-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FCGaRCoHPlvPc7M7czVak4sdc+oWOWIMlrN06clCe/eYByDmv1MueardkxFUs2PE qf1TdawQZWJt1us9BB7p4A== 0000840467-97-000008.txt : 19970428 0000840467-97-000008.hdr.sgml : 19970428 ACCESSION NUMBER: 0000840467-97-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970425 SROS: NYSE 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: 97587148 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 March 31, 1997 OR ( )Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ Commission File Number 001-10109 BECKMAN INSTRUMENTS, INC. (Exact name of registrant as specified in its charter) Delaware 95-104-0600 (State of Incorporation) (I.R.S. Employer Identification No.) 2500 Harbor Boulevard, Fullerton, California 92834 (Address of principal executive offices) (Zip Code) (714) 871-4848 (Registrant's telephone number including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ). APPLICABLE ONLY TO CORPORATE ISSUERS: Outstanding shares of common stock, $0.10 par value, as of April 15, 1997: 28,610,501 shares. PART I FINANCIAL INFORMATION Item 1. Financial Statements Page Condensed Consolidated Statements of Earnings for the three month periods ended March 31, 1997 and 1996 3 Condensed Consolidated Balance Sheets as of March 31, 1997 and December 31, 1996 4 Condensed Consolidated Statements of Cash Flows for the three month periods ended March 31, 1997 and 1996 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of 8 Financial Condition and Results of Operations PART II OTHER INFORMATION Item 1. Legal Proceedings 9 Item 2. Changes In Securities 9 Item 3. Defaults Upon Senior Securities 9 Item 4. Submission of Matters to a Vote of 9 Security-Holders Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10 BECKMAN INSTRUMENTS, INC. FIRST QUARTER REPORT CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in Millions, Except Amounts Per Share) Unaudited
Three Months Ended March 31, 1997 1996 ---- ---- Sales $231.9 $224.8 Operating costs and expenses: Cost of sales 109.6 104.9 Selling, general and administrative 74.8 73.7 Research and development 24.0 24.7 ------ ------ 208.4 203.3 ------ ------ Operating income 23.5 21.5 Nonoperating income(expense): Interest income 1.9 1.3 Interest expense (2.8) (3.1) Other, net (0.3) 0.8 ------ ------ (1.2) (1.0) ------ ------ Earnings before income taxes 22.3 20.5 Income tax provision 6.7 6.8 ------ ------ Net earnings $ 15.6 $ 13.7 ====== ====== Weighted average common shares and common share equivalents-(in thousands) 28,861 29,259 Net earnings per share $ 0.54 $ 0.47 Dividends declared per share $ 0.15 $ 0.13
See accompanying notes to condensed consolidated financial statements. BECKMAN INSTRUMENTS, INC. FIRST QUARTER REPORT CONSOLIDATED BALANCE SHEETS (Dollars in Millions) Unaudited
March 31, December 31, 1997 1996 ---- ---- Assets Current assets: Cash and equivalents $ 39.7 $ 34.6 Short-term investments 4.2 8.1 Trade receivables and other 284.5 309.5 Inventories 199.1 190.4 Deferred income taxes 21.6 21.4 Other current assets 15.5 15.4 ------ ------ Total current assets 564.6 579.4 Property, plant and equipment, net 255.4 263.5 Deferred income taxes 50.5 50.8 Other assets 66.6 66.4 ------ ------ Total assets $937.1 $960.1 ====== ====== Liabilities and Stockholders' Equity Current liabilities: Notes payable $ 25.3 $ 19.4 Accounts payable and accrued expenses 183.5 208.2 Income taxes 66.7 51.7 ------ ------ Total current liabilities 275.5 279.3 Long-term debt, less current maturities 176.1 176.6 Other liabilities 94.8 105.3 ------ ------ Total liabilities 546.4 561.2 ------ ------ Stockholders' equity 390.7 398.9 ------ ------ Total liabilities and stockholders' equity $937.1 $960.1 ====== ======
See accompanying notes to condensed consolidated financial statements. BECKMAN INSTRUMENTS, INC. FIRST QUARTER REPORT CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) Unaudited
Three Months Ended March 31, 1997 1996 ---- ---- Cash Flows from Operating Activities Net earnings $ 15.6 $ 13.7 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation and amortization 21.4 20.7 Net deferred income taxes (0.4) (0.1) Changes in assets and liabilities: Trade receivables and other 19.1 11.0 Inventories (11.0) (29.8) Accounts payable and accrued expenses (22.1) 15.2 Restructuring reserve (0.5) (2.5) Accrued income taxes 15.1 1.6 Other (11.5) (18.4) ------ ------ Net cash provided by operating activities 25.7 11.4 ------ ------ Cash Flows from Investing Activities Additions to property, plant and equipment (19.4) (20.3) Net disposals of property, plant and equipment 3.5 3.5 Sales of short-term investments 3.9 0.2 Purchases of long-term investments (0.5) - ------ ------ Net cash used by investing activities (12.5) (16.6) ------ ------ Cash Flows from Financing Activities Dividends to stockholders (4.2) (3.7) Proceeds from issuance of stock 3.7 4.5 Purchase of treasury stock (12.4) (7.7) Notes payable borrowings, net 4.4 7.0 Long-term debt borrowings 0.1 9.3 ------ ------ Net cash provided (used) by financing activities (8.4) 9.4 ------ ------ Effect of exchange rates on cash and equivalents 0.3 (0.1) ------ ------ Increase in cash and equivalents 5.1 4.1 Cash and equivalents -- beginning of period 34.6 26.2 ------ ------ Cash and equivalents -- end of period $ 39.7 $ 30.3 ====== ====== Supplemental Disclosures of Cash Flow Information Cash paid during the period for: Interest $ 10.9 $ 2.4 Income taxes $ 3.8 $ 5.1 Noncash investing and financing activities: Purchase of equipment under capital lease obligation $ 2.5 $ 1.0
See accompanying notes to condensed consolidated financial statements. BECKMAN INSTRUMENTS, INC. First Quarter 1997 Report Notes To Condensed Consolidated Financial Statements (In Millions, Except Amounts Per Share) Unaudited 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 1996 which is on file with the Securities and Exchange Commission. The results of operations for the period ended March 31, 1997 are not necessarily indicative of the results to be expected for the year ending December 31, 1997. 2 Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3 Net Earnings Per Share Net earnings per share is computed including the effect of common share equivalents. Common share equivalents represent the dilutive effect of outstanding stock options. The following table summarizes the impact of the dilutive effect of common share equivalents on net earnings per share:
Three Months ended March 31, 1997 1996 ---- ---- Net Net Earnings Earnings Shares Per Share Shares Per Share ------ --------- ------ --------- Weighted average shares of common stock outstanding 27.9 $ 0.56 28.4 $ 0.48 Common share equivalents 1.0 (0.02) 0.9 (0.01) ---- ------ ---- ------ Weighted average common and common share equivalents 28.9 $ 0.54 29.3 $ 0.47 ==== ====== ==== ======
In February 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share." SFAS 128 simplifies the computation of earnings per share ("EPS") currently required in Accounting Principles Board (APB) Opinion No. 15, "Earnings Per Share," by replacing primary and fully diluted EPS with basic and diluted EPS. Under SFAS 128, basic EPS is calculated by dividing net earnings by the weighted-average common shares outstanding during the period. Diluted EPS reflects the potential dilution to basic EPS that could occur upon conversion or exercise of securities, options, or other such items, to common shares using the weighted- average fair value of the Company's common shares during the period. SFAS 128 is required to be adopted by the Company in its year end 1997 annual report. Had the Company been required to adopt SFAS 128 currently, the first quarter basic EPS for 1997 and 1996, respectively, would have been $0.56 and $0.48, and diluted EPS would have equaled the current and historically reported net (primary) earnings per share. 4 Inventories Inventories are comprised of the following: [CAPTION] March 31, December 31, 1997 1996 ---- ---- Finished products $122.2 $123.8 Raw materials, parts and assemblies 63.7 53.0 Work in-process 13.2 13.6 ------ ------ $199.1 $190.4 ====== ======
5 Investments In March 1997, the Company entered into an agreement to purchase an automated immunochemistry product line, including the related manufacturing facility, from Sanofi Diagnostics Pasteur, adding significantly to Beckman's diagnostic testing capability and complementing the Hybritech business acquired in 1996. Beckman will now have one of the broadest test menus available from a single supplier for hospitals and commercial laboratories. The acquisition, which is expected to close on April 30, 1997, also establishes an ongoing alliance in immunochemistry between Beckman and Sanofi Diagnostic Pasteur. The acquisition was for a purchase price not material to the Company and will be accounted for as a purchase. 6 Contingencies As previously reported, although not a named defendant, the Company is obligated to contribute to any resolution of a lawsuit filed by one of the previous owners and developers of property in Irvine, California formerly owned by the Company. The Company was recently informed that the lawsuit was settled and is currently disputing its portion of the settlement. The Company believes that any additional liability beyond that provided for will not have a material adverse effect on the Company's operations or financial position. In the first quarter of 1997, the Company was notified by the California Department of Toxic Substances Control that it, together with a large number of other companies, is a potentially responsible party (PRP) with respect to remediation of a hazardous waste landfill located in Kern County, California. It is not possible at this time to reasonably estimate the amount of loss, if any, related to this matter. The Company and its subsidiaries are involved in a number of lawsuits which the Company considers normal in view of its size and the nature of its business. The Company does not believe that any liability resulting from any such lawsuits, or the matters described above, will have a material adverse effect on its operations or financial position. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in millions, except per share amounts) Operations Sales growth of 3%, 5% in constant currency, over the first quarter of the prior year, resulted from increased market share, primarily in North America and international markets excluding Europe. Sales were unfavorably impacted in 1997 by 1% from the Company placing more instruments with customers using operating- type leases in 1997 versus sales-type leases in 1996. Revenues are recognized over the lease term for operating-type leases while being recognized immediately under sales-type leases. Gross profit as a percentage of sales decreased slightly due to a change in unfavorable foreign currency fluctuations and product mix. Operating income increased $2.0 over the comparable quarter in 1996 due to the company managing its operating costs to the 1996 level while continuing to grow sales. Net earnings for the first quarter were $15.6 or $0.54 per share, representing an increase of 14% and 15%, respectively, over the prior year. Financial Condition Net cash provided by operating activities for the first three months of 1997 increased $14.3, from the comparable period in 1996, to $25.7. Contributing to this increase are the changes in trade receivables and other, accrued income taxes, and the level of purchases of inventory compared to the prior year. Net cash used in investing activities decreased to $12.5, from $16.6 in the first quarter of 1996, primarily because of cash received from the sale of short-term investments. The ratio of debt-to-total capital at March 31, 1997 of 34.0% compared to 32.9% at December 31, 1996 is due mainly to purchases of treasury stock in the first quarter of 1997. The ratio of current assets to current liabilities at March 31, 1997 of 2.0 is comparable to December 31, 1996. The Company believes it has adequate financial resources to meet expected cash flow requirements for the foreseeable future. On March 13, 1997, the Company paid a quarterly cash dividend of $0.15 per share of common stock for a total of $4.2. On April 3, 1997, the Board of Directors declared a $0.15 per share dividend payable on June 5, 1997 to shareholders of record on May 16, 1997. Business Climate The diagnostics and life sciences markets continue to be unfavorably impacted by the European recession and cost containment initiatives in several European governmental and health care systems. The life sciences market also continues to be affected by reductions of pharmaceutical capital spending in response to the consolidations of companies and constraints on research and development spending. Cost containment initiatives in U.S. and European health care systems are expected to be continuing factors which may affect the Company's sales in the short-term. PART II OTHER INFORMATION Item 1. Legal Proceedings As previously reported, in 1995 a lawsuit was filed against the Company in the Superior Court of Orange County, California by two of its former employees alleging breach of contract relating to the commercial development of certain technology (Cercek v. Beckman Instruments, Inc.). A Court- supervised mandatory settlement conference was held which did not result in settlement of the case. Discovery is continuing and the Court has scheduled the trial to begin September 22, 1997. The Company believes that the plaintiffs' claims are without merit and that the Company has good and sufficient defenses to each such claim. The Company does not believe that any liability resulting from this lawsuit will have a material adverse effect on its operations or financial position. As previously reported, in 1991 Forest City Properties Corporation and F.C. Irvine, Inc. (collectively, "Forest City"), previous owners and developers of a portion of certain real property in Irvine, California (the "property") formerly owned by the Company, filed suit against The Prudential Insurance Company of America ("Prudential"), alleging breach of contract and damages caused by pollution of the property. Although the Company is not a named defendant in the Forest City action, it is obligated to contribute to any resolution of that action pursuant to a 1990 settlement agreement with Prudential which purchased the property from the Company. The Company was recently informed by Prudential that Prudential settled the lawsuit with Forest City in October 1996 and requested the Company to pay a portion of the settlement pursuant to the 1990 settlement agreement. The Company does not agree with Prudential's claims and believes it has significant defenses to them . Although the outcome of this dispute cannot be predicted with certainty, the Company believes that any additional liability beyond that provided for will not have a material adverse effect on the Company's operations or financial position. Item 2. Changes In Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security-Holders The Annual Meeting of the Stockholders of the Company (the "Annual Meeting") was held on April 3, 1997. Three members of the Board of Directors whose terms expired at the 1997 Annual Meeting were elected to new terms expiring at the 2000 Annual Meeting. One member, Peter B. Dervan, Ph.D.,was elected to replace Earnest H. Clark, Jr. who retired and whose term also expired at the 1997 Annual Meeting. Mr. Dervan's term will expire at the 2000 Annual Meeting. The number of shares voting were as follows: VOTES FOR VOTES WITHHELD ---------- -------------- Peter B. Dervan 25,402,660 101,578 Gavin S. Herbert 25,384,025 120,213 C. Roderick O'Neil 25,402,419 101,819 Louis T. Rosso 25,380,247 123,991 The remaining members of the Board of Directors who will continue in office and the year in which their terms expire are: Term expiring in 1998: Carolyne K. Davis, Ph.D., Dennis C. Fill, Charles A. Haggerty and William N. Kelley, M.D.; Term expiring in 1999: Hugh K. Coble, Francis P. Lucier, John P. Wareham and Betty Woods. Proposed amendments to the Company's Incentive Compensation Plan of 1990, which had been approved by the Board of Directors at its December 5, 1996 and February 6, 1997 meetings, were also presented to the Stockholders at the Annual Meeting. The amendments, to be effective January 1, 1997, increase flexibility for post-termination stock option exercise periods and satisfy certain Internal Revenue Code requirements. The number of shares voting on the proposed amendments were as follows: FOR AGAINST ABSTAIN 24,535,838 831,919 136,481 Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K a) Exhibits 10. The Company's Incentive Compensation Plan of 1990, as restated with amendments of December 5, 1996 and February 6, 1997, amendments approved by stockholders April 3, 1997 and effective January 1, 1997. 11. Statement re Computation of Per Share Earnings: This information is set forth in Note 3 Earnings Per Share of the Condensed Consolidated Financial Statements included in Part I herein. 15. Independent Accountants' Review Report, April 17, 1997 27. Financial Data Schedule b) Reports on Form 8-K None. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BECKMAN INSTRUMENTS, INC. (Registrant) Date: April 24, 1997 by /S/WILLIAM W. MAY William H. May Vice President, General Counsel and Secretary Date: April 24, 1997 by /S/DENNIS K. WILSON Dennis K. Wilson Vice President, Finance and Chief Financial Officer EXHIBIT INDEX FORM 10-Q, FIRST QUARTER, 1997 Exhibit Number Description - ------- ----------- 10. The Company's Incentive Compensation Plan of 1990, as restated with amendments of December 5, 1996 and February 6, 1997, amendments approved by stockholders April 3, 1997 and effective January 1, 1997. 11. Statement re Computation of Per Share Earnings: This information is set forth in Note 3 Earnings Per Share of the Condensed Consolidated Financial Statements included in Part I herein. 15. Independent Accountants' Review Report, April 17, 1997 27. Financial Data Schedule EX-10 2 THE COMPANY'S INCENTIVE COMPENSATION PLAN EXHIBIT 10 BECKMAN INSTRUMENTS, INC. INCENTIVE COMPENSATION PLAN OF 1990 (1997 Restatement) 1. Purpose of Plan. The purpose of this Plan is to enable Beckman Instruments, Inc. and certain of its Subsidiaries to continue to compete successfully in attracting and retaining Employees with outstanding abilities by making it possible for them to acquire Shares of the Company's Common Stock on terms which will give them a more direct and continuing incentive to make substantial contributions to the future success of the Company's business. 2. Definitions. "Board" means the Board of Directors of the Company. "Code" means the Internal Revenue Code of l986, as amended, or any successor code thereto. "Company" means Beckman Instruments, Inc., a Delaware corporation. "Committee" means the Board or a committee appointed by the Board to administer this Plan, which committee shall be comprised only of two or more directors or such greater number of directors as may be required under applicable law, each of whom (i) in respect of any transaction at a time when the affected Participant may be subject to Section 162(m) of the Code, shall be an "outside director" within the meaning of Section 162(m) of the Code, and (ii) in respect of any transaction at a time when the affected Participant may be subject to Section 16 of the Securities and Exchange Act of 1934 as amended ("Exchange Act"), shall be a "Non-Employee Director" within the meaning of Rule 16b- 3(b)(3) under the Exchange Act. The Organization and Compensation Committee may be this committee if it meets these requirements. "Common Stock" means common stock of the Company, par value $.10 per Share. "Employee" means a person regularly employed by the Company or by a Subsidiary. "Incentive" means any option, restricted stock or performance award granted or issued under the Plan. "Parent Corporation" means any corporation in an unbroken chain of corporations ending with the Company if each of the corporations other than the Company 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. "Participant" means an Employee who receives an Incentive which, in whole or in part, remains outstanding. "Plan" means the Beckman Instruments, Inc. Incentive Compensation Plan of 1990, as amended. "Retirement" means termination of employment of a Participant pursuant to the Company's applicable retirement policy or plan as determined by the Committee in its discretion. "Shares" means shares of Common Stock of the Company. "Subsidiary" means any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 3. Stock Available for Incentives. (a) Stock Subject to the Plan. For each calendar year from and including the calendar year beginning January 1, 1993, a number of Shares equal to the amount of 1.5% of the total number of issued and outstanding Shares as of December 31 of the calendar year immediately preceding such year (the "1.5% Limit") shall become available for issuance under the Plan. In addition, (i) any unused portion of the Shares remaining from those reserved in 1990 for issuance under the Plan, (ii) any Shares relating to Incentives granted at any time under the Plan which have expired or have been surrendered, including but not limited to Shares covered by options which have expired or which have been surrendered without having been exercised and Shares of restricted stock forfeited to the Company, and (iii) any unused portion of the 1.5% Limit for any calendar year, shall be added to the aggregate number of Shares available for issuance in each calendar year under the Plan. In no event, except as subject to adjustment as provided in Section 3(b), shall more than 2,175,000 Shares be cumulatively available for issuance pursuant to the exercise of options awarded under the Plan which qualify as incentive stock options ("ISOs") under the Code. The maximum number of Shares subject to options that are granted during any calendar year to any individual shall be limited to 150,000 shares, subject to adjustments contemplated by Section 3(b). (b) Adjustments and Reorganizations. The number of Shares subject to this Plan shall be appropriately adjusted if the outstanding Shares are hereafter changed into or exchanged for a different number or kind of shares or other securities of the Company, or of another corporation, by reason of reorganization, merger, consolidation, recapitalization, reclassification, stock split-up, stock dividend or combination of shares. The number of shares covered by outstanding options and the exercise price therefor shall likewise be appropriately adjusted whenever the number or kind of shares shall be increased or reduced by any such procedure after the date or dates on which such options were granted; provided, however, that, in the case of ISOs, each such adjustment shall be made in such manner as not to constitute a "modification" within the meaning of Section 424(h)(3) of the Code. 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 Committee may, in its absolute discretion and on such terms and conditions as it deems appropriate, provide, either by terms of the Incentive or 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) for any option granted under this Plan, such option (A) shall be exercisable as to all Shares covered thereby, (B) shall be assumed by such successor corporation, (C) shall be canceled and be replaced by a substitute option of the successor corporation or (D) shall be canceled in consideration for a cash payment in an amount equal to the Fair Market Value of the Shares covered by such option less their aggregate exercise price; and (ii) for any such Shares of restricted stock that are still subject to restrictions, (A) all restrictions on such Shares of restricted stock shall terminate or expire, (B) obligations of the Company in relation to such Shares of restricted stock shall be assumed by such successor corporation, (C) such Shares of restricted stock shall be canceled and replaced by substitute shares of restricted stock of the successor corporation or (D) such Shares of restricted stock shall be forfeited to the Company in consideration for a cash payment in an amount to be determined by the Committee. (c) Reservation of Shares. Shares delivered in connection with any Incentive shall, in the discretion of the Committee, be either Shares heretofore or hereafter authorized and then unissued, or previously issued Shares heretofore or hereafter acquired through purchase in the open market or otherwise, or some of each. The Company shall be under no obligation to reserve or to retain in its treasury any particular number of Shares at any time, and no particular Shares, whether unissued or held as treasury shares, shall be identified as those related to this Plan. 4. Granting of Incentives. The Committee, is authorized to grant options to selected Employees pursuant to this Plan during the calendar years 1990 through 2001 but not thereafter, to issue restricted stock to selected Employees pursuant to this Plan during the calendar years 1991 through 2001 but not thereafter, and to issue performance awards to selected Employees pursuant to this Plan during the calendar years 1993 through 2001 but not thereafter. Incentives under the Plan may be granted in any one or a combination of (a) stock options, (b) restricted stock, and (c) performance awards. All Incentives shall be subject to the terms and conditions set forth herein and to such other terms and conditions as may be established by the Committee. The type of Incentive or combination thereof, the number of Shares, if any, covered by Incentives granted in each year; the Employees to whom Incentives are granted; and the number of Shares covered by Incentives granted to each Employee selected shall be wholly within the discretion of the Committee, subject only to the limitations prescribed in Sections 3, 5 and 7. 5. Stock Options. The Committee may grant options qualifying as incentive stock options ("ISOs") under Section 422 of the Code and nonqualified stock options (collectively, "options"). Options granted under this Plan shall be subject to the following terms and conditions and such other terms and conditions as the Committee may determine: (a) Option Price. The option price shall be fixed by the Committee; provided, however, that the price per Share shall not be less than 100% of the fair market value of the Shares on the date such option is granted; provided further, that, in the case of ISOs, the price per Share shall not be less than 100% (110% in the case of a Participant then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company, any Subsidiary or any Parent Corporation) of the Fair Market Value of the Shares on the date such option is granted. For purposes of ISOs granted under this Plan, the "Fair Market Value" of the Company's Common Stock shall be determined by the Committee in accordance with Section 422 of the Code and the regulations promulgated thereunder. (b) Non-transferable. Options shall not be transferable otherwise than by will or by the laws of descent and distribution and shall be exercisable, during the Participant's lifetime, only by the Participant or the Participant's guardian or legal representative. No option shall be subject, in whole or in part, to attachment, execution or levy of any kind. (c) Option Period; Expiration. Each option shall expire and all rights thereunder shall end at the expiration of such period (which shall not be more than ten years) after the date on which it was granted as shall be fixed by the Committee, subject in all cases to earlier expiration as provided in paragraphs (d) and (e) of this Section 5 in the event of termination of employment or death. No ISO may be granted to any person who, at the time the option is granted, owns (or is deemed to own under Section 424(d) of the Code) Shares possessing more than 10% of the total combined voting power of all classes of stock of the Company, any Subsidiary or any Parent Corporation, unless such option by its terms is not exercisable after the expiration of five years from the date such option is granted. (d) Participant Only; Upon Termination of Employment by Reason Other Than Death; Expiration. During the lifetime of a Participant, his or her option shall be exercisable only by the Participant and, unless otherwise provided in the option agreement or by resolution adopted after the date of grant, only while employed by the Company or a Subsidiary or within (i) three years after Retirement or total disability if and to the extent exercisable by the Participant on the last day of employment prior to such event, or (ii) three months after the Participant otherwise ceases to be so employed if and to the extent the option was exercisable by the Participant on the last day of such employment; provided, that in the case of an option which is an ISO a Participant must exercise his or her option within (i) three months from the date the Participant ceases to be so employed other than by reason of death or total disability, or (ii) twelve months after the Participant ceases to be so employed by reason of his or her total disability. The option, to the extent not exercisable on the date of termination from employment, shall terminate. Notwithstanding the above, in no event shall options be exercisable later than the end of the period fixed by the Committee in accordance with the provisions of paragraph (c) of this Section 5. (e) Upon Death; Expiration. If a Participant dies within a period during which the option could have been exercised by the Participant, his or her option may be exercised within three years after such Participant's death (but not later than the end of the period fixed by the Committee in accordance with the provisions of paragraph (c) of this Section 5) by those entitled under the Participant's will or the laws of descent and distribution, but only if and to the extent the option was exercisable by the Participant immediately prior to death. The option, to the extent not exercisable on the date of death (or, if earlier, termination from employment), shall terminate. (f) Exercisable Pursuant to Terms of Grant; Acceleration. Options shall become exercisable and in such installments (which may be cumulative) as the Committee shall provide in the terms of each individual option; provided, however, by resolution adopted after an option is granted, the Committee may on such terms and conditions as it may determine to be appropriate, accelerate the time at which such option or any portion thereof may be exercised. (g) Full or Partial Exercise. As the Committee may fix at or after the time of grant, options may be exercised in whole at one time or in part from time to time. (h) Delivery of Shares; Payment. No Shares shall be delivered upon the exercise of an option until (i) the option price has been paid in full in cash or, at the discretion of the Committee, in whole or in part in Common Stock owned by the Participant valued at fair market value on the date of exercise; (ii) all amounts which the Company (or other employer corporation) is required to withhold under federal, state or local law in connection with the exercise of the option have been paid in full in cash; (iii) such Shares have been admitted to listing on all stock exchanges on which such class of stock is then listed; (iv) the registration or other qualification requirements for such Shares, which the Committee, in its absolute discretion, deem necessary or advisable, have been completed; and (v) the approval or clearances from any state or federal governmental agency, which the Committee shall, in its absolute discretion, determine to be necessary or advisable, have been obtained. Subject to the Committee's consent, the full payment required under subparagraph (i) above may be made by retention by the Company of Shares to be issued pursuant to such option exercise with an aggregate fair market value on the date of exercise equal to the total exercise price for the options being exercised. (i) ISO $100,000 Limit. To the extent that the aggregate Fair Market Value (within the meaning of Section 5(a)) of Shares with respect to which ISOs first become exercisable by a Participant in any calendar year exceeds $100,000, taking into account both Common Stock subject to ISOs under this Plan and stock subject to incentive stock options under all other plans of the Company or any Parent Corporation, such options shall be treated as nonqualified stock options. For this purpose, the "Fair Market Value" of the stock subject to options shall be determined as of the date the options were awarded. In reducing the number of options treated as ISOs to meet the $100,000 limit, the most recently granted options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000 limit, the Committee may, in the manner and to the extent permitted by law, designate which shares of Common Stock are to be treated as shares acquired pursuant to the exercise of an ISO. 6. Restricted Stock. Shares of restricted stock granted under this Plan shall be subject to the following terms and conditions and such other terms and conditions as the Committee may determine: (a) Price; Legal Consideration. The price for issuance of the Shares of restricted stock shall be fixed by the Committee; provided that legal consideration shall be required for each issuance of Shares of restricted stock. (b) Non-transferable. Shares of restricted stock shall not be transferable until the expiration or termination of all restrictions on such Shares, and, prior to the expiration or termination of such restrictions, Shares of restricted stock shall not be subject, in whole or in part, to attachment, execution or levy of any kind. (c) Restrictions; Expiration. The Shares of restricted stock issued under this Plan shall be subject to such restrictions as the Committee shall provide and all such restrictions shall terminate or expire at the end of such period (which shall not be more than ten years) after the date on which such restricted shares were issued as shall be fixed by the Committee, subject in all cases to earlier expiration as provided in paragraph (d) of this Section 6. (d) Vesting; Acceleration. Restricted stock shall vest as the Committee shall provide in the terms of each individual grant; provided, however, by resolution adopted after restricted stock is granted, the Committee may, on such terms and conditions as it may determine to be appropriate, accelerate the time at which such restricted stock or any portion thereof shall vest. 7. Performance Awards. The Committee may, in its discretion, grant performance- based awards to eligible Employees based upon such factors as the Committee shall deem relevant in light of the specific type and terms of the award. In addition, and without limiting the generality of the foregoing, the Committee may grant performance- based awards within the meaning of Section 162(m) of the Code ("Performance Awards"), whether in the form of Shares, restricted stock performance stock, phantom stock, cash awards or other rights, whether or not related to stock values or appreciation, the grant, vesting, exercisability or payment of which depends on the degree of achievement of the Performance Criteria (within the meaning of Section 7(b) below) relative to preestablished targeted levels for (i) the Company on a consolidated, segment, subsidiary or division basis, or (ii) an individual. An award that is intended to satisfy the requirements of Section 7 applicable to Performance Awards shall be designated as such at the time of grant. Such Performance Awards shall be subject to the following terms and conditions and such other terms and conditions as the Committee may prescribe: (a) Eligible Class. The eligible class of persons for Performance Awards under this Section 7 shall be executive officers of the Company and, in the discretion of the Committee, other key employees of the Company. (b) Award Period; Performance Criteria. The Committee shall determine and include in a Performance Award grant the period of time for which a Performance Award is made ("Award Period"). The applicable Award Period may not be less than one year nor more than 10 years. The Committee shall also establish the criteria by which the performance will be measured ("Performance Criteria") during the Award Period as a basis for determination of the amount payable under the Performance Award. The Performance Criteria may include: earnings per share, sales growth, pre-tax margin, net earnings (before or after taxes, interest depreciation and/or amortization), cash flow, economic value added, return on equity or on assets or on net investment, or cost containment or reduction, or any combination thereof. The Performance Criteria may include minimum and optimum objectives or a single set of objectives. The applicable Performance Criteria and specific performance target or targets ("targets") must be approved by the Committee in advance of applicable deadlines under the Code and while the performance relating to such targets remains substantially uncertain. Performance targets may be adjusted to mitigate the unbudgeted impact of material, unusual or nonrecurring gains or losses, accounting changes or other extraordinary events not foreseen at the time the targets were set, to the extent permitted by Section 162(m) and applicable regulations and interpretations thereunder. (c) Payment; Maximum Award. The Committee shall establish the method of calculating the amount of payment to be made under a Performance Award based on the extent to which the Performance Criteria are met. After the completion of an Award Period, the performance shall be measured against the Performance Criteria, and the Committee shall determine the amount to be paid under the Performance Award. The Committee, in its discretion, may elect to make payment in Shares, restricted stock, cash or any combination of Shares, restricted stock or cash, and such payment form shall be specified in the applicable Performance Award agreement. In no event shall grants of Performance Awards in any calendar year to a Participant, whether payment in cash, Shares, restricted stock or combination of cash, Shares, or restricted stock relate to a cash amount of more than $2 million. For purposes of this limit, each Performance Award which is payable in Shares or restricted stock shall be deemed to be converted as of the date of grant to an equivalent cash amount, determined by multiplying the number of Shares or restricted stock subject to such Performance Award by the closing price of a Share of the Company's Common Stock on the New York Stock Exchange as of the date of grant of the Performance Award. Performance Awards that are canceled during the year shall be counted against this limit to the extent required by Code Section 162(m). Stock options satisfying the requirements of Code 162(m) are subject to the individual limit as set forth in Section 3(a) and not the preceding individual limit. (d) Committee Certification. Before any Performance Award is paid, the Committee must certify in writing that the Performance Criteria and any other material terms of the Performance Award were satisfied; provided, however, that a Performance Award may be paid without regard to the satisfaction of the applicable Performance Criteria in the event of a change in control event, death or total disability, to the extent permitted under Section 162(m) of the Code and Section 3(b). (e) Terms and Conditions of Awards. The Committee will have the discretion to determine the restrictions or other limitations of the individual awards granted under this Section 7 including the authority to reduce awards, payouts or vesting or to pay no awards, in its sole discretion, if the Committee preserves such authority at the time of grant by language to this effect in its authorizing resolutions or otherwise. (f) Non-Transferable. Performance Awards are not transferable, and are not subject in whole or in part, to attachment, execution or levy of any kind. 8. Continuation of Employment. Neither this Plan nor any Incentive issued hereunder shall confer upon any Employee any right to continue in the employ of the Company or any Subsidiary or limit in any respect the right of the Company or any Subsidiary to terminate his or her employment at any time for any reason, with or without cause. 9. Administration. The Committee may make such rules and regulations and establish such procedures as it deems appropriate for the administration of this Plan. The Committee's authority to administer this Plan shall include, but not be limited to, the ability to accelerate or to extend the exercisability or post- termination exercise period of any or all outstanding Incentives within the maximum terms of Incentives permitted hereunder. In the event of a disagreement as to the interpretation of this Plan or any amendment thereto or any rule, regulation or procedure thereunder or as to any right or obligation arising from or related to this Plan, the decision of the Committee shall be final and binding upon all persons in interest, including the Company and its stockholders. 10. Termination or Amendment of the Plan. The Board without further action by the stockholders may terminate this Plan at any time prior to December 31, 2001 and may from time to time amend this Plan as permitted by applicable statutes as it deems desirable. Any amendment that would (i) materially increase the benefits accruing to Participants under this Plan, (ii) materially increase the aggregate number of securities that may be issued under this Plan, or (iii) materially modify the requirements as to eligibility for participation in this Plan, shall be subject to stockholder approval only to the extent then required by Section 422 of the Code or applicable law, or deemed necessary or advisable by the Board. Without limiting any other express authority of the Committee under but subject to the express limits of this Plan, the Committee by agreement or resolution may waive conditions of or limitations on Incentives that the Committee in the prior exercise of its discretion has imposed, without the consent of a Participant, and may make other changes to the terms and conditions of Incentives that do not affect in any manner materially adverse to the Participant, his or her rights and benefits under an Incentive. No amendment, suspension or termination of this Plan or change of or affecting any outstanding Incentive shall, without written consent of the Participant, affect in any manner materially adverse to the Participant any rights or benefits of the Participant or obligations of the Company under any Incentive granted under this Plan prior to the effective date of such change. Changes contemplated by Section 3(b) shall not be deemed to constitute changes or amendments for purposes of this Section 10. No Incentive shall be granted or issued under the Plan after December 31, 2001, but Incentives granted or issued prior thereto may extend beyond that date. 11. Taxes. Prior to any distribution of cash or stock to any Participant, appropriate arrangements shall be made for the payment of any taxes required to be withheld by federal, state or local law. The Company shall be entitled to require cash payment, to withhold the amount or to retain Shares with a fair market value equal to the amount of any tax attributable to any amount payable or Shares deliverable under the Plan after giving the person entitled to receive such amount or Shares notice as far in advance as practicable. 12. Stockholder Approval of Plan. This Plan will be submitted for the approval of the Company's stockholders within twelve months after the date of the Board's initial adoption of this Plan or adoption of any amendments requiring stockholder approval. Options may be granted and Shares of restricted stock may be issued prior to such stockholder approval; provided, however, that such options shall not be exercisable and the restrictions on such Shares of restricted stock shall not expire or terminate prior to the time when this Plan is approved by the stockholders; provided, further, that if such approval has not been obtained at the end of said twelve-month period, all options previously granted and all Shares of restricted stock issued under this Plan shall thereupon be canceled and become null and void. No Shares may be granted or issued with respect to Performance Awards prior to stockholder approval of the amendment making such awards available as Incentives under this Plan. 13. Plan Construction. (a) Rule 16b-3. It is the intent of the Company that transactions in and affecting Incentives in the case of Participants who are or may be subject to Section 16 of the Exchange Act satisfy any then applicable requirements of Rule 16b- 3 so that such persons (unless they otherwise agree) will be entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the Exchange Act in respect of those transactions and will not be subjected to avoidable liability thereunder. If any provision of this Plan or of any Incentive would otherwise frustrate or conflict with the intent expressed above, that provision to the extent possible shall be interpreted as to avoid such conflict. If the conflict remains irreconcilable, the Committee may disregard the provision if it concludes that to do so furthers the interest of the Company and is consistent with the purposes of this Plan as to such persons in the circumstances. (b) Rule 162(m). It is the further intent of the Company that options with an exercise price not less than fair market value on the date of grant and Performance Awards under Section 7 of this Plan that are granted to or held by a covered employee (within the meaning of Code Section 162(m) and regulations thereunder) shall qualify as performance-based compensation under Section 162(m) of the Code, and this Plan shall be interpreted consistent with such intent. EX-15 3 INDEPENDENT ACCOUNTANTS' REVIEW REPORT KPMG Peat Marwick LLP Exhibit 15 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 March 31, 1997, and the related condensed consolidated statements of earnings and cash flows for the three-month periods ended March 31, 1997 and 1996. These condensed consolidated financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Beckman Instruments,Inc. and subsidiaries as of December 31, 1996, and the related consolidated statements of earnings, stockholders' equity and cash flows for the year then ended (not presented herein); and in our report dated January 17, 1997, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1996, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. (KPMG Peat Marwick LLP) Orange County, California April 17, 1997 EX-27 4 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. 3-MOS DEC-31-1997 MAR-31-1997 40 4 294 9 199 565 664 409 937 276 176 0 0 3 388 937 232 232 110 110 0 0 3 22 6 16 0 0 0 16 .54 .54
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