10-K/A 1 a06-8880_110ka.htm AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 AND 15(D)

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-K/A

 

AMENDMENT NO. 1

 

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2005

 

Commission File Number 001-10109

 

BECKMAN COULTER, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

95-104-0600

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

 

 

 

4300 N. Harbor Boulevard,

 

 

Fullerton, California

 

92834-3100

(Address of principal executive offices)

 

(Zip Code)

 

(714) 871-4848

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Name of each exchange on which registered

Common Stock, $0.10 par value

 

New York Stock Exchange

 

Securities registered pursuant to Section 12(g) of the Act:

None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ý Yes o No

 

Indicate by check mark if the registrant  is not required to file reports pursuant to Section 12 or Section 15(d) of the Exchange Act. o Yes ý No

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes o No

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer ý Accelerated Filer o Non-Accelerated Filer o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). o Yes ý No

 

Aggregate market value of voting stock held by non-affiliates of the registrant as of February 13, 2006: $3,706,198,029

 

63,127,202 shares of the registrant’s Common Stock, $0.10 par value were outstanding as of February 13, 2006

 

DOCUMENTS INCORPORATED BY REFERENCE

 

Certain information contained in the Proxy Statement for the Annual Meeting of Stockholders of the registrant to be held on April 12, 2006 is incorporated by reference into part III hereof.

 

 


 

EXPLANATORY NOTE

 

This Amendment No. 1 on Form 10-K/A is being filed by Beckman Coulter, Inc. (the “Company”) as an amendment to the Company’s Report on Form 10-K for the fiscal year ended December 31, 2005 to correct certain errors in the EDGAR filing text that were not consistent with the document executed by the Company and its Directors and Officers:

 

1.         To add the “Item 2. Properties” subsection in full.

 

2.         To remove the last three paragraphs appearing under the subheading “Products” in “Item 1A. Risk Factors”. These paragraphs are properly located and included as the last three paragraphs under the “Item 2. Properties” subsection.

 

In addition, the Company also wishes to correct an inadvertent inaccuracy in footnote 4 in “Item 6. Selected Financial Data” by changing the sentence reading “The combined impact of these charges was a diluted earnings per share charge of $0.60” to read “The combined impact of these charges was a diluted earnings per share charge of $0.58”.

 

The full text of “Item 1.A. Risk Factors”, “Item 2. Properties”, and “Item 6. Selected Financial Data” are set forth below. This Form 10-K/A does not reflect events occurring after the filing of the original Form 10-K, or modify or update the disclosures there in any way other than as required to reflect the amendment set forth below.

 

Item 1.A. Risk Factors

 

This report on Form 10-K, the Company’s quarterly reports on Form 10-Q, its other SEC filings, its press releases, and its other written and oral statements throughout the year may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be recognized by the use of terms such as “should”, “may”, “outlook”, “anticipates”, “expects”, and “foresees”. All forward-looking statements are based on information available and the Company’s expectations at the time they are made, and are subject to a number of risks and uncertainties, some of which are beyond the Company’s control. Actual results could differ materially.

 

Sales

 

The Company’s ability to achieve its anticipated level of sales is affected by factors such as global economic and political conditions, the availability of capital to our customers, the effects of cost containment initiatives by government and industry, capital spending policies, capital markets, and the availability of government funding. Sales also are affected by the timing and size of orders and the allocation between the hardware and consumables portions of contracts.

 

Many biomedical research customers are reliant on government funding and a number of clinical diagnostics customers rely on prompt and full reimbursement by Medicare and equivalent programs in other countries. Biomedical research sales also are affected by factors such as the level of government funding for biomedical research, bioterrorism, forensics, and food safety, pharmaceutical company spending policies, and access to capital by biotechnology start ups. Clinical diagnostics sales are affected by factors such as consolidation among customers and the Company’s ability to enter into contracts with group purchasing organizations and integrated health networks.

 

Sales, in general, also are affected by factors such as the effect of potential health care reforms, loss of market share through aggressive competition, the rate at which new products are introduced by the Company and its competitors, the extent to which new products displace existing technologies, and competitive pricing, especially in areas where currency has an effect. Other factors that could affect sales include the effect of natural disasters such as hurricanes and earthquakes on the Company’s customers, the impact of global political conditions, and general economic conditions in significant foreign countries in which the Company does business, such as Japan and Germany.

 

A substantial portion of the Company’s placements of instrument systems are under leases or bundled contracts for instruments, reagents and service. During 2005, the Company announced that it was moving from an emphasis on sales-type leases to an emphasis on operating-type leases, in response to customer preferences. This change should not affect the Company’s total revenues over the long term, typically five years, but it does have a short term impact. Under a sales-type lease, instrument revenues from the transaction are recognized at the inception of the lease, while under an operating-type lease, recognition of instrument revenue is spread out over the term of the lease. As the change in emphasis is implemented, the Company’s revenues will be lower than they otherwise would have been. The impact of this change will depend on the actual timing and magnitude of the transition from sales-type leases to operating-type leases for new lease arrangements as well as the number of sales that would have been completed as cash sales but are now completed as operating-type leases.

 

2


 

Earnings and Financial Results of Operations

 

Actual earnings may differ from those estimated due to a variety of factors. Primary among these is the level of sales and the timing and size of orders. Earnings also may be significantly impacted by unanticipated increases in the costs of labor, raw materials, freight, utilities, and other items needed to develop, manufacture, and maintain our products and operate our business. Since the Company does a substantial part of its business outside of the United States, earnings also can be significantly impacted by currency fluctuations, changes in foreign currency exchange rates, and currency hedging costs. Earnings also may be impacted by unanticipated increases in interest rates on the portion of the Company’s debt that is not fixed, thereby increasing the Company’s interest expense. Earnings per share (EPS) may be affected by the number of shares outstanding and, with respect to diluted EPS, the number and value of options outstanding. Changes in tax laws and their interpretation in the United States and other countries and the effect of taxes and changes in tax policy also may have an effect.

 

In recent years, consolidation among health care providers and the formation of buying groups has put pressure on pricing. Similarly, increases in the number of instrument systems leased rather than purchased could change the timing of earnings. These pressures challenge the Company’s ability to maintain historical profit margins, unless it can also obtain equivalent decreases in operating costs.

 

Beckman Coulter’s products and operations are subject to a number of federal, state, local and foreign laws and regulations. While it believes that its products and operations comply in all material respects with these laws and regulations, a determination that the Company is not in compliance could subject it to civil and criminal penalties, prevent it from manufacturing or selling its products, and cause it to incur substantial costs in order to come into compliance. In addition, changes to existing laws or regulations or the adoption of new laws or regulations also could prevent it from manufacturing or selling its products and cause it to incur substantial costs in order to come into compliance.

 

In July, 2005, the Company announced a reorganization to better align the company for future growth, which included combining the two operating divisions into a “one-company” structure, focusing on a smaller number of the strongest opportunities and taking a restructuring charge. The Company’s earnings and financial results of operations have been and will be impacted by the amount and timing of the restructuring and related charges and savings.

 

In 2006, the Company is required to implement Statement of Financial Accounting Standards, (“SFAS”) No. 123(R), “Share-Based Payment”. Adoption of this statement will increase compensation expense recorded by the Company. We estimate the impact in 2006 will be increased expense of approximately $20 million, or $12 million, net of tax (approximately $0.20 per diluted share).

 

Products

 

The Company’s ability to continue to grow depends on its success in continuing to improve its existing products and develop new products that meet the needs and expectations of its customers. The development of these products requires the Company to successfully integrate hardware, software, and chemistry components. Consequently, the expected introductions of new products may be impacted by factors such as the complexity and uncertainty in the development of new high-technology products and the availability of qualified engineers, programmers, and other key labor categories. Product introductions also may be impacted by the viability of supply partners for those products where Beckman Coulter is a distributor.

 

In addition, the Company’s ability to introduce new products and to continue marketing existing products may be affected by patents and other intellectual property. Finally, the introduction of new products may be affected by delays in obtaining any government marketing authorizations necessary to market the products, particularly in clinical diagnostics.

 

Difficulty in obtaining raw materials and components, especially in the rapidly evolving electronic components market, usually does not affect the introduction of new products, but may affect the Company’s ability to achieve anticipated production levels. In addition, in some cases, the Company is dependent on a small number of suppliers of finished products and of critical raw materials and components and its ability to obtain, enter into or maintain contracts with these suppliers. On occasion, the Company has been forced to redesign portions of products when a supplier of critical raw materials or components terminated its contract or no longer made them available. Political events and natural disasters that affect the Company’s customers can have the same effect on the Company’s operations, impacting its ability to manufacture and deliver products.

 

Item 2. Properties

 

Beckman Coulter’s primary instrument assembly and manufacturing facilities are located in Fullerton, Brea, and Palo Alto, California; Chaska, Minnesota; and Miami, Florida. Components, parts, and electronic subassemblies are manufactured in facilities located in Fullerton and Porterville, California and Hialeah, Florida. An additional manufacturing

 

3


 

facility is located in Galway, Ireland. Reagents and consumables are manufactured in Fullerton and Carlsbad, California; Chaska, Minnesota; Miami, Florida; Florence, Kentucky; Webster, Texas; Beverly, Massachusetts; Galway, Ireland; Germany; France; Australia; and China.

 

Beckman Coulter’s facility for the production of Hemoccult test kits and related products is located in Sharon Hill, Pennsylvania, and its facility for production of microplate readers is in Salzburg, Austria. Its Agencourt subsidiary is located in Beverly, Massachusetts and its Diagnostics Systems Laboratory subsidiary is located in Webster, Texas. A portion of Beckman Coulter’s laboratory robotics operations are conducted in facilities located in Indianapolis, Indiana. Beckman Coulter’s European administration center is located in Nyon, Switzerland.

 

In early 2002, the Company entered into agreements with a third party to provide distribution services in the United States. The products handled by that company are distributed from its warehouses located in Ontario and Hayward, California; Memphis, Tennessee; and Jersey City, New Jersey. Beckman Coulter also operates distribution locations in Chino and Fullerton, California; Chaska, Minnesota; Opa Locka, Florida; Dusseldorf, Germany; and Marseille, France.

 

Beckman Coulter owns the facilities located in Carlsbad, Fullerton, and Porterville, California; some of the facilities in Hialeah, Florida; and a facility in Krefeld, Germany. All of the other facilities are leased. The Brea and Palo Alto, California; Miami, Florida; and Chaska, Minnesota facilities, were previously owned by Beckman Coulter then sold and leased back in 1998, for initial terms of twenty years with options to renew for up to an additional thirty years.

 

Beckman Coulter believes that its production facilities meet applicable government environmental, health and safety regulations, and industry standards for maintenance, and that its facilities in general are adequate for its current business.

 

Item 6. Selected Financial Data—Dollars in millions, except amounts per share

 

Years Ended December 31,

 

2005

 

2004

 

2003

 

2002

 

2001

 

Revenue

 

$

2,443.8

 

$

2,408.3

 

$

2,192.5

 

$

2,059.4

 

$

1,984.0

 

Income from continuing operations before accounting change(1)(2)(3)(4)

 

$

150.6

 

$

210.9

 

$

207.2

 

$

135.5

 

$

141.5

 

Basic earnings per share from continuing operations before accounting change(1)(2)(3)(4)

 

$

2.42

 

$

3.42

 

$

3.38

 

$

2.19

 

$

2.34

 

Diluted earnings per share from continuing operations before accounting change(1)(2)(3)(4)

 

$

2.32

 

$

3.21

 

$

3.21

 

$

2.08

 

$

2.21

 

Dividends paid per share of common stock

 

$

0.56

 

$

0.48

 

$

0.40

 

$

0.35

 

$

0.34

 

Shares outstanding (millions)

 

62.4

 

61.6

 

62.0

 

61.0

 

61.2

 

Weighted average common shares and dilutive common share equivalents (millions)

 

64.9

 

65.8

 

64.5

 

65.1

 

64.0

 

Total assets

 

$

3,027.6

 

$

2,789.8

 

$

2,529.6

 

$

2,263.6

 

$

2,178.0

 

Long-term debt, less current maturities

 

$

589.1

 

$

611.7

 

$

625.6

 

$

626.6

 

$

760.3

 

Working capital

 

$

475.1

 

$

666.3

 

$

583.0

 

$

444.6

 

$

525.7

 

Capital expenditures

 

$

243.9

 

$

158.7

 

$

132.9

 

$

146.1

 

$

175.0

 

 

(1) In 2001, the Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS No. 133”), which resulted in a one-time cumulative effect charge associated with a change in accounting principle of $3.1 million ($4.9 million pretax). The 2001 impact on diluted earnings per share was $0.05. 2001 also includes $15.6 million ($18.8 million pretax) of amortization of goodwill and certain other intangible assets that was not recorded in subsequent years as a result of the Company’s adoption of SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). The 2001 impact on diluted earnings per share was $0.24.

 

(2) 2002 includes a $23.8 million ($39.3 million pretax) charge associated with a patent infringement settlement and related expenses. The 2002 impact on diluted earnings per share was $0.37.

 

(3) 2003 includes a) a restructure charge of $11.8 million ($18.5 million pretax) or a diluted earnings per share impact of $0.18; b) a non-taxable credit of $28.9 million that when combined with the related pretax expenses of $2.0 million ($1.2 million after taxes) resulted in a net credit of $27.7 million after taxes or a diluted earnings per share credit of $0.43 related to the settlement of a dispute associated with an escrow account created as part of the 1997 acquisition of Coulter Corporation and c) a $13.9 million litigation settlement ($23.0 million pretax) received from Flextronics, or a diluted earnings per share credit of $0.21.

 

(4) 2005 includes a) restructure related charges for employee severance and other costs of $21.9 million ($36.4 million pretax) and b) asset impairment charges and inventory write-offs of $14.6 million ($24.0 million pretax) and $1.4 million ($2.3 million pretax), respectively, related to decisions to exit certain non-strategic products and products under development. The combined impact of these charges was a diluted earnings per share charge of $0.58.

 

4


 

Exhibits

 

 

 

 

 

31

 

Rule 13a-14(a)/15d-14(a) Certifications

32

 

Section 1350 Certifications

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

BECKMAN COULTER, INC.

 

 

Date: April 12, 2006

By:

 

/s/ SCOTT GARRETT

 

 

Scott Garrett

 

 

President and Chief Executive Officer

 

 

INDEX TO EXHIBITS

 

 

 

Exhibit

 

 

 

31

 

Rule 13a-14(a)/15d-14(a) Certifications

32.

 

Section 1350 Certifications

 

5