-----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, RqyqiC5MHNsR4PY8AcREsLyjPCYFXyurtvYUuktibExyrdNUkh6nWyoSlkFsXdiY hq7pGmIQFi/J+/gEgDOFoQ== 0000950150-96-000478.txt : 19960520 0000950150-96-000478.hdr.sgml : 19960520 ACCESSION NUMBER: 0000950150-96-000478 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19960517 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: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-02317 FILM NUMBER: 96569470 BUSINESS ADDRESS: STREET 1: 2500 HARBOR BLVD CITY: FULLERTON STATE: CA ZIP: 92634 BUSINESS PHONE: 7148714848 424B2 1 PROSPECTUS SUPPLEMENT 1 RULE NO. 424(b)(2) REGISTRATION NO. 333-02317 SUBJECT TO COMPLETION, DATED MAY 16, 1996 PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED APRIL 16, 1996 $100,000,000 BECKMAN INSTRUMENTS, INC. % DEBENTURES DUE , 2026 --------------------- Interest on the Debentures is payable on and of each year, commencing , 1996. The Debentures are redeemable, in whole or in part, at the option of the Company at any time after , 2006 at a redemption price equal to the greater of (i) 100% of the principal amount of such Debentures or (ii) as determined by an Independent Investment Banker (as defined herein), the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate (as defined herein), plus, in each case, accrued interest thereon to the date of redemption. The holder of each Debenture may elect to have that Debenture, or any portion of the principal amount thereof that is a multiple of $1,000, repaid on , 2006 at 100% of the principal amount thereof, together with accrued interest to , 2006. Such election, which is irrevocable when made, must be made within the period commencing on , 2006 and ending at the close of business on , 2006. The Debentures offered hereby will be represented by one or more global Debentures registered in the name of the nominee of The Depository Trust Company ("DTC"). Beneficial interests in the global Debentures will be shown on, and transfers thereof will be effected only through, records maintained by DTC and its participants. Except as described herein, Debentures in definitive form will not be issued. The Debentures will be issued only in registered form in denominations of $1,000 and integral multiples thereof. See "Description of the Debentures." --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------------
INITIAL PUBLIC UNDERWRITING PROCEEDS TO OFFERING PRICE(1) DISCOUNT(2) COMPANY(1)(3) ----------------- ------------ ------------- Per Debenture................................. % % % Total......................................... $ $ $
- --------------- (1) Plus accrued interest, if any, from , 1996. (2) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. (3) Before deducting estimated expenses of $ payable by the Company. --------------------- The Debentures offered hereby are offered severally by the Underwriters, as specified herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. It is expected that the Debentures will be ready for delivery in book-entry form only through the facilities of DTC in New York, New York, on or about , 1996, against payment therefor in immediately available funds. GOLDMAN, SACHS & CO. CITICORP SECURITIES, INC. FIRST CHICAGO CAPITAL MARKETS, INC. --------------------- The date of this Prospectus Supplement is May , 1996. 2 LOGO ------------------------ IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 3 ________________________________________________________________________________ MEDICAL RESEARCH & DRUG DISCOVERY Universities Medical Research Pharmaceutical Biotechnology Firms Laboratories Companies
_______________________________________________________________________________ CENTRIFUGATION & ANALYTICAL SYSTEMS Beckman is a leading manufacturer of systems for medical research and drug development. The Company is one of the world's largest providers of centrifugal separation systems and is a technological leader in ultra- and high-performance centrifugal products. In the field of analytical detection, measurement and data management, Beckman has been an innovator for 60 years. The Company's wide variety of analytical systems are high performance tools that improve research productivity. For management of critical lab data and processes, the Company's CALS(TM) laboratory information management systems are used in pharmaceutical companies around the globe. [GRAPH] Beckman total 1995 sales: $300 million SEPARATION SYSTEMS AFTER MARKET SALES* Avanti(R) J Series High Performance Ultracentrifuge Rotors Centrifuges Ultracentrifuge Rotors General Purpose and Microfuge(R) Centrifuge Rotors Centrifuges Centrifuge Tubes and Optima(TM) Series Ultracentrifuges Accessories System Gold(R) Nouveau HPLC Spectrophotometer Cells Systems and Accessories LS Chemicals and DETECTION SYSTEMS and Accessories DU(R) Series UV/VIS HPLC Columns and Spectrophotometers Accessories LS 6500 Scintillation System [PHI](R) Series pH Meters, Electrodes and Buffers SOFTWARE SYSTEMS Field Service CALS(TM) Lab Manager(TM) C/S LIMS and PeakPro(R) C/S Chromatography Data System [PRODUCT PHOTOS] * After Market Sales: Customer purchases of operating supplies, chemistry kits and service after purchase of an instrument system. 4 ________________________________________________________________________________ MEDICAL RESEARCH & DRUG DISCOVERY Universities Medical Research Pharmaceutical Biotechnology Firms Laboratories Companies
_______________________________________________________________________________ DNA & PROTEIN SYSTEMS Beckman is a market leader in the growing field of DNA and protein analysis for biotechnology. Beckman believes that its Biomek(R) 2000 BioRobotics System is the leader in programmable, bench top automation for biological assays. In capillary electrophoresis, Beckman is one of the largest manufacturers of these systems for separation and detection of both proteins and DNA. Recent internal developments and technology alliances have produced proprietary chemistries that enhance Beckman's protein separation and analysis and DNA synthesis systems which provide quick, cost-effective and convenient results. [GRAPH] Beckman total 1995 sales: $70 million DNA AND PROTEIN SYSTEMS AFTER MARKET SALES* Biomek(R) 2000 BioRobotics UltraFAST Chemistries System eCap(TM) Chemistries ProScale Protein Purification Biomek(R) Labware Systems Optima XL-A Rotors and Oligo Series 1000 DNA Supplies Synthesizers HyperD+ Chemistries Optima(TM) XL-A Ultracentrifuge Field Service LF 3000 Protein Sequencer P/ACE(TM) 5000 Series Capillary Electrophoresis Systems + HyperD is a trademark of BioSepra, Inc. [PRODUCT PHOTOS] * After Market Sales: Customer purchases of operating supplies, chemistry kits and service after purchase of an instrument system. 5 ________________________________________________________________________________ CLINICAL DIAGNOSTICS Hospital Clinical Commercial Reference Physician's Offices Laboratories Laboratories and Group Practices
_______________________________________________________________________________ CLINICAL CHEMISTRY SYSTEMS Beckman is one of the world's leading providers of general chemistry systems for patient sample testing in hospital laboratories. Beckman's new family of SYNCHRON(R) Delta Series clinical systems is designed to perform high accuracy tests while optimizing efficiency and minimizing costs. By integrating our SYNCHRON(R) systems, SPINCHRON(TM) clinical centrifuges, barcoding and information systems, we have created a paperless lab. Beckman's SYNCHRON(R) systems have led the competition in worldwide placements. [GRAPH] Beckman total 1995 sales: $380 million CLINICAL CHEMISTRY SYSTEMS AFTER MARKET SALES* SYNCHRON CX(R)3 Delta Clinical SYNCHRON(R) System Chemistry System Reagents, Calibrators, SYNCHRON CX(R)4 Delta Clinical Controls and Standards Chemistry System SYNCHRON(R) Supplies and SYNCHRON CX(R)5 Delta Clinical Accessories Chemistry System Clinical Reagents SYNCHRON CX(R)7 Delta Clinical Field Service Chemistry System SYNCHRON EL-ISE(R) Electrolyte System SPINCHRON(TM) Clinical Centrifuges [PRODUCT PHOTOS] * After Market Sales: Customer purchases of operating supplies, chemistry kits and service after purchase of an instrument system. 6 ________________________________________________________________________________ CLINICAL DIAGNOSTICS Hospital Clinical Commercial Reference Physician's Offices Laboratories Laboratories and Group Practices
_______________________________________________________________________________ SPECIAL CHEMISTRY SYSTEMS & DIAGNOSTICS KITS In special chemistry testing, Beckman is a market leader in clinical protein analysis. The Paragon CZE(TM) 2000 Capillary Electrophoresis System, introduced in 1995, is the first automated serum protein system for electrophoresis. Beckman also maintains a leading position with the ARRAY(R) Protein/Drug System. Through the January 1996 acquisition of Hybritech, Beckman has enhanced its immunochemistry diagnostic capabilities with the TANDEM(R) line of cancer-marker tests. Plus, the Hybritech line of ICON(R) rapid tests complements the FlexSure(R) HP, Hemoccult(R), and Hemoccult(R) SENSA(R) brands of test kits produced by the Company's SmithKline Diagnostics, Inc. ("SKD") subsidiary. [GRAPH] Beckman total 1995 sales: $180 million SPECIAL CHEMISTRY SYSTEMS Paragon CZE(TM) 2000 Capillary FlexSure(R) HP Test for serum Electrophoresis System IgG antibodies to H.pylori Paragon(TM) Electrophoresis Hemoccult(R) and Hemoccult System SENSA(R) brand Fecal ARRAY(R) 360 and 360CE Occult Blood Tests Protein/Drug Systems Gastroccult(R) Gastric APPRAISE(R) Clinical Occult Blood and pH Test Densitometer and TANDEM(R) PSA, CEA, AFP Data Network and PAP Screening Kits TANDEM(R)-R Ostase(TM) AFTER MARKET SALES Bone Metabolism Marker Paragon(R) Capillaries, ICON(R) II HCG, II HCG Chemistries and Supplies (Urine), Strep A, ARRAY(R) Kits, Calibrators, Strep B, and Controls and Supplies QSR(R) CKMB Tests Field Service [PRODUCT PHOTOS] 7 *After Market Sales: Customer purchases of operating supplies, chemistry kits and service after purchase of an instrument system. 8 THE COMPANY Beckman Instruments, Inc. ("Beckman" or the "Company") is one of the world's leading manufacturers of instrument systems and test kits that make laboratories more efficient by simplifying and automating chemistry and biology based analytical procedures. The Company designs, manufacturers, markets and services a broad range of laboratory instrument systems, reagents and related products, which customers typically use to conduct basic scientific research, new product research and development or diagnostic analysis of patient samples. In 1995, about 60 percent of the Company's total sales were for diagnostic applications, principally in hospital laboratories, while about 40 percent of such sales were for life science applications in universities, medical schools and research institutes, or new product research and development in pharmaceutical and biotechnology companies. The Company's primary expertise and activity is the integration of chemical, biological, engineering and software sciences into complete systems that simplify and automate biologically focused laboratory processes and the distribution and support of those systems around the world. More than half of the Company's sales are generated outside the United States. Around the world, Beckman maintains ongoing partnerships with customers that result in after-market purchases of operating supplies, chemistry kits, and field service. In 1995, these after-market sales represented about 65 percent of the Company's sales. Beckman's experience, knowledge and ability in simplifying and automating the processes for biological laboratories forms a technological continuum that extends across the Company. From this common technical base extends a range of products that are configured to meet specific needs of academic research, pharmaceutical and biotechnology companies, hospitals, physicians' offices and reference laboratories (large central laboratories to which hospitals and physicians refer specialized tests). By serving several customer groups with differing needs related through common science, the Company has the opportunity to broadly apply its technology. USE OF PROCEEDS The net proceeds to be received by the Company from the issue and sale of the Debentures offered hereby are estimated to be $99.0 million, and the Company intends to use such net proceeds for general corporate purposes and to repay the Company's commercial paper outstanding at the time of the offering. As of March 31, 1996, $93.5 million of commercial paper was outstanding. The commercial paper has a variable interest rate, with an average interest rate of 5.49% at March 31, 1996, and an average maturity date of 28 days. S-3 9 CAPITALIZATION The following table sets forth as of March 31, 1996 the historical capitalization of the Company and the capitalization as adjusted to reflect the issuance of the Debentures offered hereby and the application of the net proceeds therefrom after deducting estimated offering expenses and an assumed underwriting discount. See "Use of Proceeds" above.
MARCH 31, 1996 ---------------------- ACTUAL AS ADJUSTED ------ ----------- (IN MILLIONS) Short-term obligations: Notes payable....................................................... $ 20.6 $ 20.6 Current portion of long-term obligations............................ 3.1 3.1 ------ ------ Short-term obligations........................................... $ 23.7 $ 3.7 ====== ====== Long-term obligations: Debentures offered hereby........................................... $ -- $ 100.0 Senior notes, unsecured............................................. 50.0 50.0 Commercial paper.................................................... 93.5 -- Other long-term debt................................................ 28.0 28.0 ------ ------ Long-term obligations............................................ 171.5 178.0 ------ ------ Total stockholders' equity............................................ 353.6 353.6 ------ ------ Total capitalization........................................ $525.1 $ 531.6 ====== ======
RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for the Company for the periods indicated(1):
THREE MONTH PERIOD ENDED MARCH 31, YEAR ENDED DECEMBER 31, --------------- ------------------------------------------------ 1996 1995 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- ---- ---- 4.7 4.0 4.1 4.5 (2) 4.3 3.7
- --------------- (1) The ratios of earnings to fixed charges were computed by dividing earnings by fixed charges. For this purpose, earnings include income taxes and fixed charges excluding capitalized interest. Fixed charges include interest expense, capitalized interest and a portion of rent expense deemed representative of the interest factor. (2) Earnings were insufficient to cover fixed charges by $53.9 million for the fiscal year ended December 31, 1993. S-4 10 SELECTED HISTORICAL FINANCIAL DATA The Selected Historical Financial Data below should be read in conjunction with the more detailed information appearing in the Company's Annual Report on Form 10-K/A for the year ended December 31, 1995 (the "1995 Form 10-K/A") and the other documents available as described under "Incorporation of Certain Documents by Reference" in the accompanying Prospectus. The Selected Historical Financial Data for each of the five years ended December 31, 1995 have been derived from audited financial statements, certain of which are incorporated by reference herein. The Selected Historical Financial Data for the three-month periods ended March 31, 1996 and March 31, 1995 are derived from unaudited financial statements and, in the opinion of management, include all adjustments (consisting only of normal recurring accruals) necessary to present fairly the data for such periods.
THREE MONTHS ENDED MARCH 31, YEAR ENDED DECEMBER 31, ----------------- -------------------------------------------------- 1996 1995 1995 1994 1993 1992 1991 ------ ------ ------ ------ ------ ------ ------ (DOLLAR AMOUNTS IN MILLIONS) SUMMARY OF OPERATIONS: Sales...................................... $224.8 $205.0 $930.1 $888.6 $875.7 $908.8 $857.9 Costs of sales............................. 104.9 97.2 427.2 416.3 418.3 440.9 417.7 Selling, general and administrative........ 73.7 65.2 300.4 281.9 278.5 294.8 283.1 Research and development................... 24.7 22.1 91.7 91.5 93.3 85.9 82.2 Restructuring charge....................... -- 3.1 27.7 11.3 114.7 -- -- ------ ------ ------ ------ ------ ------ ------ Operating income (loss).................... 21.5 17.4 83.1 87.6 (29.1) 87.2 74.9 Nonoperating expense, net.................. 1.0 1.8 10.7 12.7 24.8 16.5 11.1 ------ ------ ------ ------ ------ ------ ------ Earnings (loss) before income taxes........ 20.5 15.6 72.4 74.9 (53.9) 70.7 63.8 Net earnings (loss) before accounting changes.................................. 13.7 10.3 48.9 47.3 (33.6) 43.8 38.1 Net earnings (loss)........................ $ 13.7 $ 10.3 $ 48.9 $ 42.2 $(37.6) $ 43.8 $ 38.1 ====== ====== ====== ====== ====== ====== ====== Weighted average common shares and common share equivalents (millions)*.............. 29.3 28.8 28.8 28.1 27.8 28.7 29.0 Return on average stockholders' equity....... 3.9% 3.2% 14.7% 14.2% (11.9)% 12.5% 11.4% Net earnings (loss) per share before accounting changes......................... $ 0.47 $ 0.36 $ 1.70 $ 1.68 $(1.21) $ 1.53 $ 1.32 Net earnings (loss) per share................ 0.47 0.36 1.70 1.50 (1.35) 1.53 1.32 Dividends paid per share of common stock..... $ 0.13 $ 0.11 $ 0.44 $ 0.40 $ 0.36 $ 0.30 $ 0.28 FINANCIAL POSITION (END OF PERIOD): Current assets............................. $549.6 $498.7 $533.3 $512.0 $544.5 $508.6 $491.7 Current liabilities........................ 272.4 266.4 251.2 268.8 323.3 281.3 264.4 Working capital............................ 277.2 232.3 282.1 243.2 221.2 227.3 227.3 Property, plant and equipment, net......... 249.5 235.7 252.1 232.6 216.8 213.0 203.0 Total assets............................... 927.6 826.3 907.8 829.1 820.0 738.4 712.2 Long-term debt, less current maturities.... 171.5 117.3 162.7 117.3 113.7 59.5 59.0 Stockholders' equity....................... $353.6 $327.8 $347.9 $317.0 $275.5 $357.4 $343.0 Shares outstanding (millions).............. 28.3 28.8 28.3 28.0 27.8 28.6 28.9 OTHER STATISTICS: Capital expenditures....................... $ 21.3 $ 25.0 $110.0 $ 98.7 $ 92.8 $ 91.4 $ 69.7 Depreciation expense....................... $ 20.3 $ 18.2 $ 77.6 $ 69.1 $ 62.3 $ 63.9 $ 55.5 Number of employees........................ 6,113 5,865 5,702 5,963 6,689 6,980 6,996
- --------------- *Common share equivalents were not included prior to 1995 as the dilutive effect was not significant. S-5 11 MANAGEMENT'S DISCUSSION AND ANALYSIS OF HISTORICAL FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information set forth below should be read in conjunction with the consolidated financial statements and other information included in the documents incorporated by reference in the accompanying Prospectus. In 1993, the Company announced a redirected business strategy and new organization. Beckman is concentrating on clinical diagnostics and centrifugation, while at the same time shifting its investment to the biotechnology-based portion of the life sciences business, including molecular biology and related sciences. To implement this strategy, Beckman's former operating groups, the Bioanalytical Systems Group and Diagnostic Systems Group, were reorganized into a single unit. The planned reorganization included a net reduction of approximately 800 positions worldwide, primarily in 1994. The restructuring plan included a voluntary separation program for U.S.-based long-term employees, including an enhanced early retirement program; consolidation of European finance and administrative functions; and consolidation of U.S.-based manufacturing, finance, and administrative functions. The Company has made substantial progress in implementing the restructuring plan including the following: 350 U.S. based long-term employees participated in the voluntary separation program; 400 employees were reduced internationally as the Company began the centralization of certain European administrative and financial functions in Switzerland as well as other operational consolidations; 450 U.S. employees were reduced through consolidation processes; and, the cable assembly operation was sold, which included 100 employees. In addition, the Company began the process of consolidating previously separate operations into new facilities in the United Kingdom and Japan. Since implementation of the restructuring plan, employee levels have declined by more than 1,400. In 1993, the Company established a restructure reserve of $114.7 million, for incurred expenses, as part of the overall $135.0 million restructuring plan. Through 1995, $114.0 was charged against the reserve which primarily included costs associated with the U.S. based voluntary separation program and worldwide employee termination costs. In addition, restructure charges of $27.7 million and $11.3 million were recorded in 1995 and 1994, respectively, for facility moves and transition costs which were anticipated and directly associated with the 1993 restructuring plan, but could not be recognized in establishment of the original restructuring reserve under generally accepted accounting principles. Additionally, the 1995 charge was incurred to support further reductions in 1996 of approximately 120 positions worldwide and consolidation of administrative, finance and manufacturing functions not previously affected. At March 31, 1996, $9.0 million remains as a liability. Savings from the restructuring program were approximately $12.4 million for the three months ended March 31, 1996, $48.0 million in 1995 and $29.0 million in 1994. Partially offsetting these savings were constrained market conditions, restructuring transaction costs and general salary and cost increases. S-6 12 RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the results of operations as a percentage of sales:
THREE MONTHS ENDED MARCH 31, YEARS ENDED DECEMBER 31, 1996 1995 1995 1994 1993 ----- ----- ----- ----- ----- Sales........................................... 100.0% 100.0% 100.0% 100.0% 100.0% Operating costs and expenses Cost of sales................................. 46.6 47.4 45.9 46.8 47.8 Selling, general and administrative........... 32.8 31.8 32.3 31.8 31.7 Operating income before research and development(1)................................ 20.6 20.8 21.8 21.4 20.5 Research and development........................ 11.0 10.8 9.9 10.3 10.7 Operating income(1)............................. 9.6 10.0 11.9 11.1 9.8 Earnings before income taxes(2)................. 9.1 9.1 10.8 9.7 8.4 Net earnings before cumulative effect of changes in accounting principles(2)................... 6.1% 6.0% 7.1% 6.4% 5.4%
- --------------- (1) Excludes restructuring charge of $3.1 million, 1.5% of sales, for the three months ended March 31, 1995. Excludes restructuring charge of $27.7 million, 3.0% of sales; $11.3 million, 1.3% of sales; and, $114.7 million, 13.1% of sales, for the fiscal years ended December 31, 1995, 1994, and 1993, respectively. Including the restructuring charge, fiscal years 1995 and 1994 operating income was 8.9% and 9.8% of sales, respectively, and fiscal year 1993 operating loss was 3.3% of sales. (2) Excludes the effect of restructuring charges for all periods presented, except for the three months ended March 31, 1996 where no such charge occurred. The 1993 percentage excludes a pretax environmental charge of 1.4%, 0.9% after tax. Including these special charges, the Company reported earnings (loss) before income taxes of 7.6% for the three months ended March 31, 1995 and 7.8%, 8.4% and (6.1)% in fiscal years 1995, 1994, 1993, respectively, and net earnings (loss) before cumulative effect of changes in accounting principles of 5.0% for the three months ended March 31, 1995, 5.3% in fiscal years 1995 and 1994, and (3.8)% in fiscal year 1993. THREE MONTHS ENDED MARCH 31, 1996 AS COMPARED TO THREE MONTHS ENDED MARCH 31, 1995 Sales for the three months ended March 31, 1996 were $224.8 million, an increase of $19.8 million over the comparable period in the prior year. Excluding the impact of changes in foreign currency exchange rates, first quarter sales were higher by $19.0 million. The North American bioresearch business experienced lower sales for the first three months of 1996 as compared to the same period in the previous year due to decreased government funding in 1996. International diagnostic and bioresearch sales increased by more than 8% over the prior year. European markets continue to be impacted by a recession and cost containment initiatives in several European health care systems. International sales are expected to continue to be impacted by weak markets, particularly in Europe. Operating income for the three months ended March 31, 1996 increased to $21.5 million, representing an increase of 23.6% over the comparable period in the prior year. Operating income in 1995 included a restructuring charge of $3.1 million related to the reorganization and restructuring program completed in 1995. Cost of sales for the three months ended March 31, 1996 increased over the comparable period in the prior year, but declined slightly as a percentage of sales. Selling, general and administrative, and research and development expenses for the three months ended March 31, 1996 increased over the comparable period in 1995, but represent only a slight increase as a percentage of sales over the comparable period in the prior year. The reorganization and restructuring plan announced in the fourth quarter of 1993 has resulted in year-to-date 1996 savings of about $12.4 million which are mainly attributable to the reduction of more than 1,400 personnel from 1993. The Company anticipates savings from the restructuring program to be S-7 13 about $50 million in 1996, 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 $0.8 million compared to the corresponding period of the prior year, primarily as a result of foreign currency exchange gains. Earnings before income taxes for the three months ended March 31, 1996 compared to the same period of the prior year increased to $20.5 from $15.6 million (1995 included a restructuring charge of $3.1 million). The effective tax rate decreased to 33% from 34% in the prior year as a result of a lower effective tax rate in the U.S. due to the utilization of foreign tax credits. Net earnings for the first quarter were $13.7 million or $0.47 per share, representing an increase of 33.0% and 30.6%, respectively, over the prior year. Net earnings in 1995 included a $3.1 million restructuring charge which decreased earnings per share by $0.07. YEAR ENDED DECEMBER 31, 1995 AS COMPARED TO YEAR ENDED DECEMBER 31, 1994 Sales in 1995 were $930.1 million, representing an increase of 4.7% from 1994. Favorable currency exchange rates increased sales, compared to the prior year rates, by 2.2%. Sales to areas outside the United States were more than 50% of total sales. Gross profit as a percentage of sales increased to 54.1% from 53.2% in 1994. Both diagnostic and life sciences markets continue to be unfavorably impacted by the European recession and cost containment initiatives in several European health care systems. The life sciences market also continues to be affected by reductions of pharmaceutical capital spending in response to the consolidation of companies and constraints on research and development spending. While these markets are highly competitive, sales growth has been obtained through continued market penetration. Diagnostic sales, which represent approximately 60% of total sales, increased in 1995 by 5.3%. Life sciences sales increased 3.7% in 1995. 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. Excluding the impact of the restructuring charge of $27.7 million and $11.3 million in 1995 and 1994, respectively, operating income increased by 12.0% to $110.8 million in 1995 from $98.9 million in 1994. Operating income before the restructuring charge increased as a percent of sales to 11.9% in 1995 from 11.1% in 1994. The increase of $11.9 million in operating income was the result of expense reductions resulting from the restructuring plan and process improvements from the redirected strategy. The Company's investment in research and development of $91.7 million is comparable to the prior year in absolute dollars and as a percent of sales. The Company's rate of profitability before and after investment in research and development continues to improve as indicated in the preceding table. Including the restructuring charges, operating income was $83.1 million in 1995 compared to $87.6 million in 1994. Net nonoperating expenses decreased by $2.0 million to $10.7 million in 1995. The decrease is primarily the result of the Company experiencing net foreign currency transaction gains in 1995 compared to the losses experienced in 1994 from the weaker dollar. Earnings before income taxes, excluding the restructuring charge, increased 16.1% to $100.1 million. Including the restructuring charge, earnings before income taxes were $72.4 million. The 1995 effective tax rate, before the restructuring charge, compared to 1994 held constant at 34%. The effective tax rate of 38% on the restructuring charge was due to certain elements of the charges being incurred in jurisdictions with higher tax rates. The 1995 effective tax rate was 1.5 percentage points lower than the rate experienced in the first three quarters due to the impact of the restructuring charge. The following table summarizes the impact of special charges on net earnings and net earnings per share for 1995. The table also illustrates the impact of including the effect of common share equivalents for 1995. Common S-8 14 share equivalents were not included in previous years as they did not have a significant dilutive effect. Common share equivalents are comprised of stock options.
YEAR ENDED DECEMBER 31, 1995 -------------------- AMOUNT PER SHARE ------ --------- (IN MILLIONS) Net earnings before special charges and dilutive effect of common share equivalents........................................................... $66.1 $2.35 Dilutive effect of common share equivalents............................. -- (0.06) ----- ----- Net earnings before special charges..................................... 66.1 2.29 Special charges Restructuring charge, net of tax benefit.............................. (17.2 ) (0.59) ----- ----- Net earnings............................................................ $48.9 $1.70 ===== =====
Net earnings before special charges increased by approximately 16% to $66.1 million compared to 1994. The restructuring charge reduced net earnings in 1995 by $17.2 million. The Company reported net earnings of $48.9 million in 1995 compared to $42.2 million in 1994. Net earnings per share, before special charges increased approximately 13% to $2.29 (an increase of approximately 16% to $2.35 before the dilutive effect of common share equivalents). The restructuring charge reduced earnings per share by $0.59 resulting in net earnings per share of $1.70 for 1995 compared to $1.50 in 1994. YEAR ENDED DECEMBER 31, 1994 AS COMPARED TO YEAR ENDED DECEMBER 31, 1993 Sales in 1994 were $888.6 million representing an increase of 1.5% from 1993. Differences in currency exchange rates did not materially impact sales compared to the prior year. Sales to areas outside the United States were over 50% of total sales. Both diagnostic and life sciences markets were unfavorably impacted by the European recession, and cost containment initiatives in several European health care systems. Diagnostic sales, which represent approximately 60% of total sales, increased in 1994 by 3%. The diagnostic market remains highly competitive with sales growth obtained through continued market penetration. Life sciences sales declined by 1% in 1994. In addition to the factors mentioned above, the life sciences market was adversely affected by reductions of U.S. pharmaceutical capital spending in response to anticipated health care legislation. In 1994, SmithKline Diagnostics, Inc. ("SKD"), a wholly owned subsidiary, and Procter & Gamble Pharmaceutical Germany G.m.b.H. ("P&G") completed an agreement that allowed SKD to reassume control of the well-recognized H(A)EMOCCULT brand fecal occult blood testing products in Germany, Austria and several other international countries. The agreement returns a license to SKD from P&G under which P&G manufactured and sold the H(A)EMOCCULT diagnostic products. Excluding the impact of the restructuring charge of $11.3 million and $114.7 million in 1994 and 1993, respectively, operating income increased by 16% to $98.9 million in 1994 from $85.6 million in 1993. Operating income before the restructuring charges increased as a percent of sales to 11.1% in 1994 from 9.8% in 1993. The increase of $13.3 million in operating income was primarily the result of expense reductions resulting from the restructuring plan. The Company's investment in research and development decreased 2% from the prior year to $91.5 million. The Company's rate of profitability before, and after, investment in research and development continued to improve. Including the restructuring charges, operating income was $87.6 million in 1994 compared to an operating loss of $29.1 million in 1993. Net nonoperating expenses, excluding a $12.5 million environmental charge in 1993, increased by $0.4 million to $12.7 million in 1994. Including the 1993 environmental charge, net nonoperating expenses decreased by $12.1 million from 1993. S-9 15 Earnings before income taxes, excluding the restructuring and environmental charges, increased by 18% to $86.2 million. Including the restructuring charge, earnings before income taxes were $74.9 million. The 1994 effective tax rate, before the restructuring charge, was reduced to 34% from 36% in 1993 as a result of favorable withholding tax rates and increased income in lower tax rate jurisdictions. The effective tax rate of 15% on the restructuring charge was due to the limited tax benefits available for certain elements of the restructuring charge. The 1994 effective tax rate was 1.8 percentage points higher than the rate experienced in the first three quarters due to the impact of the restructuring charge. 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 the prior service obligations 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 million in the first quarter. The impact on 1994 operations was not material and is not expected to be material in future years as a result of the newly adopted accounting principle. The following table summarizes the impact of special charges on net earnings and earnings per share for the year.
YEAR ENDED DECEMBER 31, 1994 ------------------------------- AMOUNT PER SHARE ------------- --------- (IN MILLIONS) Net earnings before special charges.............................. $56.9 $2.03 Special charges Restructuring charge, net of tax benefit....................... (9.6) (0.35) Cumulative effect of change in accounting principle Accounting for postemployment benefits......................... (5.1) (0.18) ----- ----- Net earnings..................................................... $42.2 $1.50 ===== =====
Net earnings before special charges increased by approximately 20% to $56.9 million compared to 1993. Special charges reduced net earnings in 1994 by $9.6 million and $5.1 million, respectively. The Company reported net earnings of $42.2 million in 1994 compared to a net loss of $37.6 million in 1993. Net earnings per share, before special charges in 1994 and 1993, including an environmental charge in 1993, increased 20% from 1993 to $2.03. Special charges in 1994 reduced net earnings per share by $0.53 resulting in net earnings per share of $1.50 for 1994 compared to a loss of $1.35 in 1993. LIQUIDITY AND CAPITAL RESOURCES For the three months ended March 31, 1996, the Company had positive cash flow from operating activities of $11.4 and negative cash flow from investing activities of $16.6. This represents an increase in cash flows from net operating and investing activities of $20.8 from the same period in 1995. Contributing to the increase in cash flow from operating activities compared to 1995 was the change in accounts payable and accrued expenses, while the increase in cash flow from investing activities from the prior year was the result of decreased additions to property, plant and equipment and the change in short-term investments. Net cash provided by operating activities in 1995 was $60.2 million compared to $111.1 million in 1994 and $53.3 million in 1993. Contributing to the decrease in 1995 was an increase in receivables from sales type and operating leases, trade receivables and inventories. Also contributing to the decrease was increased funding to the Company's pension plan. Net cash used by investing activities was $113.0 million in 1995, an increase of $52.4 million from 1994, resulting from the purchase of short-term investments and investments in unaffiliated companies. The Company believes that net cash provided by operating activities, supplemented as necessary with funds expected to be available under the Company's credit agreement, will provide sufficient resources to meet present and reasonably foreseeable working capital requirements, debt service and other cash needs. S-10 16 The Company is authorized, through 1998, to acquire its common stock to meet the needs of its existing employee benefit plans. Under this program, Beckman repurchased approximately 220,665 shares of its Common Stock for the three months ended March 31, 1996 and 471,686 shares during 1995. The Company maintains a $150.0 million revolving Credit Agreement (the "Credit Agreement") expiring on September 30, 1999. Borrowings under the Credit Agreement are determined by current market rates and are subject to a number of conditions, including the absence of a significant change in control of the Company. As of March 31, 1996, there were no borrowings against the line. CAPITAL EXPENDITURES Expenditures for property, plant and equipment, including instruments provided to customers on an operating lease basis, totaled $110.0 million in 1995 compared with $98.7 million in 1994 and $92.8 million in 1993. The Company plans to invest at approximately the same level in 1996 and intends to finance this capital spending primarily through cash provided by operating activities. These expenditures totaled $21.3 million for the three months ended March 31, 1996. INVESTING ACTIVITIES In September 1995, the Company agreed to acquire Hybritech Incorporated, a San Diego-based life sciences and diagnostic company, effective January 2, 1996. The acquisition expanded the Company's capabilities for the development and manufacture of high sensitivity immunoassays, including cancer tests. The acquisition has been accounted for as a purchase. 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 complements the Company's biotechnology business. The acquisition will take place over the next two years and is being accounted for as a step-acquisition. Through March 31, 1996, the Company has invested approximately $8.1 million in convertible notes receivable and a less than 20% ownership of Genomyx common stock. 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 $3.5 million for the exclusive rights to market and sell certain BioSepra products. Also in March 1995, the Company made a $5.0 million 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. DIVIDENDS The Company paid cash dividends to stockholders of $0.13 per share for the first quarter of 1996, $0.44 per share in 1995, $0.40 per share in 1994, and $0.36 per share in 1993. In April 1996, the Board of Directors declared a quarterly dividend of $0.13 per share. This dividend is payable on June 6, 1996 to stockholders of record on May 17, 1996. The Company intends to continue paying cash dividends of at least the current per share amount, subject to future business conditions, requirements of the operations and financial condition of the Company. INFLATION Inflation increases the costs of goods and services used by the Company. Competitive and regulatory conditions in many markets restrict the Company's capability to fully recover the higher costs of acquired goods and services through price increases. The Company continues to improve productivity and reduce costs to mitigate the effects of inflation. S-11 17 FOREIGN CURRENCY The Company derives over 50% of its sales from sources outside of the United States. In the short-term, the relative strength or weakness of the U.S. dollar is not likely to have a material effect on the Company's business decisions. The Company actively manages its foreign currency exposures through foreign currency contracts. The Company may adjust certain aspects of its operations in the event of a sustained material change in such exchange rates. ENVIRONMENTAL MATTERS The Company is subject to federal, state, local and foreign environmental laws and regulations. The Company believes that its operations comply in all material respects with applicable federal, state, and local environmental laws and regulations and has adequate reserves to cover such items. Although the Company continues to make expenditures for environmental protection, it does not anticipate any significant expenditures in order to comply with such laws and regulations which would have a material impact on the Company's operations or financial position. See further discussion in Note 11 "Commitments and Contingencies" to the Consolidated Financial Statements contained in the 1995 Form 10-K/A incorporated by reference in the accompanying Prospectus. LITIGATION The Company and its subsidiaries are involved in a number of lawsuits which the Company considers normal in view of its size and the nature of its business. The Company does not believe that any liability resulting from these matters will have a material adverse effect on its operations or financial position. See further discussion in Note 11 "Commitments and Contingencies" to the Consolidated Financial Statements contained in the 1995 Form 10-K/A incorporated by reference in the accompanying Prospectus. ACCOUNTING MATTERS In March 1995, the Financial Accounting Standards Board ("FASB") issued SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." SFAS 121 requires the Company to adopt the provisions of the new statement no later than fiscal 1996. SFAS 121 requires an impairment loss to be recorded as a reduction to operating income if the sum of the expected undiscounted cash flows derived from an asset is less than the assets carrying value. The Company adopted SFAS 121 in 1996 without a material impact on its operations or financial position. In October 1995, the FASB issued SFAS 123, "Accounting for Stock-Based Compensation." SFAS 123 establishes a fair value based method of accounting for stock based compensation plans. SFAS 123 encourages, but does not require, adopting the fair value based method. The Company has elected not to adopt the fair value based method and will continue to report under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." As a result, SFAS 123 does not impact the Company's operations or financial position. The Company, in accordance with SFAS 123, will disclose the impact as if the fair value based method was adopted in the footnotes of the 1996 Annual Report. S-12 18 BUSINESS Beckman is one of the world's leading manufacturers of instrument systems and test kits that make laboratories more efficient by simplifying and automating chemistry and biology based analytical procedures. The Company designs, manufactures, markets and services a broad range of laboratory instrument systems, reagents and related products, which customers typically use to conduct basic scientific research, new product research and development or diagnostic analysis of patient samples. In 1995 about 60 percent of total sales were for diagnostic applications, principally in hospital laboratories, while about 40 percent of sales were for life science applications in universities, medical schools and research institutes, or new product research and development in pharmaceutical and biotechnology companies. Slightly more than one-half of reported sales were to customers outside the United States. BACKGROUND The Company was founded in 1934 by Dr. Arnold O. Beckman to manufacture analytical instruments and became a publicly traded corporation in 1952, subsequently being listed on the New York Stock Exchange in 1955. In 1968 the Company expanded its laboratory instrument focus to include health care applications in clinical diagnostics. Beckman was acquired by SmithKline Corporation to form SmithKline Beckman Corporation ("SmithKline Beckman") in 1982, and the Company was operated as a wholly owned subsidiary of SmithKline Beckman until November 4, 1988. At that time approximately 16% of Beckman's common stock was sold in a public offering and the stock was listed on the New York Stock Exchange. On July 26, 1989, SmithKline Beckman distributed the remainder of its Beckman common stock as a tax free dividend to the stockholders of SmithKline Beckman. This was part of a transaction involving the merger of SmithKline Beckman and Beecham Group p.l.c., a public limited company organized under the laws of the United Kingdom ("Beecham"). Since that time Beckman has operated as a fully independent publicly owned company. SIMPLIFICATION AND AUTOMATION OF LABORATORY PROCESSES The Company's primary expertise and activity is the integration of chemical, biological, engineering and software sciences into complete systems that simplify and automate biologically focused laboratory processes and the distribution and support of those systems around the world. These laboratory processes can generally be grouped into four categories: Synthesis and Sample Preparation/Handling -- Synthesizing compounds useful in subsequent analysis and scientific investigation or placing material into a proper container, with necessary pretreatment, dilution, measurement, weighing and identification. Separation -- Isolating materials of interest from extraneous material or separating mixtures into individual constituents, often in preparation for subsequent processing and measurement. Detection, Measurement and Characterization -- Determining the identity, structure, or quantity of specific analytes (compounds or molecules of interest) present in sample specimens. Data Processing -- Acquiring, reporting, analyzing, archiving or calculating the results of laboratory analysis. Beckman's experience, knowledge and ability in simplifying and automating these processes for biological laboratories forms a technological continuum that extends across the Company. From this common technical base comes a range of products that are configured to meet specific needs of academic research, pharmaceutical and biotechnology companies, hospitals, physicians' offices and reference laboratories (large central laboratories to which hospitals and physicians refer specialized tests). By serving several customer groups with differing needs related through common science, the Company has the opportunity to broadly apply its technology. There is a corresponding scientific and technical continuum reflected in customer laboratories. Virtually all new analytical methods and tests originate in academic research in universities and medical S-13 19 schools. If the utility of a new method or test is demonstrated by fundamental research, it often will then be used by pharmaceutical investigators, biotechnology companies, teaching hospitals or specialized clinical laboratories in an investigatory mode. In some cases these new techniques eventually emerge in routine, high volume clinical testing at hospitals and reference labs. Generally instruments used at each stage from research to routine clinical applications employ the same fundamental processes but may differ in operating features such as number of tests performed per hour and degree of automation. MARKETS Beckman's products facilitate a wide range of laboratory processes in facilities concerned with cells, subcellular particles, biochemical compounds and analysis of patient samples. In 1995 the world wide market for the types of products the Company provides was estimated at about $6.0 billion. Slightly over one-half of this market was in clinical diagnostic applications, with the remaining portion of the market in more general purpose life science applications. Other similar or related product categories not currently offered by the Company represent an additional market potential which is estimated to be approximately $10.0 billion. The size and growth of markets for the Company's products are influenced by technological innovation in bioanalytical practice, government funding for basic and disease related research (for example, heart disease, AIDS and cancer), research and development spending by biotechnology and pharmaceutical companies, health care spending and physician practice. PRODUCTS The Company offers a wide range of instrument systems and related products, including consumables, accessories, and support services, which can be grouped into categories by type of laboratory process or application: Synthesis and Sample Preparation/Handling Separation Processes Detection, Measurement and Characterization Data Processing Automated General Chemistry for Clinical Diagnostics Special Chemistry Applications for Clinical Diagnostics PRODUCT SALES AS A PERCENTAGE OF TOTAL PRODUCT SALES FOR CATEGORIES REPRESENTING MORE THAN 10 PERCENT OF SALES
1995 1994 1993 ---- ---- ---- Separation Processes........................................... 26 28 27 Automated General Chemistry for Clinical Diagnostics........... 41 40 40 Special Chemistry Applications for Clinical Diagnostics........ 19 20 20
SYNTHESIS AND SAMPLE PREPARATION/HANDLING DNA SYNTHESIZERS DNA synthesizers automate the process of making synthetic oligonucleotides from organic chemicals. The Beckman Oligo Series 1000 DNA synthesizers include a single user one-column system and a multi-user eight column system. Both systems reduce the time required for synthesis and inform the user of synthesis progress by providing reaction and reagents status throughout the process. The Company recently introduced its UltraFAST synthesis chemistry in a packaging which is also compatible with certain competitive DNA synthesizers. Oligo systems sell in the $18,000 to $30,000 price range. S-14 20 ROBOTIC WORKSTATIONS The Biomek(R) automated laboratory workstations perform complex operations involving liquids, including dispensing measured samples, adding reagents, diluting, mixing and transferring small volumes between reaction vessels. The workstations handle multiple samples in parallel and may be equipped with a photometer for detection purposes. The second generation Biomek 2000 workstation that was introduced in 1994 includes an easy-to-use Windows*-based BioWorks(TM) operating system that can be easily programmed to automate complex and repetitive tasks, including sample preparation for DNA sequencing and automated screening of chemical libraries for new pharmaceutical drugs. These systems were well received by customers in 1995. Biomek systems range in price from $35,000 to over $80,000. (*Windows is a trademark of Microsoft Corporation.) SEPARATION PROCESSES CENTRIFUGES Centrifuges separate liquid sample mixtures on the basis of density (weight per unit volume) differences between the mixture's components. Samples are put into tubes which are placed in rotors and spun at speeds varying from a few thousand to 120,000 revolutions per minute ("rpm"). The resulting centrifugal forces, which can exceed 800,000 times the force of gravity, cause sample components to separate according to their density. Centrifuges are used for the nondestructive separation of protein and DNA fractions, cellular components and other materials of interest in modern biotechnology. In addition to efficiency (low power consumption), reliability and an environmentally friendly design (e.g., without freon) on many models, Beckman centrifuges are distinguished from those of competitors by the wide variety of unique rotor, tube and adapter designs available to meet the precise needs of customer applications, including the separation of blood cells from serum, an important use in clinical diagnostic laboratories. Beckman manufacturers a broad line of centrifuges with varying speed characteristics ranging from "low speed" (few thousand rpm) to "high speed" (10,000 to 35,000 rpm) to "ultracentrifuges" (35,000 to 120,000 rpm) and sample capacities ranging from microliters (one millionth of a liter) to liters. The Avanti(R) family of centrifuges being introduced by the Company provides a revolutionary high-torque drive system which accelerates and brakes in half the time of conventional high-speed drives, thereby significantly reducing the time required to process typical samples. Prices of the Company's centrifuges vary from about $2,000 for a small low speed centrifuge to over $50,000 for an ultracentrifuge and over $100,000 for an analytical ultracentrifuge. HIGH PERFORMANCE LIQUID CHROMATOGRAPHS ("HPLC") HPLC systems rely upon the difference in the rates of passage of the components in a chemical mixture through a tubular column filled with chemically active material. HPLC systems are powerful separation devices for biologically active compounds, since they are generally non-destructive, sensitive and capable of resolving very complex mixtures of similar compounds. The System Gold(R) Nouveau HPLC manufactured by Beckman is designed to address the needs of the pharmaceutical, biotechnology, food, beverage and agricultural industries as well as those of life science researchers in academia. The system is modular, allowing it to be configured for a wide range of applications. Beckman's HPLC systems typically sell for $20,000 to $50,000. PROTEIN SEQUENCERS Beckman manufactures and sells protein sequencer systems and related chemicals. Protein sequencing is used to determine the primary structure, i.e., the amino acid sequence, of a protein. Protein sequencer systems sell in the range of $90,000 to $130,000. S-15 21 ELECTROPHORESIS Electrophoresis systems separate mixtures of proteins, DNA, and other molecules principally on the basis of differences in mass and electrical charge. The P/ACE(TM) capillary electrophoresis product line represents a powerful extension of electrophoresis technology by combining the discrimination power of traditional electrophoresis with the speed of HPLC. With several detection options, the result is an automated system for high speed, high sensitivity separation of a wide variety of compounds. In 1995 a new laser source for fluorescence detection and several new chemistry kits were introduced by the Company to expand the range of applications for capillary electrophoresis in DNA, protein and pharmaceutical analysis. P/ACE systems typically sell for $40,000 to $60,000. PROTEIN SEPARATION AND DNA SEQUENCING In 1995 the Company formed a marketing and service alliance with BioSepra Inc. ("BioSepra"), a biochromatography systems manufacturer, which expands the Company's biotechnology product line with systems that provide high speed, high resolution separation of biomolecules. In addition, to further broaden these product lines, the Company agreed to acquire over a three-year period 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. DETECTION AND MEASUREMENT SPECTROPHOTOMETER SYSTEMS Spectrophotometers detect and measure the presence of compounds in liquid mixtures by sensing the absorption of specific wavelengths of light as that light passes through the sample. Some Beckman spectrophotometers have the capability of measuring changes in absorption during biological reactions. These spectrophotometers, in conjunction with Beckman software, automatically control the time, temperature and wavelength of the measurement while computing and recording the results of the experiment. In 1995, the DU(R) 640B, a flexible and affordable bio-spectrophotometer system, was introduced to address the specific needs in molecular biology laboratories and biotechnology companies. Depending on the specific model, accessories or software, Beckman spectrophotometers sell in the $9,000 to $25,000 range. NUCLEAR COUNTERS Radioactive "labeling," which is the substitution or addition of a radioactive atom into a compound of interest, is a powerful and accepted method for tracing the path of a biochemical in a living system. A labeled compound which is fed to or injected into a test animal or plant can then be traced to specific tissue or waste product by detecting the presence of the radioactive label by scintillation counting. Beckman manufactures scintillation counters that incorporate sophisticated software and system features that combine accurate measurement with user convenience. The systems sell in the $16,000 to $30,000 range. DATA PROCESSING In addition to the software associated directly with Beckman's instrument systems, the Company produces computer software programs to aid in the data processing functions of analytical laboratories. These systems control laboratory instruments, direct data acquisition from the instruments, and compute, store and report the results in formats needed for internal purposes and satisfaction of regulatory requirements. Beckman's data management systems are characterized by several features, including the capability to operate on a variety of manufacturers' computers and applications flexibility which lets customers configure the system to meet their individual needs. These systems vary greatly in cost depending upon the customer's requirements, but typically range from $50,000 to $250,000. S-16 22 AUTOMATED GENERAL CHEMISTRY FOR CLINICAL DIAGNOSTICS Automated general chemistry systems automatically detect and quantify various chemical substances of clinical interest (analytes) in human blood, urine and other body fluids. Beckman offers several general chemistry systems with a range of capabilities to meet specific customer requirements, principally for use in medium to large hospital laboratories, but also with some application in reference laboratories. SYNCHRON(R) SYSTEMS The Company's SYNCHRON(R) line of automated general chemistry systems is a family of modular automated diagnostic instruments and the reagents, standards and other consumable products required to perform commonly requested diagnostic tests. The SYNCHRON line was developed in response to changes in reimbursement policies for hospital and clinical laboratories that required them to be more efficient. The SYNCHRON systems have been designed as compatible modules which may be used independently or in various combinations with each other to meet the specific needs of individual customers. The smallest of these modules, the SYNCHRON CX(R)3 analyzer, determines the concentration of eight of the most commonly measured analytes. The SYNCHRON CX3 DELTA, introduced in 1994, is an extension of the original CX(R)3 that adds computer enhanced software features, including positive sample identification and up to nine "on-board" chemistries. The SYNCHRON CX4CE, CX5CE, and CX7 are computer enhanced models offering bi-directional communications with laboratory information systems. The SYNCHRON series was further extended in 1995 by the introduction of the SYNCHRON CX4 DELTA, CX5 DELTA and CX7 DELTA. These models offer industry leading, innovative software features to enhance laboratory productivity and a menu of over 65 different types of tests. The extensive menu includes immunoproteins, therapeutic drugs, drugs of abuse, and a complete listing of general chemistries. SYNCHRON systems range in price from $49,000 to $185,000 and are sold principally based on their ability to improve laboratory efficiency. OTHER AUTOMATED CLINICAL CHEMISTRY PRODUCTS The Company has a stand alone electrolyte analyzer, the SYNCHRON EL-ISE(R), that provides automated analysis of patient electrolyte concentrations such as sodium, potassium, chloride, calcium and lithium. Beckman also offers a family of low cost instruments that perform glucose, blood urea nitrogen or creatinine analysis. SPECIAL CHEMISTRY APPLICATIONS FOR CLINICAL DIAGNOSTICS IMMUNOCHEMISTRY SYSTEMS The Array(R) 360 Protein and Therapeutic Drug Monitoring Systems combine automated instrumentation and advanced software that significantly enhance the efficiency of protein and drug analysis. The Array systems provide automated random access testing which allows the operator to mix samples at random, eliminating the need to analyze samples for the same analyte in batches. At the customer's option, the systems can incorporate a computer enhancement that allows automatic reading of bar-coded sample tubes for positive sample identification and bi-directional communication with the laboratory's information system. Array systems sell in the $45,000 to $55,000 price range. In January 1996, the Company acquired Hybritech Incorporated ("Hybritech"), a San Diego-based life sciences and diagnostics company. This acquisition will expand the Company's capabilities for the development and manufacture of high sensitivity immunoassays, including cancer tests. Chief among these products is a test for prostate specific antigen (PSA), utilized as an aid in the detection (in conjunction with digital rectal examination) and monitoring of prostate cancer. Currently this is the only FDA approved test for such detection. S-17 23 ELECTROPHORESIS FOR CLINICAL DIAGNOSTICS The Appraise(R) densitometer and the Paragons Electrophoresis Systems allow the Company to offer a full range of electrophoresis products that provide specialized protein analysis for clinical laboratories. Paragon reagent kits are used in the diagnosis of diabetes, cardiac, liver and other diseases. The Appraise densitometer can be used in conjunction with Paragon kits. It ranges in price from $17,000 to $24,000. In 1995 the Company introduced the first capillary electrophoresis system specifically designed for the clinical laboratory, the Paragon CZE(TM) 2000. This system is designed to fully automate the manual and somewhat tedious conventional electrophoresis analysis of serum protein electrophoresis ("SPE") and immunofixation electrophoresis ("IFE"). Positioned to complement the Paragon gels and the Appraise, the Paragon CZE 2000 is targeted at high volume electrophoresis labs worldwide. POINT OF CARE -- RAPID TEST PRODUCTS The Company also produces single use self-contained diagnostic test kits for use in physicians' offices, clinics, hospitals and other medical settings. The Hemoccult(R) product line is used as an aid in screening for gastrointestinal disease, most importantly colorectal cancer. In 1994 the Company introduced the FlexSure(R) HP test kit, a test used as an aid in the diagnosis of H.pylori infection which is associated with several gastrointestinal diseases, including peptic ulcers and gastric cancer. In addition, through its Hybritech acquisition, the Company will offer the ICON(R) test kits featuring a high sensitivity pregnancy test widely used by health care practitioners. RESEARCH AND DEVELOPMENT The Company's new products originate from four sources: internal research and development ("R&D") programs; external collaborative efforts with individuals in academic institutions and technology companies; devices or techniques that are generated in customers' laboratories; and business acquisitions. The Company's R&D teams are skilled in optics, chemistry, electronics, software, mechanical and other engineering disciplines, in addition to a broad range of biological and chemical sciences. Research studies are usually conducted in conjunction with individuals in academic institutions or other outside scientists. Development programs focus on production of new generations of existing product lines, such as the SYNCHRON(R) analyzers, as well as new product categories not currently offered by the Company. Other areas of pursuit include innovative approaches to immunochemistry, molecular biology, advanced electrophoresis technologies, automated sample processing and information technologies The Company's R&D expenditures for the periods ended March 31, 1996 and 1995 were $24.7 million and $22.1 million, respectively, and for fiscal years 1995, 1994, and 1993 were $91.7 million, $91.5 million and $93.3 million, respectively. Management intends to maintain the present level of the Company's investment in R&D spending. SALES AND SERVICE The Company has sales in over 120 countries and maintains its own marketing, service and sales forces throughout the world. While nearly all of the Company's products are distributed by Beckman sales groups, the Company employs independent distributors to serve those markets that are more efficiently reached through such channels. The Company operates a European Administration Center ("EAC") in Nyon, Switzerland. In addition to finance and administrative services, the EAC provides certain sales and customer service administrative support to the Company's subsidiaries located in Europe. Beckman's sales force is technically educated and trained in the operation and application of the Company's products. The sales force is supported by a staff of scientists and technical specialists in each product line and in each major scientific discipline served by the Company's products. S-18 24 In addition to direct sales of its instruments, the Company leases certain instruments to its customers, principally those used for clinical diagnostic applications in hospitals. Beckman provides accessory products, consumables and service for its instruments worldwide. Service offices and inventory depots are associated with sales offices, subsidiaries and dealer locations. The Company considers its reputation for service responsiveness and competence to be an important competitive asset. PATENTS AND TRADEMARKS To complement and protect the innovations created by the Company's R&D efforts, the Company has an active patent protection program which includes nearly 500 active U.S. patents and patent applications. The Company also files important corresponding applications in principal foreign countries. The Company has taken an aggressive posture in protecting its patent rights; however, no one patent is considered essential to the success of the business. The Company's primary trademark is "Beckman," with the trade name also being Beckman or Beckman Instruments, Inc. The Company vigorously protects its primary trademark, which is used on the Company's products and is recognized throughout the worldwide scientific and diagnostic community. The Company owns and uses secondary trademarks on various products, but none of these secondary trademarks is considered of primary importance to the business. S-19 25 DESCRIPTION OF THE DEBENTURES The following information concerning the % Debentures Due , 2026 (the "Debentures") offered hereby supplements and should be read in conjunction with the statements in the accompanying Prospectus under the caption "Description of Debt Securities." Capitalized terms not otherwise defined herein shall have the meanings given to them in the accompanying Prospectus. GENERAL The Debentures will be issued as Senior Securities under the Senior Indenture dated as of , 1996 (the "Indenture"), which is more fully described in the accompanying Prospectus. The Debentures will be issued as unsecured obligations of the Company in an aggregate principal amount of $100,000,000 and will mature on , 2026. The Debentures will bear interest from , 1996, payable semi-annually in arrears on each and , commencing , 1996, at rates set forth on the cover page of this Prospectus Supplement, to the persons in whose names the Debentures are registered on the preceding and , respectively. RESTRICTIVE COVENANTS The Debentures are entitled to the benefit of certain restrictive covenants described in the accompanying Prospectus under the heading "Description of Debt Securities -- Restrictive Covenants." OPTIONAL REDEMPTION The Debentures will be redeemable, in whole or in part, at the option of the Company at any time after , 2006 at a redemption price equal to the greater of (i) 100% of the principal amount of such Debentures or (ii) as determined by an Independent Investment Banker (as defined), the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued interest thereon to the date of redemption. "Adjusted Treasury Rate" means, with respect to any redemption date, the rate per annum equal to the semiannual equivalent yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such redemption date, plus 0.10%. "Comparable Treasury Issue" means the United States Treasury security selected by an Independent Investment Banker as having a maturity comparable to the remaining term of the Debentures to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of such Debentures. "Independent Investment Banker" means one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Company. "Comparable Treasury Price" means, with respect to any redemption date, (i) the average of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) on the third Business Day preceding such redemption date, as set forth in the daily statistical release (or any successor release) published by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release (or any successor release) is not published or does not contain such prices on such Business Day, (A) the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Quotations. "Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Treasury Reference Dealer at 5:00 p.m. on the third Business Day preceding such redemption date. "Reference Treasury Dealer" means each of Goldman, Sachs & Co., Citicorp Securities, Inc. and First Chicago Capital Markets, Inc. and their respective successors; provided, however, that if any of the S-20 26 foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a "Primary Treasury Dealer"), the Company shall substitute therefor another Primary Treasury Dealer. Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each holder of the Debentures to be redeemed. Unless the Company defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Debentures or portions thereof called for redemption. The Debentures will not be entitled to the benefit of a sinking fund. OPTIONAL REPAYMENT The Debentures may be repaid on , 2006, at the option of the holders of the Debentures, at 100% of their principal amount, together with accrued interest to , 2006. In order for a holder to exercise this option, the Company must receive at its office or agency in New York, New York, during the period beginning on , 2006 and ending at 5:00 p.m. (New York City time) on , 2006 (or, if , 2006 is not a Business Day, the next succeeding Business Day), the Debentures with the form entitled "Option to Elect Repayment on , 2006" on the reverse of the Debentures duly completed. Any such notice received by the Company during the period beginning on , 2006 and ending at 5:00 p.m. (New York City time) on , 2006 shall be irrevocable. See "-- Book-Entry System." The repayment option may be exercised by a holder of Debentures for less than the entire principal amount of the Debentures held by such holder, so long as the principal amount that is to be repaid is equal to $1,000 or an integral multiple of $1,000. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of any Debentures for repayment will be determined by the Company, whose determination will be final and binding. Failure by the Company to repay the Debentures when required as described in the preceding paragraph will result in an Event of Default under the Indenture. As long as the Debentures are represented by a Global Security, DTC or DTC's nominee will be the registered holder of the Debentures and therefore will be the only entity that can exercise a right to repayment. See "-- Book-Entry System." CHANGE OF CONTROL Upon a Change of Control Triggering Event, each holder of a Debenture shall have the right to require that the Company repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such holder's Debentures at a repurchase price in cash equal to 100% of the aggregate principal amount thereof plus accrued interest, if any, to the date of such repurchase. Within 30 days following any Change of Control Triggering Event, the Company will be required to mail a notice to each holder of a Debenture (with a copy to the Trustee) stating (1) that a Change of Control Triggering Event has occurred and that such holder has the right to require the Company to repurchase such holder's Debentures at a repurchase price in cash equal to 100% of the aggregate principal amount thereof plus accrued interest, if any, to the date of repurchase (the "Change of Control Offer"); (2) the repurchase date, which shall be a Business Day and be not earlier than 20 Business Days or later than 60 Business Days from the date such notice is mailed (the "Repurchase Date"); (3) that interest on any Debenture tendered will continue to accrue; (4) that interest on any Debenture accepted for payment pursuant to the Change of Control Offer shall cease to accrue after the repurchase of any Debenture on the Repurchase Date; (5) that holders electing to have a Debenture purchased pursuant to the Change of Control Offer will be required to surrender such Debenture, with the form entitled "Option to Elect Purchase" on the reverse of the Debenture completed, to the Trustee at the address specified in the notice prior to the close of business on the Business Day prior to the Repurchase Date; (6) that holders of Debentures will be entitled to withdraw their election on the terms and conditions set forth in such notice; and (7) that holders of Debentures that elect to have their Debentures purchased only in part will be issued new Debentures in a principal amount equal to the then unpurchased portion of the Debentures surrendered. For so long as the Debentures are in global form, upon a Change of Control Triggering Event, the Company will be required to deliver to DTC, within the time periods specified above, for re-transmittal to its participants, a notice substantially to the effect specified in clauses (1) through (4) and (6) of the S-21 27 previous paragraph. Such notice shall also specify the required procedures (furnished by DTC) for holders of interests in the Global Security to tender and receive payment of the purchase price for interests in accordance with DTC's rules, regulations and practices (including DTC's "Repayment Option Procedures" to the extent applicable). On the Repurchase Date, the Company shall (i) accept for payment such surrendered Debentures or portions thereof tendered pursuant to the Change of Control Offer; (ii) deposit with the Trustee money sufficient to pay the purchase price of all Debentures or portions thereof so tendered and (iii) deliver or cause to be delivered to the Trustee Debentures so accepted with an officers' certificate identifying the Debentures or portions thereof so tendered. The Company will publicly announce the result of the Change of Control Offer as soon as practicable after the Repurchase Date. The Company has agreed to comply with all applicable tender offer rules, including, without limitation, Rule 14e-1 under the Exchange Act in connection with a Change of Control Offer. The Change of Control provisions may not be waived by the Trustee or the Board of Directors of the Company. The Change of Control provisions may in certain circumstances make more difficult or discourage a takeover of the Company and, thus, the removal of incumbent management. The Change of Control provisions, however, are not the result of management's knowledge of any specific effort to accumulate shares of capital stock of the Company or to obtain control of the Company by a merger, tender offer, solicitation or otherwise, or part of a plan by management to adopt a series of anti-takeover provisions. In addition, the Change of Control provisions will not necessarily afford protection to holders of Debentures including protection against an adverse effect on the value of the Debentures, in the event that the Company or its subsidiaries and affiliates incur additional Indebtedness, whether through recapitalizations or otherwise. If a Change of Control Triggering Event were to occur, there can be no assurance that the Company would have sufficient funds to pay the Change of Control purchase price for all Debentures tendered by the holders thereof. In addition, the Company's ability to make such payment may be limited by the terms of its then-existing borrowing and other agreements. Certain of the agreements relating to the Company's bank indebtedness have similar change of control provisions that may have the effect of further limiting the Company's ability to pay the Change of Control purchase price for the Debentures tendered by the holders thereof. The failure of the Company to make such payment to holders of Debentures, if continued for 60 days after receipt of written notice of Default from the Trustee or the holders of at least 25% of the aggregate principal amount of the Debentures then outstanding, specifying such Default and requiring that it be remedied, would constitute an Event of Default under the terms of the Indenture. "Business Day" means any day other than a day on which banking institutions in the Borough of Manhattan, The City and State of New York, are authorized to close. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act), (ii) the adoption of a plan relating to the liquidation or dissolution of the Company, or (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 35% of the voting stock of the Company. "Change of Control Downgrade" means, with respect to any Change of Control, a downgrade in the rating assigned to the Debentures by two Rating Agencies arising out of or otherwise attributable to such Change of Control (whether or not such Change of Control has occurred at the time of such downgrade), unless, after giving effect to such downgrade, the rating assigned to the Debentures by either of such two Rating Agencies is Investment Grade. For purposes of the foregoing, and without limiting the generality thereof, a Change of Control Downgrade with respect to any Change of Control shall be deemed to have occurred if such Change of Control Downgrade occurs during any 90-day period beginning prior to and ending after the occurrence of such Change of Control. S-22 28 "Change of Control Triggering Event" means the later to occur of (i) any Change of Control and (ii) a Change of Control Downgrade with respect to such Change of Control. Both a Change of Control and a Change of Control Downgrade shall be required for a Change of Control Triggering Event to occur. "Investment Grade" means a rating in one of the four highest categories (without regard to subcategories within such rating categories) by a Rating Agency. "Rating Agency" means each of Standard & Poor's Ratings Group, Duff & Phelps Credit Rating Co. and Moody's Investors Service, Inc. (or, in either case, if such Person ceases to rate the Debentures for reasons outside the control of the Company, any other "nationally recognized statistical rating organization" (within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act) selected by the Company as a replacement Rating Agency). DEFEASANCE AND COVENANT DEFEASANCE The provisions of Section 1402 of the Indenture, relating to defeasance and discharge of indebtedness, and of Section 1403 of the Indenture, relating to certain restrictive covenants in the Indenture, are applicable to the Debentures. Such provisions are described in the accompanying Prospectus. BOOK-ENTRY SYSTEM The Debentures will be represented by Global Securities that will be deposited with, or on behalf of, DTC and registered in the name of a nominee of DTC. DTC has advised the company and the Underwriters as follows: DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC was created to hold securities of its participating organizations ("participants") and to facilitate the clearance and settlement of securities transactions, such as transfers and pledges, among its participants in such securities through electronic computerized book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. Participants include securities brokers and dealers (including the Underwriters), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own DTC. Access to DTC's book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. Persons who are not participants may beneficially own securities held by DTC only through participants. Unless and until they are exchanged in whole or in part for certificated Debentures in definitive form, the Global Securities may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC. The Debentures represented by the Global Securities will not be exchangeable for certificated Debentures, provided that if DTC is at any time unwilling, unable or ineligible to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will issue individual Debentures in definitive form in exchange for the Global Securities. In addition, the Company may at any time and in its sole discretion determine not to have Global Securities, and, in such event, will issue individual Debentures in definitive form in exchange for the Global Securities previously representing all such Debentures. In either instance, an owner of a beneficial interest in a Global Security will be entitled to physical delivery of Debentures in definitive form equal in principal amount to such beneficial interest and to have such Debentures registered in its name. Individual Debentures so issued in definitive form will be issued in denominations of $1,000 and any larger amount that is an integral multiple of $1,000 and will be issued in registered form only, without coupons. Payments of principal of and interest on the Debentures will be made by the Company through the Trustee to DTC or its nominee, as the case may be, as the registered owner of the Global Securities. Neither the Company nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of the Global Securities or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The S-23 29 Company expects that DTC, upon receipt of any payment of principal or interest in respect of the Global Securities, will credit the accounts of the related participants with payment in amounts proportionate to their respective holdings in principal amount of beneficial interest in the Global Securities as shown on the records of DTC. The Company also expects that payments by participants to owners of beneficial interests in the Global Securities will be governed by standing customer instructions and customary practices, as is now the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such participants. A further description of DTC's procedures with respect to the Debentures is set forth in the accompanying Prospectus under the heading "Description of Debt Securities -- Global Securities." So long as the Debentures are represented by a Global Security, DTC or DTC's nominee will be the only entity that can exercise a right to repayment pursuant to the holder's option to elect repayment of its Debentures. Notice by participants or by owners of beneficial interests in a Global Security held through such participants of the exercise of the option to elect repayment of beneficial interests in Debentures represented by a Global Security must be transmitted to DTC in accordance with its procedures on a form required by DTC and provided to participants. In order to ensure that DTC or DTC's nominee will timely exercise a right to repayment with respect to a particular Debenture, the beneficial owner of such Debenture must instruct the broker or other participant through which it holds an interest in such Debenture to notify DTC of its desire to exercise a right to repayment. Different firms have different cut-off times for accepting instructions from their customers and, accordingly, each beneficial owner should consult the broker or other participant through which it holds an interest in a Debenture in order to ascertain the cut-off time by which such an instruction must be given in order for timely notice to be delivered to DTC. The Company will not be liable for any delay in delivery of such notice to DTC. UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement, the Company has agreed to sell to each of the Underwriters named below, and each of such Underwriters has severally agreed to purchase, the principal amount of the Debentures set forth opposite its name below:
PRINCIPAL AMOUNT OF UNDERWRITER DEBENTURES --------------------------------------------------------------------- ------------ Goldman, Sachs & Co.................................................. $ Citicorp Securities, Inc............................................. First Chicago Capital Markets, Inc. ................................. ------------ Total...................................................... $100,000,000 ============
Under the terms and conditions of the Underwriting Agreement and the Pricing Agreement, the Underwriters are committed to take and pay for all of the Debentures, if any are taken. The Underwriters propose to offer the Debentures in part directly to the public at the initial public offering price set forth on the cover page of this Prospectus Supplement and in part to certain securities dealers at such price less a concession of % of the principal amount of the Debentures. The Underwriters may allow, and such dealers may reallow, a concession not to exceed % of the principal amount of the Debentures to certain brokers and dealers. After the Debentures are released for sale to the public, the offering price and other selling terms may from time to time be varied by the Underwriters. The Debentures are a new issue of securities with no established trading market. The Company has been advised by the Underwriters that the Underwriters intend to make a market in the Debentures but are not obligated to do so and may discontinue market making at any time without notice. No assurance can be given as to the liquidity of the trading market for the Debentures. In the ordinary course of their respective businesses, certain of the Underwriters and their affiliates engage and may in the future engage in investment banking and commercial banking activities with the Company and its subsidiaries. The Company has agreed to indemnify the several Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. S-24 30 $200,000,000 BECKMAN INSTRUMENTS, INC. DEBT SECURITIES ------------------------ The Company may from time to time offer Debt Securities consisting of debentures, notes and/or other evidences of indebtedness in one or more series at an aggregate initial offering price not to exceed $200,000,000 or its equivalent in any other currency or composite currency. The Debt Securities may be offered as separate series in amounts, at prices and on terms to be determined at the time of sale. The accompanying Prospectus Supplement sets forth with regard to the series of Debt Securities in respect of which this Prospectus is being delivered the title, aggregate principal amount, denominations (which may be in United States dollars, in any other currency or in a composite currency), maturity, rate, if any (which may be fixed or variable), and time of payment of any interest, any terms for redemption at the option of the Company or the holder, any terms for sinking fund payments, any listing on a securities exchange and the initial public offering price and any other terms in connection with the offering and sale of such series of Debt Securities. The Company may sell Debt Securities to or through underwriters, and also may sell Debt Securities directly to other purchasers or through agents. See "Plan of Distribution". The accompanying Prospectus Supplement sets forth the names of any underwriters or agents involved in the sale of the Debt Securities in respect of which this Prospectus is being delivered, the principal amounts, if any, to be purchased by underwriters and the compensation, if any, of such underwriters or agents. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ The date of this Prospectus is April 16, 1996. 31 IN CONNECTION WITH THE OFFERING OF CERTAIN DEBT SECURITIES, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF SUCH SECURITIES OR OTHER SECURITIES OF THE COMPANY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE- COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. ------------------------ THE COMMISSIONER OF INSURANCE OF THE STATE OF NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ------------------------ AVAILABLE INFORMATION Beckman Instruments, Inc. ("Beckman" or the "Company") has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement on Form S-3 (of which this Prospectus is a part) (together with all amendments thereto, the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Debt Securities offered hereby. This Prospectus does not and any Prospectus Supplement will not contain all of the information set forth in the Registration Statement, certain portions of which have been omitted as permitted by the rules and regulations of the Commission. Statements contained in this Prospectus and in any Prospectus Supplement as to the contents of any contract or other document are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference and the exhibits and schedules thereto. For further information regarding the Company and the Debt Securities, reference is hereby made to the Registration Statement and the exhibits and schedules thereto which may be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Commission. The Registration Statement, the exhibits and schedules forming a part thereof and the reports, proxy statements and other information filed by the Company with the Commission in accordance with the Exchange Act can be inspected and copied at the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional offices of the Commission: Seven World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the Company's common stock is listed on the New York Stock Exchange and similar information concerning the Company can be inspected and copied at the New York Stock Exchange, 20 Broad Street, New York, New York 10005. 2 32 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed by the Company with the Commission and are incorporated by reference herein: (i) Annual Report on Form 10-K/A for the fiscal year ended December 31, 1995; and (ii) Proxy Statement dated February 28, 1996. All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering made hereby shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing such documents. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus or any Prospectus Supplement to the extent that a statement contained herein, or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus or any Prospectus Supplement. This Prospectus incorporates documents by reference which are not presented herein or delivered herewith. These documents are available upon request from Beckman Instruments, Inc., 2500 Harbor Boulevard, Fullerton, California 92634, Attention: Office of Investor Relations, telephone (714) 773-7620. 3 33 THE COMPANY The Company is one of the world's leading manufacturers of instrument systems and test kits that make laboratories more efficient by simplifying and automating chemistry and biology based analytical procedures. The Company designs, manufacturers, markets and services a broad range of laboratory instrument systems, reagents and related products, which customers typically use to conduct basic scientific research, new product research and development or diagnostic analysis of patient samples. In 1995 about 60 percent of the Company's total sales were for diagnostic applications, principally in hospital laboratories, while about 40 percent of such sales were for life science applications in universities, medical schools and research institutes, or new product research and development in pharmaceutical and biotechnology companies. Slightly more than one-half of the Company's sales in 1995 were to customers outside of the United States. The Company's primary expertise and activity is the integration of chemical, biological, engineering and software sciences into complete systems that simplify and automate biologically focused laboratory processes and the distribution and support of those systems around the world. These laboratory processes can generally be grouped into four categories: - Synthesis and Sample Preparation/Handling. Synthesizing compounds useful in subsequent analysis and scientific investigation or placing material into a proper container, with necessary pretreatment, dilution, measurement, weighing and identification. - Separation. Isolating materials of interest from extraneous material or separating mixtures into individual constituents, often in preparation for subsequent processing and measurement. - Detection, Measurement and Characterization. Determining the identity, structure, or quantity of specific analytes (compounds or molecules of interest) present in sample specimens. - Data Processing. Acquiring, reporting, analyzing, archiving or calculating the results of laboratory analysis. Beckman's experience, knowledge and ability in simplifying and automating these processes for biological laboratories forms a technological continuum that extends across the Company. From this common technical base extends a range of products that are configured to meet specific needs of academic research, pharmaceutical and biotechnology companies, hospitals, physicians' offices and reference laboratories (large central laboratories to which hospitals and physicians refer specialized tests). By serving several customer groups with differing needs related through common science, the Company has the opportunity to broadly apply its technology. The Company was founded in 1934 as a California corporation and was reincorporated in Delaware in 1988. The Company's principal executive offices are located at 2500 Harbor Boulevard, Fullerton, California 92634, and its telephone number is (714) 871-4848. 4 34 USE OF PROCEEDS The net proceeds to be received by the Company from the sale of the Offered Debt Securities (as defined below) will be used as set forth in a Prospectus Supplement relating to such Offered Debt Securities. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for the Company for the periods indicated(1):
FISCAL YEAR ENDED DECEMBER 31, ---------------------------------------- 1995 1994 1993 1992 1991 ---- ---- ---- ---- ---- 4.1 4.5 (2) 4.3 3.7
- --------------- (1) The ratios of earnings to fixed charges were computed by dividing earnings by fixed charges. For this purpose, earnings includes income before income taxes and fixed charges excluding capitalized interest. Fixed charges includes interest expense, capitalized interest and a portion of rent expense deemed representative of the interest factor. (2) Earnings were insufficient to cover fixed charges by $53.9 million for the fiscal year ended December 31, 1993. 5 35 DESCRIPTION OF DEBT SECURITIES The following description of the terms of the Debt Securities sets forth certain general terms and provisions of the Debt Securities to which any Prospectus Supplement may relate. The particular terms of the Debt Securities offered by any Prospectus Supplement and the extent, if any, to which such general provisions may apply to the Debt Securities so offered will be described in the Prospectus Supplement relating to such Debt Securities. The Senior Debt Securities will be issued under an Indenture (the "Senior Indenture"), between the Company and a trustee, that will be filed as an exhibit to or incorporated by reference in the Registration Statement of which this Prospectus is a part. The Subordinated Debt Securities will be issued under an Indenture (the "Subordinated Indenture" and collectively with the Senior Indenture, the "Indenture"), between the Company and a trustee (collectively with the trustee under the Senior Indenture, the "Trustee"), that will be filed as an exhibit to or incorporated by reference in the Registration Statement of which this Prospectus is a part. The Company has appointed The First National Bank of Chicago as the Trustee for purposes of the Senior Indenture and the Subordinated Indenture, but may appoint additional or successor Trustees pursuant to the provisions of such Indentures. The following summaries of certain provisions of the Indenture do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all of the provisions of the Indenture, including the definitions therein of certain terms capitalized in this Prospectus. Wherever particular sections, articles or defined terms of the Indenture are referred to herein or in a Prospectus Supplement, such sections, articles or defined terms are incorporated herein or therein by reference. Unless specific reference is set forth below to the Senior Indenture or the Subordinated Indenture, the provisions described below are substantially identical in each such Indenture. GENERAL The Indenture will provide that Debt Securities in separate series may be issued thereunder from time to time without limitation as to aggregate principal amount. The Company may specify a maximum aggregate principal amount for the Debt Securities of any series. (Section 301) The Debt Securities are to have such terms and provisions which are not inconsistent with the Indenture, including as to maturity, principal and interest, as the Company may determine. Unless otherwise provided in the applicable Prospectus Supplement, the Senior Debt Securities will rank on a parity with other unsecured Senior Indebtedness of the Company, and the Subordinated Debt Securities will rank on a parity with other subordinated debt of the Company, and together with such other subordinated debt, will be subordinate and junior in right of payment to the prior payment in full of the Senior Indebtedness of the Company, as described below under "Subordination". The applicable Prospectus Supplement will set forth the price or prices at which the Debt Securities to be offered will be issued and will describe the following terms of such Debt Securities: (1) the title of such Debt Securities; (2) any limit on the aggregate principal amount of such Debt Securities or the series of which they are a part; (3) the Person to whom any interest on a Security of the series shall be payable, if other than the Person in whose name that Debt Security is registered at the close of business on the Regular Record Date for such interest; (4) the date or dates on which the principal of any of such Debt Securities will be payable; (5) the rate or rates per annum at which any of such Debt Securities will bear interest, if any, or the formula or provision pursuant to which such rate or rates are determined, the date or dates from which any such interest will accrue, the Interest Payment Dates on which any such interest will be payable and the Regular Record Date for any such interest payable on any Interest Payment Date; (6) the place or places where the principal of and any premium and interest on any of such Debt Securities will be payable; (7) the period or periods within which, the price or prices at which and the terms and conditions on which any of such Debt Securities may be redeemed, in whole or in part, at the option of the Company; (8) the obligation, if any, of the Company to redeem or purchase any of such Debt Securities pursuant to any sinking fund or analogous provision or at the option of the Holder thereof, and the period or periods within which, the price or prices at which and the terms and conditions 6 36 on which any of such Debt Securities will be redeemed or purchased, in whole or in part, pursuant to any such obligation; (9) the denominations in which any of such Debt Securities will be issuable, if other than denominations of $1,000 and any integral multiple thereof; (10) if the amount of principal of or any premium or interest on any of such Debt Securities may be determined with reference to an index or pursuant to a formula, the manner in which such amounts will be determined; (11) if other than the currency of the United States of America, the currency, currencies or currency units in which the principal of or any premium or interest on any of such Debt Securities will be payable (and the manner in which the equivalent of the principal amount thereof in the currency of the United States of America is to be determined for any purpose, including for the purpose of determining the principal amount deemed to be Outstanding at any time); (12) if the principal of or any premium or interest on any of such Debt Securities is to be payable, at the election of the Company or the Holder thereof, in one or more currencies or currency units other than those in which such Debt Securities are stated to be payable, the currency, currencies or currency units in which payment of any such amount as to which such election is made will be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount is to be determined); (13) if other than the entire principal amount thereof, the portion of the principal amount of any of such Debt Securities which will be payable upon declaration of acceleration of the Maturity thereof; (14) if the principal amount payable at the Stated Maturity of any of such Debt Securities will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which will be deemed to be such principal amount as of any such date for any purpose, including the principal amount thereof which will be due and payable upon any Maturity other than the Stated Maturity or which will be deemed to be Outstanding as of any such date (or, in any such case, the manner in which such deemed principal amount is to be determined); (15) if applicable, that such Debt Securities, in whole or any specified part, are defeasible pursuant to the provisions of the Indenture described under "Defeasance and Covenant Defeasance -- Defeasance and Discharge" or "Defeasance and Covenant Defeasance -- Covenant Defeasance", or under both such captions; (16) whether any of such Debt Securities will be issuable in whole or in part in the form of one or more Global Securities and, if so, the respective Depositaries for such Global Securities, the form of any legend or legends to be borne by any such Global Security in addition to or in lieu of the legend referred to under "Global Securities" and, if different from those described under such caption, any circumstances under which any such Global Security may be exchanged in whole or in part for Debt Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the names of Persons other than the Depositary for such Global Security or its nominee; (17) any terms by which any Debt Securities may be convertible into Common Stock, Preferred Stock or other securities of the Company; (18) any addition to or change in the Events of Default applicable to any of such Debt Securities and any change in the right of the Trustee or the Holders to declare the principal amount of any of such Debt Securities due and payable; (19) any addition to or change in the covenants in the Indenture described under "Restrictive Covenants" applicable to any of such Debt Securities; (20) whether such Debt Securities are subordinate to any other unsecured indebtedness of the Company; and (21) any other terms of such Debt Securities not inconsistent with the provisions of the Indenture. (Section 301) Debt Securities, including Original Issue Discount Securities, may be sold at a substantial discount below their principal amount. Certain special United States federal income tax considerations (if any) applicable to Debt Securities sold at an original issue discount may be described in the applicable Prospectus Supplement. In addition, certain special United States federal income tax or other considerations (if any) applicable to any Debt Securities which are denominated in a currency or currency unit other than United States dollars may be described in the applicable Prospectus Supplement. FORM, EXCHANGE AND TRANSFER The Debt Securities of each series will be issuable only in fully registered form, without coupons, and, unless otherwise specified in the applicable Prospectus Supplement, only in denominations of $1,000 and integral multiples thereof. (Section 302) 7 37 At the option of the Holder, subject to the terms of the Indenture and the limitations applicable to Global Securities, Debt Securities of each series will be exchangeable for other Debt Securities of the same series of any authorized denomination and of a like tenor and aggregate principal amount. (Section 305) Subject to the terms of the Indenture and the limitations applicable to Global Securities, Debt Securities may be presented for exchange as provided above or for registration of transfer (duly endorsed or with the form of transfer endorsed thereon duly executed) at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose. No service charge will be made for any registration of transfer or exchange of Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Such transfer or exchange will be effected upon the Security Registrar or such transfer agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. The Company has appointed the Trustee as Security Registrar. Any transfer agent (in addition to the Security Registrar) initially designated by the Company for any Debt Securities will be named in the applicable Prospectus Supplement. (Section 305) The Company may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, except that the Company will be required to maintain a transfer agent in each Place of Payment for the Debt Securities of each series. (Section 1002) If the Debt Securities of any series (or of any series and specified terms) are to be redeemed in part, the Company will not be required to (i) issue, register the transfer of or exchange any Debt Security of that series (or of that series and specified terms, as the case may be) during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any such Debt Security that may be selected for redemption and ending at the close of business on the day of such mailing or (ii) register the transfer of or exchange any Debt Security so selected for redemption, in whole or in part, except the unredeemed portion of any such Debt Security being redeemed in part. (Section 305) GLOBAL SECURITIES Some or all of the Debt Securities of any series may be represented, in whole or in part, by one or more Global Securities which will have an aggregate principal amount equal to that of the Debt Securities represented thereby. Each Global Security will be registered in the name of a Depositary or a nominee thereof identified in the applicable Prospectus Supplement, will be deposited with such Depositary or nominee or a custodian therefor and will bear a legend regarding the restrictions on exchanges and registration of transfer thereof referred to below and any such other matters as may be provided for pursuant to the Indenture. Notwithstanding any provision of the Indenture or any Debt Security described herein, no Global Security may be exchanged in whole or in part for Debt Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or any nominee of such Depositary unless (i) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or has ceased to be qualified to act as such as required by the Indenture, (ii) there shall have occurred and be continuing an Event of Default with respect to the Debt Securities represented by such Global Security or (iii) there shall exist such circumstances, if any, in addition to or in lieu of those described above as may be described in the applicable Prospectus Supplement. All securities issued in exchange for a Global Security or any portion thereof will be registered in such names as the Depositary may direct. (Sections 204 and 305) As long as the Depositary, or its nominee, is the registered Holder of a Global Security, the Depositary or such nominee, as the case may be, will be considered the sole owner and Holder of such Global Security and the Debt Securities represented thereby for all purposes under the Debt Securities and the Indenture. Except in the limited circumstances referred to above, owners of beneficial interests in 8 38 a Global Security will not be entitled to have such Global Security or any Debt Securities represented thereby registered in their names, will not receive or be entitled to receive physical delivery of certificated Debt Securities in exchange therefor and will not be considered to be the owners or Holders of such Global Security or any Debt Securities represented thereby for any purpose under the Debt Securities or the Indenture. All payments of principal of and any premium and interest on a Global Security will be made to the Depositary or its nominee, as the case may be, as the Holder thereof. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. These laws may impair the ability to transfer beneficial interests in a Global Security. Ownership of beneficial interests in a Global Security will be limited to institutions that have accounts with the Depositary or its nominee ("participants") and to persons that may hold beneficial interests through participants. In connection with the issuance of any Global Security, the Depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of Debt Securities represented by the Global Security to the accounts of its participants. Ownership of beneficial interests in a Global Security will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by the Depositary (with respect to participants' interests) or any such participant (with respect to interests of persons held by such participants on their behalf). Payments, transfers, exchanges and others matters relating to beneficial interests in a Global Security may be subject to various policies and procedures adopted by the Depositary from time to time. None of the Company, the Trustee or any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the Depositary's or any participant's records relating to, or for payments made on account of, beneficial interests in a Global Security, or for maintaining, supervising or reviewing any records relating to such beneficial interests. Secondary trading in notes and debentures of corporate issuers is generally settled in clearing-house or next day funds. In contrast, beneficial interests in a Global Security may trade in the Depositary's same-day funds settlement system, in which secondary market trading activity in those beneficial interests would be required by the Depositary to settle in immediately available funds. There is no assurance as to the effect, if any, that settlement in immediately available funds would have on trading activity in such beneficial interests. Also, settlement for purchases of beneficial interests in a Global Security upon the original issuance thereof may be required to be made in immediately available funds. PAYMENT AND PAYING AGENTS Unless otherwise indicated in the applicable Prospectus Supplement, payment of interest on a Debt Security on any Interest Payment Date will be made to the Person in whose name such Debt Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. (Section 307) Unless otherwise indicated in the applicable Prospectus Supplement, principal of and any premium and interest on the Debt Securities of a particular series will be payable at the office of such Paying Agent or Paying Agents as the Company may designate for such purpose from time to time, except that at the option of the Company payment of any interest may be made by check mailed to the address of the Person entitled thereto as such address appears in the Security Register. Unless otherwise indicated in the applicable Prospectus Supplement, the corporate trust office of the Trustee in The City of New York will be designated as the Company's sole Paying Agent for payments with respect to Debt Securities of each series. Any other Paying Agents initially designated by the Company for the Debt Securities of a particular series will be named in the applicable Prospectus Supplement. The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts, except that the Company will be required to maintain a Paying Agent in each Place of Payment for the Debt Securities of a particular series. (Section 1002) All moneys paid by the Company to a Paying Agent for the payment of the principal of or any premium or interest on any Debt Security which remain unclaimed at the end of two years after such principal, premium or interest has become due and payable will be repaid to the Company, and the 9 39 Holder of such Debt Security thereafter may look only to the Company for payment thereof. (Section 1003) RESTRICTIVE COVENANTS Unless any one or more of the following covenants are varied as permitted by the Indenture, which variation will be described in the applicable Prospectus Supplement, the following covenants will be applicable to each series of Debt Securities. Limitation on Liens The Indenture will provide that the Company will not, and will not permit any Restricted Subsidiary to, create, incur, issue, assume or guarantee any indebtedness of the Company or any Subsidiary secured by a Lien upon any Principal Property, or upon shares of capital stock or evidences of indebtedness issued by any Restricted Subsidiary and owned by the Company or any Restricted Subsidiary, now owned or hereafter owned by the Company, without making effective provision to secure all of the Debt Securities of each series then outstanding by such Lien, equally and ratably with any and all other indebtedness thereby secured, so long as such indebtedness shall be so secured. The foregoing restrictions shall not apply, however, to (1) Liens on any property existing at the time of the acquisition thereof; (2) Liens on property of a corporation existing at the time such corporation is merged into or consolidated with the Company or a Restricted Subsidiary or at the time of a sale, lease or other disposition of the properties of such corporation (or a division thereof) as an entirety or substantially as an entirety to the Company or a Restricted Subsidiary, provided that such Lien as a result of such merger, consolidation, sale, lease or other disposition is not extended to property owned by the Company or such Restricted Subsidiary immediately prior thereto; (3) Liens on property of a corporation existing at the time such corporation becomes a Restricted Subsidiary; (4) Liens securing indebtedness of a Restricted Subsidiary to the Company or to another Restricted Subsidiary; (5) Liens to secure all or part of the cost of acquisition, construction, development or improvement of the underlying property, or to secure indebtedness incurred to provide funds for any such purpose, provided that the commitment of the creditor to extend the credit secured by any such Lien shall have been obtained not later than twenty-four months after the later of (a) the completion of the acquisition, construction, development or improvement of such property or (b) the placing in operation of such property or of such property as so constructed, developed or improved; (6) Liens on any property created, assumed or otherwise brought into existence in contemplation of the sale or other disposition of the underlying property, whether directly or indirectly, by way of share disposition or otherwise; provided that the Company must have disposed of such property within 180 days from the creation of such Liens and any indebtedness secured by such Liens shall be without recourse to the Company or any Subsidiary; (7) Liens in favor of the United States of America or any State thereof, or any department, agency or instrumentality or political subdivision thereof, to secure partial, progress, advance or other payments; (8) Liens to secure indebtedness of joint ventures in which the Company or a Restricted Subsidiary has an interest, to the extent such Liens are on property or assets of, or equity interests in, such joint ventures; (9) Liens on Equipment Held for Resale; and (10) any indebtedness secured by Liens existing on the date of the Indenture or any extension, renewal or replacement or refunding of any Lien existing on the date of the Indenture or referred to in clauses (1) to (3) or (5); provided, however, that the aggregate principal amount of indebtedness secured thereby and not otherwise authorized by clauses (1) to (3) or (5), shall not exceed the aggregate principal amount of indebtedness, plus any premium or fee payable in connection with any such extension, renewal, replacement, or refunding, so secured at the time of such extension, renewal, replacement or refunding. Notwithstanding the restrictions described above, the Company and its Restricted Subsidiaries may incur, issue, assume or guarantee debt secured by Liens without equally and ratably securing the Debt Securities of each series then outstanding, provided, that at the time of such incurrence, issuance, assumption or guarantee, after giving effect thereto and to the retirement of any indebtedness which is concurrently being retired, the aggregate amount of all outstanding indebtedness secured by Liens so 10 40 incurred, other than any indebtedness secured by Liens permitted as described in clauses (1) through (10) above, and together with all outstanding Attributable Value of all sale and leaseback transactions permitted as described in "Limitation on Sale and Leaseback Transactions", does not exceed 15% of the Consolidated Net Tangible Assets (defined below) of the Company. (Section 1008) Limitation on Sale and Leaseback Transactions Sale and leaseback transactions by the Company or any Restricted Subsidiary involving any Principal Property are prohibited unless either (1) the Company or its Restricted Subsidiaries would be entitled pursuant to the provisions described in clauses (1) through (10) above under "Limitation on Liens" to issue, assume or guarantee indebtedness secured by a Lien on such Principal Property without equally and ratably securing the Debt Securities of each series then outstanding or (2) the Company or such Restricted Subsidiary shall apply, or cause to be applied, to the retirement of its secured debt within 120 days after the effective date of the sale and leaseback transaction, an amount not less than the greater of (i) the net proceeds of the sale of the Principal Property leased pursuant to such arrangement or (ii) the fair market value of the Principal Property so leased. This restriction will not apply to a sale and leaseback transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries or involving the taking back of a lease for a period of less than three years. Notwithstanding the restrictions described above, the Company or any Restricted Subsidiary may enter into a sale and leaseback transaction provided, that at the time of such transaction, after giving effect thereto, the Attributable Value thereof, together with all indebtedness secured by Liens permitted pursuant to the Indenture as described above under "Limitation on Liens" other than all indebtedness secured by Liens permitted as described in clauses (1) through (10) above under "Limitation on Liens" and other than the Attributable Value of such sale and leaseback transactions permitted by the preceding paragraph, does not exceed 15% of Consolidated Net Tangible Assets of the Company. (Section 1009) Certain Definitions The term "Attributable Value" in respect of any sale and leaseback transaction means, as of the time of determination, the total obligation (discounted to present value at the highest rate of interest specified by the terms of any series of Debt Securities then outstanding compounded semi-annually) of the lessee for rental payments (other than amounts required to be paid on account of property taxes as well as maintenance, repairs, insurance, water rates and other items which do not constitute payments for property rights) during the remaining portion of the base term of the lease included in such sale and leaseback transaction. (Section 101) "Consolidated Net Tangible Assets" of the Company means the aggregate amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (a) all current liabilities (excluding any indebtedness for money borrowed having a maturity of less than 12 months from the date of the most recent consolidated balance sheet of the Company but which by its terms is renewable or extendable beyond 12 months from such date at the option of the borrower) and (b) all goodwill, trade names, patents, unamortized debt discount and expense and any other like intangibles, all as set forth on the most recent consolidated balance sheet of the Company and computed in accordance with generally accepted accounting principles. (Section 101) "Equipment Held for Resale" means instrument systems and related accessories and components manufactured or assembled by the Company that are owned and held for placement in facilities of the Company's customers. "Lien" means, with respect to any property or assets, any mortgage or deed of trust, pledge, hypothecation, assignment, security interest, lien, encumbrance, or other security arrangement of any kind or nature whatsoever on or with respect to such property or assets (including any conditional sale or other title retention agreement having substantially the same economic effect as any of the foregoing). (Section 101) 11 41 "Principal Property" means any real property of the Company or any of its Subsidiaries, and any equipment located at or comprising a part of any such property, having a net book value, as of the date of determination, in excess of the greater of $50,000,000 and 10% of Consolidated Net Tangible Assets of the Company; provided, however, that Principal Property shall not include Equipment Held For Resale. (Section 101) "Restricted Subsidiary" means any Subsidiary of the Company which owns or leases a Principal Property. (Section 101) CONSOLIDATION, MERGER AND SALE OF ASSETS The Company may not consolidate with or merge into, or convey, transfer or lease its properties and assets substantially as an entirety to, any Person (a "successor Person"), and may not permit any Person to merge into, or convey, transfer or lease its properties and assets substantially as an entirety to, the Company, unless (i) the successor Person (if any) is a corporation, partnership, trust or other entity organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes the Company's obligations on the Debt Securities and under the Indenture, (ii) immediately after giving effect to the transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing under the Indenture, (iii) if, as a result of the transaction, property of the Company would become subject to a Lien that would not be permitted under the limitation on Liens described above under "Restrictive Covenants", the Company takes such steps as shall be necessary to secure the Debt Securities equally and ratably with (or prior to) the indebtedness secured by such Lien and (iv) certain other conditions are met. (Section 801) EVENTS OF DEFAULT Each of the following will constitute an Event of Default under the Indenture with respect to Debt Securities of any series: (a) failure to pay principal of or any premium on any Debt Security of that series when due, whether or not such payment is prohibited by the subordination provisions of the Subordinated Indenture; (b) failure to pay any interest on any Debt Securities of that series when due, continued for 30 days, whether or not such payment is prohibited by the subordination provisions of the Subordinated Indenture; (c) failure to deposit any sinking fund payment, when due, in respect of any Debt Security of that series, whether or not such deposit is prohibited by the subordination provisions of the Subordinated Indenture; (d) failure to perform any other covenant of the Company in the Indenture (other than a covenant included in the Indenture solely for the benefit of a series of Debt Securities other than that series), continued for 60 days after written notice has been given as provided in the Indenture; (e) failure to pay when due (subject to any applicable grace period) the principal of, or acceleration of, any indebtedness for money borrowed by the Company (including a default with respect to Debt Securities other than that series) having an aggregate principal amount outstanding of at least $15,000,000, if in the case of any such failure, such indebtedness has not been discharged or, in the case of any such acceleration, such acceleration has not been rescinded or annulled, in each case within 10 days after written notice has been given by the Trustee, or the Holders of at least 25% in aggregate principal amount of the Outstanding Debt Securities of that series, as provided in the Indenture; (f) certain events in bankruptcy, insolvency or reorganization; and (g) any other Event of Default provided with respect to Debt Securities of that series. (Section 501) If an Event of Default (other than an Event of Default described in clause (f) above) with respect to the Debt Securities of any series at the time Outstanding shall occur and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Outstanding Debt Securities of that series by notice as provided in the Indenture may declare the aggregate principal amount of the Debt Securities of that series (or, in the case of any Debt Security that is an Original Issue Discount Security or the aggregate principal amount of which is not then determinable, such portion of the aggregate principal amount of such Debt Security, or such other amount in lieu of such aggregate principal amount, as may be specified in the terms of such Debt Security) to be due and payable immediately. If an Event of Default described in clause (f) above with respect to the Debt Securities of any series at the time 12 42 Outstanding shall occur, the aggregate principal amount of all the Debt Securities of that series (or, in the case of any such Original Issue Discount Security or other Debt Security, such specified amount) will automatically, and without any action by the Trustee or any Holder, become immediately due and payable. After any such acceleration, but before a judgment or decree for payment of money has been obtained by the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of that series may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the Indenture. (Section 502) For information as to waiver of defaults, see "Modification and Waiver". Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Indenture provides that the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity. (Section 603) Subject to such provisions for the indemnification of the Trustee, the Indenture provides that Holders of at least a majority in aggregate principal amount of the Outstanding Debt Securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of that series. (Section 512) No Holder of any Debt Security of any series will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder, unless (i) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Debt Securities of that series, (ii) the Holders of at least 25% in aggregate principal amount of the Outstanding Debt Securities of that series have made written request, and such Holder or Holders have offered reasonable indemnity, to the Trustee to institute such proceeding as trustee and (iii) the Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the Outstanding Debt Securities of that series a direction inconsistent with such request, within 60 days after such notice, request and offer. (Section 507) However, such limitations do not apply to a suit instituted by a Holder of a Debt Security for the enforcement of payment of the principal of or any premium or interest on such Debt Security on or after the applicable due date specified in such Debt Security. (Section 508) The Company will be required to furnish to the Trustee annually a statement by certain of its officers as to whether or not the Company, to their knowledge, is in default in the performance or observance of any of the terms, provisions and conditions of the Indenture and, if so, specifying all such known defaults. (Section 1004) SUBORDINATION The payment of the principal of and interest on the Subordinated Debt Securities will, to the extent set forth in the Indenture relating thereto, be subordinated in right of payment to the prior payment in full of all Senior Indebtedness (as defined). Upon any payment or distribution of assets to creditors upon any liquidation, dissolution, winding up, reorganization, assignment for the benefit of creditors, marshalling of assets or any bankruptcy, insolvency, receivership or similar proceedings of the Company, the holders of all Senior Indebtedness will first be entitled to receive payment in full of all amounts due or to become due thereon before the Holders of the Subordinated Debt Securities will be entitled to receive any payment in respect of the principal of or interest thereon. In the event of the acceleration of the maturity of any Subordinated Debt Securities, the holders of all Senior Indebtedness will first be entitled to receive payment in full of all amounts due thereon before the Holders of the Subordinated Debt Securities will be entitled to receive any payment upon the principal of or interest thereon. No payments on account of principal or interest in respect of the Subordinated Debt Securities may be made if there shall have occurred and be continuing beyond any applicable grace period a default in any payment with respect to Senior Indebtedness, or if there shall have occurred an event of default with respect to any Senior Indebtedness permitting the holders thereof to accelerate the maturity thereof, or if any judicial 13 43 proceeding shall be pending with respect to any such default. (Article Fifteen of the Subordinated Indenture) By reason of such subordination, in the event of insolvency, Holders of the Subordinated Debt Securities may recover less, ratably, than other creditors of the Company, including holders of Senior Indebtedness. "Senior Indebtedness" will be defined in the Subordinated Indenture to mean the principal of (and premium, if any) and interest on (a) all indebtedness of the Company (including indebtedness of others guaranteed by the Company) other than the Subordinated Debt Securities, which is (i) for money borrowed or (ii) evidenced by a note or similar instrument given in connection with the acquisition of any businesses, properties or assets of any kind, (b) obligations of the Company as lessee under leases required to be capitalized on the balance sheet of the lessee under generally accepted accounting principles and leases of property or assets made as part of any sale and leaseback transaction to which the Company is a party and (c) amendments, renewals, extensions, modifications and refundings of any such indebtedness or obligation, unless in any case in the instrument creating or evidencing any such indebtedness or obligation or pursuant to which the same is outstanding it is provided that such indebtedness or obligation is not superior in right of payment to the Subordinated Debt Securities or such indebtedness or obligation is subordinated to senior indebtedness of the Company to substantially the same extent as the Subordinated Debt Securities are subordinated to the Senior Indebtedness, in each case whether such indebtedness or obligation is outstanding on the date of the Indenture or thereafter created, incurred or assumed. The term "indebtedness for money borrowed" when used with respect to the Company shall mean any obligation of, or obligation guaranteed by, the Company for repayment of borrowed money, whether or not evidenced by bonds, debentures, notes or other written instruments, and any deferred obligation of, or any such obligation guaranteed by the Company, for the payment of the purchase price of property or assets (but not including trade payables). (Section 101 of the Subordinated Indenture) The Indenture relating to the Subordinated Debt Securities does not prohibit or limit the incurrence of additional Senior Indebtedness. As of December 31, 1995, the Company had outstanding $189.8 million of Senior Indebtedness. MODIFICATION AND WAIVER Modifications and amendments of the Indenture may be made by the Company and the Trustee with the consent of the Holders of at least a majority in aggregate principal amount of the Outstanding Debt Securities of each series affected by such modification or amendment; provided, however, that no such modification or amendment may, without the consent of the Holder of each Outstanding Debt Security affected thereby, (a) change the Stated Maturity of the principal of, or any installment of principal of or interest on, any Debt Security, (b) reduce the principal amount of, or any premium or interest on, any Debt Security, (c) reduce the amount of principal of an Original Issue Discount Security or any other Debt Security payable upon acceleration of the Maturity thereof, (d) change the place or currency of payment of principal of, or any premium or interest on, any Debt Security, (e) impair the right to institute suit for the enforcement of any payment on or with respect to any Debt Security, (f) modify the subordination provisions in a manner adverse to the Holders of the Debt Securities, (g) reduce the percentage in principal amount of Outstanding Debt Securities of any series, the consent of whose Holders is required for modification or amendment of the Indenture, (h) reduce the percentage in principal amount of Outstanding Debt Securities of any series necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults or (i) modify such provisions with respect to modification and waiver. (Section 902) The Holders of at least a majority in aggregate principal amount of the Outstanding Debt Securities of any series may waive compliance by the Company with certain restrictive provisions of the Indenture. (Section 1010) The Holders of at least a majority in aggregate principal amount of the Outstanding Debt Securities of any series may waive any past default under the Indenture, except a default in the payment of principal, premium or interest and certain covenants and provisions of the Indenture which cannot be 14 44 amended without the consent of the Holder of each Outstanding Debt Security of such series affected. (Section 513) The Indenture will provide that in determining whether the Holders of the requisite principal amount of the Outstanding Debt Securities have given or taken any direction, notice, consent, waiver or other action under the Indenture as of any date, (i) the principal amount of an Original Issue Discount Security that will be deemed to be Outstanding will be the amount of the principal thereof that would be due and payable as of such date upon acceleration of the Maturity thereof to such date, (ii) if, as of such date, the principal amount payable at the Stated Maturity of a Debt Security is not determinable (for example, because it is based on an index), the principal amount of such Debt Security deemed to be Outstanding as of such date will be an amount determined in the manner prescribed for such Debt Security and (iii) the principal amount of a Debt Security denominated in one or more foreign currencies or currency units that will be deemed to be Outstanding will be the U.S. dollar equivalent, determined as of such date in the manner prescribed for such Debt Security, of the principal amount of such Debt Security (or, in the case of a Debt Security described in clause (i) or (ii) above, of the amount described in such clause). Certain Debt Securities, including those for whose payment or redemption money has been deposited or set aside in trust for the Holders and those that have been fully defeased pursuant to Section 1402, will not be deemed to be Outstanding. (Section 101) Except in certain limited circumstances, the Company will be entitled to set any day as a record date for the purpose of determining the Holders of Outstanding Debt Securities of any series entitled to give or take any direction, notice, consent, waiver or other action under the Indenture, in the manner and subject to the limitations provided in the Indenture. If a record date is set for any action to be taken by Holders of a particular series, such action may be taken only by persons who are Holders of Outstanding Debt Securities of that series on the record date. To be effective, such action must be taken by Holders of the requisite principal amount of such Debt Securities within a specified period following the record date. For any particular record date, this period will be 180 days or such other period as may be specified by the Company, and may be shortened or lengthened from time to time. (Section 104) DEFEASANCE AND COVENANT DEFEASANCE If and to the extent indicated in the applicable Prospectus Supplement, the Company may elect, at its option at any time, to have the provisions of Section 1402, relating to defeasance and discharge of indebtedness, or Section 1403, relating to defeasance of certain restrictive covenants in the Indenture, applied to the Debt Securities of any series, or to any specified part of a series. (Section 1401) Defeasance and Discharge. The Indenture will provide that, upon the Company's exercise of its option (if any) to have Section 1402 applied to any Debt Securities, the Company will be discharged from all its obligations, and, in the case of Subordinated Debt Securities, the provisions of Article Fifteen of the Subordinated Indenture relating to subordination will cease to be effective, with respect to such Debt Securities (except for certain obligations to exchange or register the transfer of Debt Securities, to replace stolen, lost or mutilated Debt Securities, to maintain paying agencies and to hold moneys for payment in trust) upon the deposit in trust for the benefit of the Holders of such Debt Securities of money or U.S. Government Obligations, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on such Debt Securities on the respective Stated Maturities in accordance with the terms of the Indenture and such Debt Securities. Such defeasance or discharge may occur only if, among other things, the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Company has received from, or there has been published by, the United States Internal Revenue Service a ruling, or there has been a change in tax law, in either case to the effect that Holders of such Debt Securities will not recognize gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge were not to occur. (Sections 1402 and 1404) 15 45 Defeasance of Certain Covenants. The Indenture will provide that, upon the Company's exercise of its option (if any) to have Section 1403 applied to any Debt Securities, the Company may omit to comply with certain restrictive covenants, including those described under "Restrictive Covenants" and in clause (iii) under "Consolidation, Merger and Sale of Assets" and any that may be described in the applicable Prospectus Supplement, and the occurrence of certain Events of Default, which are described above in clause (d) (with respect to such restrictive covenants) and clause (e) under "Events of Default" and any that may be described in the applicable Prospectus Supplement, will be deemed not to be or result in an Event of Default and in the case of Subordinated Debt Securities the provisions of Article Fifteen of the Subordinated Indenture relating to subordination will cease to be effective, in each case with respect to such Debt Securities. The Company, in order to exercise such option, will be required to deposit, in trust for the benefit of the Holders of such Debt Securities, money or U.S. Government Obligations, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium, if any, and interest on such Debt Securities on the respective Stated Maturities in accordance with the terms of the Indenture and such Debt Securities. The Company will also be required, among other things, to deliver to the Trustee an Opinion of Counsel satisfying the requirements of the Indenture, to the effect that Holders of such Debt Securities will not recognize gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and defeasance were not to occur. In the event the Company exercised this option with respect to any Debt Securities and such Debt Securities were declared due and payable because of the occurrence of any Event of Default, the amount of money and U.S. Government Obligations so deposited in trust would be sufficient to pay amounts due on such Debt Securities at the time of their respective Stated Maturities but may not be sufficient to pay amounts due on such Debt Securities at the time of any acceleration resulting from such Event of Default. In such case, the Company would remain liable for such payments. (Sections 1403 and 1404) NOTICES Notices to Holders of Debt Securities will be given by mail to the addresses of such Holders as they may appear in the Security Register. (Section 106) TITLE The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name a Debt Security is registered as the absolute owner thereof (whether or not such Debt Security may be overdue) for the purpose of making payment and for all other purposes. (Section 308) GOVERNING LAW The Indenture and the Debt Securities will be governed by, and construed in accordance with, the law of the State of New York. (Section 112) INFORMATION CONCERNING THE TRUSTEE The Company maintains banking relationships in the ordinary course of business with the Trustee. The occurrence of a default under either Indenture could create a conflicting interest for the Trustee under the Trust Indenture Act of 1939, as amended by the Trust Indenture Reform Act of 1990 (the "Trust Indenture Act"). If the default has not been cured or waived within 90 days after the Trustee has or acquires a conflicting interest, the Trustee generally is required by the Trust Indenture Act to eliminate such conflicting interest or resign as Trustee with respect to the Senior Debt Securities or Subordinated Debt Securities. In the event of the Trustee's resignation, the Company shall promptly appoint a successor trustee with respect to the affected Debt Securities. 16 46 PLAN OF DISTRIBUTION The Company may sell Debt Securities to or through underwriters and also may sell Debt Securities directly to other purchasers or through agents. The distribution of the Debt Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Debt Securities, underwriters may receive compensation from the Company or from purchasers of Debt Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Debt Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Debt Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Company and any profit on the resale of Debt Securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act. Any such underwriter or agent will be identified, and any such compensation received from the Company will be described, in the Prospectus Supplement. Under agreements which may be entered into by the Company, underwriters and agents who participate in the distribution of Debt Securities may be entitled to indemnification by the Company against certain liabilities, including liabilities under the Act. If so indicated in the Prospectus Supplement, the Company will authorize underwriters or other persons acting as the Company's agents to solicit offers by certain institutions to purchase Debt Securities from the Company pursuant to contracts providing for payment and delivery on a future date. Institutions with which such contracts may be made include commercial and savings banks, insurance companies, pension funds, investment companies, educational and charitable institutions and others, but in all cases such institutions must be approved by the Company. The obligations of any purchaser under any such contract will be subject to the condition that the purchase of the Offered Debt Securities shall not at the time of delivery be prohibited under the laws of the jurisdiction to which such purchaser is subject. The underwriters and such other agents will not have any responsibility in respect of the validity or performance of such contracts. LEGAL MATTERS The validity of the Debt Securities will be passed upon for the Company by Latham & Watkins, Los Angeles, California and for any underwriters or agents by Sullivan & Cromwell, Los Angeles, California. EXPERTS The financial statements of the Company as of December 31, 1995 and 1994, and for each of the years in the three-year period ended December 31, 1995, have been incorporated by reference herein in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. The report of KPMG Peat Marwick LLP covering the December 31, 1994 and 1993, financial statements refers to the adoption of the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 112, "Employers' Accounting for Postemployment Benefits", in 1994 and Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", and Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions", in 1993. 17 47 ================================================================================ NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION. _______________ TABLE OF CONTENTS PROSPECTUS SUPPLEMENT
PAGE ---- The Company.......................... S-3 Use of Proceeds...................... S-3 Capitalization....................... S-4 Ratio of Earnings to Fixed Charges... S-4 Selected Historical Financial Data... S-5 Management's Discussion and Analysis of Historical Financial Condition and Results of Operations.......... S-6 Business............................. S-13 Description of the Debentures........ S-20 Underwriting......................... S-24
PROSPECTUS
PAGE ---- Available Information................ 2 Incorporation of Certain Documents by Reference.......................... 3 The Company.......................... 4 Use of Proceeds...................... 5 Ratio of Earnings to Fixed Charges... 5 Description of Debt Securities....... 6 Plan of Distribution................. 17 Legal Matters........................ 17 Experts.............................. 17
================================================================================ ================================================================================ $100,000,000 BECKMAN INSTRUMENTS, INC. % DEBENTURES DUE , 2026 ______________ [BECKMAN LOGO] ______________ GOLDMAN, SACHS & CO. CITICORP SECURITIES, INC. FIRST CHICAGO CAPITAL MARKETS, INC. ================================================================================ -----END PRIVACY-ENHANCED MESSAGE-----