-----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, QQlFxFpbNrKFxG1z1Qa7Ue3AB/4VpUWh463KqhN7zH9dzbeJP4PHsxyMzUJ5mt75 /fQMxdf6fmXerhAXhyiseA== 0000840467-95-000004.txt : 19950721 0000840467-95-000004.hdr.sgml : 19950721 ACCESSION NUMBER: 0000840467-95-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950720 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: BECKMAN INSTRUMENTS INC CENTRAL INDEX KEY: 0000840467 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [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: 95554987 BUSINESS ADDRESS: STREET 1: 2500 HARBOR BLVD CITY: FULLERTON STATE: CA ZIP: 92634 BUSINESS PHONE: 7148714848 10-Q 1 10-Q REPORT TO SEC FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (Mark One) (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1995 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 July 13, 1995: 29,010,316 shares. PART I FINANCIAL INFORMATION Item 1. Financial Statements Page Condensed Consolidated Statements of Earnings for the three and six month periods ended June 30, 1995 and 1994 3 Condensed Consolidated Balance Sheets as of June 30, 1995 and December 31, 1994 4 Condensed Consolidated Statements of Cash Flows for the six month periods ended June 30, 1995 and 1994 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 13 Item 2. Changes In Securities 13 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Security-Holders 13 Item 5. Other Information 13 Item 6. Exhibits and Reports on Form 8-K 14 BECKMAN INSTRUMENTS SECOND QUARTER REPORT CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in Millions, Except Amounts Per Share) Unaudited
Three Months Ended Six Months Ended June 30, June 30, 1995 1994 1995 1994 Sales $230.6 $222.2 $435.6 $420.8 Operating costs and expenses: Cost of sales 108.0 105.2 205.2 200.3 Marketing, administrative and general 73.8 69.2 139.0 132.6 Research, development and engineering 22.0 22.9 44.1 44.5 Restructuring charge 3.4 1.1 6.5 2.3 ------ ------ ------ ------ 207.2 198.4 394.8 379.7 ------ ------ ------ ------ Operating income 23.4 23.8 40.8 41.1 Nonoperating income (expense): Interest income 1.1 1.2 2.4 2.3 Interest expense (3.0) (3.3) (5.8) (6.0) Other, net (0.6) (1.7) (0.9) (2.4) ------ ------ ------ ------ (2.5) (3.8) (4.3) (6.1) ------ ------ ------ ------ Earnings before income taxes 20.9 20.0 36.5 35.0 Income tax provision 7.1 7.0 12.4 12.2 ------ ------ ------ ------ Net earnings before cumulative effect of change in accounting principles 13.8 13.0 24.1 22.8 Cumulative effect of change in accounting principles: Accounting for postemployment benefits (net of tax benefit of $3.0) - - - (5.1) ------ ------ ------ ------ Net earnings $ 13.8 $ 13.0 $ 24.1 $ 17.7 ====== ====== ====== ====== Weighted average common shares and common share equivalents - (thousands) 28,674 27,977 28,749 27,948 Net earnings per share before cumulative effect of change in accounting principles $ 0.48 $ 0.46 $ 0.84 $ 0.81 Cumulative effect of change in accounting principles: Accounting for postemployment benefits (net of tax benefit of $3.0) - - - (0.18) ------ ------ ------ ------ Net earnings per share $ 0.48 $ 0.46 $ 0.84 $ 0.63 ====== ====== ====== ======
See accompanying notes to condensed consolidated financial statements. BECKMAN INSTRUMENTS,INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in Millions) Unaudited
June 30, December 31, 1995 1994 --------- --------- Assets Current assets: Cash and equivalents $ 15.1 $ 44.2 Short-term investments 6.4 0.7 Trade receivables 274.3 265.9 Inventories 171.8 150.7 Deferred income taxes 39.0 37.8 Other current assets 15.4 12.7 ------ ------ Total current assets 522.0 512.0 ------ ------ Property, plant and equipment, net 245.9 232.6 Deferred income taxes 58.5 56.6 Other assets 40.2 27.9 ------ ------ Total assets $866.6 $829.1 ====== ====== Liabilities and Stockholders' Equity Current liabilities: Notes payable $ 31.0 $ 12.2 Accounts payable and accrued expenses 189.1 202.9 Income taxes 55.9 53.7 ------ ------ Total current liabilities 276.0 268.8 Long-term debt, less current maturities 130.3 117.3 Other liabilities 116.0 126.0 ------ ------ Total liabilities 522.3 512.1 Stockholders' equity 344.3 317.0 ------ ------ Total liabilities and stockholders' equity $866.6 $829.1 ====== ======
See accompanying notes to condensed consolidated financial statements. BECKMAN INSTRUMENTS,INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) Unaudited
Six Months Ended June 30, 1995 1994 ------ ------ Cash Flows from Operating Activities Net earnings $ 24.1 $ 17.7 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation and amortization 36.1 33.9 Deferred income taxes (2.5) (1.8) Changes in assets and liabilities: Trade receivables 0.1 (3.4) Inventories (17.7) 0.6 Accounts payable and accrued expenses (6.7) (4.7) Restructuring reserve (10.3) (22.5) Income taxes 2.2 6.3 Other (25.5) 20.2 ------ ------- Net cash provided (used) by operating activities (0.2) 46.3 ------ ------- Cash Flows from Investing Activities Additions to property, plant and equipment (51.5) (41.5) Net disposals of property, plant and equipment 6.8 8.0 Sale (purchase) of short-term investments (5.7) 21.7 ------ ------- Net cash used by investing activities (50.4) (11.8) ------ ------- Cash Flows from Financing Activities Dividends to stockholders (6.2) (5.6) Proceeds from issuance of stock 9.0 5.9 Purchase of treasury stock (7.3) - Notes payable borrowings 22.1 3.1 Notes payable reductions (4.8) (11.3) Long-term debt borrowings 9.3 4.6 Long-term debt reductions - (23.9) Other (0.8) (0.3) ------ ------- Net cash provided (used) by financing activities 21.3 (27.5) Effect of exchange rates on cash and equivalents 0.2 0.3 ------ ------- Increase (decrease) in cash and equivalents (29.1) 7.3 Cash and equivalents -- beginning of period 44.2 24.2 ------ ------- Cash and equivalents -- end of period $ 15.1 $ 31.5 ====== ======= Supplemental Disclosures of Cash Flow Information Cash paid during the period for: Interest $ 2.9 $ 5.9 Income taxes $ 13.3 $ 4.7
See accompanying notes to condensed consolidated financial statements. BECKMAN INSTRUMENTS, INC. Notes To Condensed Consolidated Financial Statements (Dollars in Millions, Except Amounts Per Share) 1 Report by Management In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the results for the periods. The statements are prepared in accordance with the requirements of Form 10-Q and do not include all disclosures required by generally accepted accounting principles or those made in the Annual Report on Form 10-K for 1994 which is on file with the Securities and Exchange Commission. The results of operations for the three and six month periods ended June 30, 1995 are not necessarily indicative of the results to be expected for the year ending December 31, 1995. 2 Earnings Per Share In 1995, earnings per share is computed including common share equivalents. Common share equivalents represent the dilutive effect of outstanding stock options. Common share equivalents were excluded in periods prior to 1995 as they were less than three percent dilutive. Primary earnings per share approximates fully diluted earnings per share. Earnings per share are calculated as follows:
Quarter Ended Quarter Ended June 30, 1995 June 30, 1994 Earnings Earnings (In thousands,except amounts per share) Shares Per Share Shares Per Share ------- ------- ------- ------ Weighted average shares of common stock outstanding 28,064 $0.49 27,977 $0.46 Common share equivalents 610 (0.01) * * ------- ------- ------- ------ Weighted average common and common share equivalents 28,674 $0.48 27,977 $0.46 ======= ======= ======= ======
*Less than 3% dilutive
Six Months Ended Six Months Ended June 30, 1995 June 30, 1994 Earnings Earnings (In thousands,except amounts per share) Shares Per Share Shares Per Share ------ -------- ------ -------- Weighted average shares of common stock outstanding 28,073 $0.86 27,948 $0.63 Common share equivalents 676 (0.02) * * ------ ------ ------ ------ Weighted average common and common share equivalents 28,749 $0.84 27,948 $0.63 ====== ====== ====== ======
*Less than 3% dilutive 3 Inventories Inventories are comprised of the following:
June 30, December 31, 1995 1994 ------- ------- Finished products $120.0 $104.1 Raw materials, parts and assemblies 44.4 41.3 Work in-process 7.4 5.3 ------- ------- $171.8 $150.7 ======= =======
4 Investments In May 1995, the Company agreed to acquire Genomyx Corporation of Foster City, California. Genomyx is a developer and manufacturer of advanced DNA sequencing products and is expected to complement the Company's biotechnology business. The acquisition, which is not material to the Company, will be accounted for as a step-acquisition. In March 1995, the Company formed a marketing and service alliance with BioSepra Inc. (BioSepra), a biochromatography systems manufacturer, to offer systems for high speed, high resolution separation of biomolecules. The Company paid $3.0 for the exclusive rights to market and sell certain of BioSepra's products. Also in March 1995, the Company made a $5.0 investment in Sepracor Inc. (Sepracor), receiving exchangeable preferred stock and certain rights in regard to the disposition of Sepracor's shares of its subsidiary, BioSepra. 5 Change 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 and a net expense of $5.1 (net of tax benefit of $3.0) as the cumulative effect of the accounting change. 6 Contingencies Environmental 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 is obligated to contribute to any resolution of that action pursuant to its 1990 settlement agreement with the original purchaser. During 1994 the County formally acknowledged completion of remediation of a major portion of the soil, although there remains some areas of soil contamination that may require further remediation. The Company continues to operate a groundwater treatment system at the property and expects to do so for the foreseeable future. The Company believes it has established adequate reserves to complete the remediation of any remaining soil contamination, operation and maintenance of the groundwater treatment system and any necessary additional groundwater investigations. In September 1994, one of the tenants of the apartment houses built on the above-mentioned property filed a lawsuit against the original purchaser and a number of other defendants, not including the Company. The lawsuit alleges damages caused by the pollution of the property. Although the Company is not a named defendant at this time, the Company is obligated to contribute to any resolution of this lawsuit. 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 and 1994 lawsuits, 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 (Dollars in millions, except per share amounts) Operations Sales for the second quarter and six month period ended June 30, 1995 were $230.6 and $435.6, an increase of $8.4 and $14.8 as compared with the same periods from the prior year. Excluding the impact of changes in foreign currency exchange rates, second quarter sales remained comparable to the same period in 1994 and the six months reported sales were higher by about $1.0 compared to last year. Sales for the North American diagnostic and bioresearch business increased 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. The weakness in the international markets, particularly in Europe, is expected to continue. Operating income for the second quarter and six months ended June 30, 1995 before restructuring charges were $26.8 and $47.3, representing an increase of 8% and 9% over the same periods in 1994. Cost of sales for the second quarter and six months increased over the same periods in the prior year, but remained constant as a percent of sales. Marketing, general and administrative expenses in the second quarter and first six months of 1995 increased, compared to the same period last year, primarily as a result of foreign currency fluctuations. Research and development expenses were comparable to the second quarter and first six months of last year. After giving effect to its 1995 restructuring charges, the Company reported operating income of $23.4 and $40.8 for the second quarter and six months ended June 30, 1995. The reorganization and restructuring plan announced in the fourth quarter of 1993 has resulted in year-to-date 1995 savings of about $22 which are mainly attributable to the reduction of greater than 1,100 personnel from 1993. The Company anticipates savings from the restructuring program to be $45 in 1995, but not incremental to earnings due to certain transition costs, general salary and cost increases, as well as fluctuating foreign currencies. Nonoperating expenses decreased by $1.3 for the second quarter and $1.8 for the first six months compared to prior year. Earnings before income taxes for the second quarter and first six months compared to the same period of the prior year, excluding the restructuring charge, increased by $3.2 and $5.7. Including the restructuring charge, 1995 earnings before taxes were $20.9 for the quarter and $36.5 for six months. The effective tax rate decreased to 34% from 35% in the prior year as a result of increased income in lower tax rate jurisdictions. Net earnings for the second quarter and first six months of 1995 before restructuring charges and change in accounting principles increased to $16.0 and $28.4 or $0.56 and $0.99 per share ($0.57 and $1.01 per share before the dilutive effect of common share equivalents), compared to $13.7 and $24.3, or $0.49 and $0.87 per share for the prior year. 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 after tax charge of $5.1 in the first quarter of 1994. Net earnings for the second quarter and first six months of 1995 were $13.8 and $24.1, or $0.48 and $0.84 per share ($0.49 and $0.86 per share before the dilutive effect of common share equivalents) compared to $13.0 and $17.7, or $0.46 and $0.63 per share in 1994. The following tables summarize the impact of the dilutive effect of common share equivalents, restructuring charges and the cumulative effect of change in accounting principles on net earnings and earnings per share.
Quarter Ended June 30, 1995 1994 ---------------------- --------------------- (Shares in thousands) Per Per Shares Amt Share Shares Amt Share ------ ----- ------ ------ ----- ------ Net earnings before restructuring charge and cumulative effect of change in accounting principles 28,064 $16.0 $0.57 27,977 $13.7 $0.49 Common share equivalents 610 - (0.01) * - - ------ ----- ------ ------ ----- ------ Net earnings before restructuring charge and cumulative effect of change in accounting principles 28,674 16.0 0.56 27,977 13.7 0.49 Restructuring charge, net of tax benefit 28,674 (2.2) (0.08) 27,977 (0.7) (0.03) Cumulative effect of change in accounting principles 28,674 - - 27,977 - - ----- ------ ----- ------ Net earnings 28,674 $13.8 $0.48 27,977 $13.0 $0.46 ====== ===== ====== ====== ===== ======
Six Months Ended June 30, 1995 1994 ------------------------ --------------------- (Shares in thousands) Per Per Shares Amt Share Shares Amt Share ------ ----- ------ ------ ----- ------ Net earnings before restructuring charge and cumulative effect of change in accounting principles 28,073 $28.4 $1.01 27,948 $24.3 $0.87 Common share equivalents 676 - (0.02) * - - ------ ----- ------ ------ ----- ------ Net earnings before restructuring charge and cumulative effect of change in accounting principles 28,749 28.4 0.99 27,948 24.3 0.87 Restructuring charge, net of tax benefit 28,749 (4.3) (0.15) 27,948 (1.5) (0.06) Cumulative effect of change in accounting principles 28,749 - - 27,948 (5.1) (0.18) ----- ------ ------ ----- ------ Net earnings 28,749 $24.1 $0.84 27,948 $17.7 $0.63 ====== ===== ====== ====== ===== ======
* Less than 3% dilutive Financial Condition For the six months ended June 30, 1995, the Company had negative cash flow from operating and investing activities of $50.6. This represents a decrease of $85.1 from the same period in 1994. Contributing to the decrease was increased pension plan funding, incentive compensation payments and investments compared to 1994. The ratio of debt to capitalization at June 30, 1995 was 31.9% compared to 29.0% at December 31, 1994. The ratio of current assets to current liabilities at June 30, 1995 of 1.9 is comparable to December 31, 1994. The Company believes it has adequate financial resources to meet expected cash flow requirements for the foreseeable future. On June 1, 1995, the Company paid a quarterly cash dividend of $0.11 per share of common stock for a total of $3.1. PART II OTHER INFORMATION Item 1. Legal Proceedings As previously reported, the Company is obligated to contribute to any resolution of a lawsuit filed by Forest City Properties Corporation and FC Irvine, Inc. (collectively, "Forest City") against The Prudential Insurance Company of America ("Prudential") in 1991 concerning property in Irvine, California formerly owned by the Company. The Company's obligation arises from its 1990 settlement of earlier litigation between the Company and Prudential concerning the same property. The trial of this matter began before a jury in Los Angeles County Superior Court, California on May 10, 1995. The case was submitted to the jury on July 13, 1995. A verdict has not yet been rendered. Item 2. Changes In Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security-Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K a) Exhibits 10.1 The Company's Executive Incentive Plan, adopted by the Company in 1995. 10.2 Amendment to the December 1, 1993 Agreement Regarding Retriement Benefits of Arthur A. Torrellas, dated as of May 30, 1995, between the Company and Arthur A. Torrellas. 11. Statement re Computation of Per Share Earnings: This information is set forth in Note 2 Earnings Per Share of the Condensed Consolidated Financial Statements included in Part I herein. 15. Independent Accountants' Review Report, July 14, 1995 27. Financial Data Schedule b) Reports on Form 8-K None. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BECKMAN INSTRUMENTS, INC. (Registrant) Date: July 20, 1995 by WILLIAM H. MAY William H. May Vice President, General Counsel and Secretary Date: July 18, 1995 by D. K. WILSON Dennis K. Wilson Vice President, Finance and Chief Financial Officer EXHIBIT INDEX FORM 10-Q, SECOND QUARTER, 1995 Exhibit Number Description - ------- ----------- 10.1 The Company's Executive Incentive Plan, adopted by the Company in 1995. 10.2 Amendment to the December 1, 1993 Agreement Regarding Retriement Benefits of Arthur A. Torrellas, dated as of May 30, 1995, between the Company and Arthur A. Torrellas. 11. Statement re Computation of Per Share Earnings: This information is set forth in Note 2 Earnings Per Share of the Condensed Consolidated Financial Statements included in Part I herein. 15. Independent Accountants' Review Report, July 14, 1995 27. Financial Data Schedule EX-15 2 INDEPENDENT ACCOUNTANT'S REVIEW REPORT Exhibit 15 KPMG Peat Marwick LLP Certified Public Accountants Orange County Office Center Tower 650 Town Center Drive Costa Mesa, CA 92626 Independent Accountants' Review Report The Stockholders and Board of Directors Beckman Instruments, Inc: We have reviewed the condensed consolidated balance sheet of Beckman Instruments, Inc. and subsidiaries as of June 30, 1995, and the related condensed consolidated statements of earnings and cash flows for the three- month and six-month periods ended June 30, 1995 and 1994. These condensed consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Beckman Instruments, Inc. and subsidiaries as of December 31, 1994, and the related consolidated statements of operations and cash flows for the year then ended (not presented herein); and in our report dated January 19, 1995, 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, 1994, is fairly presented, in all material respects, in relation to the consolidated balance sheet from which it has been derived. As discussed in Note 5 to the condensed consolidated financial statements, the Company changed its method of accounting for postemployment benefits in 1994. (KPMG Peat Marwick LLP) Orange County, California July 14, 1995 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheet and the Condensed Consolidated Statement of Earnings and is qualified in its entirety by reference to such financial statements. 1,000,000 6-MOS DEC-31-1995 JUN-30-1995 15 7 283 9 172 522 614 368 867 276 130 3 0 0 341 867 361 436 156 205 0 0 6 36 12 24 0 0 0 24 .84 .84
EX-10 4 EXECUTIVE INCENTIVE PLAN Exhibit 10.1 BECKMAN FY 95 EXECUTIVE INCENTIVE PLAN CLASSES 12 AND 13 Background Key executives have two separate incentive opportunities with different time horizons and different performance measures. For the annual incentive opportunity, the focus will be on annual results in terms of Earnings Per Share Achievement as a Percent of Targeted EPS, with sales revenue and an individual performance multiplier as additional elements in determining the final incentive award. The second time horizon of incentive opportunity will be based on company "Economic Value Added" for a two-year cycle under a long-term incentive plan. ANNUAL (EPS) INCENTIVE Earnings per share continues to be a critical factor in the company's performance and valuation by the financial community. Because of its importance, the level of achievement of EPS as a percent of target is the fundamental measurement for annual incentive opportunity. The basic award guidelines for the degree of achievement are as follows: EPS Achievement Award Performance Percent of Target* of Base Earnings _____________________________________________ 104% 27.7% 102% 25.4% 100% 23.1% 98% 17.3% 96% 11.6% 94% 5.8% below 94% 0% A pro rata percentage is calculated for achievement between the above award levels. *Before special charges Sales Revenue Modifier The award percentage for EPS achievement will be increased by 10% if EPS is at target or higher for FY 95 and the company's sales goal is met or exceeded. Individual Incentive Award Determination The final step in the calculation of individual incentive awards is the application of an individual performance multiplier to the award percentage for EPS achievement after any adjustment for sales revenue. This multiplier is derived from the "overall rating" for Performance Expectations in the EXCEL process and is expressed as a percentage to be applied to the EPS award guideline. Base earnings for the period of incentive eligibility (eligible earnings) are then multiplied by the final award percentage to determine the amount of incentive award. Overall Performance Rating Performance Multiplier to be for Performance Expectations Applied to Award Guideline ______________________________________________________________ Exceptional 130% - 150% High 100% - 120% Good 50% - 90% Improved Performance Required 0 Example of How the Annual Incentive Award is Calculated Assume that EPS achievement is 102% of target before special charges and the company sales revenue goal is met or exceeded. In this example, the total amount award percentage before applying the individual performance multiplier is 27.9% (25.4% + 10% x 25.4% rounded). The 27.9% award will be increased to a 33.5% individual incentive award with an individual performance multiplier of 120%. Conversely, an individual performance modifier of 80% would reduce the 27.9% award to a 22.3% final EPS annual incentive award. Administration 1. All financial results will be measured on an "as reported" basis with no adjustment for any effect of currency fluctuations. 2. Qualifying events that may cause a modification to the original EPS award level milestones must be: 1) unanticipated; 2) non-recurring; 3) material in nature; and 4) not part of normal business operations. 3. To be eligible for an annual EPS incentive award, a participant must be in active pay status at the end of the measurement period. Partial payments will be made for retirees, as defined by the company's pension plan, who leave before the end of the fiscal year. BECKMAN TWO-YEAR ECONOMIC VALUE ADDED (EVA) INCENTIVE PLAN CYCLE THREE BEGINNING FY 95 CLASSES 12 AND 13 Background The two year (long-term plan) incentive is based upon maintaining and improving the base amount of total company EVA through a two-year measurement cycle. EVA benchmarks for incentive eligibility will be established for each two-year cycle at its beginning and successive cycles overlap by one year. For example, the second year of cycle two, fiscal year 1995, will be the first year of cycle three. EVA Definition EVA is defined as the net operating profit after-tax (excluding restructuring charges), less a cost of capital charge on a thirteen-month average capital base (excluding restructuring reserves). This performance measurement reflects the relationship between profits generated by the company and the cost of the balance sheet investment. Certain events may trigger a reassessment of the EVA targets for incentive eligibility. EVA Award Eligibility The EVA target for cycle three, ending December 31, 1996, is based upon the 1994-1998 Strategic Plan. EVA is planned to increase from the actual amount at the end of 1994, which is the threshold for award eligibility, to the target level as operating and asset management objectives are achieved. For Class 12 and 13 executives, this will generate a 10.0% of base earnings award. Gradations in performance above and below the targeted EVA are depicted below. EVA CYCLE THREE (1995 & 1996) EVA Achievement Final EVA Percent of Target Award __________________________________________________ less than 42% 0.0% 42% 5.0% 100% 10.0% 139% 20.0% greater than 139% 20.0% A pro rata incentive award percentage is calculated for EVA improvement between the specific EVA achievement levels listed. Individual Eligible Earnings for EVA Award Although the EVA measurement period is two years, the actual award calculation will be based upon an individual participant's annualized base earnings at the end of the second year of the two-year cycle. One year of eligible earnings is applied because of the overlapping nature of the two- year cycles. Deferred Stock Award Alternative Payment of the earned incentive will be made in cash, subject to standard withholding taxes and deductions, or a participant may elect to be paid in restricted stock. Details of the restricted stock payment alternative are described in the insert to this document. Administration 1. All financial results will be measured on an "as reported" basis with no adjustment for any effect of currency fluctuations. 2. Qualifying events that may cause adjustments to original approved EVA targets must be: 1) unanticipated; 2) non-recurring; 3) material in nature; and 4) not part of normal business operations. 3. To be eligible for a full EVA incentive award, a participant must be in active pay status at the end of the two-year measurement period. Partial payments will be made in cash for retirees, as defined by the company's pension plan, who do not elect payment in restricted stock and leave before completion of the EVA cycle. The acronym EVA for economic value added is attributed to Stern Steward & Co. BECKMAN TWO-YEAR ECONOMIC VALUE ADDED (EVA) INCENTIVE PLAN - CYCLE THREE RESTRICTED STOCK AWARD ALTERNATIVE The Organization and Compensation Committee of the Company's Board of Directors intends to accept requests to receive restricted stock in lieu of a cash payment of any award made under the Cycle Three EVA Incentive Plan. Restricted stock awards are made under the Incentive Compensation Plan of 1990, as amended, and the following terms: 1) Elections to receive restricted stock in lieu of cash must be made for the full amount of the award under this EVA Incentive Plan. The election must be made no later than August 1, 1996. 2) To encourage stock ownership, the amount of the award will be increased by a 33 1/3% premium and then converted into whole shares of Beckman common stock based on the closing price of Beckman common stock on the last trading day of the two-year EVA cycle. No fractional shares will be granted and any remainder which would have resulted in a fractional share will instead be paid in cash on the regular incentive payment date. 3) Restricted Stock will be issued pursuant to an agreement, which will provide that such stock cannot be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of for a twenty-four (24) month period beginning on the date of issuance (which will be the EVA incentive payment date established by the Company). However, these restrictions will lapse earlier in the event of termination due to death, total disability, or Normal or Late retirement (but not Early Retirement) under the Beckman Pension Plan. All shares awarded will be forfeited in the event of a voluntary termination due to Early Retirement during the twenty-four month period; provided, however, that where there has been a prior Section 83(b) election (and payment of applicable taxes) by an Early Retirement eligible employee, there will be no forfeiture of shares upon termination but, the restrictions on transferability will remain for the balance of the 24-month period. A voluntary termination causes forfeiture of the shares even if a prior Section 83(b) election was made (and applicable taxes were paid). In the event of an involuntary termination, for cause or otherwise, no shares will be forfeited but the restrictions on transferability will remain in effect for the full 24-month period from the date of issuance of the Restricted Stock. Under current tax law, compensation income is not recognized until the earliest to occur of (i) the last day of the full 24-month period beginning on the date of issuance of the Restricted Stock, (ii) the date of occurrence of death or termination due to total disability, the date of eligibility for Normal Retirement (but not Early Retirement) under the Company's Pension Plan, or the date of issuance of Restricted Stock if eligible for Normal or Late Retirement under the Company's Pension Plan on that date, (iii) the date of any other termination of employment, if forfeiture does not occur as a result thereof, or (iv) the date of issuance of Restricted Stock, if an Section 83(b) election is made and applicable taxes have been paid as a result thereof. The amount of income to be recognized by you will be equal to the closing price of Beckman common stock on the date of the applicable event described above, times the number of Beckman common shares awarded to you under this alternative. All applicable payroll taxes are due at that time also. IMPORTANT The Restricted Stock Agreement and Election Form will be distributed for your consideration closer to the election deadline. Information on the effect on certain of Beckman's other benefit plans and additional tax information. Certain reporting requirements under Section 16(a) of the Securities Exchange Act of 1934 apply. Also, participants are advised to consult with counsel in advance of making any election to determine potential Section 16(b) issues regarding the purchase and sale of the Company's common stock. BECKMAN FY 95 EXECUTIVE INCENTIVE PLAN CLASSES 14 THROUGH 17 Background Key executives have two separate incentive opportunities with different time horizons and different performance measures. For the annual incentive opportunity, the focus will be on annual results in terms of company Earnings Per Share Achievement as a Percent of Targeted EPS, with sales revenue and an individual performance multiplier as additional elements in determining the final incentive award. The second time horizon of incentive opportunity will be based on company "Economic Value Added" for a two-year cycle under a long-term incentive plan. ANNUAL (EPS) INCENTIVE Earnings per share continues to be a critical factor in the company's performance and valuation by the financial community. Because of its importance, the level of achievement of EPS as a percent of target is the fundamental measurement for the annual incentive opportunity. The basic award guidelines for the degree of achievement are as follows: EPS Achievement Award Percentage Percent of Target* of Base Earnings ______________________________________________ 104% 35.3% 102% 32.3% 100% 29.4% 98% 22.1% 96% 14.7% 94% 7.4% below 94% 0% A pro rata percentage is calculated for achievement between the above award levels. *Before special charges Sales Revenue Modifier The award percentage for EPS achievement will be increased by 10% if EPS is at target or higher for FY 95 and the company's sales goal is met or exceeded. Individual Incentive Award Determination The final step in the calculation of individual incentive awards is the application of an individual performance multiplier to the award percentage for EPS achievement after any adjustment for sales revenue. This multiplier is derived from the "overall rating" for Performance Expectations in the EXCEL process and is expressed as a percentage to be applied to the EPS award guideline. Base earnings for the period of incentive eligibility (eligible earnings) are then multiplied by the final award percentage to determine the amount of incentive award. Overall Performance Rating Performance Multiplier to be for Performance Expectations Applied to Award Guideline _________________________________________________________________ Exceptional 130% - 150% High 100% - 120% Good 50% - 90% Improved Performance Required 0 Example of How the Annual Incentive Award is Calculated Assume that EPS achievement is 102% of target before special charges and the company sales revenue goal is met or exceeded. In this example, the total annual award percentage before applying the individual performance multiplier is 35.5% (32.3% + 10% x 32.3% rounded). The 35.5% award will be increased to a 42.6% individual incentive award with an individual performance multiplier of 120%. Conversely, an individual performance modifier of 80% would reduce the 35.5% award to a 28.4% final EPS annual incentive award. Administration 1. All financial results will be measured on an "as reported" basis with no adjustment for any effect of currency fluctuations. 2. Qualifying events that may cause a modification to the original approved EPS award level milestones must be: 1) unanticipated; 2) non-recurring; 3) material in nature; and 4) not part of normal business operations. 3. To be eligible for an annual EPS incentive award, a participant must be in active pay status at the end of the measurement period. Partial payments will be made for retirees, as defined by the company's pension plan, who leave before the end of the fiscal year. BECKMAN TWO-YEAR ECONOMIC VALUE ADDED (EVA) INCENTIVE PLAN CYCLE THREE BEGINNING FY 95 CLASSES 14 THROUGH 17 Background The two year (long-term plan) incentive is based upon maintaining and improving the base amount of total company EVA through a two-year measurement cycle. EVA benchmarks for incentive eligibility will be established for each two-year cycle at its beginning and successive cycles overlap by one year. For example, the second year of cycle two, fiscal year 1995, will be the first year of cycle three. EVA Definition EVA is defined as the net operating profit after-tax (excluding restructuring charges), less a cost of capital charge on a thirteen-month average capital base (excluding restructuring reserves). This performance measurement reflects the relationship between profits generated by the company and the cost of the balance sheet investment. Certain events may trigger a reassessment of the EVA targets for incentive eligibility. EVA Award Eligibility The EVA target for the cycle three, ending December 31, 1996, is based upon the 1994-1998 Strategic Plan. EVA is planned to increase from the actual amount at the end of 1994, which is the threshold for award eligibility, to the target level as operating and asset management objectives are achieved. For Class 14-17 executives, this will generate a 12.6% of base earnings award. Gradations in performance above and below the targeted EVA are depicted below. EVA CYCLE THREE (1995 & 1996) EVA Achievement Final EVA Percent of Target Award ____________________________________ less than 42% 0.0% 42% 6.3% 100% 12.6% 139% 25.2% greater than 139% 25.2% A pro rata incentive award percentage is calculated for EVA improvement between the specific EVA achievement levels listed. Individual Eligible Earnings for EVA Award Although the EVA measurement period is two years, the actual award calculation will be based upon an individual participant's annualized base earnings at the end of the second year of the two-year cycle. One year of eligible earnings is applied because of the overlapping nature of the two- year cycles. Deferred Stock Award Alternative Payment of the earned incentive will be made in cash, subject to standard withholding taxes and deductions, or a participant may elect to be paid in restricted stock. Details of the restricted stock payment alternative are described in the insert to this document. Administration 1. All financial results will be measured on an "as reported" basis with no adjustment for any effect of currency fluctuations. 2. Qualifying events that may cause adjustments to original approved EVA targets must be: 1) unanticipated; 2) non-recurring; 3) material in nature; and 4) not part of normal business operations. 3. To be eligible for an EVA incentive award, a participant must be in active pay status at the end of the two-year measurement period. Partial payments will be made in cash for retirees, as defined by the company's pension plan, who do not elect payment in restricted stock, and leave before completion of the EVA cycle. The acronym EVA for economic value added is attributed to Stern Steward & Co. BECKMAN TWO-YEAR ECONOMIC VALUE ADDED (EVA) INCENTIVE PLAN - CYCLE THREE RESTRICTED STOCK AWARD ALTERNATIVE The Organization and Compensation Committee of the Company's Board of Directors intends to accept requests to receive restricted stock in lieu of a cash payment of any award made under the Cycle Three EVA Incentive Plan. Restricted stock awards are made under the Incentive Compensation Plan of 1990, as amended, and the following terms: 1) Elections to receive restricted stock in lieu of cash must be made for the full amount of the award under this EVA Incentive Plan. The election must be made no later than August 1, 1996. 2) To encourage stock ownership, the amount of the award will be increased by a 33 1/3% premium and then converted into whole shares of Beckman common stock based on the closing price of Beckman common stock on the last trading day of the two-year EVA cycle. No fractional shares will be granted and any remainder which would have resulted in a fractional share will instead be paid in cash on the regular incentive payment date. 3) Restricted Stock will be issued pursuant to an agreement, which will provide that such stock cannot be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of for a twenty-four (24) month period beginning on the date of issuance (which will be the EVA incentive payment date established by the Company). However, these restrictions will lapse earlier in the event of termination due to death, total disability, or Normal or Late retirement (but not Early Retirement) under the Beckman Pension Plan. All shares awarded will be forfeited in the event of a voluntary termination due to Early Retirement during the twenty-four month period; provided, however, that where there has been a prior Section 83(b) election (and payment of applicable taxes) by an Early Retirement eligible employee, there will be no forfeiture of shares upon termination but, the restrictions on transferability will remain for the balance of the 24-month period. A voluntary termination causes forfeiture of the shares even if a prior Section 83(b) election was made (and applicable taxes were paid). In the event of an involuntary termination, for cause or otherwise, no shares will be forfeited but the restrictions on transferability will remain in effect for the full 24-month period from the date of issuance of the Restricted Stock. Under current tax law, compensation income is not recognized until the earliest to occur of (i) the last day of the full 24-month period beginning on the date of issuance of the Restricted Stock, (ii) the date of occurrence of death or termination due to total disability, the date of eligibility for Normal Retirement (but not Early Retirement) under the Company's Pension Plan, or the date of issuance of Restricted Stock if eligible for Normal or Late Retirement under the Company's Pension Plan on that date, (iii) the date of any other termination of employment, if forfeiture does not occur as a result thereof, or (iv) the date of issuance of Restricted Stock if an Section 83(b) election is made and applicable taxes have been paid as a result thereof. The amount of income to be recognized by you will be equal to the closing price of Beckman common stock on the date of the applicable event described above, times the number of Beckman common shares awarded to you under this alternative. All applicable payroll taxes are due at that time also. IMPORTANT The Restricted Stock Agreement and Election Form will be distributed for your consideration closer to the election deadline. Information on the effect on certain of Beckman's other benefit plans and additional tax information. Certain reporting requirements under Section 16(a) of the Securities Exchange Act of 1934 apply. Also, participants are advised to consult with counsel in advance of making any election to determine potential Section 16(b) issues regarding the purchase and sale of the Company's common stock. BECKMAN FY '95 OFFICER EXECUTIVE INCENTIVE PLAN TREASURER AND DIRECTOR, CORPORATE BUSINESS DEVELOPMENT AND LICENSING Bonus Eligibility The key elements in determining incentive awards are: 1) EPS Achievement 2) Sales Revenue, and 3) Individual overall EXCEL rating EPS Achievement Earnings per share continues to be a critical factor in the company's performance and valuation by the financial community. Because of its importance, the level of achievement of EPS as a percent of target is the fundamental measurement for the annual incentive opportunity. The basic award guidelines for the degree of achievement are as follows: EPS Achievement Award Percentage Percent of Target* of Base Earnings ______________________________________________ 104% 30.0% 102% 22.0% 100% 14.0% 98% 10.5% 96% 7.0% 94% 3.5% below 94% 0% A pro rata incentive award percentage is calculated for gradations between achievement levels. *Before special charges. Sales Revenue Modifier The award percentage for EPS achievement will be increased by 10% if EPS is at target or higher for FY '95 and the company's sales goal is met or exceeded. Individual Incentive Award Determination The final step in the calculation of individual incentive awards is the application of an individual performance multiplier to the award percentage for EPS achievement after any adjustment for sales revenue. EXCEL descriptions of overall performance levels will be the basis for determining individual performance multipliers. The performance multiplier, expressed as a percentage, is applied to the EPS award guideline. Base earnings for the period of incentive eligibility (eligible earnings) are then multiplied by the final award percentage to determine the amount of incentive award. Performance Multiplier to be Overall Performance Applied to Award Guideline ___________________________________________________________ Exceptional 125% - 150% High 100% - 125% Good 75% - 100% Improved Performance Required 0% Example of How the Annual Incentive Award is Calculated Assume that EPS achievement is 100% of target (before special charges) and the company sales revenue goal is met or exceeded. In this example, the total annual award percentage before applying the individual performance multiplier is 15.4% (14.0% + 10% x 14.0%). The 15.4% award will be increased to a 18.5% individual incentive award with an individual performance multiplier of 120%. Conversely, an individual performance modifier of 80% would reduce the 15.4% award to a 12.3% final EPS incentive award. Administration 1. All financial results will be measured on an "as reported" basis with no adjustment for any effect of currency fluctuations. 2. Qualifying events that may cause a modification to the original EPS award level milestones must be: 1) unanticipated; 2) non-recurring; 3) material in nature; and 4) not part of normal business operations. 3. To be eligible for an incentive award, a participant must be in active pay status at the end of the measurement period. Exceptions may be approved on a pro rata basis for participants who retire in midyear or other special circumstances. EXECUTIVE INCENTIVE AWARD GUIDELINES PRESIDENT AND CHIEF OPERATING OFFICER FY 95 ANNUAL (EPS) INCENTIVE EPS Achievement Percent of Target* Award Percentage ____________________________________________ 104% 46.2% 102% 42.4% 100% 38.5% 98% 28.9% 96% 19.3% 94% 9.6% below 94% 0.0% A pro rata incentive award percentage is calculated for gradations between achievement levels. *Before special charges. EVA CYCLE TWO (1994 & 1995) EVA CYCLE THREE (1995 & 1996) Absolute EVA Final EVA EVA Achievement Final EVA ($ million) Award Percent of Target Award ______________________________ _____________________________ less than $0.6 0.0% less than 42% 0.0% $0.6 8.25% 42% 8.25% $20.6 16.5% 100% 16.5% $30.0 33.0% 139% 33.0% greater than $30.0 33.0% greater than 139% 33.0% A pro rata incentive award is calculated for EVA improvement between the specific EVA achievement levels listed. EXECUTIVE INCENTIVE AWARD GUIDELINES CHIEF EXECUTIVE OFFICER FY 95 ANNUAL INCENTIVE EPS Achievement Percent of Target* Award Percentage _______________________________________________ 104% 50.4% 102% 46.2% 100% 42.0% 98% 31.5% 96% 21.0% 94% 10.5% below 94% 0.0% A pro rata incentive award percentage is calculated for gradations between achievement levels. *Before special charges. EVA CYCLE TWO (1994 & 1995) EVA CYCLE THREE (1995 & 1996) Absolute EVA Final EVA EVA Achievement Final EVA ($ million) Award Percent of Target Award _____________________________ _____________________________ less than $0.6 0.0% less than 42% 0.0% $0.6 9.0% 42% 9.0% $20.6 18.0% 100% 18.0% $30.0 36.0% 139% 36.0% greater than $30.0 36.0% greater than 139% 36.0% A pro rata incentive award is calculated for EVA improvement between the specific EVA achievement levels listed. EX-10 5 TORRELLAS AMENDEMENT Exhibit 10.2 AMENDMENT TO THE DECEMBER 1, 1993 AGREEMENT REGARDING RETIREMENT BENEFITS OF ARTHUR A. TORRELLAS WHEREAS, Arthur A. Torrellas (Executive") has been employed by Beckman Instruments, Inc. ("Company") for approximately 17 years; and WHEREAS, the Executive and the Company wish to amend the Agreement Regarding Retirement Benefits of Arthur A. Torrellas adopted as of December 1, 1993 and executed on December 20, 1993 ("the Agreement") so that the Executive will continue to remain employed by and provide unique worldwide field operations experience to the Company beyond October 31, 1995. NOW, THEREFORE, this Amendment to the Agreement between the Executive and the Company is hereby adopted as of May 30, 1995 and amends the Agreement as follows: 1. All reference to October 31, 1995 in the Agreement is changed to December 31, 1996 except for paragraph 2 entitled Voluntary Termination Before or After October 31, 1995 which is deleted and the following inserted. 2. Voluntary Termination. The increase referred to in paragraph 1 does not apply if Executive, before October 31, 1995 or after December 31, 1996, voluntarily terminates employment (retires). The benefit payable under such circumstances would be the benefit normally payable from the Pension Plan and the Supplemental Plan. If the Executive voluntarily terminates employment (retires) after October 31, 1995 but before January 1, 1997, the Executive would receive the increase referred to in paragraph 1. 2. All other terms and provisions of the Agreement shall remain the same. This Amendment to the Agreement is entered into as of May 30, 1995. EXECUTIVE By: ARTHUR A. TORRELLAS Arthur A. Torrellas COMPANY BECKMAN INSTRUMENTS, INC. By: JOHN P. WAREHAM John P. Wareham Its: President and Chief Operating Officer -----END PRIVACY-ENHANCED MESSAGE-----