62% plus 2.2% for each 1% above 110% of budget ___________________________________________________________________ AWARD GUIDELINES Net Earnings Operating Profit ____________________________ __________________________ % Growth Over Award % Budget Award Prior Year Guideline Achievement Guideline ____________________________ __________________________ <13% 0 <90% 0 13% 19% 90% 2.5% >13% 19% 95% 15.0% ____________________________ 99% 25.0% 100% 44.0% No bonus eligibility for __________________________ operating profit results unless 13% or higher growth >100% SEE BELOW in company net earnings is achieved over FY 92. For Exceeding Operating Profit Budget ___________________________________________________________________ % Budget Achievement Operating Profit Award Guideline ___________________________________________________________________ 101%-110% 44% plus 3.4% for each 1% above 100% of budget 111%-125% 78% plus 2.8% for each 1% above 110% of budget ___________________________________________________________________ EX-10 5 LEGENDED STOCK AGREEMENT AND ELECTION OF DEFERRAL Exhibit 10.20 THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. BECKMAN INSTRUMENTS, INC. LEGENDED STOCK AGREEMENT AND ELECTION FOR DEFERRAL OF A PORTION OF THE FY 93 EXECUTIVE BONUS PLAN This Legended Stock Agreement and Election For Deferral (the "Agreement") is entered into between Beckman Instruments, Inc., a Delaware corporation (the "Company"), and _______________________, an employee of the Company or a subsidiary of the Company ("Employee"). RECITALS A. The Company has established the Beckman Instruments, Inc. Incentive Compensation Plan of 1990, as amended (the "Plan"), the terms of which are hereby incorporated by reference and made a part of this Agreement, which provides for the issuance of shares of the Company's Common Stock, $.10 par value, subject to certain restrictions thereon (hereinafter referred to as "Legended Stock"); B. The Company has established the Beckman Instruments, Inc. FY 93 Executive Bonus Plan With Deferred Stock Award Option; C. Employee elects to defer the Beckman net earnings results portion of any award granted to Employee under the provisions of the FY 93 Executive Bonus Plan and the additional premium amount in accordance with the Deferred Stock Award Option of the Executive Bonus Plan and to have such amount paid in the form of the Company's Common Stock issued under the Plan subject to certain restrictions thereon; and D. The Organization and Compensation Committee of the Company's Board of Directors (the "Committee"), appointed to administer the Plan, has determined that it would be to the advantage and best interest of the Company and its stockholders to issue the Legended Stock provided for herein to Employee in consideration of past services to the Company and/or its subsidiaries, and has advised the Company thereof and instructed the undersigned officer to issue said Legended Stock; THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows: ARTICLE I ELECTION FOR DEFERRAL Section 1.1 - Irrevocable Election Employee acknowledges and agrees that this election is irrevocable once made and that it is not effective unless received by the Company on or before August 10, 1993. Section 1.2 - Deferred Amount Employee acknowledges and agrees that: (a) This election applies only to the Beckman net earnings results portion of any award granted Employee under the provisions of the FY 93 Executive Bonus Plan; (b) The amount deferred pursuant to this election will be increased by and shall include a thirty-three and one-third percent (33-1/3%) premium and such amount shall then be converted into whole shares of Legended Stock based on the closing price of Beckman stock on the last trading day of the FY 93 Executive Bonus Plan year; and (c) Amounts which would otherwise result in fractional shares will be paid in cash on the regular bonus payment date. Section 1.3 - Election Employee hereby elects that the Beckman net earnings results portion and the premium be deferred and paid in the form of Legended Stock under a grant from the Plan subject to the terms and conditions herein. ARTICLE II DEFINITIONS Whenever the following terms are used below in this Agreement they shall have the meaning specified below unless the context clearly indicates to the contrary. Section 2.1 - Change of Control "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 hereof, constitute the Board of the Company (the "Incumbent Board"), cease for any reason to constitute at least a majority of the Board provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be considered as though such person were a member of the Incumbent Board of the Company; (c) the stockholders of the Company approve a merger or consolidation with any other corporation, other than (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. Section 2.2 - Plan "Plan" shall mean the Beckman Instruments, Inc. Incentive Compensation Plan of 1990, as amended and restated May 6, 1992. Section 2.3 - Pronouns The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates. Section 2.4 - Legended Stock "Legended Stock" shall mean Common Stock of the Company issued under this Agreement and subject to the Restrictions imposed hereunder. Section 2.5 - Restrictions "Restrictions" shall mean the restrictions on sale or other transfer and the exposure to forfeiture imposed upon the Legended Stock under this Agreement. Section 2.6 - Retirement "Retirement" means termination of employment of Employee under normal or late retirement (but not early retirement) provisions of the Company's applicable retirement policy or plan as determined by the Committee in its discretion. Section 2.7 - Secretary "Secretary" shall mean the Secretary of the Company. Section 2.8 - Subsidiary "Subsidiary" shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. Section 2.9 - Termination of Employment "Termination of Employment" shall mean the time when the employee-employer relationship between Employee and the Company or a Subsidiary is terminated for any reason, including, but not by way of limitation, a termination by resignation, discharge, death, Total Disability or Retirement, but excluding any termination where there is a simultaneous reemployment by the Company or a Subsidiary. The Committee, in its absolute discretion, shall determine the effect of all other matters and questions relating to Termination of Employment, including, but not by way of limitation all questions of whether particular leaves of absence constitute Terminations of Employment. Section 2.10 - Total Disability "Total Disability" shall mean that Employee has satisfied the criteria for determination of disability (without regard to any age requirement) for extended basic life insurance under the Company's life insurance program (such determination shall in no way imply that Employee is otherwise eligible for extended basic life insurance). Section 2.11 - Treasurer "Treasurer" shall mean the Treasurer of the Company. ARTICLE III ISSUANCE OF LEGENDED STOCK Section 3.1 - Issuance of Legended Stock In consideration of Employee's agreement to remain in the employ of the Company or a Subsidiary and for other good and valuable consideration, the Company agrees to irrevocably issue to Employee the number of shares of its $.10 par value Common Stock as set forth in Schedule A, upon the terms and conditions set forth in this Agreement. Schedule A shall be distributed to Employee on or about the regular bonus payment date for the FY 93 Executive Bonus Plan. The date of issuance of the Legended Stock shall be the date shown on Schedule A. Section 3.2 - Consideration to Company As partial consideration for the issuance of Legended Stock by the Company, Employee agrees to render faithful and efficient services to the Company or a Subsidiary with such duties and responsibilities as the Company shall from time to time prescribe. Nothing in this Agreement or in the Plan shall confer upon Employee any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and its Subsidiaries, which are hereby expressly reserved, to discharge Employee at any time for any reason, with or without cause. ARTICLE IV RESTRICTIONS Section 4.1 - Forfeiture of Legended Stock All shares of Legended Stock shall be forfeited back to the Company immediately upon a voluntary Termination of Employment occurring within twenty-four (24) months from the date of issuance, other than termination due to Retirement, Total Disability, or death. Section 4.2 - Legend Certificates representing shares of Legended Stock issued pursuant to this Agreement shall, until all restrictions lapse and new certificates are issued pursuant to Section 4.3, bear the following legend: "The shares represented by this certificate are subject to reacquisition by Beckman Instruments, Inc., and such shares may not be sold or otherwise transferred except pursuant to the provisions of the Legended Stock Agreement by and between Beckman Instruments, Inc. and the registered owner of such shares." Section 4.3 - Lapse of Restrictions (a) If no forfeiture pursuant to Section 4.1 has occurred, the Restrictions shall lapse with respect to 100% of the shares of Legended Stock on the date which is twenty-four (24) months from the date the Legended Stock is issued. (b) Notwithstanding subsection (a) above, the Restrictions will lapse with respect to 100% of the shares of Legended Stock in the following events: (i) A Termination of Employment by death or Total Disability; (ii) A Termination of Employment by Retirement; or, (iii) A Change of Control of the Company. (c) As soon as practicable, the Company shall, upon the lapse of the Restrictions, cause new certificates to be issued and delivered to Employee or his legal representative, free from the legend provided for in Section 4.2. Notwithstanding the foregoing, no such new certificate shall be delivered to Employee or his legal representative unless and until Employee or his 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 lapse of Restrictions. Section 4.4 - Merger, Consolidation, Exchange, Acquisition, Liquidation or Dissolution In the event that the Company is succeeded by another corporation in a reorganization, merger, consolidation, acquisition of property or stock, separation or liquidation, the Board or the Committee may, in its absolute discretion and on such terms and conditions as it deems appropriate, provide, by a resolution adopted prior to the occurrence of the reorganization, merger, consolidation, acquisition of property or stock, separation, or liquidation, that for some period of time prior to such event, (i) all Restrictions on such shares of Legended Stock shall terminate or expire, (ii) obligations of the Company in relation to such shares of Legended Stock shall be assumed by such successor corporation, (iii) such shares of Legended Stock shall be cancelled and replaced by substitute shares of Legended Stock of the successor corporation or (iv) such shares of Legended Stock shall be forfeited to the Company in consideration for a cash payment in an amount to be determined by the Committee. Section 4.5 - Restrictions on New Shares In the event that the outstanding shares of the Company's Common Stock are changed into or exchanged for a different number or kind of shares or other securities of the Company or of another corporation pursuant to a merger of the Company into another corporation, or the exchange of all or substantially all of the assets of the Company for the securities of another corporation, or the acquisition by another corporation of 80% or more of the Company's then outstanding voting stock, or the liquidation or dissolution of the Company, or a stock split-up or stock dividend, such new or additional or different shares or securities which are attributable to Employee in his capacity as the owner of the Legended Stock, shall be considered to be Legended Stock and shall be subject to all of the Restrictions, unless the Committee provides, pursuant to Section 4.4 or Section 4.3(b), for the expiration of the Restrictions on the shares of Legended Stock underlying the distribution of the new or additional shares or securities. ARTICLE V MISCELLANEOUS Section 5.1 - Administration The Committee shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules. Any dispute or disagreement which shall arise under or as a result of or pursuant to this Agreement or the grant or issuance of Legended 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 Legended Stock. Section 5.2 - Legended Stock Not Transferable Neither the Legended Stock nor any interest or right therein or part thereof shall be liable for the debts, contracts, or engagements of Employee or his 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 5.2 shall not prevent transfers by will or by the applicable laws of descent and distribution. Section 5.3 - Conditions to Issuance of Stock Certificates The Company shall not be required to issue or deliver any certificate or certificates for shares of stock pursuant to this Agreement prior to fulfillment of all of the following conditions: (a) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed; (b) The completion of any registration or other qualification of such shares under any state or Federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, which the Committee shall, in its absolute discretion, deem necessary or advisable; (c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Committee shall, in its absolute discretion, determine to be necessary or advisable; and (d) The lapse of such reasonable period of time as the Committee may from time to time establish for reasons of administrative convenience. Section 5.4 - Escrow The Treasurer or such other escrow holder as the Committee may appoint shall retain physical custody of the certificates representing the Legended Stock, including shares of Legended Stock issued pursuant to Section 4.5, until all of the Restrictions expire or shall have been removed; provided, however, that in no event shall Employee retain physical custody of any certificates representing Legended Stock issued to him. Section 5.5 - Notices Any notice 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 him at the last known address shown on Company records. By a notice given pursuant to this Section, either party may hereafter designate a different address for notices to be given to him. Any notice which is required to be given to Employee shall, if Employee is then deceased, be given to Employee's personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section. Any notice shall have been deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal Service. Section 5.6 - Rights as Stockholder Except as otherwise provided herein, the holder of the Legended Stock shall have all the rights of a stockholder with respect to the Legended Stock, including the right to vote the Legended Stock and the right to receive all dividends or other distributions paid or made with respect to the Legended Stock. Section 5.7 - Entire Agreement; Modification This Agreement constitutes the entire agreement between the parties hereto and supersedes any and all other written or oral agreements, understandings, representations or proposals which may have been made prior to or concurrently with the execution of the Agreement. No modification or amendment of this Agreement or any additional agreement concerning Legended Stock will take effect unless it is approved by the Committee and is in writing and signed by Employee and the Vice President of Human Resources. Any modification, amendment, or additional agreement must expressly state the intention of the parties to modify or supplement the terms of this Agreement. Section 5.8 - Receipt of Documents Employee acknowledges the receipt of FY 93 Executive Bonus Plan with Stock Award Deferral Option, the Incentive Compensation Plan of 1990 as amended and restated May 6, 1992, Plan prospectus documents, and tax information. Employee acknowledges that he has been encouraged to seek tax and securities counsel before making the election herein. Section 5.9 - Titles Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto. EMPLOYEE BECKMAN INSTRUMENTS, INC. ____________________________ By_________________________________ Richard K. Sears Vice President - Human Resources Date:_______________________ EX-10 6 LOAN AGREEMENT (MULTIPLE ADVANCE) Exhibit 10.21 Certification of Foreign Language Document Attached hereto is a fair and accurate English translation of the following document which in its original form appears in the Japanese language: Loan Agreement (Multiple Advance) made as of the 30th day of September 1993 by and between Beckman Instruments (Japan) Ltd., a corporation organized and existing under the laws of Japan and The Industrial Bank of Japan, Limited, a Japanese bank. I certify under penalty of perjury that the foregoing is true and correct. KENJI YAMAURO Kenji Yamamuro Controller Beckman Instruments (Japan) Ltd. December 21, 1993 (Date) LOAN AGREEMENT (Multiple Advance) September 30, 1993 TO: The Industrial Bank of Japan, Limited 3-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan Article 1 (Borrowing Clause) Based upon the terms and conditions set forth in the following Articles, I have promised to borrow the amount set forth below, subject further to the terms and conditions set forth in the Agreement on Bank Transactions separately executed and delivered to your bank. 1. Amount: The aggregate principal amount of the Loan shall be JPY 500,000,000 (five hundred million yen) being made available in several advances; provided, that the date and amount of each advance shall be determined by further agreement with you. If the amount required by me has been reduced due to changes in its plan or otherwise, the above-described amount may be reduced by further agreement with your bank. Notwithstanding this Agreement, I confirm that you may reduce, or refuse to make available, the aforesaid amount if any one of the items specified in Article 5 of the Agreement on Bank Transaction or Article 7 of this agreement is applicable to me or the Guarantor at the time of an advance. 2. Purpose: The purpose of the Loan is for working capital. 3. Maturity Date: The Maturity Date shall be September 30, 1999. 4. Repayment: The principal of the Loan shall be repaid on the Maturity Date. 5. Interest Rate: For advances drawn down on or before September 30, 1993, the interest rate shall be 4.8% p.a. For advances drawn down on or after 1 October, 1993, the interest rate shall be the Long-Term Prime Lending Rate prevailing on the date of draw down. The Interest shall be calculated on the basis of a year of three hundred sixty five (365) days. 6. Interest Payment Date: The Interest Payment Dates shall mean the last day if March, June, September and December in each year, commencing on December 30, 1993, the last such Interest Payment Date to be on the Maturity Date. 7. Manner of Interest Payment: Interest shall be payable with respect to each Loan in arrears on each Interest Payment Date thereof, initially, for the period from and including the date of advance thereof, to and including the immediately following. Interest Payment Date thereof, and thereafter from and including the day immediately following each Interest Payment Date thereof to and including the next Interest Payment Date thereof. Or, in the case of the Final Payment, the Maturity Date thereof. 8. Default Interest: In the event that I fail to perform any of my obligations hereunder when due, I shall pay default interest which shall be 14% per annum (based on a year of 365 days). Article 2 (Prepayment) 1. If I intend to pay, prior to the specified maturity Date, any or all of my obligations under this Agreement, I shall obtain your prior approval thereto. 2. In case of a prepayment as aforesaid where applicable Interest Rate is higher than your Long term Prime Lending Rate ("LTPR") on the Prepayment Date, I shall pay you forthwith a prepayment commission which is to be calculated based upon the interest rate difference between the applicable Interest Rate and the LTPR for the period from and including the Prepayment Date to and including the Maturity Date. Article 3 (Assignment of Credit) 1. I agree that you may assign to other financial institutions in the future any or all of my obligation hereunder without any notice. However even after such assignment, I may continue to pay my obligations hereunder to you as provided in Article 1 of this Agreement, and you shall transfer what you receive to such assignee(s) in proportion to the amount of the Loan(s) assigned. Moreover you may continue to demand from me payment of my obligations hereunder. I confirm that the assigned Loan(s) shall remain subject to the terms and conditions of the relevant Agreement on Bank Transactions as notified separately executed and delivered to you. 2. I confirm as long as you have been so authorized, by such assignee(s), with respect to the assigned Loan you may act as agent of such regarding the collection and management thereof. Article 4 (Financial Report) At the end of each of my annual fiscal periods, I shall furnish my business report, balance sheet, profit and loss statement, etc., for each such fiscal period to you. Article 5 (Cost) All reasonable costs and expenses incurred in connection with the preparation of this Agreement or otherwise relating hereto or necessary for the preservation of your rights hereunder, shall be borne by me. Article 6 (Notarial Deeds) I shall, upon your demand at any time, take all necessary procedures to cause a competent notary public to execute notarial deeds containing an acknowledgment of my obligations hereunder and an agreement to the compulsory enforcement thereof. Article 7 (Immediate Payment) 1. If any of the events set forth in the following clauses shall apply to me, any and all of my obligations hereunder shall immediately become due and payable even in the absence of notice or demand, etc. from you; and I shall pay such obligations forthwith: 1. If I suspend payment of my debts or if an application or petition is submitted for bankruptcy, commencement of composition of creditors, commencement of corporate reorganization proceedings, commencement of company arrangement or commencement of special liquidation. 2. If I become subject to Clearing House to the procedures for suspension of business transactions. 3. If an order or notice is issued for provisional attachment, provisional attachment for the purpose of assuring collection or attachment with respect to any of my deposits or other credits with you. 4. If my whereabouts become unknown to you due to my failure to notify you of a change in my address or any other causes attributable to me. 2. If any of the events set forth in the following clauses shall apply to the Guarantor, any and all of my obligations hereunder shall immediately become due and payable even in the absence of notice or demand, etc. from you; and I shall pay such obligations forthwith: 1. If the Guarantor suspends payment of its debts or if an application or petition is submitted for bankruptcy, commencement of composition of creditors, commencement of corporate reorganization proceedings, commencement of company arrangement or commencement of special liquidation. 2. If the whereabouts of Guarantor become unknown to you due to failure to notify you of a change in address or any other causes ascribable to me or the Guarantor. 3. In the event of any of the following, upon your demand, any and all obligations I owe you hereunder shall immediately become due and payable; and I shall pay them forthwith: 1. If I fail to perform all or any part of my obligations when due. 2. If I violate the terms of any agreement on transactions with you. 3. If I cease to be wholly owned directly or indirectly by Beckman Instruments Inc. 4. If the guarantee issued on September 28th, 1993 by Beckman Instruments Inc. is canceled, terminated or modified unfavorably to you, or is avoided, or if the due date thereof is not extended or action which has the same effect as such an extension is not taken after the expired thereof. Article 8 (Non-business Days) In case the due date of payment of any obligations hereunder falls on a Sunday or any other holiday, you may change the due date to the day immediately preceding the same. Article 9 (Negative Pledge) With your consent, I shall not, for the purposes of securing other debt, create, any security interest, upon or with respect to any of my properties or assets, whether now owned or hereafter acquired, provided that I shall be permitted to create security interests (1) with respect to superior rights arising in connection with taxes to be imposed; (2) with respect to superior rights arising in connection with carriers', warehousemen's and mechanics' liens and other similar liens imposed by law arising in the ordinary course of business and not material in amount; (3) with respect to superior rights arising in connection with workmen's compensation laws, unemployment insurance, or pension or other social welfare legislation; or (4) on properties or assets acquired after the date hereof, which security interests were in existence prior to such acquisition or were created at the time of purchase solely to secure the purchase price of such properties or assets. Article 10 (Relation to Agreement on Bank Transactions) Notwithstanding Article 1 of this Agreement, this Agreement shall govern in case of any conflicts between this Agreement and the Agreement on Bank Transactions. Article 3, Article 4, and Article 5 paragraph 2 section 5 of the Agreement on Bank Transaction shall not apply to this Agreement. IN WITNESS WHEREOF, this Agreement has been executed in a single copy which you shall keep in your possession. BECKMAN JAPAN KK. BY (SEAL APPLIED) EX-10 7 TERM LOAN AGREEMENT (CITIBANK TOKYO) Exhibit 10.22 TERM LOAN AGREEMENT between BECKMAN INSTRUMENTS (JAPAN) LTD. and CITIBANK, N.A., TOKYO BRANCH SEPTEMBER 30, 1993 TERM LOAN AGREEMENT THIS AGREEMENT made as of the 30th day of September, 1993 by and between Beckman Instruments (Japan) Ltd., a corporation organized and existing under the laws of Japan with its principal office at 6, Sanbancho, Chiyoda-ku, Tokyo 102, Japan (hereinafter called the "Company"), and Citibank, N.A., Tokyo Branch at 3-14, Higashi-Shinagawa 2-chome, Shinagawa-ku, Tokyo, Japan, a United States national banking association and a foreign bank branch licensed in Japan (hereinafter called the "Bank".) WITNESS: WHEREAS, the Company wishes to borrow certain funds from the Bank, and the Bank is willing to lend such funds, all on the terms and conditions hereinafter set forth; and WHEREAS, Beckman Instruments, Inc., a Delaware corporation (the "Guarantor"), has agreed to provide guaranty (the "Guaranty") with respect to performance of any and all obligations of the Company hereunder. NOW THEREFORE, the parties hereby agree as follows: ARTICLE 1: AMOUNT AND TERMS OF THE LOAN Section 1.01 Subject to the terms and conditions hereof, and in reliance on the representations and warranties contained herein, the Bank hereby agrees to make a term loan (the "Loan") to the Company in the total principal amount of seven hundred million Japanese Yen 700,000,000 (hereinafter the "Principal Amount") to be used by the Company for the refinancing of existing short term borrowing. Section 1.02 The Loan shall be drawn down in one lump sum on September 30, 1993 (hereinafter the "Drawdown Date") in exchange for one (1) promissory note (hereinafter the "Note"). The Note shall be issued by the Company and shall be payable to the order of the Bank at the office of the Bank hereinabove set forth (hereinafter the "Office of the Bank"). The Note shall be in form and substance satisfactory to the Bank and shall include the Drawdown Date, and the Principal Amount and the date of maturity, as follows: Amount of Note Maturity Date J. Yen 700,000,000 September 30, 1998 (the "Maturity Date") Section 1.03 The Company shall repay the Loan by repayment of the Principal Amount and any other outstanding sum under this Agreement in one lump sum on the Maturity Date. The Company may not prepay the Loan (whether in whole or in part) prior to the Maturity Date. Repayment shall be made in Japanese Yen. Section 1.04 The Company shall pay interest on the Principal Amount at the rate of 4.6% per annum (hereinafter the "Contract Rate"). Interest shall accrue in Japanese Yen and shall be calculated on the basis of a 365-day year for the actual number of days elapsed. The payment of interest shall be made to the Bank semi-annually in arrears on the last Business Day of March and September each year. As used herein, Business Day means a day other than a Saturday, Sunday or day on which banks are required to close in Tokyo, Japan. Any such day on which an interest payment shall be made hereunder is hereinafter called an "Interest Payment Date." If the Company shall fail to pay when due (whether at stated maturity, by acceleration or otherwise) the whole or any portion of the principal of the Loan, interest thereon or any other amount due from the Company under this Agreement, the Company agrees to pay the default interest on such past due principal of the Loan and, to the fullest extent permitted by applicable law, on such past-due interest and other amounts, in either case from and including the due date thereof until the same shall be paid in full, at a rate per annum equal to two percent (2%) above the Contract Rate. This Section 1.04 shall supercede the provision of Article 3 of the Agreement for Banking Transactions executed by and between the parties hereto on the 1st day of May, 1978 (hereinafter the "Agreement for Banking Transactions") with respect to the Loan. Section 1.05 In the event that there are changes in applicable laws or regulations, or in the interpretation thereof, by any governmental authority charged with the administration thereof, which would impose, modify or deem applicable any reserve requirements against the Loan under this Agreement, or which would impose any other condition with respect to this Agreement, the Loan, its principal or interest, or the Note issued thereunder, the result of any of the foregoing being to increase the cost to Bank of making or maintaining the Loan, then the Company, upon the Bank's request and subject to Japanese Government approval, if necessary, hereby agrees either to pay to the Bank an amount so as to reimburse the Bank the amount corresponding to such increased costs to the Bank or to take any other alternative action so as to indemnify the Bank with respect to any such increased costs. Section 1.06 Any and all payments by the Company hereunder shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges, withholdings and all liabilities with respect thereto, provided that the Bank provide the Company with a certificate of the tax authority under Article 180 of the Income Tax Law, excluding (i) taxes imposed on the Bank's income, (ii) franchise taxes imposed on the Bank by the jurisdiction under the laws of which the Bank is organized or any political subdivision thereof, and (iii) if applicable, taxes imposed on the Bank's income, and franchise taxes imposed on the Bank, by the jurisdiction of the Bank's lending office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If the Company shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this paragraph) the Bank will receive and retain an amount equal to the sum the Bank would have received had no such deductions been made, (ii) the Company shall make such deductions and (iii) the Company shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law and shall provide the Bank with proper evidence of such payment. In addition, the Company agrees to pay any stamp taxes which arise from any payment made hereunder or from the execution and delivery of this Agreement and the Note (hereinafter referred to as "Other Taxes"). The Company will indemnify the Bank for the full amount of Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this paragraph) paid by the Bank or any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Without prejudice to the survival of any other agreement contained herein our agreements and obligations contained in this paragraph shall survive the payments in full of the Loan and principal and interest hereunder. ARTICLE II: REPRESENTATIONS AND WARRANTIES Section 2.01 The Company represents and warrants as follows: (a) The Company is a corporation duly organized under the laws of Japan, and is duly qualified to do business wherever necessary to carry on its present operations. (b) The making and performance of this Agreement and of the Note are within the Company's corporate powers, have been duly authorized by all necessary corporate actions and do not contravene any law or any contractual restriction binding on the Company. (c) This Agreement is, and the Note when duly executed and delivered will be, legal and binding obligations of the company, enforceable against it in accordance with their respective terms, subject, however, to limitations with respect to restrictions imposed by law in connection with bankruptcy, company reorganization and similar proceedings. (d) There are no pending or threatened actions or proceedings before any court or administrative agency which may materially adversely affect the Company's financial condition or operations. (e) The latest balance sheet and related earning statement of the Company for the fiscal year then ended have been furnished to the Bank, and they correctly set forth the Company's financial condition as of such date and the results of its operations for such period, and since such date there has been no material adverse change in such condition or operations. (f) The claims of the Bank against the Company under this Agreement rank at least pari passu with all other unsecured debts of the Company. ARTICLE III: COVENANTS OF THE COMPANY Section 3.01 During the terms of this Agreement and for so long as any obligation is outstanding under the Loan or the Note, the Company will furnish to the Bank (i) within one hundred and twenty (120) days after the close of each fiscal year, the Company's annual report and accounts including the balance sheet and profit and loss statement for such period, audited by independent public accountant(s) of recognized standing, and (ii) such other financial information as the Bank may reasonably require from time to time, but subject to the conditions that the Bank maintain such financial information in strict confidence, that the Bank utilize such financial information only for the general banking purposes, including, but not limited to, analysis of credit worthiness of the Company and enforcement of the Bank's rights under this Agreement, and that the information be disclosed only to the Lenders (hereinafter defined) who agree to be bound by these conditions. The Lenders shall be deemed to have agreed to be bound by these conditions upon purchase of the Participation (hereinafter defined). Section 3.02 During the term of this Agreement and for so long as any obligation is outstanding under the Loan or the Note, the Company will furnish to the Bank simultaneously with such financial statements a certificate signed by a duly authorized officer of the Company confirming that no event has occurred nor is continuing which would constitute an Event of Default (hereinafter defined) or would constitute such an Event of Default but for the requirement that notice be given or time elapse or both. Section 3.03 During the term of this Agreement and for so long as any obligation is outstanding under the Loan or the Note, without the prior written consent of the Bank, the Company will not enter into any merger or consolidation or sell or otherwise transfer or encumber a substantial portion of its assets so as to cause material adverse changes(s) to the Company's operations or financial condition. ARTICLE IV: CONDITIONS OF LENDING Section 4.01 The obligation of the Bank to make the Loan hereunder shall not become effective unless all of the following conditions precedent are fully satisfied: (a) The Bank shall have received on or before the Drawdown Date the following documents in form and substance satisfactory to the Bank: (i) Certified copy of the Company's Articles of Incorporation, (ii) Certified extract from the minutes of a meeting of the Board of Directors of the Company authorizing the Loan, this Agreement and the issue of the Note, (iii) Legal evidence showing that the person(s) who executed this Agreement, the Note and other related documents were fully authorized to do so and that the signature or seal of such person(s) affixed to this Agreement, the Note and other documents are genuine and (iv) the fees contained in the fee letter of even date herewith. (b) The representations and warranties made by the Company in connection with the execution and delivery of this Agreement and the Note or contained in any certificate furnished pursuant hereto continue to be true and correct as if made on the Drawdown Date, and there shall not have occurred, in the opinion of the Bank, any material adverse change in the Company's financial, business and other conditions since the date hereof. (c) There shall not have occurred or been continuing any of the following events: (1) Any acts of force majeure preventing the Bank from complying with this Agreement, including but not limited to, foreign exchange control or other restriction or change on capital outflows or inflows put into effect by the Government of Japan, the United States of America or any other government, their subdivision, their agency or otherwise; (2) Any representation or warranty made by the Company in connection with the execution and delivery of this Agreement or the Note or contained in any certificate furnished pursuant hereto being found at any time incorrect in any material respect when made; (3) Default by the Company in the performance of any terms, covenants or agreements contained in this Agreement; or (4) Any circumstances specified in sub-paragraphs (d) through (i) of Section 5.01. (d) The Bank shall have received from the Guarantor the Guaranty with respect to the Company's obligations under this Agreement in the form and substance satisfactory to the Bank. The Company shall not be required to furnish to the Bank any other security with respect to the Loan in addition to the Guaranty. This section 4.01(d) shall supersede the provision of Article 4 of the Agreement for Banking Transactions with respect to the Loan. (e) The Bank shall have received on or before the Drawdown Date the following documents in form and substance satisfactory to the Bank: (i) Certified copy of the Guarantor's Articles of Incorporation, (ii) Certified extract from the minutes of a meeting of the Board of Directors of the Guarantor authorizing the Guaranty, (iii) Legal evidence showing that the person(s) who executed the Guaranty, and other related documents were fully authorized to do so and that the signature of such person(s) affixed to the Guaranty and other documents are genuine and (iv) Legal evidence showing that the Guarantor is duly organized and validly existing and in good standing. ARTICLE V: EVENTS OF DEFAULT Section 5.01 If any of the following events (hereinafter the "Events of Default") shall occur and be continuing with respect to the Company: (a) The Company shall default on any payment of principal of or interest on the Loan or the Note; or (b) Any representation or warranty made in connection with the execution and delivery of this Agreement or the Note or contained in any certificate furnished pursuant hereto shall prove to be incorrect when made in any material respect; or (c) The Company shall default in a material manner in the performance of any other terms, covenants or agreements contained in this Agreement; or (d) The Company shall become insolvent or bankrupt or make any assignment for the benefit of creditors, or consent to the appointment of a trustee or receiver, or liquidator shall be appointed for the Company or for a substantial part of its property; or bankruptcy, reorganization, insolvency or similar proceedings shall be instituted by or against the Company under the laws of any jurisdiction; or (e) The Company shall fail to pay indebtedness for borrowed money or guarantees thereon or any other indebtedness other than under this Agreement, owing by the Company, or any interest or premium thereon, when due, whether such indebtedness shall become due by scheduled maturity, by required prepayment, acceleration, by demand or otherwise; or the Company shall fail to comply with any covenant or provision other than under this Agreement which failure causes acceleration of any indebtedness other than this Agreement owed by the Company, or there occurs in the Company any event causing acceleration of any indebtedness other than under this Agreement owed by the Company, or any interest or premium thereon; or (f) The Clearing House in observance of its rules shall take procedures for suspension of the transactions of the Company with banks and similar institutions; or (g) An order or notice of provisional attachment, preservative attachment or attachment shall be dispatched in respect of any deposit or any other credits of the Company with the Bank; or (h) Any of the claims of the Bank against the Company under this Agreement shall fail for any reason to rank at least pari passu with all other unsecured debts of the Company. then, all obligations then outstanding hereunder shall become and be immediately due and payable without presentment, demand, protest, presentation of the Note, or other notice of any kind, all of which are expressly waived by the Company. Section 5.02 If any of the items (a) through (d) of Section 5.01 shall occur and be continuing with respect to the Guarantor or the Guarantor shall fail to pay any portion of indebtedness for borrowed money or guarantees thereon or any other indebtedness of US$5,000,000 or more, owing by the Guarantor, or any interest or premium thereon, when due, whether such indebtedness shall become due by scheduled maturity, by required prepayment, acceleration, by demand or otherwise or the Guarantor shall fail to comply with any covenant or provision which failure causes acceleration of any indebtedness of US$5,000,000 or more owed by the Guarantor, or there occurs in the Guarantor any event causing acceleration of any indebtedness of US$5,000,000 or more owed by the Guarantor or any interest or premium thereon; provided, that, the event set forth in this Section 5.02 constitutes an Event of Default only when the Bank declares default of the Loan based upon such event, then, all obligations then outstanding hereunder shall become and be immediately due and payable without presentment, demand, protest, presentation of the Note, or other notice of any kind, all of which are expressly waived by the Company. Section 5.03 This Article V shall supersede the provision of Article 5 of the Agreement for Banking Transactions with respect to the Loan. ARTICLE VI: MISCELLANEOUS Section 6.01 The Company acknowledges that, in connection with the transactions under this Agreement, the Bank will enter into certain hedging arrangements (including but not limited to swap transactions) with third parties. Such hedging arrangements rely upon performance by the Company under this Agreement. The Company shall indemnify the Bank for, and hold the Bank harmless against, any damages, losses, costs or expenses arising in connection with any and all related hedging transactions between the Bank and third parties due to early termination of the Loan pursuant to Article V above. Such damages, losses, costs and expenses shall be limited to those reasonable under the prevailing market practice and shall include all closeout and associated expenses to enter into the market to obtain any counter-transactions necessary. Section 6.02 The Bank may at any time, and from time to time, sell or otherwise transfer a participation in the Loan ("Participation") to one or more banks, finance companies, insurance companies, other financial institutions or funds (each, a "Lender") in or to all or a portion of its rights and obligations under this Agreement and the Note. Any Lender may sell or otherwise transfer its Participation. Payments by the Company under this Agreement (or on the Note) shall in all cases be made to the Bank at the Office of the Bank and the Company shall not be concerned with any payment which may be due to a Lender as a result of a sale or transfer of a Participation. Section 6.03 All payments under this Agreement and the Note shall be made in Japanese Yen at the Office of the Bank and the Company hereby indemnifies the Bank against any loss, cost and expense incurred where payment is made in another currency or currencies or at another place. Where any payment is made in a currency other than Japanese Yen, the amount due shall be satisfied only to the extent that the currency tendered can purchase Japanese Yen at the Bank's quoted rate on the date payment was due. Section 6.04 No failure or delay on the part of the Bank in exercising any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power, or privilege hereunder or given by law. Section 6.05 All notices, demands and communications in connection with this Agreement, the Loan and the Note shall be given in writing to the other party at the following addresses by prepaid registered mail: If to the Company: Beckman Instruments (Japan) Ltd. 6, Sanbancho, Chiyoda-ku, Tokyo 102 JAPAN Attention: Kenji Yamamuro Director Finance and Administration Telephone No.: (813) 3221-5911 Facsimile No.: (813) 3221-5912 with a copy to: Beckman Instruments, Inc. 2500 Harbor Boulevard, Box 3100, Fullerton, CA 92634-3100, U.S.A. Attention: General Counsel Telephone No.: (714) 773-6904 Fascimile No.: (714) 773-7936 If to the Bank: 3-14, Higashi-Shinagawa 2-chome Shinagawa-ku, Tokyo JAPAN Attention: Capital Markets Group Telephone No.: (813) 5462-9150 Fascimile No.: (813) 5462-5154 Any notice, demand or communication by facsimile must also be sent by prepaid registered mail. Section 6.06 All accounting terms not specifically defined herein shall be construed in accordance with generally accepted principles of good accounting practice. Section 6.07 The Company agrees to pay all reasonable legal costs and expenses in connection with the preparation, execution, and delivery of this Agreement and costs and expenses, including legal costs and expenses, in connection with the enforcement of this Agreement and the Note. Section 6.08 This Agreement may be amended or supplemented, by mutual consent in writing, in the event any circumstanced requiring such amendment or supplementation shall be considered to have arisen after the signing of this Agreement. Section 6.09 This Agreement together with the Agreement for Banking Transactions sets forth the entire understanding of the parties with regard to the subject matter, and supersedes all other negotiations, prior discussions and prior agreements or understandings, whether written or oral, relating to the subject matter. To the extent that the provisions of this Agreement are inconsistent with the provisions of the Agreement for Banking Transactions, the provisions of this Agreement shall prevail. Section 6.10 (a) This agreement shall inure to the benefit of the Bank and its successors and assigns including any subsequent holder or holders of the Note, and the term "Bank" shall include any such holder or holders whenever the context permits. All agreements, representations and warranties, covenants and undertakings contained in this Agreement are for the benefit of each and every Lender from time to time holding a Participation in the Loan. (b) Neither the obligations of the Company under this Agreement or under the Note, nor any rights of the Company under this Agreement or the Note, shall be assigned, transferred or otherwise disposed of by the Company. Section 6.11 This Agreement, the Note and any other documents required under this Agreement shall be governed by the laws of Japan. The Company hereby irrevocably submits to the non-exclusive jurisdiction of the Tokyo District Court and any New York State or Federal Court of the United States of America sitting in New York City, and all courts of appeal therefrom, with respect to this Agreement, the Note and any matter, action or proceedings arising therefrom. The Company waives any right to claim immunity from suit or against enforcement of a judgement or to claim that the forums mentioned in this Section are inconvenient. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers. Company: Beckman Instruments (Japan) Ltd. By STAMP APPLIED Name: Title: Bank: Citibank, N.A., Tokyo Branch By STAMP APPLIED Name: Title: EX-10 8 TERM LOAN AGREEMENT (DKB) Exhibit 10.23 Certification of Foreign Language Document Attached hereto is a fair and accurate English translation of the following document which in its original form appears in the Japanese language: Term Loan Agreement made as of the 9th day of December 1993 by and between Beckman Instruments (Japan) Ltd., a corporation organized and existing under the laws of Japan and The Dai-Ichi Kangyo Bank Limited, a Japanese bank. I certify under penalty of perjury that the foregoing is true and correct. KENJI YAMAMURO Kenji Yamamuro Controller Beckman Instruments (Japan) Ltd. December 21, 1993 (Date) [THIS IS AN ENGLISH TRANSLATION. THE OFFICIAL TEXT WILL BE EXECUTED IN THE JAPANESE LANGUAGE, AND SHALL GOVERN IN THE EVENT OF CONFLICT.] TERM LOAN AGREEMENT This Term Loan Agreement made as of December 9, 1993, by and between Beckman Instruments (Japan) Limited, a corporation organized and existing under the laws of Japan with its principal office at 6, Sanbancho, Chiyoda-ku, Tokyo 102, Japan ("BIJ") and The Dai-Ichi Kangyo Bank Limited, a corporation organized and existing under the laws of Japan with its principal office at 1-5, 1-chome, Uchisaiwaicho, Chiyoda-ku, Tokyo 100, Japan ("DKB") is entered to memorialize the complete understanding of the parties concerning the December 9, 1993, Five Hundred Million Yen ("Amount") loan to BIJ by DKB ("Loan"). Article 1 Borrowing Clause Based upon the terms and conditions set forth in the following Articles, BIJ has borrowed and DKB has loaned the Amount, subject further to the terms and conditions set forth in the Agreement on Bank Transactions dated July 30, 1977 ("ABT") separately executed by the parties. 1. Amount: The Loan shall be drawn on December 9, 1993, in one lump sum of Yen 500,000,000 (Five hundred million yen). 2. Purpose: The purpose of the Loan is for working capital. 3. Maturity Date: The Maturity Date shall be December 9, 1998. 4. Repayment: The principal of the Loan shall be repaid on the Maturity Date unless earlier prepaid as set forth in this Agreement. 5. Interest Rate: The Interest Rate shall be 3.7%. (Three and seven-tenths percent) per annum. Interest shall be calculated on the basis of a year of three hundred sixty-five (365) days. 6. Interest Payment Dates: The "Interest Payment Dates" shall mean each March 9, June 9, September 9 and December 9 occurring on or prior to the Maturity Date, and commencing on March 9, 1994. The last Interest Payment Date shall be the Maturity Date. 7. Manner of Interest Payment: Interest shall be payable with respect to outstanding principal of the Loan in arrears on each Interest Payment Date. On the initial Interest Payment Date, interest shall apply to the period from and including the date of advance to and including the first Interest Payment Date. On subsequent Interest Payment Dates, interest shall apply to the period measured from and including the day following the preceding Interest Payment Date to and including the then current Interest Payment Date or, in the case of the final payment, the Maturity Date. 8. Settlement Account of Principal and Interest: Principal and interest shall be withdrawn, without BIJ issuing a check or similar item, by DKB from the BIJ Current Account (#0129968) with the DKB Hibiya Branch. 9. Default Interest: In the event that BIJ fails to pay any of its obligations hereunder when due, BIJ shall pay default interest which shall be 14% per annum (based on a year of 365 days). Article 2 Prepayment 1. Prior to the specified Maturity Date, BIJ may not prepay the Loan, whether in whole or part. 2. In case of a prepayment arising as a result of BIJ default pursuant to Article 7, if the Interest Rate is higher than the prime rate on "DKB's Fixed Interest Long Term Loan" (the "FILT Prime Rate") on the Prepayment Date, BIJ shall pay a prepayment commission. The prepayment commission shall equal the difference between the interest that would have accrued at the Interest Rate and the interest that would accrue over the remaining term of the Loan if the FILT Prime Rate applied to the Loan. The remaining term shall be considered to commence from and including the day following the Prepayment Date to and including the Maturity Date. Article 3 Assignment 1. DKB may assign to other financial institutions any or all of BIJ's payment obligations without any notice. In that event: 1. DKB shall continue to demand payment from BIJ and confirms and shall confirm that the Loan shall remain subject to the terms and conditions of this Agreement exclusively; 2. BIJ confirms and upon request shall confirm that the Loan shall remain subject to the terms and conditions of this Agreement exclusively; 3. BIJ shall continue to pay obligations hereunder to DKB as provided in Article 1 of this Agreement, and DKB shall transfer the receipts to such assignee(s) in proportion to the amount of the Loan assigned or otherwise as DKB may have agreed with the assignee. 4. BIJ confirms that as long as DKB has been authorized by such assignee(s) with respect to the assigned loan, DKB may act as agent of such assignee(s) regarding the collection and management thereof. 2. The assigned Loan shall remain subject to the terms and conditions of this Agreement. Article 4 Financial Report Within On Hundred Twenty (120) days following the end of its fiscal year, BIJ shall furnish DKB a copy of its annual financial report. Article 5 Costs If it should become necessary for DKB to take legal action to collect funds and to enforce its rights to receive any payment which is due, or becomes due as a result of a default by BIJ as set forth in Article 7, DKB's reasonable costs and expenses, including fees of outside counsel, actually paid to unrelated third parties shall be borne by BIJ, but only if such costs and expenses directly arise from and are incurred in connection with such action for collection and enforcement of rights. Article 6 Closing and Post-closing Documents 1. No later than December 20, 1993, a signed original guaranty in the form attached shall be provided to DKB by Beckman Instruments, Inc. For purposes of funding on schedule, DKB has accepted a facsimile copy of the guaranty delivered under the representation that the original is being sent by courier. 2. No later than December 24, 1993, BIJ shall provide DKB with a copy of its Board of Directors' resolution authorizing BIJ to enter this Agreement. Article 7 Immediate Payment 1. If any of the following events shall apply to BIJ, any and all of BIJ's obligations under this Agreement immediately shall become due and payable, even in the absence of notice or demand from DKB, and BIJ shall pay such obligations forthwith: 1. If BIJ suspends payment of its debts or if an application or petition is submitted for bankruptcy, commencement of composition of creditors, commencement of corporate reorganization proceedings, commencement of company arrangement or commencement of special liquidation. 2. If the Clearing House suspends the transactions of BIJ with banks and similar companies. 3. If an order or notice is issued for provisional attachment, provisional attachment for the purpose of assuring collection or attachment with respect to any of BIJ's deposits or other credits with DKB. 4. If the whereabouts of BIJ become unknown to DKB due to BIJ's failure to notify DKB of a change in address or any other causes attributable to BIJ. 2. If any of the following events shall apply to any guarantor of BIJ's payment obligations under this Agreement, any and all of BIJ's obligations under this Agreement immediately shall become due and payable, even in the absence of notice or demand from DKB, and BIJ shall pay such obligations forthwith: 1. If the guarantor suspends payment of its debts or if an application or petition is submitted for bankruptcy, commencement of composition of creditors, commencement of corporate reorganization proceedings, commencement of company arrangement or commencement of special liquidation. 2. If the whereabouts of guarantor become unknown to DKB due to failure to notify DKB of a change in address or any other causes attributable to BIJ or the guarantor. 3. If any of the following events should occur, upon DKB's demand any and all of BIJ's payment obligations under this Agreement immediately shall become due and payable, and BIJ shall pay such obligations forthwith: 1. If BIJ fails to pay any amount payable under this Agreement when due and fails to cure this defective performance by the end of the second complete business day following receipt of demand from DKB. 2. If BIJ should violate any other provision of this Agreement and fail to remedy such defective performance within thirty (30) days following receipt of demand from DKB. 3. If the ultimate parent of BIJ ceases to be Beckman Instruments, Inc. 4. If the guarantee issued effective December 9, 1993, by Beckman Instruments, Inc., is terminated, is modified without prior acceptance of the modification by DKB, is avoided or otherwise rendered void or unenforceable, or is not extended directly, or indirectly by action which has the same effect as an extension, to match any extension of this Agreement or of the opportunity for BIJ to perform its obligations under this Agreement. Article 8 Non-Business Days In case the due date of payment of any obligation hereunder falls on a Sunday or any other holiday, the due date shall be the immediately preceding business day. Article 9 Notices All legal notices and demands in connection with this Agreement or the Loan shall be set forth in writing and shall be delivered to the other party at the following addresses by personal delivery, prepaid certified mail or by certified delivery courier as follows: If to BIJ: Beckman Instruments (Japan) Ltd. 6, Sanbancho, Chiyoda-ku, Tokyo 102 JAPAN Attention: Kenji Yamamuro Director, Finance & Administration Phone: (813) 3221-5911 Fax: (813) 3221-5912 WITH A COPY TO: Beckman Instruments, Inc. 2500 Harbor Boulevard Fullerton, California USA 92634 Attention: Vice President, General Counsel & Secretary Phone: (714) 773 6904 Fax: (714) 773 7936 If to DKB: The Dai-Ichi Kangyo Bank, Ltd. Hibiya Branch 1-1, 1-chome, Shinbashi, Minato-ku Tokyo 105, Japan Attention: Hideshi Nagata Phone: (813) 3591 3271 Fax: (813) 3508 0816 Article 10 Entire Agreement & Official Language 1. Duplicate original copies of this Agreement shall be executed by the parties, with each party to receive a fully executed original, and either original shall be considered valid and legally binding. 2. This Agreement together with the ABT by and between BIJ and DKB sets forth the entire understanding of the parties with regard to the subject matter, and supersedes all other negotiations, prior discussions and prior agreements or understandings, whether written or oral, relating to the subject matter. To the extent that the provisions of the ABT are inconsistent with the provisions of this Agreement, this Agreement shall prevail. Article 3, Article 4 and Article 5 of the ABT are superseded entirely by the provisions of this Agreement. IN WITNESS WHEREOF, BIJ and DKB execute this Agreement. Beckman Instruments (Japan) Limited By: SEAL APPLIED Name: Taiji Nishimoto Title: President & Representative Director The Dai-Ichi Kangyho Bank Limited By: SEAL APPLIED Name: Hideshi Nagata Title: Hibiya Branch General Manager EX-10 9 AGREEMENT REGARDING RETIREMENT BENEFIT Exhibit 10.24 AGREEMENT REGARDING RETIREMENT BENEFITS OF ARTHUR A. TORRELLAS WHEREAS, Arthur A. Torrellas ("Executive") has been employed by Beckman Instruments, Inc. ("Company") for approximately 16 years; and WHEREAS, the Executive and the Company wish to provide an incentive for the Executive to continue to remain employed by, and provide unique international expertise to, the Company through October, 1995, and to provide for an enhanced retirement benefit should he retire October 31, 1995, NOW, THEREFORE, this Agreement between the Company and the Executive ("Agreement") is hereby adopted this 1st day of December, 1993. 1. Retirement Supplement. If Executive retires October 31, 1995, his aggregate pension benefit from the Beckman Instruments, Inc. Pension Plan ("Pension Plan") and the Beckman Instruments, Inc. Supplemental Pension Plan ("Supplemental Plan") shall be increased by 38%. The 38% increase shall be calculated by first calculating the aggregate single life benefit payable to Executive from the Pension Plan and the Supplemental Plan. Such aggregate amount shall be increased by 38%. The increase shall be payable from the Supplemental Plan (along with any other benefits which would otherwise be payable from the Supplemental Plan). The benefit payable from the Pension Plan shall not be changed. If an optional form of benefit is elected by Executive pursuant to the terms of the Pension Plan and the Supplemental Plan, then the amount of the optional form of benefit shall be calculated by using the single life benefit after the increase described above. Accordingly, the 38% increase in benefits shall be reflected in any optional form of benefit. 2. Voluntary Termination Before or After October 31, 1995. The increase referred to in paragraph 1 does not apply if Executive, before October 31, 1995, or after October 31, 1995, voluntarily terminates employment (retires). The benefit payable under such circumstances would be the benefit normally payable from the Pension Plan and the Supplemental Plan. 3. Surviving Spouse Benefit. Under the Pension Plan and the Supplemental Plan, a surviving spouse benefit is payable if Executive dies while employed and while married for at least one year on the date of his death. If Executive dies prior to October 31, 1995 while still an active employee, then the aggregate surviving spouse benefit under the Pension Plan and the Supplemental Plan shall be increased by 38%. The increase shall be calculated according to the method set forth in paragraph 1. If Executive dies after the enhanced retirement benefits described in paragraph 1 commence, then the method of calculation set forth in paragraph 1 will result in the increased benefit applying to the survivor portion (if any) of the optional form of benefit (if any) elected by Executive. For example, if Executive elected a joint and survivor benefit with his surviving spouse as the contingent annuitant, then the payments which are continued to his surviving spouse after his death would reflect the increase described in paragraph 1. 4. Termination by Company. If, prior to October 31, 1995, the Company terminates Executive, other than for "Cause" (as defined in the Change of Control Agreement dated as of May 1, 1989), then the 38% increase to Executive's aggregate benefit referred to in paragraph 1 shall apply, calculated according to the benefit earned by Executive under the Pension Plan and the Supplemental Plan through the date of Executive's termination of employment. The increase shall not apply if Executive is terminated at any time for "Cause," or at any time after October 31, 1995. 5. No Competition. The increased benefits referred to in this Agreement shall not be payable if, within one year of Executive's termination of employment, he engages in business activities, as an employee or otherwise, which the Company reasonably determines are in competition with the Company. If the Company determines that the competition prohibited by this paragraph has occurred during such one year period, the Company shall (1) suspend further payment of the increased portion of the benefits, and (2) offset against future benefit payments from the Supplemental Plan the increased portion of any benefits which had previously been paid to Executive. 6. This Agreement shall be considered an exhibit to the Supplemental Plan and shall constitute an official plan document for the Supplemental Plan. 7. This Agreement shall be construed in accordance with applicable federal law, and to the extent that state law is not preempted by federal law, according to the laws of the State of California. 8. This Agreement shall not modify any of the terms and conditions of Executive's employment except as explicitly set forth herein. 9. This Agreement is the entire agreement between the parties and supercedes any and all prior and contemporaneous oral and written agreements and discussions regarding the subject of enhanced retirement benefits discussed herein. The parties may only amend this Agreement by the mutual execution of a document referencing this Agreement and pursuant to a resolution of the Company's Board of Directors approving such amendment. This Agreement is entered into this 20th day of December, 1993. EXECUTIVE By ARTHUR A. TORRELLAS Arthur A. Torrellas COMPANY BECKMAN INSTRUMENTS, INC. By JOHN P. WAREHAM John P. Wareham Its President EX-13 10 FINANCIAL REVIEW SECTION OF ANNUAL REPORT Exhibit 13 FINANCIAL REVIEW Section of the Company's Annual Report to Stockholders for the year ended December 31, 1993 FINANCIAL REVIEW Dollars in millions, except amounts per share Overview The Company designs, manufactures, markets and services a broad range of laboratory instrument systems, reagents and related products, that address the needs of diagnostic laboratories in hospitals and independent clinical reference laboratories as well as bioanalytical laboratories in the life sciences market, including those in universities, research institutes, pharmaceutical companies and biotechnology companies. Generally, the Company's products simplify and automate laboratory processes, saving time and money. Products for clinical diagnostic laboratories include general and special chemistry systems together with reagents, accessories and software which are used to detect and quantify various substances of clinical interest in human blood and other body fluids. Products for life sciences laboratories include centrifuges, high performance liquid chromatographs, spectrophotometers, laboratory robotic workstations, capillary zone electrophoresis systems, nuclear counters, protein sequencers, DNA synthesizers and the reagents and supplies for their operation. Beckman supports its products with a worldwide sales and service network. Redirected Business Strategy and Reorganization In 1993 the Company announced a redirected business strategy and a new organization. Beckman will concentrate on clinical diagnostics and centrifugation while at the same time shifting its investment to the biotechnology based portion of the life sciences business including molecular biology and related sciences. The redirected strategy will position Beckman to capitalize on the technical and market continuum that exists between the life sciences and clinical fields by enabling the Company to serve a growing research market today that will spawn clinical opportunities in the future. To implement this strategy, Beckman's former operating groups, the Bioanalytical Systems Group and Diagnostic Systems Group, have been reorganized into a single unit. The new organization is headed by John P. Wareham, who has been appointed President and Chief Operating Officer, reporting to Louis T. Rosso, who continues as Chairman and Chief Executive Officer. Mr. Wareham was previously Vice President of the Diagnostic Systems Group. In support of the redirected business strategy and adjustment to unfavorable market conditions; including the European recession, the worldwide drive to contain health care costs and generally weak economic conditions; the Company announced a reorganization plan in late 1993. The planned reorganization includes a net reduction of approximately 800 positions worldwide, primarily in 1994. The restructuring plan includes a voluntary separation program for U.S. based long term employees, including an enhanced early retirement program; consolidation of European finance and administrative functions; and consolidation of U.S. based manufacturing, finance, and administrative functions. To accomplish these changes, a pretax restructuring charge of $114.7 was recorded in the fourth quarter of 1993. In addition the Company anticipates approximately $20.0 of additional restructuring costs to be incurred in 1994. The restructuring charge in 1993 consists primarily of employee related severance, pension and postretirement benefit costs as well as costs associated with the reduction of facilities. Asset disposal costs are approximately $4.1. The approximately $20.0 restructuring charge in 1994 consists primarily of facility startup and rearrangement costs. The Company expects to realize annual savings of approximately $25.0 from the restructuring in 1994 increasing to approximately $45.0 in 1995 and beyond. Results of Operations The following table sets forth, for the periods indicated, the results of operations as a percentage of sales: Years ended December 31, 1993 1992 1991 Sales 100.0% 100.0% 100.0% Operating costs and expenses Cost of sales 47.8 48.5 48.7 Marketing, administrative and general 31.7 32.4 33.0 Operating income before research, development, and engineering (1) 20.5 19.1 18.3 Research, development and engineering 10.7 9.5 9.6 Operating income (1) 9.8 9.6 8.7 Earnings before income taxes (2) 8.4 7.8 7.4 Net earnings before cumulative effect of changes in accounting principles (2) 5.4% 4.8% 4.4% (1) Excludes pretax restructuring charge of $114.7 in 1993, 13.1% of sales, which resulted in the Company reporting an operating loss of 3.3% of sales. (2) Excludes pretax restructuring and environmental charges of $114.7 and $12.5, respectively, which represent 14.5% of sales. These charges resulted in the Company reporting a loss before income taxes of 6.1% and a net loss before cumulative effect of changes in accounting principles of 3.8% of sales. 1993 Compared to 1992 Sales in 1993 were $875.7 representing a decrease of 4% from 1992. Without the unfavorable impact of changes in foreign currency exchange rates, sales would have increased by 1%. Sales to areas outside the United States were over 50% of total sales. Both diagnostic and life sciences markets were unfavorably impacted by the European recession, cost containment initiatives in several European health care systems, and changes in currency. Diagnostic sales, representing over 55% of total sales, decreased in 1993 by 3% with currency unfavorably impacting sales by 6%. The diagnostic market remains highly competitive with sales growth being obtained through continued market penetration. Sales of life sciences instrumentation declined by 5% in 1993 with currency unfavorably impacting sales by 3%. In addition to the factors mentioned above, the life sciences market was adversely affected by reductions of U.S. pharmaceutical capital spending in response to anticipated health care legislation. Cost containment initiatives in European health care systems and anticipated U.S. health care legislation are expected to be continuing factors which may affect the Company's sales in the short-term. Excluding the impact of the restructuring charge (see "Redirected Business Strategy and Reorganization") recorded in 1993, operating income decreased by 2% to $85.6 in 1993 from $87.2 in 1992. Operating income before the restructuring charge increased as a percent of sales to 9.8% in 1993 from 9.6% in 1992. Contributing to the increase in operating income as a percent of sales was improved gross margin resulting from an increase in sales of higher margin products and a decrease in operating expenses partially offset by an increased investment in research, development and engineering. Operating expenses decreased due to cost containment as well as a reduction in Company performance based incentive compensation. The Company's investment in research, development and engineering increased 9% from the prior year to $93.3. The Company's rate of profitability before, and after, investment in research, development and engineering continues to improve as indicated in the above table. In 1993 the Company announced a redirected business strategy and reorganization (see "Redirected Business Strategy and Reorganization"). The planned reorganization includes a net reduction of approximately 800 positions worldwide, primarily in 1994. To accomplish these changes, a pretax restructuring charge of $114.7 was recorded in the fourth quarter of 1993. Including the restructuring charge, the operating loss was $29.1 in 1993 compared to operating income of $87.2 in 1992. Net nonoperating expenses, excluding a $12.5 environmental charge (see "Environmental Matters"),decreased by $4.2 to $12.3 in 1993. The decrease was the result of lower foreign currency expense in 1993 compared to 1992. Foreign currency expense was higher in 1992 primarily as a result of the collapse of the European Exchange Rate Mechanism (ERM). Including the environmental charge, net nonoperating expenses increased by $8.3 million to $24.8. Earnings before income taxes, excluding the restructuring and environmental charges, increased by 4% to $73.3. Including the restructuring and environmental charges, the loss before income taxes was $53.9. The 1993 effective tax rate, before the restructuring and environmental charges, was reduced to 36% from 38% in 1992 as a result of increased income in lower tax rate jurisdictions. The passage of the 1993 budget act which changed the U.S. statutory tax rate from 34% to 35% effective January 1, 1993 did not have a significant impact on the Company's effective tax rate. In the first quarter of 1993, the Company was required to adopt two new accounting principles which together resulted in a one-time, noncash charge to net earnings of $4.0. The adoption of Statement of Financial Accounting Standards No. 106 ("SFAS 106") "Employers' Accounting for Postretirement Benefits Other Than Pensions" resulted in an aftertax increase to the net loss of $30.2. This cumulative effect adjustment represents a previously unrecognized postretirement benefit obligation to retirees, employees, employees' beneficiaries and covered dependents. The adoption of Statement of Financial Accounting Standards No. 109 ("SFAS 109") "Accounting for Income Taxes" resulted in a reduction in the net loss of $26.2. The cumulative effect adjustment represents an expected benefit to be realized from increased net deductible temporary differences. The impact on future operating results of the newly adopted accounting principles when taken in combination with changes in benefit plans is not expected to be material. The following table summarizes the impact of the restructuring and environmental charges and the cumulative effect of changes in accounting principles on net earnings (loss) and earnings (loss) per share for the year. Per Amount Share Year ended December 31, 1993 Net earnings before restructuring and environmental charges and cumulative effect of changes in accounting principles $ 46.9 $ 1.69 Restructuring charge, net of tax benefit $(73.0) $(2.63) Environmental charge, net of tax benefit $( 7.5) $(0.27) Cumulative effect of changes in accounting principles Accounting for income taxes $ 26.2 $ 0.95 Accounting for postretirement benefits other than pensions $(30.2) $(1.09) Net loss $(37.6) $(1.35) Net earnings before the restructuring and environmental charges and the cumulative effect of changes in accounting principles increased by 7% to $46.9 compared to 1992. The restructuring and environmental charges reduced net earnings by $73.0 and $7.5, respectively, and the cumulative effect of changes in accounting principles increased the net loss by $4.0. The Company reported a net loss of $37.6 in 1993 compared to net earnings of $43.8 in 1992. Earnings per share before the cumulative effect of changes in accounting principles and the restructuring and environmental charges increased 10% from 1992 to $1.69. The restructuring and environmental charges reduced earnings per share by $2.63 and $0.27, respectively, and the cumulative effect of changes in accounting principles increased the net loss per share by $0.14 resulting in net loss per share of $1.35 for 1993 compared to net earnings per share in 1992 of $1.53. 1992 Compared to 1991 Sales in 1992 were $908.8 representing an increase of 6% over 1991. Changes in foreign currency exchange rates accounted for 2% of the sales increase. Sales to areas outside the United States were over 55% of total sales. Diagnostic sales increased in 1992, in a very competitive environment, through market penetration. Sales in the Diagnostic market were over 55% of total sales. Sales of life sciences instrumentation increased worldwide despite a continued slowdown in government funding in the United States and parts of Europe. The life sciences sales increase was due in part to increased penetration of pharmaceutical and biotechnology accounts. Operating income increased by 16% to $87.2 in 1992. The gross profit rate increased to 51.5% in 1992 from 51.3% in 1991 as a result of benefits achieved through facility consolidations and manufacturing efficiencies. Marketing, administrative, and general expenses decreased as a percent of sales due to cost containment efforts and leverage from sales growth. The Company's investment in research, development and engineering increased by 5% over the prior year to $85.9. Net nonoperating expenses increased by $5.4 to $16.5 in 1992. Contributing to the increase was higher expenses in the Company's currency hedging program associated with the recent volatility in European exchange rates and disruption of the ERM. Net interest expense increased slightly in 1992 due to reduced interest income. Earnings before income taxes increased by 11% to $70.7. The 1992 effective tax rate was reduced to 38% from 40% in 1991 as a result of increased income in lower tax rate jurisdictions, occurring principally in the fourth quarter. Net earnings of $43.8, or $1.53 per share, increased by 15% from 1991 net earnings of $38.1, or $1.32 per share. Liquidity and Capital Resources Net cash provided by operating activities in 1993 was $53.3 compared to $90.2 in 1992 and $83.1 in 1991. Operating cash in excess of investing activities was negative in 1993 by $19.2 due to an increased contribution to the Company's pension plan of $30.0. Accounts payable and accrued expenses have been impacted by changes in certain payables and compensation accruals. The Company believes that net cash provided by operating activities, supplemented as necessary with funds expected to be available under the Company's credit agreement, will provide sufficient resources to meet present and reasonably foreseeable working capital requirements, debt service and other cash needs, including the negative impact on cashflow expected in 1994 of approximately $39.0 resulting from the Company's decision to restructure. Beginning in 1995 the Company should experience incremental positive cash flow of approximately $28.0 as a result of the restructure. Beckman continued to repurchase shares of its common stock during 1993 to meet the needs of the Company's existing stock-related employee benefit plans. By February 1993, the Company had completed the purchase of its then authorized 2,000,000 share repurchase program having acquired the remaining 290,000 shares. During 1993, the Company was authorized to acquire up to 1,000,000 common shares per year up to a maximum of 3,000,000 additional shares. The Company acquired 969,000 shares under this program during 1993. The Company has a $100.0 credit agreement (see Note 5 "Debt") with a group of banks which permits the Company to borrow on a revolving credit basis at short-term market rates. Any increase in outstanding borrowings under the credit agreement is subject to a number of conditions, including the absence of a significant change in control of the Company. The credit agreement requires the Company to maintain specified amounts of consolidated net worth, and specified ratios of debt to total capital and operating income to interest charges. The credit agreement also limits the Company's ability to mortgage its assets, to merge or consolidate or to sell assets. As of December 31, 1993, the Company was in compliance with the covenants of the credit agreement. In February 1993 the Company entered into an agreement to issue $50.0 in senior notes of which $20.0 ("Series A") were issued in February and $30.0 ("Series B") were issued in June 1993. The $50.0 senior notes mature in the year 2000. The Company also issued $11.1 of yen denominated senior notes in 1993. These notes mature in 1998 and 1999. Capital Expenditures Expenditures for property, plant and equipment, including instruments provided to customers on an operating lease basis, totaled $92.8 in 1993 compared with $91.4 in 1992, and $69.7 in 1991. The Company plans to invest at approximately the same level in 1994 and intends to finance this capital spending primarily through cash provided by operating activities. Dividends The Company paid cash dividends to stockholders each quarter for a total of $0.36 per share in 1993,$0.30 per share in 1992 and $0.28 per share in 1991. In January 1994 the Board of Directors declared a first quarter dividend of $0.10 per share. This dividend is payable March 3, 1994 to stockholders of record on February 11, 1994. The Company intends to continue paying cash dividends of at least the current per share amount, subject to future business conditions, requirements of the operations and financial condition of the Company. Inflation Inflation increases the costs of goods and services used by the Company. Competitive and regulatory conditions in many markets restrict the Company's ability to fully recover the higher costs of acquired goods and services through price increases. The Company continues to improve productivity and reduce costs to mitigate the effects of inflation. Foreign Currency The Company derives over 50% of its sales from sources outside of the United States. As a result of a disruption in the participation by member countries in the ERM and volatility in foreign currencies, sales and earnings derived from foreign operations are subject to more variability than historically realized. In the short-term, the relative strength or weakness of the U.S. dollar is not likely to have a material effect on the Company's business decisions. The Company actively manages its foreign currency exposures through foreign currency contracts. The Company may adjust certain aspects of its operations in the event of a sustained material change in such exchange rates. Accounting Pronouncements to be Adopted In November 1992 the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 112 ("SFAS 112"), "Employers' Accounting for Postemployment Benefits." This new standard requires the Company to recognize an obligation for postemployment benefits provided to former or inactive employees, their beneficiaries, and covered dependents, after employment but before retirement. The Company historically recognized these costs on a cash basis. The Company anticipates that the transition obligation will be less than $10.0 on a pretax basis. The Company will adopt this statement in the first quarter of 1994. Environmental Matters In 1983 the Company discovered organic chemicals in the groundwater near a waste storage pond at a Company facility in Porterville, California. SmithKline Beckman ("SmithKline"), the Company's former controlling stockholder, agreed to indemnify the Company with respect to this matter for any costs incurred by the Company in excess of applicable insurance, eliminating any impact on the Company's earnings or financial position. SmithKline Beecham Corporation, the surviving entity of the 1989 merger between SmithKline and Beecham Group p.l.c., assumed the obligations of SmithKline in this respect. The Company is also involved in the investigation and remediation of soil and groundwater contamination for property it sold in 1984. In 1990 the Company entered into an agreement with the purchaser for settlement of a 1988 lawsuit and for sharing current and future costs of investigation, remediation and other claims. In 1991 a lawsuit was filed against the 1984 purchaser by a third party that had subsequently purchased a portion of the above property, alleging damages caused by the pollution of the property. Although the Company is not a named defendant in the action, the Company may be obligated to contribute to any resolution of that action pursuant to its 1990 settlement agreement with the original purchaser. In 1993 the Company increased its existing reserves for soil and groundwater remediation and for resolution of the 1991 lawsuit by $12.5. During 1993 the Company made substantial progress in soil remediation on the site, although there remain some areas of soil contamination that may require further remediation. The Company also operated a groundwater treatment system throughout most of 1993 and in the fourth quarter expanded the capacity of the system. The expanded system is believed to be adequate to remediate the groundwater based upon information available in 1993. A series of test wells were drilled on the property which provided additional information concerning the area of groundwater contamination. The Company believes it has established adequate reserves to complete the remediation of any remaining soil contamination, operation and maintenance of the expanded groundwater treatment system and any additional groundwater investigations. Investigations on the property are continuing and there can be no assurance that further investigation will not reveal additional contamination or result in additional costs. The Company believes additional remediation costs for the contamination discovered by the current investigations and liability for the resolution of the 1991 lawsuit, if any, beyond those already provided will not have a material adverse effect on the Company's operations or financial position (see Note 10 "Commitments and Contingencies"). CONSOLIDATED BALANCE SHEETS Beckman Instruments, Inc. December 31 1993 1992 Dollars in millions Assets Current assets Cash and equivalents $ 24.2 $ 25.9 Short-term investments 21.9 20.1 Trade receivables 252.1 265.1 Inventories 163.9 163.1 Deferred income taxes 70.6 20.7 Other current assets 11.8 13.7 Total current assets 544.5 508.6 Property, plant and equipment, net 216.8 213.0 Deferred income taxes 30.3 - Other assets 28.4 16.8 Total assets $820.0 $738.4 Liabilities and Stockholders' Equity Current liabilities Notes payable $ 31.7 $ 44.4 Accounts payable 42.7 52.3 Accrued compensation 33.2 48.6 Other accrued expenses 166.8 94.1 Income taxes 48.9 41.9 Total current liabilities 323.3 281.3 Long-term debt 113.7 59.5 Deferred income taxes - 13.2 Other liabilities 107.5 27.0 Total liabilities 544.5 381.0 Commitments and contingencies Stockholders' equity Preferred stock, $.10 par value; authorized 10,000,000 shares; none issued - - Common stock, $.10 par value; authorized 75,000,000 shares; shares issued 29,124,457 at 1993 and 1992; shares outstanding 27,849,959 at 1993 and 28,558,543 at 1992 2.9 2.9 Additional paid-in capital 129.6 130.5 Foreign currency translation adjustment (1.1) 17.4 Retained earnings 172.4 220.1 Treasury stock, at cost (28.3) (13.5) Total stockholders' equity 275.5 357.4 Total liabilities and stockholders' equity $820.0 $738.4 See accompanying notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF OPERATIONS Beckman Instruments, Inc. Years ended December 31, 1993 1992 1991 Dollars in millions, except amounts per share Sales $ 875.7 $908.8 $857.9 Operating costs and expenses Cost of sales 418.3 440.9 417.7 Marketing, administrative and general 278.5 294.8 283.1 Research, development and engineering 93.3 85.9 82.2 Restructuring charge 114.7 - - 904.8 821.6 783.0 Operating income (loss) (29.1) 87.2 74.9 Nonoperating income (expense) Interest income 4.1 4.8 7.3 Interest expense (12.7) (13.0) (15.3) Other, net (16.2) (8.3) (3.1) (24.8) (16.5) (11.1) Earnings (loss) before income taxes (53.9) 70.7 63.8 Income tax provision (benefit) (20.3) 26.9 25.7 Net earnings (loss) before cumulative effect of changes in accounting principles (33.6) 43.8 38.1 Cumulative effect of changes in accounting principles Accounting for income taxes 26.2 - - Accounting for postretirement benefits other than pensions (net of tax benefit of $17.0) (30.2) - - Net earnings (loss) $ (37.6) $ 43.8 $ 38.1 Average number of shares outstanding - (thousands) 27,827 28,658 28,970 Net earnings (loss) per share before cumulative effect of changes in accounting principles $ (1.21) $ 1.53 $ 1.32 Cumulative effect of changes in accounting principles Accounting for income taxes 0.95 - - Accounting for postretirement benefits other than pensions (1.09) - - Net earnings (loss) per share $ (1.35) $ 1.53 $ 1.32 See accompanying notes to consolidated financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS Beckman Instruments, Inc. Years ended December 31, 1993 1992 1991 Dollars in millions Cash Flows from Operating Activities Net earnings (loss) $(37.6) $43.8 $38.1 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities Depreciation and amortization 63.5 64.7 55.9 Restructuring charge 66.8 - - Net deferred income taxes (39.2) 5.5 0.2 Changes in assets and liabilities Trade receivables (1.5) (13.1) (21.6) Inventories (5.8) (0.6) (6.1) Accounts payable and accrued expenses (13.1) (3.1) 22.3 Accrued income taxes 7.0 2.6 (2.4) Other 13.2 (9.6) (3.3) Net cash provided by operating activities 53.3 90.2 83.1 Cash Flows from Investing Activities Additions to property, plant and equipment (90.4) (88.0) (67.5) Net disposals of property, plant and equipment 19.7 13.3 10.7 Purchase of short-term investments (1.8) (14.1) - Other - (0.7) (3.6) Net cash used by investing activities (72.5) (89.5) (60.4) Cash Flows from Financing Activities Dividends to stockholders (10.1) (8.5) (8.1) Proceeds from issuance of stock 13.5 19.5 4.3 Purchases of treasury stock (28.3) (27.8) (7.3) Notes payable borrowings 11.5 43.8 9.1 Notes payable reductions (22.3) (31.0) (9.9) Long-term debt borrowings 82.0 2.3 13.4 Long-term debt reductions (27.3) (1.6) (18.2) Other (0.9) 0.6 0.2 Net cash provided (used) by financing activities 18.1 (2.7) (16.5) Effect of exchange rates on cash and equivalents (0.6) - - Increase (decrease) in cash and equivalents (1.7) (2.0) 6.2 Cash and equivalents-beginning of year 25.9 27.9 21.7 Cash and equivalents-end of year $ 24.2 $25.9 $27.9 Supplemental Disclosures of Cash Flow Information Cash paid during the year for Interest $ 12.4 $21.8 $18.3 Income taxes $ 14.5 $24.4 $27.6 Noncash investing and financing activities Capital lease obligations of $2.4 for 1993, $3.4 for 1992 and $2.2 for 1991 were incurred when the Company entered into leases for new equipment. See accompanying notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Dollars in millions, except amounts per share 1. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of Beckman Instruments, Inc., and its wholly owned subsidiaries. The consolidated entity is referred to as the Company in the accompanying consolidated financial statements. All significant transactions among the consolidated entities have been eliminated from the financial statements. The accounts of most of the Company's non-U.S. subsidiaries are included on the basis of their fiscal years ended November 30. Foreign Currency Translation Non-U.S. assets and liabilities are translated into U.S. dollars at fiscal year-end exchange rates. Operating results are translated at exchange rates prevailing during the year. The resulting translation adjustments are accumulated as a separate component of stockholders' equity. The Company utilizes foreign currency contracts to manage the impact of foreign currency fluctuations on its business. Where the foreign currency contracts provide an effective hedge against currency fluctuations, gains and losses are deferred and recognized in the period that gains and losses on the hedged items are recognized. Gains and losses resulting from foreign currency transactions and translation adjustments relating to foreign entities deemed to be operating in U.S. dollar functional currency or in highly inflationary economies are included in results of operations. The Company experienced net foreign currency expenses of $2.1 in 1993, $8.1 in 1992 and $0.9 in 1991. Cash and Equivalents For purposes of the consolidated statements of cash flows, the Company considers cash and equivalents to include cash in banks, time deposits and investments having an original maturity of three months or less. All cash and equivalents are carried at cost which approximates market. Short-Term Investments Short-term investments are principally comprised of investments with original maturities in excess of three months. Investments are carried at cost which approximates market. Inventories Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method. Property, Plant and Equipment and Depreciation Land, buildings and machinery and equipment are carried at cost. The cost of additions and improvements are capitalized, while maintenance and repairs are expensed as incurred. Depreciation is computed generally on the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized over the lesser of the life of the asset or the term of the lease. Earnings Per Share Earnings (loss) per share is calculated on a weighted average basis, including the dilutive effect of common stock equivalents in 1992 and 1991. Primary earnings per share approximates fully diluted earnings per share. Revenue Recognition In general, revenue is recognized as the product is shipped. When a customer enters into an operating-type lease agreement, revenue is recognized over the life of the lease. Under a sales-type lease agreement, revenue is recognized at the time of shipment with appropriate interest income recognized over the life of the lease. Service revenues are recognized ratably over the life of the service agreement or as service is performed, if not under contract. Income Taxes In the first quarter of 1993, the Company adopted Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes". SFAS 109 requires a change from the deferred method of accounting for income taxes of Accounting Principle Board Opinion 11 ("APB Opinion 11") to the asset and liability method of accounting for income taxes. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Accordingly, the Company recognized deferred tax assets reflecting the benefit expected to be realized from net deductible temporary differences. The recognition resulted in the Company recording income and a deferred tax asset equal to the cumulative effect of the accounting change of $26.2 (net of a valuation allowance of $10.1) in the first quarter of 1993. For the periods ended December 31, 1992 and 1991, income taxes were based upon pretax financial statement income with an appropriate deferred tax provision in accordance with APB Opinion 11 to provide for the tax effect of timing differences between pretax financial statement income and taxable income per the tax return. Accounting Pronouncements to be Adopted In November 1992 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112 ("SFAS 112"), "Employers' Accounting for Postemployment Benefits". SFAS 112 requires the Company to recognize an obligation for postemployment benefits provided to former or inactive employees, their beneficiaries and covered dependents after employment but before retirement. Depending on the terms of the benefit, the obligation must be recognized in accordance with either SFAS 43 or SFAS 5. The Company has historically recognized these costs on either a cash basis or, when accrued, in accordance with SFAS 5. The Company anticipates that the transition obligation will be less than $10.0 on a pretax basis. The Company will adopt this accounting standard in the first quarter of 1994. Reclassification Certain amounts from the prior years have been reclassified to conform to the 1993 presentation. 2. Redirected Business Strategy and Reorganization In the fourth quarter of 1993, the Company announced a redirected business strategy and a new organization. The Company will concentrate on clinical diagnostics and centrifugation while shifting its investment to the biotechnology based portion of the life sciences business, including molecular biology and related sciences. The redirected strategy will position the Company to capitalize on the technical and market continuum that exists between the life sciences and clinical fields by enabling the Company to serve a growing research market today that will spawn clinical opportunities in the future. To implement this strategy the Company's operating groups, the Bioanalytical Systems Group and Diagnostic Systems Group, have been reorganized into a single unit. In support of the redirected business strategy and adjustment to unfavorable market conditions; including the European recession, the worldwide drive to contain health care costs and generally weak economic conditions; the Company announced a restructuring plan. The planned restructure includes a net reduction of approximately 800 positions worldwide, primarily in 1994. The plan includes a voluntary separation program for U.S. based, long-term employees, including an enhanced early retirement program; consolidation of European finance and administrative functions and consolidation of U.S. based manufacturing, finance and administrative functions. To accomplish these changes, a pretax restructuring charge of $114.7 was recorded in the fourth quarter of 1993. In addition the Company anticipates approximately $20.0 of additional restructuring costs to be incurred in 1994. The restructuring charge in 1993 consists primarily of employee related severance, pension and postretirement costs as well as costs associated with the reduction of facilities. Asset disposal costs are approximately $4.1 of the 1993 charge. 3. Distribution of Company Stock owned by SmithKline In 1989 SmithKline Beckman ("SmithKline") entered into an agreement to reorganize and combine certain of its businesses with Beecham Group p.l.c. This agreement was approved by the stockholders of both companies creating the new company of SmithKline Beecham p.l.c. As a result of this agreement, all shares of Beckman Common Stock owned by SmithKline were distributed to the holders of SmithKline stock, effective July 1989. In conjunction with the distribution of Beckman Common Stock, the Company entered into a tax agreement ("Tax Agreement") and a distribution agreement with SmithKline. Certain provisions of such agreements are still in effect at December 31, 1993. 4. Composition of Certain Financial Statement Captions 1993 1992 Trade receivables Trade $261.2 $274.3 Current portion of lease receivables 2.8 2.9 Less allowance for doubtful receivables (11.9) (12.1) $252.1 $265.1 Inventories Finished products $110.2 $110.3 Raw materials, parts and assemblies 42.0 43.3 Work in process 11.7 9.5 $163.9 $163.1 Property, plant and equipment, net Land $ 10.3 $ 11.9 Buildings 133.1 134.6 Machinery and equipment 214.3 203.0 Instruments subject to lease(a) 166.4 148.9 524.1 498.4 Less accumulated depreciation Building, machinery and equipment (214.8) (202.2) Instruments subject to lease (92.5) (83.2) $216.8 $213.0 Other accrued expenses Restructure reserve $ 65.4 $ - Unrealized service income 35.4 35.6 Insurance 25.1 9.5 Accrued warranty and installation costs 5.9 6.7 Other 35.0 42.3 $166.8 $ 94.1 (a) Includes instruments leased to customers under three- to five-year cancelable operating leases. 5. Debt Notes payable consist primarily of bank borrowings by the Company's subsidiaries outside the U.S. under local line of credit facilities and the current portion of long-term debt. The bank borrowings are short-term borrowings at rates which approximate the current market rates; therefore, the carrying value of the notes approximates the market value. At December 31, 1993 approximately $107.6 of unused short-term lines of credit were available to the Company's subsidiaries outside the U.S. at various interest rates. Within the U.S., the Company had available $20.0 in committed unused short-term lines of credit at market rates. Compensating balances and commitment fees on these lines of credit are not material and there are no withdrawal restrictions. The Company's current $100.0 revolving Credit Agreement expires on July 1, 1996. The Agreement was amended as of December 31, 1993. Borrowings under the Credit Agreement bear interest at current market rates and are subject to a number of conditions, including the absence of a significant change in control of the Company. In addition, the Credit Agreement requires the Company to maintain minimum consolidated tangible net worth and specified ratios of debt to total capital and operating income to interest charges. The Credit Agreement also limits the Company's ability to mortgage its assets, to merge or consolidate or to sell certain assets. Defaults under the Credit Agreement include nonpayment, breach of covenants, bankruptcy and certain cross defaults to other Company debt. Aggregate dividend payments are limited to the sum of $45.0 and 30% of consolidated cumulative net earnings of the Company from June 30, 1992. As of December 31, 1993, there were no borrowings against the credit line and the Company is in compliance with the covenants of the Credit Agreement. Long-term debt consisted of the following at December 31: Average Rate of Interest 1993 1992 Senior notes, maturing 2000, unsecured 7.4% $ 50.0 $25.0 Commercial paper 3.4% 48.4 27.5 Other long-term debt 6.7% 17.6 9.5 116.0 62.0 Less current maturities 2.3 2.5 Long-term debt $113.7 $59.5 The $50.0 senior notes mature in the year 2000 and are comprised of Series A $20.0 and Series B $30.0. Series A notes bear interest at 7.3%, and Series B notes bear interest at 7.4% annually. Interest is payable semiannually on both Series A and Series B notes. The terms and conditions of the senior notes are similar to those of the Credit Agreement. The market value of the senior notes has been determined by quotes from a financial institution. At December 31, 1993 the market value of the senior notes is approximately $2.6 higher than the face value. The commercial paper program is backed by the Company's $100.0 Credit Agreement. The commercial paper is issued at current market rates; therefore, the carrying value approximates the market value. Other long-term debt at December 31, 1993 consists principally of $11.1 of yen denominated senior notes of which $6.5 mature in 1998 and $4.6 mature in 1999. Capitalized leases of $6.5 in 1993 and $7.2 in 1992 are also included in other long-term debt. The Company has entered into interest rate swap agreements to reduce the impact of changes in interest rates on its long-term debt. At December 31, 1993 the Company had outstanding interest rate swap agreements with commercial banks having a total notional principal amount of $35.0. In some agreements the Company is paying a floating rate and receiving a fixed rate from the counterparties, while in other agreements the Company is paying a fixed rate and is receiving a floating rate. The agreements mature at various dates through December 1995. Interest expense is adjusted for the net amount receivable or payable under the swap agreements. The Company is exposed to credit loss in the event of nonperformance by the counterparties to the agreements, which the Company believes is remote. The market value of the interest rate swaps has been determined by quotes from financial institutions who are counterparties to the interest rate swaps. This value represents the estimated amount the Company would receive or pay if the swap agreements were terminated. At December 31, 1993 the Company would have to pay $1.3 to terminate the swap agreements. The aggregate maturities of long-term debt for the five years subsequent to December 31, 1993 are $2.3 in 1994, $1.2 in 1995, $48.9 in 1996, $0.3 in 1997, $6.7 in 1998 and $56.6 in 1999 and beyond. 6. Income Taxes As discussed in Note 1, the Company adopted SFAS 109 in the first quarter of 1993. The income tax provision for the years 1992 and 1991, and the resulting deferred tax assets and liabilities at December 31, 1992, were prepared in accordance with APB Opinion 11. The components of earnings (loss) before income taxes were: 1993 1992 1991 U.S. $(66.0) $ 8.4 $(12.3) Non-U.S. 12.1 62.3 76.1 $(53.9) $ 70.7 $ 63.8 The provision (benefit) for income taxes consisted of the following: 1993 1992 1991 Current U.S. federal $ 4.8 $ 8.5 $ 7.3 Non-U.S. 9.3 16.3 23.4 U.S. state and Puerto Rico 2.7 2.2 2.7 Total current 16.8 27.0 33.4 Deferred U.S. federal (20.2) - (8.1) Non-U.S. (16.9) (0.1) 0.4 Total deferred, net (37.1) (0.1) (7.7) Total $(20.3) $26.9 $25.7 The reconciliations of the U.S. federal statutory tax rate to the consolidated effective tax rate is as follows: 1993 1992 1991 Statutory tax rate (35.0)% 34.0% 34.0% State taxes, net of U.S. tax benefit 1.1 1.7 0.7 Ireland and Puerto Rico income (14.9) (10.5) (10.1) Non-U.S. taxes 6.0 15.1 11.5 Tax credit utilization - (6.6) - Losses producing limited tax benefits - 2.3 3.6 Foreign income taxed in the U.S. 5.3 - - Other (0.2) 2.0 0.5 Effective tax rate (37.7)% 38.0% 40.2% Certain income of subsidiaries operating in Puerto Rico and Ireland is taxed at substantially lower income tax rates than the U.S. federal statutory tax rate. The lower rates reduced expected income taxes and reduced the net loss in 1993 by approximately $8.1 and increased net earnings by approximately $7.4 in 1992 and $6.4 in 1991. Since April 1990, earnings from manufacturing operations in Ireland are subject to a 10% tax. The lower Puerto Rico income tax rate expires in July 2003. The components of the provision for deferred income taxes are: 1993 1992 1991 Restructuring costs $(43.5) $ - $ - International transactions 5.9 - - Accelerated depreciation (0.7) (2.0) (2.3) Accrued expenses (5.0) (4.5) (2.4) Pension costs 5.0 6.1 (0.4) Postretirement medical costs (0.9) - - Other 2.1 0.3 (2.6) $(37.1) $(0.1) $(7.7) Based upon the Company's historical pretax earnings, adjusted for significant items such as non-recurring charges, management believes it is more likely than not that the Company will realize the benefit of the existing deferred tax asset at December 31, 1993. Management believes the existing net deductible temporary differences will reverse during periods in which the Company generates net taxable income. Certain tax planning or other strategies will be implemented, if necessary, to supplement income from operations to fully realize recorded tax benefits. The tax effect of temporary differences which give rise to significant portions of deferred tax assets and liabilities at December 31, 1993 consist of the following: Deferred Tax Assets Receivables $1.6 Inventories 5.0 Capitalized expenses 2.7 Intercompany transactions 7.7 Pension expense 8.8 Accrued expenses 18.1 Restructuring costs 31.0 Environmental costs 5.9 Postretirement benefits 23.0 Other 9.3 113.1 Less: Valuation allowance (11.5) Total deferred tax assets 101.6 Deferred Tax Liabilities Depreciation 0.7 Net deferred tax asset $100.9 At December 31, 1993 the Company has recorded a valuation allowance of $11.5 for certain deductible temporary differences for which it is more likely than not that the Company will not receive future benefits. Non-U.S. withholding taxes and U.S. taxes have not been provided on approximately $169.7 of unremitted earnings of certain non-U.S. subsidiaries because such earnings are or will be reinvested in operations or will be offset by appropriate credits for foreign income taxes paid. SmithKline and its consolidated subsidiaries (including the Company) have settled all issues with the U.S. Internal Revenue Service through 1986. All U.S. federal income tax liability issues between the Company and SmithKline have been resolved through 1986 in accordance with the Tax Agreement. Such resolution did not have a material effect on the Company's consolidated financial position or operating results. The Company believes that its ultimate U.S. federal income tax liability to SmithKline, if any, for all applicable post 1986 tax years will not have a material effect on the consolidated financial position or operating results of the Company. 7. Pension and Retirement Benefits The Company has defined benefit pension plans covering substantially all of its employees. Consolidated pension expense was $53.0 in 1993, including amounts associated with the restructuring, $16.3 in 1992 and $15.3 in 1991. U.S. pension benefits are based on years of service and compensation during the five highest consecutive earnings years. Components of U.S. pension expense were: 1993 1992 1991 Service cost $11.5 $9.7 $ 8.9 Interest cost 20.4 18.4 16.3 Actual return on plan assets (23.5) (16.7) (11.3) Net amortization and deferral 3.1 0.4 (2.3) $11.5 $11.8 $11.6 As part of the Company's reorganization, (see Note 2 "Redirected Business Strategy and Reorganization"), the Company implemented a voluntary separation program for U.S. based long-term employees. Eligible voluntary separation program participants also received a substantial enhancement to their pension benefit. Eligible participants' pension benefit was calculated by adding five years to their age and five years to their service period. This enhanced pension benefit resulted in the Company recording a $35.9 pension expense associated with the restructuring. The Company's funding policy is to provide currently for accumulated benefits, subject to federal regulations. Plan assets consist principally of U.S. government fixed income securities and corporate stocks and bonds. Funded status of the Company's pension liabilities and assets and amounts recognized in the Company's financial statements with respect to the U.S. plan were: 1993 1992 Vested benefit obligation $(269.7) $(177.1) Accumulated benefit obligation $(278.3) $(184.4) Projected compensation increases (59.2) (61.7) Projected benefit obligation (337.5) (246.1) Plan assets at fair market value 248.5 191.6 Projected benefit obligation in excess of plan assets (89.0) (54.5) Unrecognized transition obligation 3.4 4.1 Unrecognized net loss 59.0 26.3 Unrecognized prior service cost 10.1 11.6 Adjustment required to recognize minimum liability (13.5) - Accrued pension cost in other liabilities $ (30.0) $ (12.5) The expected long-term rate of return on U.S. plan assets was 9.75% in 1993 and 10.50% in 1992. The discount rate used in determining obligations was 7.25% in 1993 and 8.50% in 1992, and the assumed average rate of increase in future compensation levels was 4.25% in 1993 and 6.20% in 1992. Certain subsidiaries outside the U.S. have separate pension plan arrangements which include both funded and unfunded plans. Unfunded foreign pension obligations are recorded as a liability on the Company's consolidated balance sheets. Plan assets and accrued liabilities for those plans exceed vested benefits. Pension expense for plans outside of the U.S. were $4.5 in 1993, $3.9 in 1992 and $2.9 in 1991. The Company has a voluntary defined contribution savings plan for its U.S. employees. Eligible employees may contribute a portion of their compensation to this plan. Company contributions, which are based on a percentage of employee contributions, were $4.2 in 1993, $3.9 in 1992 and $3.6 in 1991. Employees generally become fully vested with respect to Company contributions after three years of service with the Company. In addition to pension benefits, the Company and its subsidiaries presently provide certain health care and life insurance benefits for retired U.S. employees and their dependents. Eligibility for the plan and participant cost sharing is dependent upon the participant's age at retirement, years of service and retirement date. In January 1993, the Company adopted Statement of Financial Accounting Standards No. 106 ("SFAS 106"), "Employers Accounting for Postretirement Benefits Other Than Pensions". This statement requires the Company to accrue, as current costs, the postretirement benefits during the period the employees provide their service. SFAS 106 also required the Company to recognize a transition obligation for prior years' service cost. Accordingly, the Company recorded a transition obligation for past service of $47.2 and a net expense of $30.2 (net of tax benefits of $17.0) as the cumulative effect of the accounting change in 1993. Annual pretax postretirement benefits expense for 1993 increased $2.6 due to the implementation of SFAS 106. The net periodic cost for postretirement health care and life insurance benefits for 1993 includes the following: Service cost $1.4 Interest cost 3.9 $5.3 The voluntary separation program resulted in a curtailment loss to the postretirement benefits plan of $7.2 which was recognized in 1993 as a component of the $114.7 restructuring cost (see Note 2 "Redirected Business Strategy and Reorganization"). The following table sets forth the plan's funded status and amounts recognized in the Company's consolidated balance sheet at December 31, 1993: Accumulated postretirement benefit obligations Retirees $44.0 Fully eligible active plan participants 1.9 Other active plan participants 21.7 Total obligation 67.6 Plan assets - Accumulated postretirement benefit obligation in excess of plan assets 67.6 Unrecognized net loss 10.7 Accrued postretirement benefit liability $56.9 The costs of the retiree health and life insurance benefits were calculated using a health care cost trend rate which assumed a 12% increase in health care costs in 1994 with the rate decreasing to a 6% increase by the year 2007. An assumed 1% increase in the health care cost trend rate for each year would have resulted in an increase in the net periodic cost to $6.1 and an accumulated postretirement benefit obligation of $76.8. The accumulated postretirement benefit obligation was calculated using a discount rate of 7.25%. For the periods ended December 31, 1992 and 1991, the cost of retiree health care insurance benefits were recognized as expense as expenditures were incurred. These costs were $2.5 in 1992 and $2.2 in 1991. Employees outside the U.S. generally receive similar benefits from government-sponsored plans. 8. Benefit Plans Stock Options In 1988, the Company adopted an Incentive Compensation Plan for its officers and key employees, which provided for stock-based incentive awards based upon several factors including Company performance. This plan expired on December 31, 1990, but options outstanding on that date were not affected by such termination. Pursuant to this plan, the Company has granted options to purchase approximately 755,000 shares, with an expiration date of ten years from the date of grant. The Company has also adopted the Incentive Compensation Plan of 1990. This 1990 plan reserves shares of the Company's common stock for grants of options and restricted stock. Granted options expire ten years from the date of grant. Subsequent to stockholder approval in 1992, amendments were adopted to extend the expiration of the plan to 2001 and to increase each year, commencing January 1, 1993, the number of shares available under the plan by 1.5% of the number of common stock shares issued and outstanding as of the prior December 31. As of January 1, 1994, 913,868 shares remain available for grant under this plan. The following is a summary of transactions of the Incentive Compensation Plans of 1988 and 1990: Number of Price Per Shares Share Amount Options outstanding at Dec. 31, 1990 1,199,703 $13.88 - $19.00 $21.5 Granted(a) 598,820 0.00 - 18.75 10.4 Exercised(a) (43,625) 0.00 - 19.00 - Cancelled (51,876) 13.88 - 19.00 (0.9) Options outstanding at Dec. 31, 1991 1,703,022 $13.88 - $19.00 $31.0 Granted 486,100 18.75 - 20.00 9.7 Exercised (70,594) 16.50 - 19.00 (1.2) Cancelled (49,261) 16.50 - 20.00 (0.9) Options outstanding at Dec. 31, 1992 2,069,267 $13.88 - $20.00 $38.6 Granted 438,000 22.50 9.9 Exercised (163,825) 13.88 - 20.00 (3.0) Cancelled (17,395) 18.38 - 22.50 (0.4) Options outstanding at Dec. 31, 1993 (b) 2,326,047 $13.88 - $22.50 $45.1 (a) Includes grant and exercise of approximately 42,000 shares of restricted stock granted to certain officers and employees of the Company. (b) At December 31, 1993 1,503,283 shares were exercisable under these plans. Stock Purchase Plan The Company's stock purchase plan allows all U.S. employees and employees of certain subsidiaries outside of the U.S. to purchase the Company's common stock at favorable prices and upon favorable terms. Subsequent to stockholder approval in 1992, amendments were adopted to extend the expiration of the plan to December 31, 2001, and in each calendar year commencing in 1992, to reserve additional shares of common stock for use in the plan based upon the number of common shares issued and outstanding as of the annual stockholders' meeting. Employees purchased 288,401 shares in 1993. At December 31, 1993 437,655 shares remain available for use in the plan. Treasury Stock The Board of Directors has approved a stock repurchase program whereby the Company was authorized to purchase on the open market 3,000,000 shares of the Company's common stock through December 1993. In addition the Company may purchase 1,000,000 shares per year through 1995. In total 5,000,000 shares have been authorized for purchase. The shares have been, and will continue to be, reissued to satisfy the Company's obligations under existing employee benefit plans. Through December 1993, the Company had purchased 2,969,000 shares of its common stock for $63.4 and at December 31, 1993 1,274,498 shares remain in treasury of which 988,107 are held by the Benefit Equity Fund. At December 31, 1992 565,914 shares were held in treasury. In February 1993 the Company created the Benefit Equity Fund (BEF), a trust for prefunding future stock-related obligations of employee benefit plans. The BEF does not change these plans or the amounts of stock expected to be issued for these plans. The BEF will be funded by existing shares in treasury as well as from additional shares the Company will purchase on the open market over time. While shares in the BEF are not considered outstanding for the calculation of earnings per share, the shares within the BEF are voted by the participants of the Stock Purchase Plan. 9. Stockholders' Equity Changes in stockholders' equity were as follows: Foreign Additional Currency Common Paid-in Translation Retained Treasury Stock Capital Adjustment Earnings Stock Balances, December 31, 1990 $2.9 $127.3 $40.4 $155.0 $ - Net earnings 38.1 Foreign currency translation adjustments (9.8) Dividend to stockholders (8.1) Purchase of treasury stock (7.3) Issuance of restricted stock (0.8) 0.8 Employee stock purchase 2.4 (0.2) 2.3 Balances, December 31, 1991 2.9 128.9 30.6 184.8 (4.2) Net earnings 43.8 Foreign currency translation adjustments (13.2) Dividend to stockholders (8.5) Purchase of treasury stock (27.8) Vesting of restricted stock 0.4 Employee stock purchase 1.2 18.5 Balances, December 31, 1992 2.9 130.5 17.4 220.1 (13.5) Net loss (37.6) Foreign currency translation adjustments (18.5) Dividend to stockholders (10.1) Purchase of treasury stock (28.3) Vesting of restricted stock 0.2 Employee stock purchase (1.1) 13.5 Balances, December 31, 1993 $2.9 $129.6 $(1.1) $172.4 $(28.3) 10. Commitments and Contingencies Environmental The Company is subject to federal, state, local and foreign environmental laws and regulations. The Company believes that its operations comply in all material respects with applicable federal, state and local environmental laws and regulations. Although the Company continues to make expenditures for environmental protection, it does not anticipate any significant expenditures in order to comply with such laws and regulations which would have a material impact on the Company's operations or financial position. In 1983 the Company discovered organic chemicals in the groundwater near a waste storage pond at a Company facility in Porterville, California. SmithKline, the Company's former controlling stockholder, agreed to indemnify the Company with respect to this matter for any costs incurred by the Company in excess of applicable insurance, eliminating any impact on the Company's earnings or financial position. SmithKline Beecham Corporation, the surviving entity of the merger between SmithKline Beckman and Beecham Group p.l.c., assumed the obligations of SmithKline Beckman in this respect. The Company is also involved in the investigation and remediation of soil and groundwater contamination for property it sold in 1984. In 1990 the Company entered into an agreement with the purchaser for settlement of a 1988 lawsuit and for sharing current and future costs of investigation, remediation and other claims. In 1991 a lawsuit was filed against the 1984 purchaser by a third party that had subsequently purchased a portion of the above property, alleging damages caused by the pollution of the property. Although the Company is not a named defendant in the action, the Company may be obligated to contribute to any resolution of that action pursuant to its 1990 settlement agreement with the original purchaser. In 1993 the Company increased its existing reserves for soil and groundwater remediation and for resolution of the 1991 lawsuit by $12.5. During 1993 the Company made substantial progress in soil remediation on the site, although there remains some areas of soil contamination that may require further remediation. The Company also operated a groundwater treatment system throughout most of 1993 and in the fourth quarter expanded the capacity of the system. The expanded system is believed to be adequate to remediate the groundwater based upon information available in 1993. A series of test wells were drilled on the property which provided additional information concerning the area of groundwater contamination. The Company believes it has established adequate reserves to complete the remediation of any remaining soil contamination, operation and maintenance of the expanded groundwater treatment system and any additional groundwater investigations. Investigations on the property are continuing and there can be no assurance that further investigations will not reveal additional contamination or result in additional costs. The Company believes additional remediation costs for the contamination discovered by the current investigations and liability for the resolution of the 1991 lawsuit, if any, beyond those already provided will not have a material adverse effect on the Company's operations or financial position. Litigation The Company and its subsidiaries are involved in a number of lawsuits which the Company considers normal in view of its size and the nature of its business. The Company does not believe that any liability resulting from such lawsuits will have a material adverse effect on the results of operations or financial position of the Company. Other At December 31, 1993 the Company had written foreign currency options of $4.4 and purchased foreign currency options of $7.4 which expire at various dates through March 1994. In addition the Company had commitments to sell forward various currencies totalling $4.8 through March 1994. These instruments are used in combination to hedge the Company's firm commitments denominated in foreign currencies and mitigate the impact of changes in foreign currency exchange rates on the Company's operations. The market values of the foreign currency options and forward contracts have been determined by solicitation of dealer quotes. At December 31, 1993 the market values of the foreign currency contracts result in unrealized losses to the Company of $0.1. In 1993 the Company commenced a program to hedge anticipated transactions denominated in foreign currencies in an effort to mitigate the impact of changes in foreign currency exchange rates on future operations. To accomplish this objective, the Company utilizes complex options consisting of a combination of purchased options and call spreads. The market values of the purchased options and the call spreads have been determined by solicitation of dealer quotes. At December 31, 1993 the market value of the complex options result in an unrealized gain to the Company of $0.9. During 1993 the Company received proceeds of $40.0 from factoring trade receivables. The Company is contingently liable for the possible uncollected portion of the factored receivables, if any, which was $1.1 at December 31, 1993. 11. Business Segment Information Industry Segment The Company is engaged primarily in the design, manufacture and sale of laboratory instrument systems and related products. Geographic areas 1993 1992 1991 Sales United States-domestic $581.2 $586.8 $542.4 United States-export 24.1 20.2 21.6 Europe 303.6 357.8 330.9 Asia and other areas 144.7 134.7 124.7 Transfers between areas (177.9) (190.7) (161.7) Total sales $875.7 $908.8 $857.9 Operating income (loss) United States before research, development and engineering $ 68.8 $121.8 $ 99.5 and engineering (a) (93.3) (85.9) (82.2) United States (24.5) 35.9 17.3 Europe (9.2) 41.9 45.6 Asia and other areas 4.6 9.4 12.0 Total operating income (loss) $(29.1) $ 87.2 $ 74.9 Identifiable assets United States $370.5 $372.3 $366.9 Europe 205.6 246.6 239.4 Asia and other areas 92.2 61.6 58.8 Corporate 151.7 57.9 47.1 Total assets $820.0 $738.4 $712.2 (a) The Company's principal research, development and engineering efforts are performed in the United States. Identifiable assets are those assets used by the operations in each geographic location. Corporate assets consist primarily of cash and equivalents, short-term investments, deferred tax assets, lease receivables and fixed assets of a corporate nature. Asia and other areas include primarily operations in Japan, Canada and Latin America. Inter-area sales are made at terms that allow for a reasonable profit to the seller. At December 31, 1993 trade receivables by geographic area were United States $71.5, Europe $128.4 (including certain countries where normal trade terms are substantially longer than U.S. terms) and Asia and other areas $52.2. At December 31, 1992 trade receivables by geographic area were United States $74.1, Europe $157.3 and Asia and other areas $33.7. 12. Lease Commitments The Company leases certain facilities, equipment and automobiles. Certain of the leases provide for payment of taxes, insurance and other charges by the lessee. Rent expense was $34.5 in 1993, $28.5 in 1992 and $28.8 in 1991. Minimum annual rentals payable under non-cancelable operating leases with a remaining term of more than one year from December 31, 1993, aggregate $29.8 and for each of the next five years are $11.3 in 1994, $8.4 in 1995, $4.8 in 1996, $3.2 in 1997, $1.6 in 1998 and $0.5 in 1999 and beyond. Report by Management The consolidated financial statements and related information for the years ended December 31, 1993, 1992 and 1991 were prepared by management in accordance with generally accepted accounting principles. Financial data included in other sections of this Annual Report are consistent with that in the consolidated financial statements. Management maintains a system of internal accounting controls which is designed to provide reasonable assurance, at appropriate costs, that its financial and related records fairly reflect transactions, that proper accountability for assets exists, and that established policies and procedures are followed. A professional staff of internal auditors reviews compliance with corporate policies. Among these policies is an ethics policy, which requires employees to maintain high standards in conducting the Company's affairs, and requires management level employees to submit certificates of compliance annually. Management continually monitors the system of internal accounting controls for compliance and believes the system is appropriate to accomplish its objectives. The Company's independent auditors examine the Company's consolidated financial statements in accordance with generally accepted auditing standards. Their report expresses an independent opinion on the fairness of the Company's reported operating results and financial position. In performing this audit, the auditors consider the Company's internal control structure and perform such other tests and auditing procedures as they deem necessary. The Board of Directors, through its Audit Committee, reviews both internal and external audit results and internal controls. The Audit Committee consists of three outside Directors and meets periodically with management, internal auditors and the independent auditors to review the scope and results of their examinations. Both the independent auditors and the internal auditors have free access to this Committee, with and without management being present, to discuss the results of their audits. LOUIS T. ROSSO DENNIS K. WILSON Louis T. Rosso Dennis K. Wilson Chairman and Chief Executive Officer Vice President, Finance and Chief Financial Officer Independent Auditors' Report To the Stockholders and Board of Directors of Beckman Instruments, Inc.: We have audited the accompanying consolidated balance sheets of Beckman Instruments, Inc. and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of operations and cash flows for each of the years in the three-year period ended December 31, 1993. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Beckman Instruments, Inc. and subsidiaries as of December 31, 1993 and 1992, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1993 in conformity with generally accepted accounting principles. As discussed in Note 1 and Note 7 to the consolidated financial statements, the Company adopted the provisions of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" and Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions" in 1993. KPMG PEAT MARWICK Orange County, California January 20, 1994 FIVE-YEAR FINANCIAL AND STATISTICAL DATA Beckman Instruments, Inc. Years Ended December 31, 1993 1992 1991 1990 1989 Dollars in millions, except amounts per share Summary of Operations Sales $875.7 $908.8 $857.9 $815.2 $785.9 Costs of sales 418.3 440.9 417.7 396.7 383.5 Marketing, administrative and general 278.5 294.8 283.1 266.3 248.1 Research, development and engineering 93.3 85.9 82.2 80.6 70.3 Restructuring charge 114.7 - - - - Operating income (loss) (29.1) 87.2 74.9 71.6 84.0 Nonoperating expense, net 24.8 16.5 11.1 10.2 11.7 Earnings (loss) before income taxes (53.9) 70.7 63.8 61.4 72.3 Net earnings (loss) before accounting changes (33.6) 43.8 38.1 36.2 41.9 Net earnings (loss) (37.6) 43.8 38.1 36.2 41.9 Average number of shares outstanding (millions) 27.8 28.7 29.0 28.7 28.5 Return on average stockholders' equity (11.9%) 12.5% 11.4% 12.2% 16.7% Net earnings (loss) per share before accounting changes $(1.21) $ 1.53 $ 1.32 $ 1.26 $ 1.47 Net earnings (loss) per share (1.35) 1.53 1.32 1.26 1.47 Dividends paid per share of common stock 0.36 0.30 0.28 0.28 0.28 Financial Position at December 31 Current assets $544.5 $508.6 $491.7 $465.3 $411.9 Current liabilities 323.3 281.3 264.4 246.8 224.7 Working capital 221.2 227.3 227.3 218.5 187.2 Property, plant and equipment, net 216.8 213.0 203.0 203.1 182.1 Total assets 820.0 738.4 712.2 681.0 607.1 Long-term debt 113.7 59.5 59.0 64.6 75.9 Stockholders' equity 275.5 357.4 343.0 325.6 268.8 Shares outstanding 27.8 28.6 28.9 29.0 28.6 Other Statistics Capital expenditures $ 92.8 $ 91.4 $ 69.7 $ 70.0 $ 56.6 Research, development and engineering expense 93.3 85.9 82.2 80.6 70.3 Depreciation expense 62.3 63.9 55.5 47.2 39.2 Number of employees 6,581 6,879 6,883 7,054 7,283 Quarterly Data (Unaudited) Beckman Instruments, Inc. Dollars in millions, except amounts per share March 31 June 30 Sept.30 Dec.31 Total 1993 Quarter Ended Sales $201.7 $221.8 $215.6 $236.6 $875.7 Cost of sales 97.1 106.7 103.9 110.6 418.3 Marketing, administrative and general 63.3 72.1 66.1 77.0 278.5 Research, development and engineering 22.4 22.9 23.2 24.8 93.3 Restructuring charge - - - 114.7 114.7 Operating income (loss) 18.9 20.1 22.4 (90.5) (29.1) Earnings (loss) before income taxes 16.0 18.2 18.0 (106.1) (53.9) Net earnings (loss) before accounting changes 10.2 11.7 11.5 (67.0) (33.6) Net earnings (loss) 6.2 11.7 11.5 (67.0) (37.6) Net earnings (loss) per share before accounting changes 0.36 0.42 0.42 (2.41) (1.21) Net earnings (loss) per share 0.22 0.42 0.42 (2.41) (1.35) 1992 Quarter Ended Sales $213.0 $225.1 $220.5 $250.2 $908.8 Cost of sales 105.5 111.0 104.8 119.6 440.9 Marketing, administrative and general 68.4 73.9 70.4 82.1 294.8 Research, development and engineering 20.4 20.8 20.8 23.9 85.9 Operating income 18.7 19.4 24.5 24.6 87.2 Earnings before income taxes 15.2 17.5 18.7 19.3 70.7 Net earnings 9.3 10.7 11.4 12.4 43.8 Net earnings per share 0.32 0.37 0.40 0.44 1.53 Stock Prices and Other Information Stock Exchanges and Prices The Company's common stock is listed on the New York Stock Exchange. Its ticker symbol is BEC. The following presents a summary of the price range for the common stock as reported on the New York Stock Exchange Composite Tape for the periods ended December 31, 1993 and 1992, respectively. Quarter 1993 1st 2nd 3rd 4th High 25 1/2 23 5/8 26 3/8 28 1/4 Low 21 7/8 20 1/2 19 5/8 25 Quarter 1992 1st 2nd 3rd 4th High 22 1/2 20 7/8 23 5/8 24 1/4 Low 17 5/8 18 3/8 18 1/8 20 Dividends The Company paid cash dividends to stockholders of $0.36 per share in 1993, $0.30 per share in 1992 and $0.28 per share in 1991. The Company intends to continue paying cash dividends of at least the current per share amount, subject to future business conditions, requirements of the operations and financial condition of the Company. In January 1994 the Board of Directors declared a first quarter dividend of $0.10 per share. This dividend is payable March 3, 1994 to stockholders of record on February 11, 1994. Annual Meeting The annual meeting of stockholders will be held on March 30, 1994 at the Brea Civic Center in Brea, California. Formal notice of the meeting together with the proxy statement and form of proxy will be mailed to each stockholder of record on February 1, 1994. Form 10-K Annual Report Available to Stockholders A copy of Beckman Instruments' Form 10-K annual report filed with the Securities and Exchange Commission may be obtained without charge by writing to the Company as follows: Beckman Instruments, Inc. Jay Steffenhagen, Vice President Office of Investor Relations, M/S A-41-A 2500 Harbor Boulevard Fullerton, California, 92634-3100 Telephone: 714-773-7764 FAX: 714-773-8543 There are no accounting differences between the financial statements presented in this Annual Report and the Form 10-K report, but the Form 10-K report does provide certain supplemental information as required by Securities and Exchange Commission regulations. Transfer Agent, Registrar and Dividend Disbursing Agent First Chicago Trust Company of New York 30 West Broadway New York, NY 10007-2192 Telephone: 212-587-6406 Significant Subsidiaries Beckman Analytical S.p.A. Beckman Instruments (Australia) Pty. Ltd. Beckman Instruments (Canada), Inc. Beckman Instruments (Caribe), Inc. Beckman Instruments Espana S.A. Beckman Instruments France S.A. Beckman Instruments G.m.b.H. Beckman Instruments (Ireland), Inc. Beckman Instruments (Japan), Ltd. Beckman Instruments (United Kingdom), Ltd. Beckman Instruments International S.A. Beckman Instruments de Mexico, S.A. de C.V. SmithKline Diagnostics, Inc. EX-22 11 PRINCIPAL SUBSIDIARIES Exhibit 22 PARENTS AND SUBSIDIARIES ________________________ The following table lists current subsidiaries of the Company whose results are included in the Company's combined financial statements. The list of subsidiaries does not include certain subsidiaries which, when considered in the aggregate, do not constitute a significant subsidiary of the Company. Jurisdiction Name of Company of Incorporation _______________ ________________ Beckman Instruments (Australia) Pty. Ltd. Australia Beckman Instruments (Caribe) Inc. California Beckman Instruments (Canada) Inc. Canada SmithKline Diagnostics, Inc. Delaware Beckman Instruments (United Kingdom) Ltd. England Beckman Instruments France S.A. France Beckman Instruments G.m.b.H. Germany Beckman Analytical S.p.A. Italy Beckman Instruments (Japan) Ltd. Japan Beckman Instruments de Mexico, S.A. de C.V. Mexico Beckman Instruments (Ireland) Inc. Panama Beckman Instruments Espana S.A. Spain Beckman Instruments International S.A. Switzerland EX-24 12 AUDITOR'S REPORT Exhibit 24 KPMG PEAT MARWICK Certified Public Accountants Orange County Office Center Tower 650 Town Center Drive Costa Mesa, CA 92626 The Board of Directors Beckman Instruments, Inc.: We consent to incorporation by reference in the registration statements (nos. 33-31573, 33-31862, 33-41519, 33-51506, 33-55778, 33-66990 and 33-66988) on Form S-8 of Beckman Instruments, Inc. of our reports dated January 20, 1994, relating to the consolidated balance sheets of Beckman Instruments, Inc. and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of operations and cash flows and related supplementary financial schedules for each of the years in the three-year period ended December 31, 1993, which reports appear in the December 31, 1993 annual report on Form 10-K of Beckman Instruments, Inc. Our reports refer to the adoption of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, and Statement of Financial Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, in 1993. KPMG PEAT MARWICK Orange County, California February 8, 1994 -----END PRIVACY-ENHANCED MESSAGE-----