-----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, sElBbY72EqUEJ3h24IOs0yTAs+ziTCvZZfW4pHfi1MQ6YE5NOWB4vSERDRIKmel5 oPt1HVkR9vq4fLXlvjVEtA== 0000840467-94-000004.txt : 19940425 0000840467-94-000004.hdr.sgml : 19940425 ACCESSION NUMBER: 0000840467-94-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19940421 FILED AS OF DATE: 19940422 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10109 FILM NUMBER: 94523785 BUSINESS ADDRESS: STREET 1: 2500 HARBOR BLVD CITY: FULLERTON STATE: CA ZIP: 92634 BUSINESS PHONE: 7148714848 10-Q 1 1ST QUARTER REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (Mark One) (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 1994 OR ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ Commission File Number 001-10109 BECKMAN INSTRUMENTS, INC. (Exact name of registrant as specified in its charter) Delaware 95-104-0600 (State of Incorporation) (I.R.S. Employer Identification No.) 2500 Harbor Boulevard, Fullerton, California 92634 (Address of principal executive offices) (Zip Code) (714) 871-4848 (Registrant's telephone number including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ). APPLICABLE ONLY TO CORPORATE ISSUERS: Outstanding shares of common stock, $0.10 par value, as of April 12, 1994: 29,050,918 shares. PART I FINANCIAL INFORMATION Item 1. Financial Statements Page Condensed Consolidated Statements of Earnings for the three months ended March 31, 1994 and 1993 3 Condensed Consolidated Balance Sheets as of March 31, 1994 and December 31, 1993 4 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 1994 and 1993 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II OTHER INFORMATION Item 1. Legal Proceedings 12 Item 2. Changes In Securities 12 Item 3. Defaults Upon Senior Securities 12 Item 4. Submission of Matters to a Vote of Security-Holders 12 Item 5. Other Information 12 Item 6. Exhibits and Reports on Form 8-K 13 BECKMAN INSTRUMENTS, INC. FIRST QUARTER REPORT CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in Millions, Except Amounts Per Share) Unaudited Three Months Ended March 31 ------------------- 1994 1993 ------ ------ Sales $198.6 $201.7 Operating costs and expenses: Cost of sales 95.1 97.1 Marketing, administrative and general 63.4 63.3 Research, development and engineering 21.6 22.4 Restructuring charge 1.2 - ------ ------ 181.3 182.8 ------ ------ Operating income 17.3 18.9 Nonoperating income (expense): Interest income 1.1 0.9 Interest expense (2.7) (3.1) Other, net (0.7) (0.7) ------ ------ (2.3) (2.9) ------ ------ Earnings before income taxes 15.0 16.0 Provision for income taxes 5.2 5.8 Net earnings before cumulative effect of changes in accounting principles 9.8 10.2 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) Accounting for postemployment benefits (net of tax benefit of $3.0) (5.1) - ------ ------ Net earnings $ 4.7 $ 6.2 ====== ====== Average number of shares outstanding (thousands) 27,917 28,211 Net earnings per share before cumulative effect of changes in accounting principles $0.35 $0.36 Cumulative effect of changes in accounting principles: Accounting for income taxes - 0.93 Accounting for postretirement benefits other than pensions - (1.07) Accounting for postemployment benefits (0.18) - ------ ------ Net earnings per share $ 0.17 $ 0.22 ====== ====== See accompanying notes to condensed consolidated financial statements. BECKMAN INSTRUMENTS,INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Millions) Unaudited March 31 December 31 1994 1993 -------- -------- Assets Current assets: Cash and equivalents $ 14.3 $ 24.2 Short-term investments 25.2 21.9 Trade receivables 254.9 252.1 Inventories 164.4 163.9 Deferred income taxes 72.1 70.6 Other current assets 13.2 11.8 ------ ------ Total current assets 544.1 544.5 Property, plant and equipment, net 217.5 216.8 Deferred income taxes 30.7 30.3 Other assets 27.2 28.4 ------ ------ Total assets $819.5 $820.0 ====== ====== Liabilities and Stockholders' Equity Current liabilities: Notes payable $ 27.7 $ 31.7 Accounts payable and accrued expenses 229.8 242.7 Income taxes 51.5 48.9 ------ ------ Total current liabilities 309.0 323.3 Long-term debt 106.9 113.7 Other liabilities 125.6 107.5 ------ ------ Total liabilities 541.5 544.5 ------ ------ Stockholders' equity 278.0 275.5 ------ ------ Total liabilities and stockholders' equity $819.5 $820.0 ====== ====== See accompanying notes to condensed consolidated financial statements. BECKMAN INSTRUMENTS,INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) Unaudited Three Months Ended March 31 ------------------ 1994 1993 ------- -------- Cash Flows From Operating Activities Net earnings. . . . . . . . . . . . . . . . . . . $ 4.7 $ 6.2 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization. . . . . . . . . . 16.5 15.6 Changes in assets and liabilities: Trade receivables . . . . . . . . . . . . . . . (1.4) 6.2 Inventories . . . . . . . . . . . . . . . . . . - (9.4) Deferred income taxes . . . . . . . . . . . . . (1.8) (37.2) Accounts payable and accrued expenses . . . . . (6.7) (20.5) Restructure reserve . . . . . . . . . . . . . . (9.5) - Income taxes. . . . . . . . . . . . . . . . . . 2.6 2.6 Other . . . . . . . . . . . . . . . . . . . . . 17.7 5.0 ------ ------ Net cash provided (used) by operating activities . . . . . . . . . . . . 22.1 (31.5) ------ ------ Cash Flows from Investing Activities Additions to property, plant and equipment. . . . (19.5) (18.2) Disposal of property, plant and equipment . . . . 3.4 3.7 Net (purchase)of investments. . . . . . . . . . . (3.3) - ------ ------ Net cash used by investing activities . . . . (19.4) (14.5) ------ ------ Cash Flows from Financing Activities Dividends to stockholders . . . . . . . . . . . . (2.8) (2.4) Proceeds from issuance of stock . . . . . . . . . 2.4 3.3 Treasury stock repurchase . . . . . . . . . . . . - (15.9) Notes payable borrowing . . . . . . . . . . . . . 6.7 9.2 Notes payable reductions. . . . . . . . . . . . . (11.7) (5.6) Long-term debt borrowing. . . . . . . . . . . . . 4.7 67.0 Long-term debt reductions . . . . . . . . . . . . (11.7) (27.3) Other . . . . . . . . . . . . . . . . . . . . . . (0.3) - ------ ------ Net cash provided (used) by financing activities. . . . . . . . . . . . . . . . . . (12.7) 28.3 ------ ------ Effect of exchange rates on cash and equivalents. . . . . . . . . . . . . . . . . 0.1 (0.5) ------ ------ Decrease in cash and equivalents. . . . . . . . . (9.9) (18.2) Cash and equivalents -- beginning of period . . . 24.2 25.9 ------ ------ Cash and equivalents -- end of period . . . . . . $14.3 $ 7.7 ====== ====== Supplemental Disclosures of Cash Flow Information Cash paid during the period for: Interest . . . . . . . . . . . . . . . . . . . . $ 1.4 $ 3.4 Income taxes . . . . . . . . . . . . . . . . . . $ 1.1 $ - See accompanying notes to condensed consolidated financial statements. BECKMAN INSTRUMENTS, INC. Notes To Condensed Consolidated Financial Statements 1 Report by Management In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results for the periods. The statements are prepared in accordance with the requirements of Form 10-Q and do not include all disclosures required by generally accepted accounting principles or those made in the annual Form 10-K for 1993 which is on file with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 1994 are not necessarily indicative of the results to be expected for the year ending December 31, 1994. 2 Inventories Inventories are comprised of the following: March 31 December 31 1994 1993 ---------- ----------- Finished products $ 109.9 $ 110.2 Raw materials, parts and assemblies 43.7 42.0 Work in-process 10.8 11.7 ------- ------- $ 164.4 $ 163.9 ======= ======= 3 Changes in Accounting Principles Postemployment benefits Effective January 1, 1994 the Company adopted Statement of Financial Accounting Standards No. 112 ("SFAS 112") "Employers' Accounting for Postemployment Benefits". This statement requires the Company to recognize an obligation for postemployment benefits provided to former or inactive employees, their beneficiaries and covered dependents after employment but before retirement. Accordingly, the Company recognized a transition obligation of $8.1 million and a net expense of $5.1 million (net of tax benefit of $3.0) as the cumulative effect of the accounting change. Adoption of SFAS 112 will not have a material impact on operating results of the Company for 1994. Income Taxes Effective January 1, 1993 the Company adopted Statement of Financial Accounting Standards No. 109 ("SFAS 109"), "Accounting for Income Taxes". 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 tax deferred asset equal to the cumulative effect of the accounting change of $26.2 million (net of a valuation allowance of $10.1 million). Postretirement Benefits Other Than Pension Effective January 1, 1993 the Company adopted SFAS 106 "Employers Accounting for Postretirement Benefits Other Than Pensions" and immediately recognized its obligation for prior years' service cost. Accordingly, the Company recorded a transition obligation of $47.2 million and a net expense of $30.2 (net of tax benefits of $17.0) as the cumulative effect of the accounting change. 4 Contingencies The Company is 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 million. 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 available information. 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. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Operations Sales for the three month period ended March 1994 were $198.6 million, a decrease of $3.1 million from the prior year. The impact of changes in foreign currency exchange rates reduced reported sales by $4.5 million compared to last year. On a constant currency basis, sales increased 1% versus the prior year. Sales for the North American diagnostic business have grown significantly over the prior year. The international diagnostic and bioresearch markets continue to be impacted by the European recession and cost containment initiatives in several European health care systems. These factors, as well as currency exchange rates, have resulted in a decrease in reported international sales of more than 5% compared to the prior year. The weakness in the international markets, particularly in Europe, is expected to continue. Operating profit of $18.5 million for the first three months of 1994, before the restructuring charge of $1.2 million, is $0.4 million below last year's operating profit. The decline in operating profit resulted from a decline in the sales, although restructuring efforts led to a slight improvement in the gross profit margin to 52.1% in 1994 from 51.9% in 1993. Selling, general and administrative expenses for the first quarter of 1994 have remained at levels consistent with the prior year. Research and development expenses of $21.6 million are slightly less than the first quarter of last year but are over 10% of sales, reflecting the Company's continued commitment to future products. After giving effect to its 1994 restructuring expenses, the Company reported operating profit for the first quarter of 1994 of $17.3 million. The reorganization and restructuring plan announced in the fourth quarter of 1993 resulted in first quarter 1994 savings attributable to the Company's voluntary separation program, which resulted in personnel reductions of approximately 300 through March. Reduced sales volume and certain transition costs have mitigated the benefit of these savings. As the restructuring implementation gains momentum, these savings are expected to increase and the benefits will exceed the transition costs. The Company anticipates savings from the restructuring program to be $25 million in 1994. Not all of these savings will be incremental to earnings during this time of company transition, constrained markets and flat sales. During the first quarter of 1994, the Company began consolidation of certain European administrative and financial functions in its facility in Switzerland. The Company has created a new subsidiary, Beckman Eurocenter S.A., to perform the finance and administration functions currently performed at subsidiaries throughout Europe. Nonoperating expenses of $2.3 million in 1994 decreased by $0.6 million from the prior year. The decrease is attributable to lower net interest expense as the Company has lower levels of both short- term and long-term debt. Earnings before income taxes for the first quarter 1994, excluding the restructuring charge, increased by $0.2 million to $16.2 million. Including the restructuring charge, the earnings before taxes was $15.0 million. The effective tax rate was reduced to 35% from 36% as a result of increased income in lower tax rate jurisdictions. Net earnings for the first three months of 1994 before restructuring charges and changes in accounting principles increased to $10.6 million, or $0.38 per share, compared to $10.2 million, or $0.36 per share. Including the restructuring charge, net earnings before the cumulative effect of changes in accounting principles for the first quarter of 1994 decreased to $9.8 million, or $0.35 per share. In the first quarter of 1994, the Company adopted Statement of Financial Accounting Standard No. 112 ("SFAS 112") "Employers' Accounting for Postemployment Benefits". This statement requires the Company to recognize a prior service obligation resulting from the Company's commitment to provide benefits to former or inactive employees, their beneficiaries and covered dependents after employment but before retirement. Adoption of SFAS 112 resulted in the Company recording an aftertax charge of $5.1 million in the first quarter. Net earnings for the first quarter of 1994 were $4.7 million, or $0.17 per share compared to $6.2 million, or $0.22 per share in 1993. The following table summarizes the impact of restructuring charges and the cumulative effect of changes in accounting principles on net earnings and earnings per share for the three months ended March 31, 1994 and 1993. 1994 1993 ------------ ----------- Per Per Amt Share Amt Share ----- ----- ----- ----- Net earnings before restructuring charge and cumulative effect of changes in accounting principles $10.6 $0.38 $10.2 $0.36 Restructuring charge, net of taxes (0.8) (0.03) - - Cumulative effect of changes in accounting principles (5.1) (0.18) (4.0)(0.14) ----- ----- ----- ----- Net earnings $ 4.7 $0.17 $6.2 $0.22 ----- ----- ----- ----- Financial Condition For the three months ended March 31, 1994, the Company had positive cash flow from operating and investing activities of $2.7 million. This represents an increase of $48.7 million from the same 1993 period. Contributing to the increase was lower pension plan funding and smaller incentive compensation payments compared to 1993. The ratio of debt to capitalization at March 31, 1994 was 32.6% compared to 34.5% at December 31, 1993. The ratio of current assets to current liabilities at March 31, 1994 of 1.76 has increased from 1.68 at December 31, 1993. The Company believes it has adequate financial resources to meet expected cash flow requirements for the foreseeable future, including the negative short-term impact associated with the Company's reorganization and restructuring plan. In 1995 and beyond, the Company's restructuring plan will have a positive impact on cash flow. On March 3, 1994, the Company paid a quarterly cash dividend of $0.10 per share of common stock for a total of $2.8 million. On March 30, 1994, the Board of Directors declared a $0.10 per share dividend payable on June 2, 1994 to shareholders of record on May 13, 1994. PART II OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes In Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security-Holders The Annual Meeting of the Stockholders of the Company (the "Annual Meeting") was held on March 30, 1994. Four members of the Board of Directors whose terms expired at the 1994 Annual Meeting were elected to new terms expiring at the 1997 Annual Meeting, with the number of shares voting as follows: NAME VOTES FOR VOTES WITHHELD ---- --------- -------------- Earnest H. Clark, Jr. 25,167,969 140,420 Gavin S. Herbert 25,159,066 149,323 C. Roderick O'Neil 25,165,959 142,430 Louis T. Rosso 25,162,377 146,012. The remaining members of the Board of Directors who will continue in office and the year in which their terms expire are: Carolyne K. Davis, Ph.D. (1995), Dennis C. Fill (1995), William N. Kelley, M.D. (1995), Henry Wendt (1995), Francis P. Lucier (1996), David S. Tappan, Jr. (1996) and John P. Wareham (1996). Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K a) Exhibits 4. Amendment 1993-1 to the Company's Savings and Investment Plan, adopted November 3, 1993, filed in connection with the Form S-8 Registration Statement filed with the Securities and Exchange Commission on September 1, 1992, File No. 33-51506. 15. Independent Accountants' Report, April 15, 1994 b) Reports on Form 8-K None. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BECKMAN INSTRUMENTS, INC. (Registrant) Date: April 20, 1994 by WILLIAM H. MAY William H. May Vice President, General Counsel and Secretary Date: April 20, 1994 by DENNIS K. WILSON Dennis K. Wilson Vice President, Finance and Chief Financial Officer EXHIBIT INDEX Exhibit Number Description 4. Amendment 1993-1 to the Company's Savings and Investment Plan, adopted November 3, 1993, filed in connection with the Form S-8 Registration Statement filed with the Securities and Exchange Commission on September 1, 1992, File No. 33-51506 15. Independent Accountants' Report, April 15, 1994 EX-4 2 AMENDMENT TO SAVINGS AND INVESTMENT PLAN EXHIBIT 4 AMENDMENT 1993-1 BECKMAN INSTRUMENTS, INC. SAVINGS AND INVESTMENT PLAN WHEREAS, Beckman Instruments, Inc. ("Company") maintains the Beckman Instruments, Inc. Savings and Investment Plan ("Plan"); and WHEREAS, the Company has the right to amend the Plan; and WHEREAS, the Company desires to amend the Plan to allow for the election provided in Treasury Regulation Section 1.414(q)- 1T, Q&A 14(b), concerning the definition of "highly compensated employee," to modify the definition of Plan Compensation to conform to administrative practices and legal changes and to add the legally-required provisions for "direct rollovers", NOW, THEREFORE, the following Amendment 1993-1 is hereby adopted, effective January 1, 1993, except as otherwise set forth below. 1. Subsection (e) of the definition of "Highly Compensated Employee" contained in Section 1.2 of the Plan is hereby amended to read as follows: "(e) For this purpose, if the Committee so elects, the 'determination year' shall be the Plan Year, and the 'look-back year' shall be the calendar year ending with or within the Plan Year. Accordingly, since the Plan Year is the same as the calendar year, the 'determination year' and the 'look-back year' shall be the same period, as permitted by Regulation Section 1.414(q)-1T, Q&A 14(b). This election shall also apply to all plans, entities and arrangements of the Company which require a determination of highly compensated employees under Internal Revenue Code Section 414(q)." 2. Effective August 1, 1989, the second sentence of the definition of "Plan Compensation" contained in Section 1.2 is hereby amended to read as follows: "Plan Compensation also includes any amounts contributed to a plan qualifying under Sections 401(k) or 125 of the Code as salary reduction contributions." 3. Effective January 1, 1994, the following is hereby added to the end of the definition of "Plan Compensation" contained in Section 1.2: "Effective January 1, 1994, '$200,000' when used above shall be replaced by '$150,000.' The $150,000 limitation shall be indexed in increments of $10,000." 4. The following new Section 6.11 is hereby added to the Plan: "6.11 Direct Rollovers. (a) This Section 6.11 applies to distributions made on or after January 1, 1993. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a Distributee's election under this Section 6.11, a Distributee may elect, at the time and in the manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution paid directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. (b) Eligible Rollover Distributions: for purposes of this Section 6.11, an "Eligible Rollover Distribution: is any distribution of all or any portion of the balance to the credit of the Distributee, except that an Eligible Rollover Distribution does not include: (1) any distribution to the extent such distribution is required under Section 401(a)(9) of the Code; and (2) the portion of any distribution that is not includable in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (c) Eligible Retirement Plan: For purposes of this Section 6.11, "Eligible Retirement Plan" is an individual retirement account described in Section 408(a) of the Code, an individual retirement annuity described in Section 408(b) of the Code, an annuity plan described in Section 403(a) of the Code, or a qualified trust described in Section 401(a) of the Code, that accepts the Distributee's Eligible Rollover Distribution. However, in the case of an Eligible Rollover Distribution to the surviving spouse, an Eligible Retirement Plan is an individual retirement account or individual retirement annuity. (d) Distributee: For purposes of this Section 6.11, a "Distributee" includes an Employee or former Employee. In addition, the Employee's or former Employee's surviving spouse and the Employee's or former Employee' spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Section 414(p) of the Code, are Distributees with regard to the interest of the spouse or former spouse. (e) Direct Rollover: For purposes of this Section 6.11, a "Direct Rollover" is a payment by the Plan to the Eligible Retirement Plan specified by the Distributee." IN WITNESS WHEREOF, this Amendment 1993-1 is hereby adopted this 3rd day of November, 1993. BECKMAN INSTRUMENTS, INC. By: RICHARD K. SEARS Richard K. Sears Its: Vice President - Human Resources EX-15 3 INDEPENDENT ACCOUNTANTS' REPORT KPMG Peat Marwick EXHIBIT 15 Certified Public Accountants Orange County Office Center Tower 650 Town Center Drive Costa Mesa, CA 92626 Independent Accountants' Report The Stockholders and Board of Directors Beckman Instruments, Inc: We have reviewed the condensed consolidated balance sheet of Beckman Instruments, Inc. and subsidiaries as of March 31, 1994, and the related condensed consolidated statements of earnings and cash flows for the three-month periods ended March 31, 1994 and 1993 in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of obtaining an understanding of the system for the preparation of interim financial information, applying analytical review procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Beckman Instruments, Inc. and subsidiaries as of December 31, 1993, and the related consolidated statements of operations and cash flows for the year then ended (not presented herein); and in our report dated January 20, 1994, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1993, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. As discussed in Note 3 to the condensed consolidated financial statements, the Company changed its method of accounting for postemployment benefits in 1994 and income taxes and postretirement benefits other than pensions in 1993. KPMG PEAT MARWICK Orange County, California April 15, 1994 -----END PRIVACY-ENHANCED MESSAGE-----