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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0001095811-01-001587.txt : 20010314
<SEC-HEADER>0001095811-01-001587.hdr.sgml : 20010314
ACCESSION NUMBER: 0001095811-01-001587
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 8
CONFORMED PERIOD OF REPORT: 20001231
FILED AS OF DATE: 20010313
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: BECKMAN COULTER INC
CENTRAL INDEX KEY: 0000840467
STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826]
IRS NUMBER: 951040600
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 001-10109
FILM NUMBER: 1566845
BUSINESS ADDRESS:
STREET 1: 4300 N HARBOR BLVD
STREET 2: PO BOX 3100
CITY: FULLERTON
STATE: CA
ZIP: 92834-3100
BUSINESS PHONE: 7147736907
MAIL ADDRESS:
STREET 1: 4300 N HARBOR BLVD
STREET 2: PO BOX 3100
CITY: FULLERTON
STATE: CA
ZIP: 92834-3100
FORMER COMPANY:
FORMER CONFORMED NAME: BECKMAN INSTRUMENTS INC
DATE OF NAME CHANGE: 19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>a69813e10-k.txt
<DESCRIPTION>FORM 10-K FISCAL YEAR ENDED DECEMBER 31,2000
<TEXT>
<PAGE> 1
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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
COMMISSION FILE NUMBER 001-10109
BECKMAN COULTER, INC.
4300 N. HARBOR BOULEVARD, FULLERTON, CALIFORNIA 92834-3100 (714) 871-4848
(PRINCIPAL EXECUTIVE OFFICES)
<TABLE>
<S> <C>
DELAWARE 95-104-0600
STATE OF INCORPORATION I.R.S. EMPLOYER IDENTIFICATION NO.
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<S> <C>
COMMON STOCK, $.10 PAR VALUE NEW YORK STOCK EXCHANGE
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by X mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate by X mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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 the
Form 10-K. [ ]
Aggregate market value of voting stock held by non-affiliates of the
registrant as of January 15, 2001: $2,278,596,249.38.
Common Stock, $.10 par value, outstanding as of January 15, 2001:
59,766,459 shares.
Documents incorporated by reference in this report:
<TABLE>
<S> <C>
Documents incorporated...................................... Form 10-K Part Number
Those portions of the Annual Report to
Stockholders for the fiscal year ended
December 31, 2000 referenced herein....................... Part I and Part II
Proxy Statement for the 2001 Annual
Meeting of Stockholders to be held on
April 5, 2001............................................. Part III
</TABLE>
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<PAGE> 2
BECKMAN COULTER, INC.
PART I
ITEM 1. BUSINESS
OVERVIEW
Beckman Coulter simplifies and automates laboratory processes used in all
phases of the battle against disease. The company designs, manufactures, and
markets systems which consist of instruments, chemistries, software, and
supplies that meet a variety of laboratory needs. Its products are used in a
range of applications, from instruments used for pioneering medical research,
clinical trials and drug discovery to diagnostic tools found in hospitals and
physicians' offices. Beckman Coulter competes in market segments that total
approximately $31 billion in annual sales worldwide and currently has products
which address approximately half of that market.
Beckman Coulter's product lines include virtually all blood tests routinely
performed in hospital laboratories and a range of systems for medical and
pharmaceutical research. The Company has more than 125,000 systems operating in
laboratories around the world, with approximately two-thirds of annual revenues
coming from after-market customer purchases of operating supplies, chemistry
kits, and service. Beckman Coulter markets its products in approximately 130
countries, with approximately 45% of revenues coming from outside the United
States.
Beckman Coulter's principal executive offices are located at 4300 N. Harbor
Blvd., Fullerton, California 92835. Its mailing address is P.O. Box 3100,
Fullerton, CA 92834-3100. The telephone number is (714) 871-4848.
COMPANY HISTORY
Beckman Coulter adopted its current name in April, 1998. The name change
followed the October, 1997 acquisition of Coulter Corporation by what was then
Beckman Instruments, Inc.
Beckman Instruments, Inc. was founded by Dr. Arnold O. Beckman in 1935, and
entered the laboratory market by introducing the world's first pH meter. Beckman
Instruments became a publicly-traded corporation in 1952. In 1968, Beckman
Instruments expanded its laboratory instrument focus to include healthcare
applications in clinical diagnostics. Beckman Instruments was acquired by
SmithKline Corporation to form SmithKline Beckman Corporation in 1982. It was
operated as a subsidiary of SmithKline Beckman until 1989 when it was divested.
Since that time, Beckman Instruments, now Beckman Coulter, Inc., has operated as
a fully independent, publicly-owned company.
Coulter Corporation was founded by Wallace and Joseph Coulter in 1958.
Coulter was formed to market the "Coulter Counter", an instrument used to
determine the distribution of red and white cells in blood. This instrument was
based on the "Coulter Principle", which was developed by Wallace Coulter in
1948. The Coulter Principle involved an electronic, automatic way of counting
and measuring the size of microscopic particles. Coulter Corporation was a
private company and remained under the control of the Coulter family until it
was acquired by Beckman in 1997.
CUSTOMERS AND MARKETS -- THE BIOMEDICAL CONTINUUM
The two primary segments which Beckman Coulter serves are the clinical
diagnostics market and the life science research market. Beckman Coulter's
clinical diagnostics customers include hospital clinical laboratories,
physicians' offices and group practices, and commercial reference laboratories
(large central laboratories to which hospitals and physicians refer tests).
Beckman Coulter's life science research customers include universities
conducting academic research, medical research laboratories, pharmaceutical
companies, and biotechnology firms. Beckman Coulter's customers are continually
searching for processes and systems that can perform tests faster, more
efficiently and at lower costs. Beckman Coulter believes that its focus on
automated, high-throughput systems positions it to capitalize on this need.
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From complex DNA sequencing to simple one-use diagnostic screening kits,
Beckman Coulter is one of the largest companies devoted solely to biomedical
testing. Beckman Coulter serves the estimated $31 billion biomedical testing
market with core competencies in technology, applications, distribution and
service. The Company leverages its investment in research and development to
create a range of systems that integrate instruments, software and chemistries
for use across the spectrum of biomedical testing.
Breakthrough medical research and drug discovery are currently high growth
markets, thanks to advances in genomics. With the rough map of the human genome
complete, the work that will more directly affect patient care begins as
researchers incorporate this information into specific studies to improve
therapeutics. All of Beckman Coulter's Life Science Research products play a
role in the biomedical research and development testing area. These systems help
researchers understand disease by simplifying and automating key testing
processes.
Universities and medical research laboratories represent about 46% of the
market for this type of testing. These groups perform basic medical research to
further understand the molecular basis of disease. Biotechnology firms and
pharmaceutical companies represent the other 54% of the biomedical research
market. They rely on Beckman Coulter's instrument systems to speed the long and
detailed drug discovery process.
More than 75,000 Beckman Coulter systems operate in life science labs
today. The Company is a technological leader in robotic automation/liquid
handling, centrifugation and capillary electrophoresis. Research and development
testing is estimated to be an $8 billion market.
Once new therapeutics and vaccines emerge from the research phase, they
move into clinical trials to evaluate their effectiveness. In this stage,
standard blood chemistry tests are run on patients regularly. At the same time,
specialized tests are performed, based on the particular disease state under
evaluation.
As new diagnostic technologies move from research applications into more
general patient use, they are often performed in private laboratories or
university hospitals. Genetic testing, cancer monitoring and special immune
system testing fall into this category. Beckman Coulter has a menu of more than
1,000 flow cytometry tests currently used in researching, diagnosing and
monitoring diseases such as leukemia, HIV, and various cancers. They are also
critical in the evaluation of bone marrow and other transplants. The P/ACE(TM)
Series capillary electrophoresis technology is being used in some regions of the
world for genetic mutation screening, hemoglobin variant analysis, and drug
screening. The same technology also is used to monitor critical amino acids. The
market for specialty testing is estimated to be $3 billion.
Once diagnostic technologies become generally accepted, they become part of
routine patient care. Physicians order tests such as cholesterol, glucose, and
complete blood cell counts on a daily basis. These tests are used to provide
information for diagnosis and to help monitor the efficacy of therapy. Beckman
Coulter has one of the broadest product lines available to the diagnostic
laboratory. This product breadth allows the Company to provide a systems
approach to improving total laboratory productivity. The Company's systems can
perform nearly 100% of the tests routinely performed on patient samples in the
hospital laboratory. Beckman Coulter has top market positions in hematology,
hemostasis, and routine chemistry testing. It is also a leader in providing
progressive automation solutions that help labs speed test results, lower labor
expenses, ensure the quality of testing and reduce overall healthcare costs.
Beckman Coulter is also active in point-of-care testing. These tests are
used for rapid diagnosis or on-going patient monitoring. Some tests, such as
CBCs (complete blood counts) are performed on analyzers designed for quick,
single sample results. Other tests are disposable, one-use tests to screen for
pregnancy, infectious disease, ulcer-causing bacteria and indications of cancer.
The patient care testing market is estimated to be $20 billion.
The clinical diagnostics and life science research markets both have
significant barriers to entry. One major barrier is the research and development
investment and technical infrastructure required to develop products that
require the integration of chemistry, engineering, cellular analysis, and
computer sciences. In addition, it is necessary to have an extensive worldwide
distribution infrastructure with highly qualified personnel to provide sales,
service, customer training, and technical product support. Also, in some cases,
permission to market clinical diagnostics products must be obtained in the
United States and other countries.
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Nevertheless, both the clinical diagnostics and the life science research
markets are highly competitive. Beckman Coulter encounters significant
competition in each market from many domestic and international manufacturers.
Also, the clinical diagnostics market continues to be unfavorably impacted by
global health care cost containment policies, while the life science research
market continues to be affected by consolidation of pharmaceutical companies and
governmental constraints on research and development spending, primarily outside
of the United States.
Consolidation also is a key factor affecting the clinical diagnostics
market. Attempts to lower costs and increase efficiencies have led to
consolidation among healthcare providers in the United States. One result of
this consolidation is the formation of powerful provider groups that leverage
their purchasing power with suppliers to contain costs. Preferred supplier
arrangements and combined purchases are becoming more commonplace. Consequently,
it has become essential for manufacturers to provide cost-effective diagnostic
systems to remain competitive. In addition, consolidation has put pressure on
diagnostic equipment manufacturers to broaden their product offerings to
encompass a wider range of testing capability, greater automation and higher
volume capacity. Manufacturers that have the ability to automate a wide variety
of tests on integrated workstations have a distinct competitive advantage. Broad
testing menus that include immunoassays and routine chemistry tests are highly
attractive to laboratories seeking to reduce the number of vendors they utilize.
Finally, consolidation has made it increasingly important for suppliers to
deploy a highly focused sales force that is able to execute innovative marketing
approaches and to maintain a reliable after-sale service network.
The size and growth of Beckman Coulter's markets are influenced by a number
of factors, such as 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, healthcare spending, and physician practice. As a
result of the cost containment pressures and other factors described above,
Beckman Coulter expects both markets to grow in the low single digits over the
short term. In the long term, Beckman Coulter expects worldwide healthcare
expenditures for diagnostic testing to increase, primarily as a result of
growing demand for services generated by the aging of the world population,
increasing expenditures on diseases requiring costly treatment (for example,
diabetes, AIDS and cancer), and expanding demand for improved healthcare
services in developing countries.
PRODUCTS
Beckman Coulter offers a wide range of instrument systems and related
products, including reagents, consumables, accessories, and support services in
both the clinical diagnostics and the life science research segments. The
following table shows the breakdown of sales between the two market segments:
PRODUCT SALES AS A PERCENT OF TOTAL PRODUCT SALES
FOR CATEGORIES REPRESENTING
MORE THAN 10 PERCENT OF SALES
<TABLE>
<CAPTION>
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Clinical Diagnostics............................ 78 78 78
Life Science Research........................... 22 22 22
</TABLE>
CLINICAL DIAGNOSTICS PRODUCTS OVERVIEW
The clinical diagnostics market encompasses the detection and monitoring of
disease by means of laboratory evaluation and analysis of bodily fluids, cells,
and other substances from patients. This type of testing is referred to as "in
vitro diagnostic" or "IVD" testing. Due to its important role in the diagnosis
and treatment of patients, IVD testing is an integral part of the overall
management of patient care. Additionally, IVD testing is increasingly valued as
an effective method of reducing healthcare costs by reducing the length of
hospital stays through accurate, early detection of health disorders and
management of treatment.
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IVD systems are composed of instruments, reagents, consumables, service and
data management systems. They automate repetitive manual tasks, improve test
accuracy, and speed the reporting of results. Instruments typically have a five-
to ten-year life. Reagents are substances that react with the patient sample to
produce measurable, objective results. The consumables vary across application
segments but are generally items such as sample containers, adapters, and
pipette tips used during test procedures. Reagents, accessories, consumables,
and services generate significant ongoing revenues for suppliers. Sample
handling and preparation devices as well as data management systems are becoming
increasingly important components of IVD systems. These system enhancements
reduce customer costs through automation.
Beckman Coulter believes that the most important criteria customers use to
evaluate IVD systems are operating costs, reliability, reagent quality and
service. It also believes that by providing a fully integrated system that is
cost effective, reliable and easy to use, it builds loyalty among customers who
value consistency and accuracy in test results.
The major diagnostic fields that comprise the IVD industry include clinical
chemistry, immunochemistry, microbiology, hematology and blood banking. The IVD
industry market was estimated to be $20 billion in 1999 and is estimated to grow
at a 4% compound annual rate through the year 2002. Beckman Coulter primarily
serves the hospital and reference laboratory customers of the IVD market, which
tend to use more precise, higher volume and more automated IVD systems. Hospital
and reference laboratory customers constitute approximately $15.5 billion of the
IVD market. Beckman Coulter divides the market into three major broad
subcategories -- clinical chemistry, immunodiagnostics, and cellular analysis.
It also offers products in areas it identifies as primary care (primarily
physician offices and clinics), hemostasis, and flow cytometry.
CLINICAL CHEMISTRY SYSTEMS
Clinical chemistry systems use electrochemical detection or chemical
reactions with patient samples to detect and quantify substances of diagnostic
interest (referred to as "analytes") in blood, urine or other body fluids.
Commonly performed tests include protein, glucose, cholesterol, triglycerides,
electrolytes, and enzymes. Beckman Coulter offers a range of automated clinical
chemistry systems to meet the testing requirements of varying size laboratories,
together with software that allows these systems to communicate with central
hospital computers. To save time and reduce errors, systems identify patient
samples through barcodes. Automated clinical chemistry systems are designed to
be available for testing on short notice, twenty-four hours a day. Beckman
Coulter has generally configured its systems for the work flow in medium and
large hospitals, but the systems also have application in regional reference
labs. Over 180 tests for individual analytes are offered for use with Beckman
Coulter's clinical chemistry systems. These products range in price from $45,000
to over $300,000.
Beckman Coulter's line of SYNCHRON(R) Automated General Chemistry Systems
is a family of products which include modular automated diagnostic instruments
and the reagents, standards and other consumable products required to perform
commonly requested diagnostic tests. The SYNCHRON systems were 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 is the SYNCHRON CX(R)3 (DELTA)
Analyzer. It is designed to perform a number of the tests routinely ordered by
physicians and has up to nine on-board chemistries. The SYNCHRON CX(R)4, CX(R)5,
CX(R)7, CX(R)7 RTS, CX(R)9 ALX, and SYNCHRON LX(R)20 Analyzers are random access
systems designed to perform routine chemistry profiles as well as some special
chemistry profiles, and can perform over 85% of the laboratory's general
chemistry testing requirements.
IMMUNODIAGNOSTIC SYSTEMS
Immunodiagnostic systems, like clinical chemistry systems, use chemical
reactions to detect and quantify chemical substances of diagnostic interest in
blood, urine or other body fluids. The key difference is that immunodiagnostic
systems use antibodies and antigens as the central component in analytical
reactions.
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Antibodies are created by an organism's immune system and, when incorporated in
test kits, provide the ability to detect and quantify very low analyte
concentrations. Commonly performed tests assess thyroid function, and screen and
monitor for cancer and cardiac risk. Immunodiagnostic systems have been designed
to meet the special requirements of these reactions and to simplify lab
processes. They are able to automatically identify individual patient sample
tubes and communicate with the laboratory's central computer. Beckman Coulter
offers over 60 immunodiagnostic test kits for individual analytes. These
automated systems range in price from $60,000 to $90,000.
Beckman Coulter's two primary immunodiagnostic systems are the IMMAGE(R)
Immunochemistry System and the Access(R) Immunoassay System. The IMMAGE system
is a high throughput immunochemistry analyzer for specific proteins, various
immunologic markers and therapeutic drugs. This system provides automated random
access testing which allows the operator to mix samples at random, eliminating
the need to analyze in batches. The IMMAGE System builds on the extensive
installed base of its predecessors, the Array(R), Array(R) 360, and Array(R)
360CE Protein and Therapeutic Drug Monitoring Systems. The Array 360CE was the
world's first computer enhanced, immunochemistry system offering sample
identification using bar codes and bidirectional communication with a
laboratory's central computer. The Access System serves as a disease state
management platform used to assist medical professionals to detect and monitor
critical parameters for thyroid function, anemia, blood viruses, infectious
disease, cancer, allergy, fertility, therapeutic drugs, diabetes and
cardiovascular and skeletal diseases.
During 2000, Beckman Coulter introduced its Access(R) Hybritech(R) PSA and
Access(R) Hybritech(R) free PSA blood tests. These tests were the first PSA and
free PSA pairing of automated tests to receive FDA approval as an aid in the
detection of prostate cancer. These product introductions were followed by FDA's
clearance of the Company's Access(R) OSTASE(R) blood test as the first automated
serum-based assay as an aid in the management of osteoporosis and Paget's
disease.
Electrophoresis systems provide analytical information by using an
electrical charge to separate a sample into its various components. The presence
or absence of various components as well as the relative concentrations of each
provide diagnostic information. The relative concentration of each component is
determined by scanning the test result using a densitometer. Beckman Coulter
sells a variety of manual and automated electrophoresis tests under the name
Paragon(R) Systems. The manual Paragon(R) Electrophoresis Systems allow Beckman
Coulter to offer a full range of electrophoresis products that provide
specialized protein analysis for clinical laboratories. These products use a gel
based material as the separation medium. Paragon reagent kits are used in the
diagnosis of diabetes, as well as cardiac, liver and other diseases. The
APPRAISE(R) Densitometer is used in conjunction with Paragon reagent kits. The
Paragon CZE(R) 2000 System is the first capillary electrophoresis system
specifically designed for the clinical laboratory. This system is designed to
fully automate the manual and somewhat labor intensive conventional
electrophoresis analysis of serum protein electrophoresis (SPE) and
immunofixation electrophoresis (IFE). Positioned to complement the Paragon gels
and the APPRAISE Densitometer, the Paragon CZE 2000 System is targeted at high
volume electrophoresis labs worldwide.
Beckman Coulter also sells a number of manual immunodiagnostic tests.
Paramount among these products are tests for prostate specific antigen (PSA) and
free PSA. The PSA test is utilized as an aid in the detection (in conjunction
with digital rectal examination) and monitoring of prostate cancer. The free PSA
test is used in conjunction with Beckman Coulter's PSA test to assist in
determining which patients require further testing and evaluation. Another
manual immunochemistry test is the OSTASE(R) assay, which is used for the
management of postmenopausal osteoporosis, making it the first blood test
cleared for such use.
CELLULAR ANALYSIS SYSTEMS
Beckman Coulter's blood cell systems use the principles of physics, optics,
electronics and chemistry to separate cells of diagnostic interest and then
quantify and characterize them. These systems fall into two categories:
hematology and flow cytometry. Hematology systems allow clinicians to study
formed elements in blood such as red and white blood cells and platelets. The
most common diagnostic result is a "CBC" or complete blood count, which provides
eight to twenty-three blood cell parameters. Flow cytometers can
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extend analysis beyond blood to include bone marrow, tumors and other cells. The
rise of the AIDS epidemic and the need to monitor subclasses of white cells
moved cytometry from largely a research technique into general clinical
practice. These systems are automated, use bar codes to identify samples and can
communicate with central computers.
Beckman Coulter's hematology product line is structured to address the
differing requirements of the high, medium, and low volume portions of this
market. The systems in the higher volume segment utilize volume, conductivity
and light scatter (VCS) technology in addition to conventional, electrical
aperture-impedance (Coulter Principle) technology. Unlike other technologies,
the Coulter VCS method counts and characterizes white blood cells while
maintaining their near native integrity throughout the analysis. The systems in
the lower volume segment rely exclusively upon electrical aperture-impedance
technology.
Systems designed for the high volume segment include the COULTER(R)
GEN*S(TM) CELL and the COULTER(R) STKS(TM) Hematology Systems. The GEN*S System
was introduced in 1996. It provides walkaway, whole blood analysis for CBCs,
five-part white blood cell differential, red cell morphology and reticulocyte
analysis with automated slidemaking and staining from a single aspiration of
blood. The system automates manual interpretation and result verification
through its data management workstation. The STKS is a cost-effective system
designed for high volume clinical laboratories which provides a CBC and
five-part white blood cell differential; red cell morphology and semi automated
reticulocyte analysis. These high volume hematology systems typically sell in
the $70,000 to $120,000 price range.
Moderate Volume Hematology Systems include the COULTER(R) HmX and the
COULTER(R) MAXM(TM) Hematology Systems. The HmX System was introduced in 1999.
It offers the technology features of the larger systems in a compact bench top
system designed for the moderate volume market segment. The HmX is available in
two configurations, a fully automated walkaway system and a single sample
loading system; both systems come with a data management system. The COULTER HmX
hematology system offers the same comprehensive CBC, five-part white blood cell
differential, red cell morphology and semi-automated reticulocyte analysis as
the COULTER STKS. The system uses Coulter's advanced VCS technology in an
affordable instrument for the moderate volume workload laboratory. The MAXM
hematology system is a cost effective, bench top system designed for the
moderate volume laboratory. The system utilizes Coulter's VCS technology to
produce an accurate and reliable CBC, five-part white blood cell differential
and semi-automated reticulocyte analysis. These moderate volume hematology
systems typically sell in the $40,000 to $75,000 price range.
Low-volume hematology systems include the COULTER(R) A(C)-T(TM) family of
hematology systems. The A(C)-T product range consists of four hematology
analyzers. The COULTER A(C)-T hematology analyzer, was introduced in 1996. It
offers a complete blood count. In 1998, the COULTER A(C)-T diff was released.
This product added three-part white blood differential analysis to the system.
In 1999, the COULTER(R) A(C)-T diff 2(TM) was released. The A(C)-T diff 2 system
added the safety of closed vial sampling to the CBC and three-part white blood
cell differential analysis capabilities. The COULTER(R) A(C)-T 5diff(TM) system
was introduced in 2000. This product offers the capability of CBC and five part
white cell differential using ACV technology. All of the A(C)-T series
hematology analyzers are designed to use a very small sample volume, making them
ideal for analysis of pediatric samples. These low volume hematology systems
typically sell in the range of $10,000 to $35,000.
Beckman Coulter's line of flow cytometry systems includes the COULTER(R)
EPICS(R) ALTRA(TM) HyPerSort Cell Sorting System and the COULTER(R) EPICS(R)
XL(TM) Flow Cytometer. The EPICS ALTRA Cytometer is used for advanced
diagnostics and research. It is designed to perform sophisticated cell analysis
and sorting applications using Beckman Coulter's extensive portfolio of
reagents. The EPICS ALTRA performs complex multi-parameter applications such as
DNA analysis, physiologic measurements, chromosome enumeration and the study of
the hematopoetic process. The cell sorting capability of the system allows for
the rapid separation of very large numbers of specific cell populations from a
heterogeneous mixture. The EPICS XL Cytometer is a bench top flow cytometer used
primarily to analyze white blood cells in clinical and clinical research
settings. Because the system is flexible and upgradeable with varying sample
preparation systems, it has proven successful in different environments, from
research labs to high and low volume hospital
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and commercial labs. The Coulter TQ-Prep(TM) provides a consistent, standardized
method for preparing whole blood for flow cytometric analysis. The Coulter
PrepPlus Workstation was introduced in 2000. The PrepPlus(TM) provides precision
pipetting of reagents and controls. Working in concert with the TQ-Prep, the
PrepPlus further simplifies and automates the pre-preparation stage of flow
cytometric analysis. These products sell for $15,000 to $300,000.
Particle characterization products are used to identify specific
characteristics (such as number, size, and relative mobility) of particles
suspended in solution. They are also used to identify characteristics such as
surface area and pore size distribution of powdered or solid materials. This
group offers over eight product lines utilizing seven different technologies to
satisfy markets such as biological research and pharmaceutical development as
well as a host of Industrial segments. With it's origins back to the Coulter
Principle, this group has evolved a large menu of solutions to satisfy customer
needs in analysis of countless materials. Two of the main product lines are the
Multisizer 3 and the Z Series. These "Coulter Counter" based instruments are
considered to be the highest resolution particle and cell size/count analyzers
in the world. They have become standardized systems in areas such as platelet
cell counting and research for body fluids. They also have uses in such
industrial processes as yeast analysis in the beer brewing industry.
Complementing these products are other high resolution instruments such as the
LS Series laser diffraction particle size analyzers. These systems are heavily
used in the pharmaceutical arena as well as general industrial applications such
as paints and cements. Other systems available offer users solutions utilizing
image analysis, surface area analysis, Zeta Potential, and membrane porosity
analysis. System prices range from $9,000 to $80,000.
HEMOSTASIS SYSTEMS
The property of circulation which maintains blood within the blood vessels
is referred to as hemostasis. The hemostatic process depends upon a delicate
balance between a system that promotes clotting and another that removes the
clots after they have formed. A defect in any part of any one of these systems
will result in an imbalance that can lead to either excessive bleeding
(hemophilia) or a propensity to clot (stroke and myocardial infarction) Beckman
Coulter offers a complete line of coagulation analyzers and their corresponding
reagents that monitor both of these systems.
Beckman Coulter is the North American distributor of the Instrumentation
Laboratory ("IL") line of hemostasis products. These hemostasis systems rely on
clotting, chromogenic and immunologic technologies to produce the detailed
information that the clinician requires to be able to make an appropriate
assessment of a patient's hemostatic system. All of these systems utilize an
optical detection method that either detects a clotting or agglutination
process, or a color change, after the appropriate reagents have been mixed with
the patient's blood.
Beckman Coulter's hemostasis product line has suitable systems to meet the
needs of a wide range of customers. These products include Instrumentation
Laboratory's ACL Advance and ELECTRA1800C Systems, which meet the challenges of
the large reference laboratories with requirements for very high volume
analyzers. Instrumentation Laboratory's ACL 9000, ACL Advance, and ACL 7000,
contain a very diverse menu of esoteric tests, which the special coagulation
laboratories require. Instrumentation Laboratory's ACL 7000, ELECTRA 1400C, ACL
1000/100 accommodate the needs of the medium to small sized laboratory.
To complement these analyzers, Beckman Coulter also offers Instrumentation
Laboratory's IL Test and Hemoliance brands of coagulation reagents. Utilizing
these products, a laboratory may perform standard screening tests such as the
activated partial thromboplastin time and prothrombin time in addition to a wide
range of special tests that can detect defects in any area of the of the
hemostatic system.
PRIMARY CARE DIAGNOSTICS
Beckman Coulter offers a number of products used in physicians' offices,
clinics, hospitals and other medical settings. These products include several
single-use self-contained diagnostic test kits, such as the Hemoccult(R) occult
blood test (OBT) and the FlexSure(R) HP test kit. The Hemoccult test is used as
an aid in screening for gastrointestinal disease, most importantly colorectal
cancer, and is the number one seller in the colorectal screening market. The
FlexSure HP test is used as an aid in the diagnosis of H. pylori infection,
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which is associated with several gastrointestinal diseases, including peptic
ulcers and gastric cancer. In addition, Beckman Coulter markets the ICON(R) line
of test kits, featuring a high sensitivity pregnancy test widely used by health
care practitioners.
LIFE SCIENCE RESEARCH PRODUCTS OVERVIEW
Life science research is the study of the characteristics, behavior and
structure of living organisms and their component systems. Life science
researchers utilize a variety of instruments and related biochemicals and
supplies in the study of life processes. Beckman Coulter estimates that in 1999
the total market for instruments and related biochemicals and supplies used
primarily for life science research was approximately $10.6 billion. Beckman
Coulter focuses on customers doing research in university and medical school
labs, research institutes, government labs, and biotechnology and pharmaceutical
companies. The market for life science research instruments and related
biochemicals and supplies used by these customers in 1999 was approximately $8.1
billion. The products which Beckman Coulter provides to serve these customers
include centrifuges, liquid handling robotic workstations, capillary
electrophoresis, DNA sequencers, DNA synthesis, spectrophotometers, HPLC
systems, and liquid scintillation counters. Trends in the life science research
market include the growth in funding for genetic analysis and drug discovery
research coupled with an increasing demand for automation and efficiency in high
throughput processes.
Beckman Coulter divides its life science research products into two broad
categories -- robotic automation and genetic analysis, and centrifugation and
analytical systems.
ROBOTIC AUTOMATION AND GENETIC ANALYSIS PRODUCTS
Beckman Coulter's products are used in many parts of the drug discovery
process. An important application for the robotic automation products is in
primary screening. The primary screen is done to test libraries of compounds for
possible interaction with a target protein, which is associated with a disease
state. High-throughput screening is a term that is often used to describe the
primary screen, which can involve the screening of 100,000 or more compounds.
Secondary screening and pre clinical testing can also require samples to be
processed in an automated or high-throughput mode.
The Human Genome Project, the SNP Consortium, and a host of "gene hunter"
companies are currently providing valuable genetic information to pharmaceutical
companies that allows the pharmaceutical company to select relevant target
proteins. The analysis of massive amounts of genetic information also requires
the automation of sample processing in order to meet the aggressive timetables
which have been established for some projects.
DNA sequencers allow researchers to determine a nucleic acid sequence
through an electrophoretic separation. DNA synthesizers provide an essential
component, primers, for many molecular biology reactions. These techniques are
central to molecular biology and the understanding of the genetic component of
life processes. Beckman Coulter's primary entry in the DNA sequencing field is
its CEQ(TM) 2000XL DNA Analysis System, which was introduced in 2000. This
system uses capillary electrophoresis technology along with Beckman Coulter's
proprietary linear polyacrylamide gel to obtain large reads of genetic code in
less time. DNA analysis systems sell in the range of $80,000 to $120,000.
SNPs are variations in genetic code that can predispose people to certain
illnesses and cause unique responses to treatment. Scientists hope these
variations will help them to understand how and when the genetic variations are
manifested differently in chronic conditions like asthma, diabetes, heart
disease, and cancer. Beckman Coulter has collaborated with companies such as
Third Wave Technologies, Orchid BioSciences, and Sequenom to develop new methods
for faster SNP detection which rely on products such as Beckman Coulter's
Biomek(R) Automated Workstations and Sagian(TM) Core systems to streamline the
task. These products provide customers with the means to perform low-cost,
automated assay development as well as accurate analysis of tens of thousands
human genetic variations.
Liquid handling robotic workstations and integrated systems automatically
perform exacting and repetitive processes in biotechnology and drug discovery
laboratories. Operations include the dispensing,
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measuring, dilution and mixing of samples and analysis of reactions as well as
robotic manipulation of samples. Key products in this area are Beckman Coulter's
Sagian(TM) Core Systems and Biomek(R) FX workstation, which was introduced in
2000. These products help biotechnology and pharmaceutical firms substantially
reduce the time to market for new drugs by allowing them to process assays 24
hours a day. These systems use sophisticated scheduling and data handling
software. In 2000, Beckman Coulter signed distribution agreements with Cellomics
and Promega to sell their specialized products in concert with its automation
systems. Prices range from $50,000 to $500,000.
CENTRIFUGATION AND ANALYTICAL SYSTEMS
Beckman Coulter offers a wide range of life science research systems that
are used to advance basic understanding of life processes. Much of this basic
research is done in university and medical school labs, research institutes and
government labs. The same research systems are also used for applied research in
pharmaceutical and biotechnology companies. Product categories include
centrifuges, flow cytometers, high performance liquid chromatography ("HPLC"),
capillary electrophoresis, spectrophotometers and liquid scintillation counters.
Centrifuges separate liquid samples based on the density of the components.
Samples are rotated at up to 130,000 revolutions per minute to create forces
that exceed 1,000,000 times the force of gravity. These forces result in a
nondestructive separation that allows proteins, DNA and other cellular
components to retain their biological activity. Centrifuge models range from
small table top units, such as the Microfuge(R) line of products to larger,
free-standing units, such as the Avanti(R) J Series. During 2000, Beckman
Coulter introduced its Avanti J-20XP high performance centrifuge, which is used
for processing large-volume samples. Centrifuges are priced from $2,000 to
$250,000.
Flow cytometers rapidly count and categorize multiple types of cells in
suspension. Common research applications include blood, bone marrow and tumor
cells for the study of AIDS, leukemias and lymphomas. These systems are similar
to those used in clinical applications and sell in the $70,000 to $400,000
range.
HPLC uses pressurized solvents to mobilize sample mixtures through columns
packed with solid or gel phase separating agents. This technique is capable of
separating very complex mixtures of both organic and inorganic molecules.
Beckman Coulter focuses on biologically related applications and sells a variety
of products under the System Gold(R) name. These systems range in price from
$20,000 to $50,000.
Beckman Coulter also provides specialized software that is capable of
recording, manipulating and archiving data from multiple chromatographic
systems, and other instruments. This type of software is essential to the
pharmaceutical production process and installations can range from $20,000 to
over $1,000,000.
Capillary electrophoresis uses the electrical charge found on biological
molecules to separate mixtures into their component parts. Its chief advantages
are its ability to process very small sample volumes, separation speed and high
resolution. The technique is considered a complement to HPLC. Beckman Coulter
has systems for basic research, pharmaceutical methods development, and quality
control. These systems are based on the P/ACE(TM) Series platform. Capillary
electrophoresis systems sell in the range of $30,000 to $90,000.
Spectrophotometry is the optical measurement of compounds in liquid
mixtures. Monitoring biological reactions is a typical application for this
technology. Beckman Coulter's DU(R) series of spectrophotometers are
characterized by adaptive software that allows users to control the time,
temperature and wavelength of light used for measurement; while computing and
recording experimental results. Spectrophotometers sell in the $5,000 to $30,000
range.
Researchers often insert radioactive atoms into compounds that are then
introduced into biological systems. The compounds can be traced to a specific
tissue or waste product by measuring the amount and type of radioactive label
that is present with a liquid scintillation counter. Beckman Coulter's LS(TM)
6500 Series Liquid scintillation systems sell in the $16,000 to $30,000 range.
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IMMUNOMICS
In 2000, Beckman Coulter formed its Immunomics Operations to develop and
introduce products based on a proprietary technology which allows direct ex vivo
quantitation of antigen specific T cells. Current methods for detecting these
antigen specific T cells, such as Cytotoxicity Assay, Limiting Dilution Assay
(LDA), and ELISpot, are cumbersome and convenient reagents for them have not
been available. Beckman Coulter's products, on the other hand, will be suitable
for routine laboratory use, measure all antigen specific cells, and allow
multiparametric flow analysis for functional determinations.
This line of products -- called iTAg(TM) MHC Tetramers -- will bridge both
the life science research and clinical diagnostics markets. Initially, they will
include standard research products and custom products designed to meet the
needs of researchers measuring the response to specific peptides. Performed on
flow cytometers, these cellular immune response tests can be used in a variety
of clinical research activities, such as in clinical trials to quickly determine
if new vaccines or therapies are creating the appropriate response in the body.
Ultimately, Beckman Coulter anticipates that complementary in vitro diagnostic
tests will be developed using the same technology.
COMPETITION
The markets for Beckman Coulter's products are highly competitive, with
many companies participating in one or more parts of each market segment.
Competitors in the clinical diagnostics market include Abbott Laboratories
(Diagnostics Division), Bayer/Chiron, Dade International/Behring Diagnostics
Division, Becton Dickinson and Company, Johnson & Johnson (Ortho Diagnostics
Division), Roche (Roche Boehringer Mannheim Diagnostics Division) Diagnostica
Stago and Sysmex Corporation of America (a subsidiary of TOA Medical Electronics
Co. Ltd.).
Competitors focused more directly in the life science research market
include, Agilent Technologies, Amersham Pharmacia Biotech p.l.c., Becton
Dickinson, Bio-Rad Laboratories, Inc., Hitachi, Packard BioScience Company,
Jouan, Kendro Laboratory Products, Applied Biosystems, Shimadzu, Tecan, and
Waters Corporation. Some of these competitors are divisions or subsidiaries of
corporations with substantial resources. In addition, Beckman Coulter competes
with several companies that offer reagents, consumables and service for
laboratory instruments that are manufactured by Beckman Coulter and others.
RESEARCH AND DEVELOPMENT
Beckman Coulter's new products originate from four sources: (1) internal
research and development programs; (2) external collaborative efforts with
individuals in academic institutions and technology companies; (3) devices or
techniques that are generated in customers' laboratories; and (4) business and
technology acquisitions. Development programs focus on production of new
generations of existing product lines as well as new product categories not
currently offered. Areas of pursuit include innovative approaches to cell
characterization, immunochemistry, molecular biology, advanced electrophoresis
technologies, automated sample processing and information technologies. Beckman
Coulter's research and development teams are skilled in optics, chemistry,
electronics, software and mechanical and other engineering disciplines, in
addition to a broad range of biological and chemical sciences. Beckman Coulter's
research and development expenditures were $185 million in 2000, $173.4 million
in 1999 and $171.4 million in 1998.
SALES AND SERVICE
Beckman Coulter has sales in approximately 130 countries and maintains its
own marketing, service and sales forces in major markets throughout the world.
Most of Beckman Coulter's products are distributed by Beckman Coulter's sales
groups; however, Beckman Coulter employs independent distributors to serve those
markets that are more efficiently reached through such channels. In addition to
direct sales of its instruments, Beckman Coulter leases certain instruments to
its customers, principally those used for clinical diagnostic applications in
hospitals.
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Beckman Coulter's sales representatives are technically educated and
trained in the operation and application of Beckman Coulter'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 Beckman
Coulter's products. These individuals give Beckman Coulter the ability to
provide immediate after sales service and technical support, elements which are
critical to customer satisfaction. This includes capabilities to provide
immediate technical support by phone and to deliver parts or have a service
engineer on site within hours. To have such capabilities on a global basis
requires a major investment in personnel, facilities, and other resources.
Beckman Coulter's large, existing installed base of instruments makes the
required service and support infrastructure financially viable. Beckman Coulter
considers its reputation for service responsiveness and competence and its
worldwide sales and service network to be important competitive assets.
PATENTS AND TRADEMARKS
Beckman Coulter's primary trademark and trade name are "Beckman Coulter".
The company vigorously protects its primary trademark, which is used on Beckman
Coulter's products and is recognized throughout the worldwide scientific and
diagnostic community. Beckman Coulter owns and uses secondary trademarks on
various products, but none of these secondary trademarks is considered of
primary importance to the business.
To complement and protect the innovations created by Beckman Coulter's
research and development efforts, Beckman Coulter has a patent protection
program which includes approximately 600 active U.S. patents and patent
applications. Of this number, approximately 235 relate to the life science
research segment and the remaining 365 relate to the clinical diagnostics
segment. Beckman Coulter also files important corresponding applications in
principal foreign countries. Beckman Coulter has taken an aggressive posture in
protecting its patent rights.
While no one patent is considered essential to the success of the business,
a number of patents relating to major product lines or which provide significant
sources of licensing revenue will expire in 2001. These include patents covering
some of the reagents used with the cellular analysis products and patents
covering certain fundamental immunoassay technologies. Some of these patents
have been the basis for substantial licensing revenues in the past.
GOVERNMENT REGULATIONS
Beckman Coulter's products and operations are subject to a number of
federal, state, local and foreign laws and regulations. It believes that its
products and operations comply in all material respects with these laws and
regulations. Although Beckman Coulter continues to make expenditures to comply
with these requirements, it does not anticipate any expenditures which would
have a material impact on Beckman Coulter's operations or financial position.
All clinical diagnostics products sold in the United States are subject to
laws and regulations administered by the United States Food & Drug
Administration ("FDA"). These laws and regulations require the products to be
safe and effective for their intended uses and to be developed and manufactured
in accordance with "good manufacturing practices". They also require the
labeling for the products to contain specified information and, in some cases,
the FDA must review and approve the quality assurance protocols specified in the
labeling. In addition, certain products must meet performance standards or
conform to other special controls adopted by the FDA, and some products are
subject to a formal premarket approval process.
In 1993 the member states of the European Union (EU) began implementation
of their plan for a new unified EU market with reduced trade barriers and
harmonized regulations. The EU adopted a significant international quality
standard, the International Organization for Standardization Series 9000 Quality
Standards ("ISO 9000"). Beckman Coulter's major manufacturing operations and
development centers have been certified as complying with the requirements of
the appropriate ISO 9000 standard. Many of Beckman Coulter's international sales
and service subsidiaries also have been certified as complying.
The European Union also has adopted a number of "directives" that specify
requirements for medical devices and other products. Beckman Coulter's products
that are covered by these directives must comply
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with their requirements in order to be sold in the European Union. The key
directives that have been applicable to Beckman Coulter's products include those
establishing requirements for electromechanical compatibility, packaging and
packaging waste, and non-implantable medical devices. In order to comply with
these requirements, the company has taken steps such as modifying certain of its
designs, obtaining specialized test equipment, generating information about its
packaging materials, and modifying its product labeling. In 1999, the European
Union adopted a new directive establishing requirements for in vitro diagnostic
products. This directive is being phased in, beginning in June, 2000, and will
become mandatory in June, 2003.
The design of Beckman Coulter's products and the potential market for their
use may be directly or indirectly affected by U.S. and foreign regulations
concerning reimbursement for clinical testing services. The configuration of new
products, such as the SYNCHRON series of clinical analyzers, reflects Beckman
Coulter's response to the changes in hospital capital spending patterns such as
those engendered by the U.S. Medicare Diagnostic Related Groups ("DRGs"). Under
the DRG system, a hospital is reimbursed a fixed sum for the services rendered
in treating a patient, regardless of the actual cost of the services provided.
Japan, France, Germany and Italy are among other countries that are in the
process of adopting reimbursement policies designed to lower the cost of
healthcare.
Medicare reimbursement of inpatient capital costs incurred by a hospital
(to the extent of Medicare utilization) is in a 10-year transition period begun
in 1991 from the "capital cost pass-through" payment methodology to a
"prospective capital" payment methodology based on DRGs. To date, Beckman
Coulter has not experienced, and does not expect to experience in the future,
any material financial impact from the change in Medicare's payment for
inpatient capital costs.
The current health care reform efforts in the United States and in some
foreign countries are expected to further alter the methods and financial
aspects of doing business in the health care field. Beckman Coulter is closely
following these developments so that it may position itself to take advantage of
them. However, Beckman Coulter cannot predict the effect on its business of
these reforms should they occur nor of any other future government regulation.
ENVIRONMENTAL MATTERS
Beckman Coulter is subject to federal, state, local and foreign
environmental laws and regulations. Although Beckman Coulter continues to make
expenditures for environmental protection, it does not anticipate any
expenditures to comply with such laws and regulations which would have a
material impact on Beckman Coulter's operations or financial position. Beckman
Coulter believes that its operations comply in all material respects with
applicable federal, state, and local environmental laws and regulations.
To address contingent environmental costs, Beckman Coulter establishes
reserves when the costs are probable and can be reasonably estimated. Beckman
Coulter believes that, based on current information and regulatory requirements
(and taking third party indemnities into consideration), the reserves
established by Beckman Coulter for environmental expenditures are adequate.
Based on current knowledge, to the extent that additional costs may be incurred
that exceed the reserves, the amounts are not expected to have a material
adverse effect on Beckman Coulter's operations, financial condition, or
liquidity, although no assurance can be given in this regard.
In 1983, Beckman Coulter discovered organic chemicals in the groundwater
near a waste storage pond at its manufacturing facility in Porterville,
California. Soil and groundwater remediation have been underway at the site
since 1983. In 1989, the U.S. Environmental Protection Agency issued a final
Record of Decision specifying the soil and groundwater remediation activities to
be conducted at the site. Beckman Coulter believes that it has completed all of
the required work and has initiated discussions with the EPA regarding the
criteria to be used in making this determination. SmithKline Beckman, Beckman
Coulter's former controlling stockholder, agreed to indemnify Beckman Coulter
with respect to this matter for any costs incurred in excess of applicable
insurance, eliminating any impact on Beckman Coulter's earnings or financial
position. SmithKline Beecham p.l.c., the surviving entity of the 1989 merger
between SmithKline Beckman and Beecham and GlaxoSmithKline p.l.c., the surviving
entity of the 2000 merger between SmithKline Beecham and Glaxo Wellcome, assumed
the obligations of SmithKline Beckman in this respect.
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In 1987, soil and groundwater contamination was discovered on property in
Irvine, California formerly owned by Beckman Coulter. In 1988, The Prudential
Insurance Company of America ("Prudential"), which had purchased the property
from Beckman Coulter, filed suit against Beckman Coulter in U.S. District Court
in California for recovery of costs and other alleged damages with respect to
the soil and groundwater contamination. In 1990, Beckman Coulter entered into an
agreement with Prudential for settlement of the lawsuit and for sharing current
and future costs of investigation, remediation and other claims.
Soil and groundwater remediation of the Irvine property have been in
process since 1988. During 1994, the County agency overseeing the site soil
remediation formally acknowledged completion of remediation of a major portion
of the soil. During 1998, two additional areas of soil requiring remediation
were identified. Work on one area was completed in 1998 and work on the second
area was completed in 1999. In July 1997, the California Regional Water Quality
Control Board, the agency overseeing the site groundwater remediation, issued a
closure letter for the upper water bearing unit. Beckman Coulter and Prudential
continued to operate a groundwater treatment system throughout most of 1999. In
October, 1999, the Regional Water Quality Control Board agreed that the system
could be shut down. Continued monitoring will be necessary for a period of time
to verify that groundwater conditions remain acceptable.
Beckman Coulter believes that additional remediation costs, if any, beyond
those already provided for the contamination discovered by the current
investigations will not have a material adverse effect on Beckman Coulter's
operations, financial position, or liquidity. However, there can be no assurance
that further investigation will not reveal additional soil or groundwater
contamination or result in additional costs.
EMPLOYEE RELATIONS
As of December 31, 2000, Beckman Coulter had approximately 6,945 employees
located in the United States and approximately 2,575 employees in international
operations. Beckman Coulter believes its relations with its employees are good.
GEOGRAPHIC AREA INFORMATION
Information with respect to the above-captioned item is incorporated by
reference to Note 15, "BUSINESS SEGMENT INFORMATION" of the Consolidated
Financial Statements of Beckman Coulter's Annual Report to Stockholders for the
year ended December 31, 2000.
FORWARD-LOOKING STATEMENTS
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", "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.
1. Sales. The Company's ability to achieve its anticipated level of
sales is affected by factors such as capital spending policies and the
availability of government funding. In particular, many life science
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. Sales also are
impacted by 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, comparative pricing,
especially in areas where currency has an effect, and general economic
conditions in significant foreign countries in which we do business, such
as, Japan and Germany.
2. Earnings and Financial Results of Operations. Actual earnings may
differ from those estimated due to factors such as changes in exchange
rates between the time sales are recorded and financial statements are
prepared. Earnings also may be impacted by unanticipated increases in
interest rates on
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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. The effect of taxes and changes in tax
policy also may have an effect as may unanticipated increases in labor and
other costs. In recent years, consolidation among health care providers and
the formation of buying groups has put pressure on pricing. These pressures
challenge the Company's ability to maintain historical profit margins,
unless it can also obtain equivalent decreases in operating costs.
3. Products. Expected introductions of new products may be impacted by
complexity and uncertainty regarding development of new high-technology
products. 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. Introduction of new products may be affected
by delays in obtaining any government approvals necessary to market the
products, particularly in clinical diagnostics. Introduction of new
products also may be delayed due to shortages in qualified engineers,
programmers, and other key labor categories. The ability to obtain 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.
ITEM 2. PROPERTIES
Beckman Coulter's primary instrument assembly and manufacturing facilities
are located in Fullerton, Brea, and Palo Alto, California; Chaska, Minnesota;
and Hialeah and Opa Locka, Florida. Components, parts, and electronic
subassemblies are manufactured in facilities located in Fullerton and
Porterville, California and Hialeah, Florida. An additional manufacturing
facility is located in Galway, Ireland. Reagents are manufactured in Fullerton,
Carlsbad, and Palo Alto, California; Chaska, Minnesota; Miami, Florida;
Florence, Kentucky; Galway, Ireland; Germany; France; Japan; Australia; and
China.
Part of Beckman Coulter's computer software products business is located in
Allendale, New Jersey and its facility for the production of Hemoccult(R) test
kits and related products is located in Sharon Hill, Pennsylvania. A portion of
Beckman Coulter's laboratory robotics operations are conducted in leased
facilities in Indianapolis, Indiana. Beckman Coulter's principal distribution
locations are in Brea and Fullerton, California; Chaska, Minnesota; Somerset,
New Jersey; Florence, Kentucky; Frankfurt, Germany; and Paris, France. Beckman
Coulter's European Administration Center is located in Nyon, Switzerland.
Beckman Coulter owns the facilities located in Carlsbad, Fullerton, and
Porterville, California; and some of the facilities in Hialeah, Florida. All of
the other facilities are leased. The Brea and Palo Alto, California; Miami,
Florida; and Chaska, Minnesota facilities, which previously were owned by
Beckman Coulter and sold in 1998, are leased for initial terms of twenty years
with options to renew for up to an additional thirty years. All manufacturing
facilities located outside of the U.S. are leased with the exception of Germany,
France, and Japan. During 2000, as part of previously announced restructuring
activities, Beckman Coulter closed its manufacturing operations in Hong Kong,
Brazil and Argentina.
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 3. LEGAL PROCEEDINGS
Beckman Coulter and its subsidiaries are involved in a number of lawsuits
which Beckman Coulter considers ordinary and routine in view of its size and the
nature of its business. Beckman Coulter does not believe that any ultimate
liability resulting from any such lawsuits will have a material adverse effect
on its operations, financial position, or liquidity. However, no assurance can
be given as to the ultimate outcome with respect to such lawsuits. The
resolution of such lawsuits could be material to Beckman Coulter's operating
results for any particular period, depending upon the level of income for such
period.
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In December 1999, Streck Laboratories, Inc. served Beckman Coulter and
Coulter Corporation with a complaint filed in the United States District Court
for the District of Nebraska. The complaint alleges that control products sold
by Beckman Coulter and/or Coulter Corporation infringe each of five patents
owned by Streck, and seeks injunctive relief, damages, attorney fees and costs.
We, on behalf of ourselves and on behalf of Coulter Corporation have answered
the complaint and have filed a counterclaim against Streck for patent
infringement. We continue to believe that there is no reasonable basis for us to
conclude that this litigation could lead to an outcome that would have a
material adverse effect on our consolidated operations or financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of stockholders during the fourth
quarter of 2000.
EXECUTIVE OFFICERS OF BECKMAN COULTER
The following is a list of the executive officers of Beckman Coulter as of
February 2, 2001, showing their ages, present positions and offices with Beckman
Coulter and their business experience during the past five or more years.
Officers are elected by the Board of Directors and serve until the next annual
Organization Meeting of the Board. Officers may be removed by the Board at will.
There are no family relationships among any of the named individuals, and no
individual was selected as an officer pursuant to any arrangement or
understanding with any other person.
JOHN P. WAREHAM, 59, Chairman of the Board, President and Chief Executive
Officer
Mr. Wareham is Chairman, President and Chief Executive Officer of Beckman
Coulter. He became Chairman in February 1999, Chief Executive Officer in
September 1998 and President in October 1993. He also served as Beckman
Coulter's Chief Operating Officer from October 1993 to September 1998 and as
Vice President, Diagnostic Systems Group from 1984 to 1993. Prior to 1984, he
had served as President of Norden Laboratories, Inc., a wholly owned subsidiary
of SmithKline Beckman Corporation engaged in developing, manufacturing and
marketing veterinary pharmaceuticals and vaccines, having first joined
SmithKline Corporation, a predecessor of SmithKline Beckman Corporation, in
1968. He is a director and Chairman of AdvaMed (formerly the Health Industry
Manufacturers Association), a member of the Center for Corporate Innovation, a
member of the Chief Executive Roundtable of the University of California at
Irvine, and a member of the board of Steris Corporation. He has been a director
of Beckman Coulter since 1993.
JACK FINNEY, 62, Vice President, Bioresearch Division
Mr. Finney has been Vice President, Bioresearch Division since 1997. He
first joined Beckman Coulter in 1962 as a customer service specialist, became
product line manager in 1965 and marketing manager in 1971 at Beckman's Spinco
Division in Palo Alto, California. He became Manager in 1981 of Altex Scientific
Operations in Berkeley, California and in 1985 Vice President and Manager of the
Altex Division in San Ramon, California. In 1991, he was named Vice President of
Product Development for the Spinco Business Unit, and in 1994, was assigned
overall responsibility for the centrifuge business.
JAMES T. GLOVER, 51, Vice President and Treasurer
Mr. Glover was named Vice President and Treasurer in December, 1999. He had
been Vice President and Controller of Beckman Coulter since 1993, and previously
Vice President, Controller -- Diagnostic Systems Group from 1989. Mr. Glover
joined Beckman Coulter in 1983, serving in several management positions,
including a two-year term at Allergan, Inc., then a Company affiliate. Prior to
1983, he held management positions with KPMG LLP and another Fortune 500
Company.
AMIN I. KHALIFA, 47, Vice President and Chief Financial Officer
Mr. Khalifa has been Vice President and Chief Financial Officer since
December, 1999. He first joined Beckman Coulter in June, 1999 as Vice President,
Chief Financial Officer and Treasurer. Prior to joining
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Beckman Coulter he had been Chief Financial Officer of the Agricultural Sector
of Monsanto Company, head of Investor Relations and Strategy for Aetna, Inc.,
Senior Vice President and Chief Financial Officer of Aetna Health Plans, and
held various positions of increasing responsibility during a sixteen year career
at PepsiCo.
FIDENCIO MARES, 54, Vice President, Human Resources and Corporate Communications
Mr. Mares was named Vice President, Human Resources and Corporate
Communications of Beckman Coulter in 1995. Prior thereto he had been President
of The Gas Company of Hawaii. Before that he was Senior Vice President of
Administration and Human Resources for Pacific Resources, Inc., Corporate Wage
and Salary Manager and Corporate Human Resources Services Manager for Getty Oil
Company/Texaco, Inc., and held various human resources managerial positions at
Southern California Edison.
WILLIAM H. MAY, 58, Vice President, General Counsel and Secretary
Mr. May has been Vice President, General Counsel and Secretary of Beckman
Coulter since 1985 and has been General Counsel and Secretary of Beckman Coulter
since 1984. Mr. May also is a member of the Board of the Arnold and Mabel
Beckman Foundation. Mr. May first joined Beckman Coulter in 1976.
EDGAR E. VIVANCO, 57, Senior Vice President, Diagnostics Development and
Corporate Manufacturing
Mr. Vivanco was named Senior Vice President, Diagnostics Development and
Corporate Manufacturing in January, 1999. He had been President of Coulter
Corporation and Vice President of the Cellular Analysis Division since November
1997, and previously was Vice President of the Biotechnology Development Center.
Mr. Vivanco joined Beckman Coulter in 1971 as a microbiologist at the Microbics
Operations in La Habra, California. In 1973, he moved to Carlsbad as a
Development Microbiologist and became Production Manager in 1975, Manufacturing
Manager in 1978, and Site Manager in 1986. In 1987, he became Technical
Operations Manager for the Diagnostics Operations and in 1990, became Director
of Worldwide Reagents and Chemical Processing.
ALBERT R. ZIEGLER, 62, Senior Vice President, Diagnostics Commercial Operations
Mr. Ziegler was named Senior Vice President, Diagnostics Commercial
Operations in January, 1999. He had been Vice President, Clinical Chemistry
Division since October 1997 and Vice President, Diagnostics Development Center
since 1994. He joined Beckman Coulter in 1986 as Vice President, North America
Operations for the Diagnostic Systems Group. Prior thereto, he had been
President of Branson Ultrasonics Corporation, a manufacturer of industrial
ultrasound instruments and a subsidiary of SmithKline Beckman until the
divestiture of SmithKline Beckman's industrial instruments businesses in 1984.
Mr. Ziegler first joined SmithKline in 1971.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
As of January 12, 2001 there were approximately 6,551 holders of record of
Beckman Coulter's common stock. During 2000, Beckman Coulter paid three
quarterly dividends of sixteen cents per share (eight cents per share post
split) and one quarterly dividend of seventeen cents per share (eight and
one-half cents per share post split) for a total of sixty-five cents per share
(thirty-two and one-half cents per share post split) of common stock for the
year. During 1999 Beckman Coulter paid four consecutive quarterly dividends of
sixteen cents per share of common stock, for a total of sixty-four cents per
share for the year. During 2000, Beckman Coulter also conducted a stock split in
the form of a two-for-one stock dividend distributed on December 7, 2000 to
stockholders of record on November 15, 2000. Under the terms of Beckman
Coulter's principal credit agreement, which expires on October 31, 2002,
dividend payments are limited but not prohibited. To date this limitation has
not had an impact on Beckman Coulter's dividends and is not expected to have an
impact in the foreseeable future. Additional information with respect to the
above-captioned item is incorporated herein by reference to the section entitled
"QUARTERLY INFORMATION (UNAUDITED)" of Beckman Coulter's Annual Report to
Stockholders for the year ended December 31, 2000.
ITEM 6. SELECTED FINANCIAL DATA
Information with respect to the above-captioned Item is incorporated herein
by reference to the section entitled "SELECTED FINANCIAL INFORMATION" of Beckman
Coulter's Annual Report to Stockholders for the year ended December 31, 2000.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information with respect to the above-captioned Item is incorporated herein
by reference to the section entitled "MANAGEMENT'S DISCUSSION AND ANALYSIS" of
Beckman Coulter's Annual Report to Stockholders for the year ended December 31,
2000.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information with respect to the above-captioned Item is incorporated by
reference to the section entitled "FINANCIAL RISK MANAGEMENT" of Beckman
Coulter's Annual Report to Stockholders for the year ended December 31, 2000.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information with respect to the above-captioned Item is incorporated by
reference to the sections entitled "FINANCIAL REVIEW", "CONSOLIDATED BALANCE
SHEETS", "CONSOLIDATED STATEMENTS OF OPERATIONS", "CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY", "CONSOLIDATED STATEMENTS OF CASH FLOWS", "QUARTERLY
INFORMATION", "INDEPENDENT AUDITORS' REPORT" and the notes to these sections of
Beckman Coulter's Annual Report to Stockholders for the year ended December 31,
2000.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors -- the information with respect to directors required by this
Item is incorporated herein by reference to those parts of Beckman Coulter's
Proxy Statement for the Annual Meeting of Stockholders to be held April 5, 2001
entitled "ELECTION OF DIRECTORS" and "ADDITIONAL INFORMATION ABOUT THE BOARD OF
DIRECTORS."
Executive Officers -- The information with respect to executive officers
required by this Item is set forth in Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
The information with respect to executive compensation required by this
item is incorporated by reference to that part of Beckman Coulter's Proxy
Statement for the Annual Meeting of Stockholders to be held April 5, 2001
entitled "EXECUTIVE COMPENSATION", excluding those sections entitled
"Organization and Compensation Committee Report on Executive Compensation" and
"Performance Graph".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information with respect to security ownership required by this Item is
incorporated by reference to that part of Beckman Coulter's Proxy Statement for
the Annual Meeting of Stockholders to be held April 5, 2001 entitled "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information with respect to certain relationships and related
transactions required by this Item is incorporated by reference to that part of
Beckman Coulter's Proxy Statement for the Annual Meeting of Stockholders to be
held April 5, 2001 entitled "ADDITIONAL INFORMATION ABOUT THE BOARD OF
DIRECTORS, Compensation Committee Interlocks and Insider Participation."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1), (a)(2) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
The financial statements and financial statement schedules filed as part of
the report are incorporated by reference in the "INDEX OF FINANCIAL STATEMENTS
AND SCHEDULES" following this Part IV.
(a)(3) EXHIBITS
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Management contracts and compensatory plans or arrangements
are identified by *.
2.1 Stock Purchase Agreement among Coulter Corporation, The
Stockholders of Coulter Corporation and Beckman Coulter,
dated as of August 29, 1997 (incorporated by reference to
Exhibit 2.1 of Beckman Coulter's Report on Form 8-K dated
November 13, 1997, File No. 001-10109). (Note: Confidential
treatment has been obtained for portions of this document.)
3.1 Amended and Restated By-Laws of Beckman Coulter, as of
November 30, 1994 (incorporated by reference to Exhibit 3.2
of the Company's Annual Report to the Securities and
Exchange Commission on form 10-K for the fiscal year ended
December 31, 1994, File No. 001-10109).
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3.2 Fifth Restated Certificate of Incorporation dated April 24,
2000 (incorporated by reference to Exhibit 3.1 of the
Company's submission on Form S-3 files with the Securities
and Exchange Commission on May 5, 2000, File No. 333-02317).
4.1 Specimen Certificate of Common Stock (incorporated by
reference to Exhibit 4.1 of Amendment No. 1 to Beckman
Coulter's Form S-1 registration statement, File No.
33-24572).
4.2 Rights Agreement between Beckman Coulter and Morgan
Shareholder Services Trust Company, as Rights Agent, dated
as of March 28, 1989 (incorporated by reference to Exhibit 4
of the Company's current report on Form 8-K filed with the
Securities and Exchange Commission on April 25, 1989, File
No. 1-10109).
4.3 First amendment to the Rights Agreement dated as of March
28, 1989 between Beckman Coulter and First Chicago Trust
Company of New York (formerly Morgan Shareholder Services
Trust Company), as Rights Agent, dated as of June 24, 1992
(incorporated by reference to Exhibit 1 of Beckman Coulter's
current report on Form 8-K filed with the Securities and
Exchange Commission on July 2, 1992, File No. 001-10109).
4.4 Senior Indenture between Beckman Coulter and The First
National Bank of Chicago as Trustee, dated as of May 15,
1996, filed in connection with the Form S-3 Registration
Statement filed with the Securities and Exchange Commission
on April 5, 1996, File No. 333-02317 (incorporated by
reference to Exhibit 10.1 of Beckman Coulter's Quarterly
Report to the Securities and Exchange Commission on Form
10-Q for the quarterly period ended June 30, 1996, File No.
001-10109).
4.5 7.05% Debentures Due June 1, 2026, filed in connection with
the Form S-3 Registration Statement filed with the
Securities and Exchange Commission on April 5, 1996, File
No. 333-02317 (incorporated by reference to Exhibit 10.2 of
Beckman Coulter's Quarterly Report to the Securities and
Exchange Commission on Form 10-Q for the quarterly period
ended June 30, 1996, File No. 001-10109).
4.6 Amendment 1998-1 to Beckman Coulter's Employees' Stock
Purchase Plan dated December 9, 1998.
4.7 Stockholder Protection Rights Agreement dated as of February
4, 1999 (incorporated by reference to Exhibit 4 of the
Company's Form 8-K filed with the Securities and Exchange
Commission on February 8, 1999, File No. 99523266).
4.8 Stockholder Protection Rights Agreement (incorporated by
reference to Exhibit 4 of Beckman Coulter's report on Form
8-K filed with the Securities and Exchange Commission on
February 8, 1999, File No. 001-10109).
10.1 Credit Agreement dated as of October 31, 1997 among the
Company as Borrower, the Initial Lenders and the Initial
Issuing Banks named therein, and Citicorp USA, Inc. as Agent
(incorporated by reference to Exhibit 10.1 of Beckman
Coulter's Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarterly period ended
September 30, 1997, File No. 001-10109).
10.2 Guaranty dated as of October 31, 1997 made by each Guarantor
Subsidiary (as defined in the Credit Agreement, Exhibit 10.1
herein) of Beckman Coulter, in favor of the Lender Parties
(as defined in the Credit Agreement) (incorporated by
reference to Exhibit 10.2 of Beckman Coulter's Quarterly
Report to the Securities and Exchange Commission on Form
10-Q for the quarterly period ended September 30, 1997, File
No. 001-10109).
10.3 Line of Credit Agreement dated as of June 26, 1998 and Line
of Credit Promissory Note in favor of Mellon Bank, N.A.,
dated as of March 25, 1998.
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10.4 Benefit Equity Amended and Restated Trust Agreement between
Beckman Coulter and Mellon Bank, N.A., as Trustee, for
assistance in meeting stock-based obligations of the
Company, dated as of February 10, 1997 (incorporated by
reference to Exhibit 10.7 of Beckman Coulter's Annual Report
to the Securities and Exchange Commission on Form 10-K for
the Fiscal Year ended December 31, 1997, File No.
001-10109).
*10.5 Beckman Coulter's Annual Incentive Plan for 1997, adopted by
Beckman Coulter in 1997 (incorporated by reference to
Exhibit 10.1 of Beckman Coulter's Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for the
quarterly period ended June 30, 1997, File No. 001-10109.
*10.6 Beckman Coulter's Incentive Compensation Plan of 1990,
amended and restated April 4, 1997, with amendments approved
by stockholders April 3, 1997 and effective January 1, 1997
(incorporated by reference to Exhibit 10 of Beckman
Coulter's Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarterly period ended March
31, 1997, File No. 001-10109).
*10.7 Amendment to Beckman Coulter's Incentive Compensation Plan
of 1990 adopted December 5, 1997 (incorporated by reference
to Exhibit 4.1 to Post-Effective Amendment No. 1 to the Form
S-8 Registration Statement filed January 13, 1998,
Registration No. 333-24851.
*10.8 Beckman Coulter's Incentive Compensation Plan, as amended by
the Beckman Coulter's Board of Directors on October 26, 1988
and as amended and restated by Beckman Coulter's Board of
Directors on March 28, 1989 (incorporated by reference to
Exhibit 10.16 of Beckman Coulter's Annual Report to the
Securities and Exchange Commission on Form 10-K for the
fiscal year ended December, 31 1989, File No. 001-10109).
*10.9 Amendment to Beckman Coulter's Incentive Compensation Plan,
adopted December 5, 1997 (incorporated by reference to
Exhibit 4.2 to Post Effective Amendment No. 1 to the Form
S-8 Registration statement, filed January 13, 1998,
Registration No. 33-31573).
*10.10 Restricted Stock Agreement and Election (Cycle
Three -- Economic Value Added Incentive Plan), adopted by
Beckman Coulter in 1996 (incorporated by reference to
Exhibit 10.15 of the Company's Annual Report to the
Securities and Exchange Commission on Form 10-K for the
fiscal year period ended December 31, 1996, File No.
001-10109).
*10.11 Form of Restricted Stock Agreement, dated as of January 3,
1997, between Beckman Coulter and certain of its Executive
Officers and certain other key employees (incorporated by
reference to Exhibit 10.1 of Beckman Coulter's Quarterly
Report to the Securities and Exchange Commission on Form
10-Q for the quarterly period ended June 30, 1997, File No.
001-10109).
*10.12 Beckman Coulter's Supplemental Pension Plan, adopted by the
Company October 24, 1990 (incorporated by reference to
Exhibit 10.4 of Beckman Coulter's Annual Report to the
Securities and Exchange Commission on Form 10-K for the
fiscal year ended December, 31 1990, File No. 001-10109).
*10.13 Amendment 1995-1 to Beckman Coulter's Supplemental Pension
Plan, adopted by Beckman Coulter in 1995, effective as of
October 1, 1993 (incorporated by reference to Exhibit 10.17
of the Company's Annual Report to the Securities and
Exchange Commission on Form 10-K for the fiscal year ended
December 31, 1996, File No. 001-10109).
*10.14 Amendment 1996-1 to Beckman Coulter's Supplemental Pension
Plan, dated as of December 9, 1996 (incorporated by
reference to Exhibit 10.18 of Beckman Coulter's Annual
Report to the Securities and Exchange Commission on Form
10-K for the fiscal year ended December 31, 1996, File No.
001-10109).
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*10.15 Stock Option Plan for Non-Employee Directors (Amended and
Restated effective as of August 7, 1997), incorporated by
reference to Exhibit 4.1 of Beckman Coulter's Registration
Statement on Form S-8 filed with the Securities and Exchange
Commission on October 8, 1997, Registration No. 333-37429.
*10.16 Agreement Regarding Retirement Benefits of Albert Ziegler,
dated June 16, 1995, between Beckman Coulter and Albert
Ziegler (incorporated by reference to exhibit 10.22 of
Beckman Coulter's Annual Report to the Securities and
Exchange Commission on Form 10-K for the fiscal year ended
December 31, 1995, File No. 001-10109).
*10.17 Agreement Regarding Retirement Benefits of Fidencio M.
Mares, adopted and dated April 30, 1996, between Beckman
Coulter and Fidencio M. Mares (incorporated by reference to
Exhibit 10.3 of Beckman Coulter's Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for the
quarterly period ended June 30, 1996, File No. 001-10109).
10.18 Amendment 1997-1 to Beckman Coulter's Employees' Stock
Purchase Plan, adopted effective January 1, 1998 and dated
October 20, 1997 (incorporated by reference to Exhibit 10.3
of the Company's Quarterly Report to the Securities and
Exchange Commission on Form 10-Q for the quarterly period
ended September 30, 1997, File No. 001-10109).
*10.19 Beckman Coulter's Amended and Restated Deferred Directors'
Fee Program, amended as of June 5, 1997 (incorporated by
reference to Exhibit 10.6 of Beckman Coulter's Quarterly
Report to the Securities and Exchange Commission on Form
10-Q for the quarterly period ended September 30, 1997, File
No. 001-10109).
*10.20 Amendment 1997-2 to Beckman Coulter's Supplemental Pension
Plan, adopted as of October 31, 1997 (incorporated by
reference to Exhibit 10.7 of Beckman Coulter's Quarterly
Report to the Securities and Exchange Commission on Form
10-Q for the quarterly period ended September 30, 1997, File
No. 001-10109).
*10.21 Form of Restricted Stock Award Agreement between Beckman
Coulter and its non-employee Directors, effective as of
October 3, 1997 (incorporated by reference to Exhibit 4.1 of
the Company's Registration Statement on Form S-8 filed with
the Securities and Exchange Commission on October 8, 1997,
Registration No. 333-37429).
*10.22 Form of Stock Option Grant for non-employee Directors
(incorporated by reference to Exhibit 4.3 of Beckman
Coulter's Registration Statement on Form S-8 filed with the
Securities and Exchange Commission on October 8, 1997,
Registration No. 333-37429).
*10.23 Beckman Coulter's Employees' Stock Purchase Plan, amended
and restated as of November 1, 1996, filed in connection
with the Form S-8 Registration Statement filed with the
Securities and Exchange Commission on December 19, 1995,
File No. 33-65155 (incorporated by reference to Exhibit
10.29 of Beckman Coulter's Annual Report to the Securities
and Exchange Commission on Form 10-K for the fiscal year
ended December 31, 1997, File No. 001-10109).
*10.24 Beckman Coulter's Option Gain Deferral Program, dated
January 14, 1998 (incorporated by reference to Exhibit 4.2
of Post-Effective Amendment No. 1 to the Form S-8
Registration Statement filed with the Securities and
Exchange Commission on January 13, 1998, Registration No.
333-24851).
*10.25 Form of Coulter's Special Incentive Plan and Sharing Bonus
Plan, assumed by Beckman Coulter October 31, 1997
(incorporated by reference to Exhibit 10.38 of Beckman
Coulter's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended December
31, 1997, File No. 001-10109).
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10.26 Distribution Agreement, dated as of April 11, 1989, among
SmithKline Beckman Corporation Beckman Coulter and Allergan,
Inc. (incorporated by reference to Exhibit 3 to SmithKline
Beckman Corporation's Current Report on Form 8-K filed with
the Securities and Exchange Commission on April 14, 1989,
File No. 1-4077).
10.27 Amendment to the Distribution Agreement effective as of June
1, 1989 between SmithKline Beckman Corporation, Beckman
Coulter and Allergan, Inc. (incorporated by reference to
Exhibit 10.26 of Amendment No. 2 to Beckman Coulter's Form
S-1 registration statement, File No. 33-28853).
10.28 Cross-Indemnification Agreement between Beckman Coulter and
SmithKline Beckman Corporation (incorporated by reference to
Exhibit 10.1 of Amendment No. 1 to Beckman Coulter's Form
S-1 registration statement, File No. 33-24572).
10.29 Amendment No. 1 dated April 3, 1998 to the Credit Agreement
by and among Beckman Coulter, as borrower, the Initial
Lenders and the Issuing Banks named therein, and Citicorp
USA, Inc. as Agent dated October 31, 1997 (incorporated by
reference to Exhibit 10.1 of Beckman Coulter's Quarterly
Report to the Securities and Exchange Commission on Form
10-Q for the quarter ended March 31, 1998, File No.
001-10109).
*10.30 Amendment No. 1998-1, adopted and effective as of April 2,
1998 to Beckman Coulter's 1998 Incentive Compensation Plan
(incorporated by reference to Exhibit 10.2 of Beckman
Coulter's Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarter ended March 31,
1998, File No. 001-10109).
*10.31 1998 Annual Incentive Plan (AIP) (incorporated by reference
to Exhibit 10.3 of Beckman Coulter's Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for the
quarter ended March 31, 1998, File No. 001-10109).
10.32 Lease Agreement made as of June 25, 1998 among Beckman
Coulter, Inc., NPDC-EY Brea Trust, and NPDC-RI Brea Trust
(incorporated by reference to Exhibit 2.5 of Beckman
Coulter's current report on Form 8-K filed with the
Securities and Exchange Commission on July 9, 1998, File No.
001-10109).
10.33 Lease Agreement made as of June 25, 1998 between Beckman
Coulter, Inc., and Cardbeck Chaska Trust (incorporated by
reference to Exhibit 2.6 of Beckman Coulter's current report
on Form 8-K filed with the Securities and Exchange
Commission on July 9, 1998, File No. 001-10109).
10.34 Lease Agreement made as of June 25, 1998 between Coulter
Corporation and Cardbeck Miami Trust (incorporated by
reference to Exhibit 2.7 of Beckman Coulter's current report
on Form 8-K filed with the Securities and Exchange
Commission on July 9, 1998, File No. 001-10109).
10.35 Lease Agreement made as of June 25, 1998 among Beckman
Coulter, Inc., NPDC-EY Palo Alto Trust, and NPDC-RI Palo
Alto Trust (incorporated by reference to Exhibit 2.8 of the
Company's current report on Form 8-K filed with the
Securities and Exchange Commission on July 9, 1998, File No.
001-10109).
10.36 Lease Modification Agreement made as of June 25, 1998 among
Beckman Coulter, Inc., NPDC-EY Brea Trust, and NPDC-RI Brea
Trust (incorporated by reference to Exhibit 2.9 of the
Company's current report on Form 8-K filed with the
Securities and Exchange Commission on July 9, 1998, File No.
001-10109).
10.37 Lease Modification Agreement made as of June 25, 1998 among
Beckman Coulter, Inc. and Cardbeck Chaska Trust
(incorporated by reference to Exhibit 2.10 of Beckman
Coulter's current report on Form 8-K filed with the
Securities and Exchange Commission on July 9, 1998, File No.
001-10109).
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10.38 Lease Modification Agreement made as of June 25, 1998 among
Coulter Corporation and Cardbeck Miami Trust (incorporated
by reference to Exhibit 2.11 of Beckman Coulter's current
report on Form 8-K filed with the Securities and Exchange
Commission on July 9, 1998, File No. 001-10109).
10.39 Lease Modification Agreement made as of June 25, 1998 among
Beckman Coulter, Inc., NPDC-EY Palo Alto Trust, and NPDC-RI
Palo Alto Trust (incorporated by reference to Exhibit 2.12
of Beckman Coulter's current report on Form 8-K filed with
the Securities and Exchange Commission on July 9, 1998, File
No. 001-10109).
10.40 Guaranty of Lease, executed as of June 25, 1998, by Beckman
Coulter, Inc. for the benefit of Cardbeck Miami Trust
(incorporated by reference to Exhibit 2.13 of Beckman
Coulter's current report on Form 8-K filed with the
Securities and Exchange Commission on July 9, 1998, File No.
001-10109).
*10.41 Beckman Coulter's Amended and Restated Executive Deferred
Compensation Plan dated October 28, 1998, effective as of
September 1, 1998 (incorporated by reference to Exhibit 4.1
of Beckman Coulter's Registration Statement on Form S-8
filed with the Securities and Exchange Commission on
December 18, 1998, Registration No. 333-69249).
*10.42 Beckman Coulter's Amended and Restated Executive Restoration
Plan dated October 28, 1998, effective as of September 1,
1998 (incorporated by reference to Exhibit 4.1 of the
Company's Registration Statement on Form S-8 filed with the
Securities and Exchange Commission on December 18,1998,
Registration No. 333-69251).
*10.43 Beckman Coulter's Amended and Restated Savings Plan dated
December 24, 1998, effective as of September 1998
(incorporated by reference to Exhibit 4.1 of Beckman
Coulter's Registration Statement on Form S-8 filed with the
Securities and Exchange Commission on February 10, 1999,
Registration No. 333-72081).
*10.44 Amendment 1998-1, adopted and effective as of April 2, 1998
to Beckman Coulter's 1998 Incentive Compensation Plan
(incorporated by reference to Exhibit 10.2 of Beckman
Coulter's Quarterly Report to the Securities and Exchange
Commission on Form 10-Q for the quarterly period ended March
31, 1998, File No. 001-10109)
*10.45 1999 Annual Incentive Plan (AIP) (incorporated by reference
to Exhibit 10.1 of Beckman Coulter's Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for the
quarter ended September 30, 1999, File No. 001-10109).
*10.46 Amendment 1999-1, adopted October 22, 1999 and effective as
of September 1, 1998, to the Beckman Coulter, Inc. Executive
Restoration Plan (incorporated by reference to Exhibit 10.2
of Beckman Coulter's Quarterly Report to the Securities and
Exchange Commission on Form 10-Q for the quarter ended
September 30, 1999, File No. 001-10109).
*10.47 Amendment 1999-2, adopted November 23, 1999, to the Beckman
Coulter, Inc. 1998 Incentive Compensation Plan (incorporated
by reference to Exhibit 10.51 of Beckman Coulter's Annual
Report to the Securities and Exchange Commission on Form
10-K for the fiscal year ended December 31, 1999, File No.
001-10109).
*10.48 Amendment 1999-1, adopted December 20, 1999, to the Beckman
Coulter, Inc. Savings Plan. (incorporated by reference to
Exhibit 10.52 of Beckman Coulter's Annual Report to the
Securities and Exchange Commission on Form 10-K for the
fiscal year ended December 31, 1999, File No. 001-10109).
*10.49 Change of Control Agreement between Beckman Coulter, Inc.
and John P. Wareham, dated as of January 1, 2000
(incorporated by reference to Exhibit 10.53 of Beckman
Coulter's Annual Report to the Securities and Exchange
Commission on Form 10-K for the fiscal year ended December
31, 1999, File No. 001-10109).
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*10.50 2000 Annual Incentive Plan (AIP)(incorporated by reference
to Exhibit 10.1 of Beckman Coulter's Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for the
quarter ended March 31, 2000, File No. 001-10109).
*10.51 Beckman Coulter, Inc. Savings Plan, Amendment 2000-1, dated
June 5, 2000. (incorporated by reference to Exhibit 10.1 of
Beckman Coulter's Quarterly Report to the Securities and
Exchange Commission on Form 10-Q for the quarter ended June
30, 2000, File No. 001-10109).
*10.52 Beckman Coulter, Inc. Executive Deferred Compensation Plan,
Amendment 2000-1, dated October 19, 2000 (incorporated by
reference to Exhibit 10.1 of Beckman Coulter's Quarterly
Report to the Securities and Exchange Commission on Form
10-Q for the quarter ended September 30, 2000, File No.
001-10109).
*10.53 Beckman Coulter, Inc. Executive Deferred Compensation Plan,
Amendment 2000-2, dated October 19, 2000 (incorporated by
reference to Exhibit 10.1 of Beckman Coulter's Quarterly
Report to the Securities and Exchange Commission on Form
10-Q for the quarter ended September 30, 2000, File No.
001-10109).
*10.54 Beckman Coulter, Inc. Executive Restoration Plan, Amendment
2000-1, dated October 19, 2000 (incorporated by reference to
Exhibit 10.3 of Beckman Coulter's Quarterly Report to the
Securities and Exchange Commission on Form 10-Q for the
quarter ended September 30, 2000, File No. 001-10109).
*10.55 Form of Change in Control Agreement, dated as of January 1,
2001, between Beckman Coulter, certain of its Executive
Officers and certain other key employees.
*10.56 Amendment 2000-2 adopted December 21, 2000 to the Beckman
Coulter, Inc. Savings Plan
*10.57 Executive Retention Incentive Program Summary (February
2001)
11. Statement regarding computation of per share earnings: This
information is incorporated by reference to the discussions
of "Earnings (Loss) Per Share" located in Note 14 of the
Consolidated Financial Statements of Beckman Coulter's
Annual Report to Stockholders for the year ended December
31, 1999.
13. The portion of Beckman Coulter's Annual Report to
Stockholders for the year ended December 31, 2000 titled
"Financial Results".
21. Subsidiaries.
23. Consent of KPMG LLP
24. Power of Attorney (included herein on the signature page).
99.1 II. Valuation and Qualifying Accounts.
</TABLE>
(b) Reports on Form 8-K During Fourth Quarter ended December 31, 2000.
The following reports on Form 8-K were filed since September 30, 2000:
"Beckman Coulter Announces Two-For-One Stock Split, Increases Dividend"
filed October 6, 2000.
BECKMAN COULTER, INC.
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
The consolidated financial statements of Beckman Coulter and the related
report of KPMG LLP, dated January 25, 2001 are incorporated by reference to the
section entitled "Financial Results" filed as Exhibit 13 to this Form 10-K.
Schedules not included herein have been omitted because they are not
applicable, are no longer required or the required information is presented in
the consolidated financial statements or in the notes to the consolidated
financial statements.
24
<PAGE> 26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
BECKMAN COULTER, INC.
By /s/ JOHN P. WAREHAM
------------------------------------
John P. Wareham
Chairman of the Board, President
and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints John P. Wareham, Amin I.
Khalifa, William H. May, and James T. Glover, and each of them, as his or her
true and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments to this Annual Report on Form
10-K, and to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the foregoing, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JOHN P. WAREHAM Chairman of the Board, February 1, 2001
- ----------------------------------------------------- President and Chief Executive
John P. Wareham Officer
/s/ AMIN I. KHALIFA Vice President, Finance and February 1, 2001
- ----------------------------------------------------- Chief Financial Officer
Amin I. Khalifa (Principal Financial Officer)
/s/ JAMES B. GRAY Director/Controller (Principal February 1, 2001
- ----------------------------------------------------- Accounting Officer)
James B. Gray
/s/ HUGH K. COBLE Director February 1, 2001
- -----------------------------------------------------
Hugh K. Coble
/s/ CAROLYNE K. DAVIS Director February 1, 2001
- -----------------------------------------------------
Carolyne K. Davis, Ph.D.
/s/ PETER B. DERVAN Director February 1, 2001
- -----------------------------------------------------
Peter B. Dervan, Ph.D.
Director , 2001
- -----------------------------------------------------
Ronald W. Dollens
</TABLE>
25
<PAGE> 27
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ CHARLES A. HAGGERTY Director February 1, 2001
- -----------------------------------------------------
Charles A. Haggerty
/s/ GAVIN HERBERT Director February 1, 2001
- -----------------------------------------------------
Gavin S. Herbert
/s/ VAN B. HONEYCUTT Director February 1, 2001
- -----------------------------------------------------
Van B. Honeycutt
Director , 2001
- -----------------------------------------------------
William N. Kelley, M.D.
/s/ C. RODERICK O'NEIL Director February 1, 2001
- -----------------------------------------------------
C. Roderick O'Neil
/s/ BETTY WOODS Director February 1, 2001
- -----------------------------------------------------
Betty Woods
</TABLE>
26
<PAGE> 28
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
10.55 Form of Change in Control Agreement, dated as of January 1,
2001, between Beckman Coulter, certain of its Executive
Officers and certain other key employees.
10.56 Amendment 2000-2 adopted December 21, 2000 to the Beckman
Coulter, Inc. Savings Plan
10.57 Executive Retention Incentive Program Summary (February
2001)
13. The portion of Beckman Coulter's Annual Report to
Stockholders for the year ended December 31, 2000 titled
"Financial Results".
21. Subsidiaries
23. Consent of KPMG LLP
99.1 II. Valuation and Qualifying Accounts
</TABLE>
27
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.55
<SEQUENCE>2
<FILENAME>a69813ex10-55.txt
<DESCRIPTION>EXHIBIT 10.55
<TEXT>
<PAGE> 1
EXHIBIT 10.55
AGREEMENT
This Agreement ("Agreement") is dated as of January 1, 2001, and is entered into
by and between ___________________ ("Employee") and Beckman Coulter, Inc., a
Delaware corporation ("Beckman"). Employee and Beckman hereby agree to the
following terms and
conditions:
1. Purpose of Agreement. The purpose of this Agreement is to provide that,
in the event of a "Change in Control," Employee may become entitled to
receive additional benefits in the event of his termination. It is
believed that the existence of these potential benefits will benefit
Beckman by discouraging turnover among Employees with Agreements and
causing such Employees to be more able to respond to the possibility of a
Change in Control without being influenced by the potential effect of a
Change in Control on their job security.
2. Change in Control. As used in this Agreement, the phrase "Change in
Control" shall mean the following and shall be deemed to occur if any of
the following events occur:
(a) Any "person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of
securities of Beckman representing 15% or more of the combined
voting power of Beckman's then outstanding voting securities,
provided that, no Change in Control shall be deemed to occur
solely because a corporation (the "seller") owns 15% or more of
Beckman voting securities if such ownership is only a transitory
step in a reorganization whereby Beckman purchases the assets of
the seller for Beckman voting securities and the seller liquidates
shortly thereafter; or if the "person" described above is an
underwriter or underwriting syndicate that has acquired ownership
of the Company's securities solely in connection with a public
offering of the Company's securities or is an employee benefit
plan maintained by the Company or any of its subsidiaries.
(b) Individuals who, as of the date hereof, constitute the Board of
Directors of Beckman (the "Incumbent Board"), cease for any reason
to constitute at least a majority of the Board of Directors,
provided that any person becoming a director subsequent to the
date hereof whose election, or nomination for election by
Beckman's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board
(other than an election or nomination of an individual whose
initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of Beckman, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall be deemed
to be a member of the Incumbent Board of Beckman;
(c) The consummation of a merger or consolidation with any other
corporation, other than
<PAGE> 2
(1) a merger or consolidation which would result in the voting
securities of Beckman outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or
by being converted into voting securities of another
entity) more than 85% of the combined voting power of the
voting securities of Beckman or such other entity
outstanding immediately after such merger or consolidation,
(2) a merger or consolidation affected to implement a
recapitalization of Beckman (or similar transaction) in
which no person acquires 15% or more of the combined voting
power of Beckman's then outstanding voting securities; or
(d) The stockholders of Beckman approve a plan of complete liquidation
of Beckman or an agreement for the sale or disposition by Beckman
of all or substantially all of Beckman's assets.
Furthermore, even though a transaction meets the definition of a Change
in Control set forth in clause (a) of the first sentence of this section,
such transaction shall not constitute a Change in Control under this
Agreement if subsequent to the transaction and at all times thereafter at
least 70% of the voting power of Beckman's then outstanding voting
securities remain widely held by members of the general public.
In addition, the merger or consolidation which would constitute a Change
in Control under clause (c) of the first sentence of this section shall
not be treated as a Change in Control if three criteria are met: (1)
after the merger or consolidation, persons who owned Beckman voting
securities prior to the merger or consolidation own at least 60% of the
voting securities of the surviving entity; (2) the voting securities not
owned by former Beckman shareholders are widely held by the general
public; and (3) the Organization and Compensation Committee ("the
Committee") resolves, prior to the approval that would otherwise
constitute a Change in Control under clause (c), that no Change in
Control shall be treated as having occurred. For the purpose of this
paragraph, the former Beckman shareholders shall be treated as owning the
shares owned by the entity into which their shares are converted so that,
for example, if the reorganization causes Beckman to become a wholly
owned subsidiary of another entity and the former Beckman shareholders
own at least 60% of that entity, then the share ownership requirement
shall be considered to have been satisfied.
3. Rights and Obligations Prior to a Change in Control. Prior to a Change in
Control the rights and obligations of Employee with respect to his
employment by Beckman shall be whatever rights and obligations are
negotiated between Beckman and Employee from time to time. The existence
of this Agreement, which deals with such rights and obligations
subsequent to a Change in Control, shall not be treated as raising any
inference with respect to what rights and obligations exist prior to a
Change in Control unless specifically stated elsewhere in this Agreement.
4. Effect of a Change in Control. In the event of a Change in Control,
Sections 6 through 9 of this Agreement shall become applicable to
<PAGE> 3
Employee if his Qualifying Termination occurs on or prior to the second
anniversary of the date upon which the Change in Control occurred. If a
Qualifying Termination has occurred by that date, this Agreement shall
remain in effect until Employee receives the various benefits to which he
has become entitled under the terms of this Agreement; otherwise, upon
such date this Agreement shall be of no further force or effect.
5. Qualifying Termination. If, subsequent to a Change in Control Employee's
employment terminates, such termination shall be considered a Qualifying
Termination unless:
(a) Employee voluntarily terminates employment. It shall not be
considered, however, a voluntary termination of employment if,
following the Change in Control, Employee's compensation or duties
are changed in any material respect from what they were
immediately prior to a Change in Control, and subsequent to such
change Employee elects to terminate employment. A "change in any
material respect" shall encompass any substantial diminishment or
modification in Employee's overall compensation (as measured by
the overall value of such compensation, including fringe benefits,
to Employee), position, duties, responsibilities, or reporting
relationship, and shall also include the transfer of Employee's
job location to a site more than 50 miles away from his place of
employment prior to the Change in Control.
(b) The termination is on account of Employee's death or disability.
As used herein, "disability" refers to an illness or accident that
causes Employee to be unable to perform the duties of his or her
job for six months or more consecutive months.
(c) Employee is involuntarily terminated for "cause." For this purpose
"cause" shall mean:
(i) any material act of misconduct against Beckman or any
of its affiliates, such as fraud, misappropriation, or
embezzlement;
(ii) conviction of a felony involving a crime of moral
turpitude;
(iii) willful and knowing significant violation of rules or
regulations of any governmental or regulatory body which has a
material impact to the business of Beckman; or
(iv) substantial and willful failure to render services in
accordance with the job description of Employee's position (other
than as a result of illness, accident or other physical or mental
incapacity), provided that (A) a demand for performance of
services has been delivered to the Employee in writing by or on
behalf of the Chief Executive Officer (CEO) of Beckman at least 60
days prior to termination identifying the manner in which such CEO
believes that the Employee has failed to perform and (B) the
Employee has thereafter failed to remedy such failure to perform.
<PAGE> 4
6. Constructive Qualifying Termination. If within six months prior to a
change in control the Employee's employment terminates other than by
causes listed in paragraph 5(a)(b) & (c), Employee may submit to an
arbitration proceeding under paragraph 17 the determination of whether
said termination within six month prior to a change in control was a
constructive Qualifying Termination, entitling the Employee to
Compensation and other benefits that would have been granted if said
termination had occurred after a change in control.
7. Date and Notice of Termination. Any termination of the Employee's
employment by Beckman or by the Employee shall be communicated by a
written notice of termination to the other party (the "Notice of
Termination"). Where applicable, the Notice of Termination shall indicate
the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Employee's employment under the
provision so indicated. The date of the Employee's termination of
employment with Beckman (the "Date of Termination") shall be determined
as follows: (i) if the Employee's employment is terminated by Beckman,
either with or without Cause, the Date of Termination shall be the date
specified in the Notice of Termination (which, in the case of a
termination by Beckman other than for Cause, shall not be less than two
(2) weeks from the date such Notice of Termination is given unless
Beckman elects to pay the Employee, in addition to any other amounts
payable hereunder, an amount equal to two (2) weeks of the Employee's
base salary in effect on the Date of Termination), and (ii) if the basis
for the Employee's Termination is a Qualifying Termination, the Date of
Termination shall be determined by Beckman, but shall not in any event be
less than fifteen (15) days nor more than sixty (60) days from the date
such Notice of Termination is given.
8. Severance Payment. If Employee is terminated as a result of a Qualifying
Termination, Beckman shall pay Employee within 30 days of said Qualifying
Termination a cash lump sum equal to __________ ( ) times Employee's
"Compensation" as a severance payment ("Severance Payment").
(a) "Compensation" shall equal the sum of the Employee's highest
annual salary rate (i.e., the highest rate of annual salary that
Employee has been entitled to while an employee of Beckman) plus a
"Management Bonus Increment." The Management Bonus Increment
equals the "applicable percentage" of the highest annual salary
rate. The "applicable percentage" is determined by looking at the
management bonus plan that is applicable to Employee at the time
of the Qualifying Termination and calculating the total award
guideline percentage that would be applicable if the target
performance were achieved. The total award guideline percentage
(at target) shall not be adjusted either up or down by any
individual performance rating under the plan. If subsequent to
this Agreement the Beckman Management Bonus Plan is redesigned or
replaced, the applicable percentage shall be equitably adjusted to
reflect the percentage of salary that Employee could reasonably
expect to receive as a bonus if his performance had been excellent
and profit objectives had been met for the year of the Qualifying
Termination. If at the time of the Qualifying Termination neither
the Beckman Management
<PAGE> 5
Bonus Plan nor a successor plan with a substantially similar bonus
potential is in place and applicable to Employee, the calculation
of the applicable percentage shall be based on the terms of the
Beckman Management Bonus Plan that applied to Employee at the time
that this Agreement was executed.
(b) In lieu of a cash lump sum, Employee may elect in writing to
receive the Severance Payment provided by this Section in equal
monthly installments over ________ ( ) years (depending on the
applicable multiple discussed in this Section 8). Such election
may only be made prior to the occurrence of the events which
constitute the Change in Control in question and such election is
irrevocable once made.
(c) The Severance Payment hereunder is in lieu of any severance
payments that Employee might otherwise be entitled to from Beckman
under the terms of any severance pay arrangement not referred to
in this Agreement.
(d) If a Qualifying Termination occurs during a calendar year,
Employee shall receive a prorata Management Bonus for that portion
of the year before the Qualifying Termination occurred. The
prorata Management Bonus shall be calculated to the nearest month
based on a twelve month year. Further, the prorata Management
Bonus shall be based on the total award guideline percentage
applicable to Employee if the target performance were achieved.
The total award guideline percentage (at target) shall not be
adjusted either up or down by any individual performance rating
under the plan.
9. Stock Option Grants and Other Forms of Employee Compensation.
(a) Employee may have received or will receive stock option grants or
restricted stock under the Beckman Incentive Compensation Plan, or
other stock option plans of Beckman. In the event of a Qualifying
Termination, Beckman agrees (1) that all such stock options shall
be immediately exercisable and shall remain exercisable for the
length of the option period, and (2) that all such restricted
stock shall have the restrictions removed.
(b) Beckman acknowledges that it may establish new Employee
compensation programs subsequent to the date of this Agreement in
addition to the ones described in this Agreement. If such a
program is established, Employee becomes a participant in such a
program, and the receipt by Employee of the benefits to which he
is potentially entitled under the program is conditioned upon the
satisfaction of a vesting requirement, then such vesting
requirement shall be treated as completely satisfied in the event
of a Qualifying Termination.
10. Pension Plan for Employees of Beckman (the "Pension Plan"). In addition
to any retirement benefits that might otherwise be due Employee under the
Pension Plan or any successor plan, Employee shall receive additional
payments from Beckman calculated as set forth in this section if Employee
is terminated on account of a Qualifying Termination.
<PAGE> 6
(a) At the time that Employee (or Employee's beneficiary) first begins
to receive benefits under the Pension Plan there shall be
calculated the difference between the benefit that Employee or
Employee's beneficiary has begun to receive under the Pension Plan
and the benefit that would have been received if Employee had
worked for another ________ ( ) years (depending on the
compensation multiple discussed in Section 8 used to calculate the
Employee's Severance Payment) subsequent to the date of the
Qualifying Termination. For the purpose of the preceding sentence,
Employee shall be deemed to have received "Earnings" under the
Pension Plan for the period subsequent to the Qualifying
Termination at an annual rate equal to his Compensation, as
calculated under Section 8(a) of this Agreement. This difference
shall be paid by Beckman as a supplemental payment to Employee or
Employee's beneficiary for the period of time that he is entitled
to the payment that is being supplemented.
(b) To the extent that Employee's pension benefit is provided by a
different tax-qualified defined benefit pension plan for Beckman
employees, the calculation of the obligation under this section
shall be calculated with regard to such successor plan's benefit
formula and other relevant features. This section shall be applied
with regard to the new plan in a manner designed to provide
Employee with the additional benefits he would have received if he
had remained employed for another ____________ ( ) years, as the
case may be. If Employee is not participating in a tax-qualified
defined benefit pension plan at the time of the Qualifying
Termination, the benefit under this section shall be calculated
with regard to the terms of the Pension Plan at the time of this
Agreement.
11. Additional Benefits. In the event of a Qualifying Termination, Employee
shall be entitled to continue to participate in the following employee
benefit programs which had been made available to Employee before the
Qualifying Termination: group medical insurance, group dental insurance,
group-term life insurance, disability insurance, automobile allowance,
financial planning services, outplacement services, continuation of D&O
insurance, and indemnification. These programs shall be continued at no
additional cost to Employee; provided that, Employee acknowledges that
tax rules may require the inclusion of the value of such benefits in
Employee's income. The programs shall be continued in the same way and at
the same level as immediately prior to the Qualifying Termination. The
programs shall continue for __________ ( ) years, depending on Employee's
compensation multiple under Section 8.
12. Funding of SERP Obligations Upon Change of Control and a Qualifying
Termination. Upon the occurrence of a Change in Control and a Qualifying
Termination of the Employee, Beckman shall fund that portion, if any, of
the obligations of Beckman to the Employee, under any supplemental
executive retirement plan ("SERP") and other non qualified plans that may
then cover the Employee, that are not then irrevocably funded by
establishing and irrevocably funding a trust for the benefit of the
Employee. The amount of such fund shall include the obligations of
Beckman to Employee under any non qualified plan as well as the then
present value of the supplemental pension obligation due as
<PAGE> 7
determined by a nationally recognized firm qualified to provide actuarial
services which has not rendered services to Beckman during the two years
preceding such determination. The actuary shall be selected by Beckman,
subject to approval by the Employee (which approval shall not
unreasonably be withheld), and paid by Beckman. The establishment and
funding of such trust shall not affect the obligation of Beckman to pay
any non qualified benefits, including, but not limited to supplemental
pension payments under the terms of the applicable SERP.
13. Section 280G
(a) Gross-Up. Notwithstanding any other provisions of this Agreement,
in the event that any payment or benefit received or to be
received by the Employee or the acceleration of any payment or
benefit (all such payments and benefits, and accelerations thereof
including the Change in Control Severance Payments, being
hereinafter called the "Total Payments") would be subject (in
whole or in part) to the tax (the "Excise Tax") imposed under
Section 4999 of the Code, Beckman shall pay to the Employee such
additional amounts (the "Gross-Up Payment") such that the net
amount retained by the Employee, after deduction of any Excise Tax
on the Total Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall
be equal to the Total Payments. For purposes of determining the
amount of the Gross-Up Payment, the Employee shall be deemed to
pay federal income tax at the highest marginal rate of federal
income taxation in the calendar year in which the Gross-Up Payment
is calculated for purposes of this section, net of the maximum
reduction in federal income taxes which could be obtained from
deduction of such state and local taxes. In the event that the
Excise Tax is subsequently determined to be less than the amount
taken into account hereunder, the Employee shall repay to Beckman,
at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross-Up Payment
attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax and federal, state and
local income tax imposed on the Gross-Up Payment being repaid by
the Employee to the extent that such repayment results in a
reduction in Excise Tax and/or a federal, state or local income
tax deduction) plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount taken
into account hereunder (including by reason of any payment the
existence or amount of which cannot be determined at the time of
the Gross-Up Payment), Beckman shall make an additional Gross-Up
Payment in respect of such excess (plus any interest, penalties or
additions payable by the Employee with respect to such excess) at
the time that the amount of such excess is finally determined. The
Employee and Beckman shall each reasonably cooperate with the
other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for
Excise Tax with respect to the Total Payments.
<PAGE> 8
(b) Accounting Firm. All determinations to be made with respect to
this Section 13 shall be made by Beckman's independent accounting
firm (or, in the case of a payment following a Change in Control,
the accounting firm that was, immediately prior to the Change in
Control, Beckman's independent auditor). The accounting firm shall
be paid by Beckman for its services performed hereunder.
14. Term of Agreement. This Agreement shall be effective from January 1, 2001
through December 31, 2010. Beckman may, in its sole discretion and for
any reason, provide written notice of termination (effective as of the
then applicable expiration date) to Employee no later than 60 days before
expiration date of this Agreement. If written notice is not so provided,
this Agreement shall be automatically extended for an additional period
of 12 months past the expiration date. This Agreement shall continue to
be automatically extended for an additional 12 months at the end of such
12-month period and each succeeding 12-month period unless notice is
given in the manner described in this section.
15. Governing Law. Except to the extent that federal law is applicable, this
Agreement is made and entered into in the State of California, and the
laws of California shall govern its validity and interpretation in the
performance by the parties hereto of their respective duties and
obligations hereunder.
16. Entire Agreement. This Agreement constitutes the entire agreement between
the parties respecting the benefits due Employee in the event of a Change
in Control followed by a Qualifying Termination, and there are no
representations, warranties or commitments, other than those set forth
herein, which relate to such benefits. This Agreement may be amended or
modified only by an instrument in writing executed by all of the parties
hereto. This is an integrated agreement.
17. Dispute Resolution. Any disagreement, dispute, controversy or claim
arising out of or relating to this Agreement or the interpretation of
this Agreement or any arrangements relating to this Agreement or
contemplated in this Agreement or the breach, termination or invalidity
thereof shall be settled by final and binding arbitration administered by
JAMS/Endispute in Orange County, California in accordance with the then
existing JAMS/Endispute Arbitration Rules and Procedures for Employment
Disputes. In the event of such an arbitration proceeding, the Employee
and Beckman shall select a mutually acceptable neutral arbitrator from
among the JAMS/Endispute panel of arbitrators. In the event the Employee
and Beckman cannot agree on an arbitrator, the Administrator of
JAMS/Endispute will appoint an arbitrator. Neither the Employee nor
Beckman nor the arbitrator shall disclose the existence, content, or
results of any arbitration hereunder without the prior written consent of
all parties. Except as provided herein, the Federal Arbitration Act shall
govern the interpretation, enforcement and all proceedings. The
arbitrator shall apply the substantive law (and the law of remedies, if
applicable), of the State of California, or federal law, or both, as
applicable and the arbitrator is without jurisdiction to apply any
different substantive law. The arbitrator shall have the authority to
entertain a motion to dismiss and/or a motion for summary judgement by
any party and shall apply the standards governing such motions under the
Federal Rules of Civil Procedure. The
<PAGE> 9
arbitrator shall render an award and a written, reasoned opinion in
support thereof. Judgement upon the award may be entered in any court
having jurisdiction thereof. The Employee and Beckman shall generally
each be responsible for payment of one-half the amount of the
arbitrator's fee, provided, however, that Beckman shall pay to the
Employee all legal fees and expenses (including but not limited to fees
and expenses in connection with any arbitration) incurred by the Employee
in disputing in good faith any issue arising under this Agreement
relating to the termination of the Employee's employment in connection
with a Change in Control or in seeking in good faith to obtain or enforce
any benefit or right provided by this Agreement on account of a Change in
Control.
In the case of a termination for cause, and Employee files for
arbitration under the dispute resolution paragraph 17, the Company shall
continue to pay Employee his salary from the time of said termination for
cause for a period of six (6) months. The arbitrator in the dispute
resolution proceeding shall have the authority to direct the Company of
the Employee (taking into account the good faith claim and the needs of
the Employee) to continue payment of Employee's salary beyond said six
months. If Employee is successful in the arbitration proceeding with a
finding of a Qualifying Termination and receives his Compensation under
this Agreement, the payment of salary subsequent to the alleged
termination for cause will be deducted from any payment of Compensation
to the Employee.
18. Tax Withholding. All amounts paid under this Agreement shall be subject
to all applicable federal, state and local wage and employment tax
withholding.
19. Release. Notwithstanding anything herein to the contrary, Beckman's
obligation to make the payments provided for in this Agreement is
expressly made subject to and conditioned upon (i) the Employee's prior
execution of a release substantially in the form attached hereto as
Exhibit A within forty-five days after the applicable Date of Termination
and (ii) the Employee's non-revocation of such release in accordance with
the terms thereof.
20. Successors: Binding Agreement.
(a) Assumption by Successor. Beckman shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets
of Beckman expressly to assume and to agree to perform its
obligations under this Agreement in the same manner and to the
same extent that Beckman would be required to perform such
obligations if no such succession had taken place; provided,
however, that no such assumption shall relieve Beckman of its
obligations hereunder. As used herein, Beckman shall mean any
successor to its business and/or assets as aforesaid that assumes
and agrees to perform its obligations by operation of law or
otherwise.
(b) Enforceability Beneficiaries. This Agreement shall be binding upon
and inure to the benefit of the Employee (and the Employee's
personal representatives and heirs) and Beckman and any
organization which succeeds to substantially all of the
<PAGE> 10
business or assets of Beckman, whether by means of merger,
consolidation, acquisition of all or substantially all of the
assets of Beckman or otherwise, including, without limitation, as
a result of a Change in Control or by operation of law. This
Agreement shall inure to the benefit of and be enforceable by the
Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Employee should die while any amount would still
be payable to such Employee hereunder if he had continued to live,
all such amounts, unless otherwise provided herein, shall be paid
in accordance with the terms of this Agreement to his devisee,
legatee or other designee or, if there is no such designee, to his
estate.
21. Confidentiality: Non Solicitation.
(a) Confidentiality. The Employee acknowledges that in the course of
his employment within Beckman, he has acquired non-public
privileged or confidential information and trade secrets
concerning the operations, future plans and methods of doing
business ("Proprietary Information") of Beckman, and the Employee
agrees that it would be extremely damaging to Beckman if such
Proprietary Information were disclosed to a competitor of Beckman
or to any other person or corporation. The Employee understands
and agrees that all Proprietary Information the Employee has
acquired during the course of such employment has been divulged to
the Employee in confidence and further understands and agrees to
keep all Proprietary Information secret and confidential (except
for such information which is or becomes publicly available other
than as a result of a breach by the Employee of this provision)
without limitation in time. In view of the nature of the
Employee's employment and the Proprietary Information the Employee
has acquired during the course of such employment, the Employee
likewise agrees that Beckman would be irreparably harmed by any
disclosure of Proprietary Information in violation of the terms of
this paragraph and that Beckman shall therefore be entitled to
preliminary and/or permanent injunctive relief prohibiting the
Employee from engaging in any activity or threatened activity in
violation of the terms of this paragraph and to any other judicial
relief available to it. Inquires regarding whether specific
information constitutes Proprietary Information shall be directed
to Beckman's General Counsel (or, if such position is vacant,
Beckman's Chief Executive Officer); provided, however, that
Beckman shall not unreasonably classify information as Proprietary
Information.
(b) Non-Solicitation of Employees. The Employee recognizes that he
possesses and will possess confidential information about other
employees of Beckman, relating to their education, experience,
skills, abilities, compensation and benefits, and interpersonal
relationships with customers of Beckman. The Employee recognizes
that the information he possesses and will possess about these
other employees is not generally known, is of substantial value to
Beckman in developing their business and in securing and retaining
customers, and has been and will be acquired by him because of his
business position within Beckman.
<PAGE> 11
The Employee agrees that for a period of one (1) year following
the Date of Termination, he will not, directly or indirectly,
solicit recruit any employee of Beckman for the purpose of being
employed by him or by any other competitor of Beckman on whose
behalf he is acting as an agent, representative or employee and
that he will not convey any such confidential information or trade
secrets about other employees of Beckman to any other person;
provided, however, that it shall not constitute a solicitation or
recruitment of employment in violation of this paragraph to
discuss employment opportunities with any employee of Beckman who
has either first contacted the Employee or regarding whose
employment the Employee has discussed with and received written
approval of Beckman's Vice President, Human Resources (or, if such
position is vacant, Beckman Chief Executive Officer), prior to
making such solicitation or recruitment. In view of the nature of
the Employee's employment with Beckman, the Employee likewise
agrees that Beckman would irreparably harmed by any solicitation
or recruitment in violation of the terms of this paragraph and
that Beckman shall therefore be entitled to preliminary and/or
permanent injunction relief prohibiting the Employee from engaging
in any activity or threatened activity in violation of the terms
of this paragraph and to any other judicial relief available to
it.
22. Notices. Any notice or communications required or permitted to be given
to the parties hereto shall be delivered personally or be sent by United
States registered or certified mail, postage prepaid and return receipt
requested, and addressed or delivered as follows, or to such other
addresses the party addressed may have substituted by notice pursuant to
this section:
(a) If to Beckman Coulter, Inc.:
Beckman Coulter, Inc.
4300 N. Harbor Boulevard
Fullerton, California 92835
Attn: Vice President, General Counsel and Secretary
(b) If to Employee:
------------------------
------------------------
------------------------
23. Captions. The captions of this Agreement are inserted for convenience and
do not constitute a part hereof.
24. Severability. In case any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal or
unenforceable in other respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement,
but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein and there shall
be deemed substituted for such other provision as will most nearly
accomplish the intent of the parties to the extent permitted by the
applicable law. In case this Agreement, or any one or more of the
provisions hereof, shall be held to be invalid, illegal or
<PAGE> 12
unenforceable within any governmental jurisdiction or subdivision
thereof, this Agreement or any such provision thereof shall not as a
consequence thereof be deemed to be invalid, illegal or unenforceable in
any other governmental jurisdiction or subdivision thereof.
25. Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together
shall constitute one and the same Agreement.
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first written above in
Fullerton, California.
BECKMAN COULTER, INC.
By
-------------------------------------------
John P. Wareham, Chairman
President and Chief Executive Officer
EMPLOYEE
---------------------------------------------
<PAGE> 13
Exhibit A
RELEASE OF ALL CLAIMS
1.0 This Release of all Claims ("Release") serves to conclude
__________________________'s (name) employment at Beckman Coulter, Inc.
("Company") pursuant to a change in control Agreement dated ___________________
and a Qualifying Termination thereunder.
2.0 Consideration of the full and final settlement of any and all claims that
______________________ (name) may have or have made against the Company, or any
of its agents at any time through and including, the effective date of this
Release and for the execution and delivery of this Release is the Company's
obligations under the Agreement between _______________________ (name) and the
Company dated _____________________.
3.0 __________________________ (name) and (his/her) heirs, executors and
administrators, if any, hereby forever release and discharge the Company, any of
its past, present or future parent companies, subsidiaries, affiliates,
divisions, successors, assigns, trust fiduciaries, stockholders, agents,
directors, officers, employees, representatives, heirs, attorneys, and all
persons acting by, through, under or in concert with them, or any of them
(hereinafter collectively known as "Releasees") of and from any and all manner
of claims, causes of action, or complaints, in law or in equity, of any nature
whatsoever, known or unknown, fixed or contingent (hereinafter called "Claims"),
which _______________________ (name) now has or may have against the Releasees,
or any of them, arising out of (his/her) employment or separation from Company,
and any other claim of any nature whatsoever based upon any fact or event
occurring prior to the date of this Release.
4.0 Without limiting the generality of paragraph 3, _________________ (name)
ALSO SPECIFICALLY AGREES TO WAIVE ANY RIGHT TO RECOVERY BASED ON LOCAL, STATE OR
FEDERAL AGE, SEX, SEXUAL ORIENTATION, PREGNANCY, RACE, COLOR, NATIONAL ORIGIN,
MARITAL STATUS, RELIGION, PHYSICAL DISABILITY, MENTAL CONDITION OR MENTAL
DISABILITY DISCRIMINATION LAWS, INCLUDING WITHOUT LIMITATION, TITLE VII OF THE
CIVIL RIGHTS ACT OF 1964, THE AGE DISCRIMINATION IN EMPLOYMENT ACT, THE
AMERICANS WITH DISABILITIES ACT, THE FEDERAL FAMILY MEDICAL LEAVE ACT OF 1993,
THE CALIFORNIA FAMILY RIGHTS ACT OF 1991 AND THE FAIR EMPLOYMENT AND HOUSING
ACT, WHETHER SUCH CLAIM OR CLAIMS MAY BE BASED ON AN ACTION FILED BY YOU OR BY A
GOVERNMENTAL AGENCY.
5.0 ____________________(name) is aware that after the effective date of this
Release ____________________ (name) may discover facts different from, or in
addition, those ____________________(name) now knows or believes to be true with
respect to the Claims released in paragraphs 3 and 4 above and agrees that this
Release shall be and remain in effect in all respects as a complete and general
release as to all matters released, notwithstanding any different or additional
facts.
6.0 It is _____________________'s (name) intention in executing this Release
that it shall be effective as a bar to each and every Claim of any nature
whatsoever. In furtherance of this intention,
<PAGE> 14
____________________(name) specifically waives the benefit of SECTION 1542 OF
THE CIVIL CODE OF THE STATE OF CALIFORNIA, which states the following:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT
THE TIME OF EXECUTING THIS RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY EFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
7.0 This Release shall be construed and interpreted in accordance with the laws
of the State of California.
8.0 I, _____________________, (name) understand, acknowledge and represent that:
(a) I have carefully read and understand this Release and its final
and binding effect;
(b) This Release constitutes a voluntary waiver of any and all rights
and claims I have against Company as of the date of the execution
of this Release;
(c) I have waived rights or claims pursuant to this Release in
exchange for consideration, the value of which exceeds payment or
remuneration to which I was already entitled;
(d) I was advised to consult and have had the opportunity to fully
discuss the contents and consequences of this Release with any
attorney of my choice prior to executing it;
(e) I have a period of at least 21 days to consider the terms of this
Release. I may revoke this Release at any time during the seven
(7) days following the date I execute this Release, and this
Release shall not become effective or enforceable until such
revocation period has expired;
(f) I have voluntarily and knowingly signed this Release.
----------------------------------------
Name
----------------------------------------
Date
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.56
<SEQUENCE>3
<FILENAME>a69813ex10-56.txt
<DESCRIPTION>EXHIBIT 10.56
<TEXT>
<PAGE> 1
EXHIBIT 10.56
AMENDMENT 2000-2
BECKMAN COULTER, INC.
SAVINGS PLAN
WHEREAS, Beckman Coulter, Inc. (the "Company"), a Delaware
corporation, maintains the Beckman Coulter, Inc. Savings Plan (the "Plan"); and
WHEREAS, the Company wishes to amend the Plan so that
contributions are calculated based upon Participants' Plan Compensation before
reduction for deferrals to the Company's Executive Deferred Compensation Plan
and Executive Restoration Plan; and
WHEREAS, the Company has the right to amend the Plan;
NOW, THEREFORE, the Plan is hereby amended, effective January 1,
2001, as follows:
1. The definition of Annual Bonus contained in Section 1.2 of the
Plan is amended to read as follows:
"ANNUAL BONUS" or "ANNUAL BONUSES" shall mean the portion of Plan
Compensation paid under the Company's executive and management
incentive and performance sharing programs, or such similar
broad-based programs as maintained by the Company from
time-to-time (not including individualized programs such as
retention bonuses).
<PAGE> 2
2. The definition of Plan Compensation contained in Section 1.2 of
the Plan is amended to read as follows:
"`PLAN COMPENSATION' shall mean compensation paid during the Plan
Year and includes the following: regular earnings, overtime, sick
pay, shift differential, shift premium, vacation pay, Variable
Pay, call-in pay, patent payments and holiday pay. Plan
Compensation also includes any amounts contributed to a plan
qualifying under Sections 401(k) or 125 of the Code as salary
reduction contributions and any variable compensation paid
according to a formal program or programs officially adopted by
the Company on or after January 1, 1995. Any other form of
compensation is excluded from Plan Compensation, including but not
limited to the following: prizes, awards, housing allowances,
stock option exercises, stock appreciation rights, restricted
stock exercises, performance awards, auto allowances, loss of use
of company car, tuition reimbursement, article payments, tax
reimbursement, Christmas gift, special awards, non-recurring
bonuses, move-related payments, forms of imputed income, and Share
Value Plan payments. Plan Compensation shall not include amounts
deferred under the Company's non-qualified deferred compensation
programs, provided that for contributions made for Plan Years
commencing on or after January 1, 2001 (but not for previous Plan
Years), Plan Compensation shall include the amounts described in
this subsection prior to deferral under the Company's Executive
Deferred Compensation Plan and Executive Restoration Plan. Plan
Compensation shall also not include any amounts paid to an
Employee prior to the date on which he or she became a
Participant. Notwithstanding the foregoing, the maximum
<PAGE> 3
amount of an Employee's Plan Compensation which shall be taken
into account under the Plan for any Plan Year (the "Maximum
Compensation Limitation") shall be $150,000 adjusted at the same
time and in the same manner as under Sections 401(a)(17) and
415(d) of the Code. For any Plan Year of fewer than twelve months,
the Maximum Compensation Limitation shall be reduced to the amount
obtained by multiplying such limitation by a fraction having a
numerator equal to the number of months in the Plan Year and a
denominator equal to twelve."
3. The following new definition of Variable Pay is hereby added to
Section 1.2 of the Plan:
"`VARIABLE PAY' shall mean Annual Bonuses and sales and service
incentive compensation."
4. The references to "Annual Bonus" in Sections 3.1 and 3.2 are
amended to refer to "Variable Pay."
IN WITNESS WHEREOF, this Amendment 2000-2 is hereby adopted this
21st day of December, 2000.
BECKMAN COULTER, INC.
By /s/ Fidencio M. Mares
------------------------------------------
Its Vice President, Human Resources
-----------------------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.57
<SEQUENCE>4
<FILENAME>a69813ex10-57.txt
<DESCRIPTION>EXHIBIT 10.57
<TEXT>
<PAGE> 1
EXHIBIT 10.57
EXECUTIVE RETENTION INCENTIVE PROGRAM SUMMARY
February 2001
The Executive Retention Incentive Program was approved by the Organization and
Compensation Committee of the Company's Board of Directors in October 1999 and
was adopted by the Company with implementation finalized in September 2000. The
purpose of the program is to provide an incentive for executive retention and to
promote stock ownership achievement. Under the Company's Executive Retention
Incentive Program, the Company will make quarterly advance payments of interest
due on certain five-year loans obtained by certain key executives designated by
the Chairman of the Company's Board of Directors through, and fully funded by,
an outside lender. The advances apply to compensation to be earned upon
satisfying certain service and other contingencies. Interest advances are made
only during the period of employment and may be suspended during the time
certain contingencies are not met. Each executive must provide the Company with
a promissory note for the amount advanced in the event of a termination of
employment for reasons shown in the promissory note. In the event of termination
for certain other reasons, generally in the event of death, disability or
retirement, the interest advance will be forgiven on a pro-rata basis through
the termination date. Nothing in the program confers any right to continued
employment with the Company, nor does it interfere with the Company's right to
terminate employment. The Company may terminate this program at any time with
twelve months advance notice to the participants.
The forms of the promissory note relating to this program are attached hereto as
Recourse Promissory Note "A" and Recourse Promissory Note "B."
<PAGE> 2
RECOURSE PROMISSORY NOTE "A"
Fullerton, California _______________, 20___
1. MAKER'S PROMISE TO PAY. FOR VALUE RECEIVED, ___________________ ("MAKER"),
promises to pay to the order of BECKMAN COULTER, INC., a Delaware corporation
("HOLDER"), at 4300 North Harbor Boulevard, Fullerton, California 92834-3100 or
at such other place as Holder may from time to time designate in writing to
Maker, so much as Holder shall have advanced to Maker pursuant to the terms and
conditions of this Recourse Promissory Note ("NOTE") to pay Maker's interest
only payments as due and payable on that certain Promissory Note due to Mellon
Bank, N.A., executed by Maker on ___________, 20___ (the "MELLON LOAN NOTE"). A
copy of the Mellon Loan note shall be attached hereto as Exhibit A. All amounts
advanced to Maker under the terms and conditions of this Note shall constitute
in the aggregate the "PRINCIPAL BALANCE." If not sooner accelerated pursuant to
Section 5, the Principal Balance shall be due and payable and no future advances
shall be permitted hereunder on the earlier of the date that is (a) sixty (60)
months after the date of the Mellon Loan note as set forth above, or (b) the due
date of the Mellon Loan (the "MATURITY DATE").
2. TERMINATION OF ADVANCES. If at any time before the Maturity Date, Maker does
not maintain compliance with the stock ownership guidelines as set forth in that
certain memorandum dated as of _____________, Holder shall no longer be required
to make any advances to Maker under this Note. The Chairman of the Board of
Holder in his sole and absolute discretion may make exceptions to such
termination of advances after written request by Maker.
3. PAYMENT. Any payments received by Holder pursuant to the terms hereof shall
be applied to the Principal Balance due Holder pursuant to the terms hereof.
4. RELIEF OF PAYMENT OBLIGATION.
(a) Subject to the terms hereof, Maker shall be relieved of his or her
obligation to pay the Principal Balance due and payable hereunder
on the Maturity Date if Maker has been and continues to be a
full-time employee of Holder, in good standing, through the term
of this Note and as of the close of business on the Maturity Date.
If an Event of Acceleration has occurred as a result of Maker's
termination of employment as set forth in Section 5(a) herein, as
of Maker's employment termination date Maker shall be relieved of
his or her obligation to pay the Principal Balance due and payable
hereunder and this Note shall be cancelled and deemed paid in full
and no future advances shall be permitted hereunder if and only if
Maker's employment with Holder terminated as a result of either
(i) Holder's termination of Maker's employment without Cause (as
defined below), or (ii) Maker's death or Disability.
(b) For purposes of this Note, the following definitions shall apply:
"CAUSE" shall be defined as: (i) the willful refusal of
Maker to comply with a lawful, written order of the Board of
Directors so long as the order is consistent with the scope and
responsibilities of Maker's position; (ii) dishonesty by Maker
<PAGE> 3
which results in a material financial loss to Holder or material
injury to its public reputation; or (iii) Maker's conviction of
any felony involving an act of moral turpitude.
"DISABILITY" shall mean termination from employment as a
result of a medically determinable physical or mental impairment
of a potentially permanent character which prevents an Maker from
engaging in any substantial gainful employment.
(c) Any relief of Maker's payment obligation hereunder shall be
treated as additional compensation income to Maker as of the date
of such relief. Any imputed interest arising as a result of this
Note shall also be treated as additional compensation income to
Maker as determined in accordance with the Internal Revenue Code
of 1986, as amended, and any applicable state law. Any such
compensation income shall be included in Maker's Form W-2 for the
appropriate calendar year and will be subject to any applicable
payroll taxes and federal and state income tax withholding
requirements. As a condition precedent for any relief of Maker's
payment obligations hereunder, Maker shall be required to pay any
applicable payroll taxes and federal and state income tax
withholding amounts arising from such relief. Such amounts shall
be due to Holder immediately prior to any relief of any obligation
hereunder. Maker hereby authorizes Holder to offset any such
payroll taxes and withholding obligations against any monies
otherwise due to Maker. If such monies are not available to fully
extinguish all of Maker's obligations hereunder, Maker shall make
payment to Holder in immediately available funds of any such
shortfall.
5. ACCELERATION. An occurrence of either of the following shall be deemed to be
an "EVENT of ACCELERATION" under this Note:
(c) the termination of Maker's employment by Holder,
(d) the failure of Maker to comply with any other covenant or
obligation under this Note.
6. REMEDIES. Upon the occurrence of an Event of Acceleration hereunder, Holder
may, in its sole and absolute discretion and without demand or notice to Maker,
(a) declare the entire Principal Balance immediately due and payable, (b) cease
making any advances hereunder, and (c) exercise any and all rights and powers
and pursue any and all remedies now or hereafter available under applicable law.
No delay or omission on the part of Holder in exercising any right or remedy
under this Note shall operate as a waiver of such right or remedy.
7. WAIVERS. Maker hereby waives diligence, presentment, protest and demand,
notice of protest, demand, dishonor and nonpayment of this Note, and notice of
intention to accelerate the maturity of this Note, and expressly agrees that,
without in any way affecting the liability of Maker hereunder, Holder may extend
any date or time for payment hereunder, accept security or release any party
liable hereunder and release any security now or hereafter securing this Note.
Maker further waives, to the fullest extent permitted by law, the right to plead
any and all statutes of limitations as a defense to demand on this Note, or on
any deed of trust, security agreement, lease assignment,
<PAGE> 4
guaranty or other agreement now or hereafter securing this Note. Maker hereby
waives all rights of setoff and counterclaim with respect to this Note,
including rights of setoff and counterclaim with respect to this Note which may
arise from claims heretofore unknown to Maker.
8. AT WILL EMPLOYMENT. Maker agrees that nothing in this Note shall alter the
"at will" nature of Maker's employment with Holder nor shall this Note be
construed as a guarantee of employment for any specific time period. Maker
understands and agrees that this Note is not an employment contract, and nothing
in this Note creates any right to Maker's continuous employment by Holder, or to
Maker's employment for any particular term. Nothing in this Note shall affect in
any manner whatsoever the right or power of Holder to terminate Maker's
employment, for any reason, with or without cause.
9. NOTICES. Any notice, request, demand, instruction or other communication to
be given to any party hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by registered or certified mail,
return receipt requested, as follows:
If to Maker:
------------------------
------------------------
------------------------
If to Holder: Beckman Coulter, Inc.
4300 North Harbor Boulevard
Fullerton, California 92834-3100
Attn: Vice President Human Resources
Copy to: Vice President, General Counsel &
Secretary
The addressees for the purpose of this Note may be changed by giving written
notice of such change in the manner provided for giving such notice. However,
unless and until such written notice of change is actually received, the last
address and addressees as stated by written notice, or provided herein if no
notice of change has been received, shall be deemed to continue in effect for
all purposes hereunder.
10. ATTORNEYS' FEES. If Holder seeks legal advice following a default by Maker
hereunder or refers this Note to collection or to reclaim, protect, preserve or
enforce this Note, then Maker shall pay all fees, expenses and any other costs
associated with such default (including, without limitation, all attorneys'
fees, expenses and costs).
11. SEVERABILITY. Every provision of this Note is intended to be severable. In
the event any term or provision hereof is declared by a court of competent
jurisdiction to be illegal or invalid for any reason whatsoever, such illegality
or invalidity shall not affect the balance of the terms and provisions, which
shall remain binding and enforceable.
12. NUMBER AND GENDER. In this Note the singular shall include the plural and
the masculine shall include the feminine and vice versa, if the context so
requires.
13. ASSIGNMENT. This Note may be assigned, transferred, hypothecated or
<PAGE> 5
otherwise conveyed, in whole or in part, by Holder without the prior written
consent of Maker. Maker may not assign, transfer, hypothecate or otherwise
convey his or her rights, duties or obligations under this Note.
14. CHOICE OF LAW. This Note shall be governed and construed in accordance with
the laws of the State of California.
MAKER
By:
-------------------------------------
<PAGE> 6
EXHIBIT A
MELLON PROMISSORY NOTE
<PAGE> 7
RECOURSE PROMISSORY NOTE "B"
Fullerton, California _______________, 20___
1. MAKER'S PROMISE TO PAY. FOR VALUE RECEIVED, _____________________ ("MAKER"),
promises to pay to the order of BECKMAN COULTER, INC., a Delaware corporation
("HOLDER"), at 4300 North Harbor Boulevard, Fullerton, California 92834-3100 or
at such other place as Holder may from time to time designate in writing to
Maker, so much as Holder shall have advanced to Maker pursuant to the terms and
conditions of this Recourse Promissory Note ("NOTE") to pay Maker's interest
only payments as due and payable on that certain Promissory Note due to Mellon
Bank, N.A., executed by Maker on ___________, 20___ (the "MELLON LOAN NOTE"). A
copy of the Mellon Loan note shall be attached hereto as Exhibit A. All amounts
advanced to Maker under the terms and conditions of this Note shall constitute
in the aggregate the "PRINCIPAL BALANCE." If not sooner accelerated pursuant to
Section 5, the Principal Balance shall be due and payable, and no future
advances shall be permitted hereunder, on the earlier of the date that is (a)
sixty (60) months after the date of the Mellon Loan note as set forth above, or
(b) the due date of the Mellon Loan (the "MATURITY DATE").
2. TERMINATION OF ADVANCES. If at any time before the Maturity Date, Maker
terminates employment with Holder or Maker does not maintain compliance with the
stock ownership guidelines as set forth in that certain memorandum dated as of
_______________ or if Holder terminates the program after twelve (12) months
advance notice, Holder shall no longer be required to make any advances to Maker
under this Note. The Chairman of the Board of Holder in his sole and absolute
discretion may make exceptions to termination of advances due to non-compliance
with stock ownership guidelines after written request by Maker.
3. PAYMENT. Any payments received by Holder pursuant to the terms hereof shall
be applied to the Principal Balance due Holder pursuant to the terms hereof.
4. RELIEF OF PAYMENT OBLIGATION.
(a) Maker shall be relieved of his or her obligation to pay the
Principal Balance due and payable hereunder on the Maturity Date
if Maker has been and continues to be a full-time employee of
Holder, in good standing, through the term of this Note and as of
the close of business on the Maturity Date. If an Event of
Acceleration has occurred as a result of Maker's termination of
employment as set forth in Section 5(a) herein, as of Maker's
employment termination date Maker shall be relieved of his or her
obligation to pay the Principal Balance due and payable hereunder
and this Note shall be cancelled and deemed paid in full and no
future advances shall be permitted hereunder if and only if (i)
Holder terminates Maker's employment without Cause (as defined
below), or (ii) Maker's termination of employment is due to death,
Disability, or Retirement.
(b) For purposes of this Note, the following definitions shall apply:
<PAGE> 8
"CAUSE" shall mean: (i) the willful refusal of Maker to
comply with a lawful, written order of the Board of Directors so
long as the order is consistent with the scope and
responsibilities of Maker's position; (ii) dishonesty by Maker
which results in a material financial loss to Holder or material
injury to its public reputation; or (iii) Maker's conviction of
any felony involving an act of moral turpitude.
"DISABILITY" shall mean Maker has a medically determinable
physical or mental impairment of a potentially permanent character
which prevents Maker from engaging in any substantial gainful
employment.
"RETIREMENT" shall mean that Maker's age as of his or her
most recent birthday plus Maker's vesting years of service under
the Beckman Coulter, Inc. Pension Plan or under Retirement Plus in
the Beckman Coulter, Inc. Savings Plan, whichever is applicable to
Maker at time of termination, equals 65, or if Maker is age 65 or
older on his or her most recent birthday, he or she has completed
one vesting year of service under the applicable plan referenced
herein.
(c) Any relief of Maker's payment obligation hereunder shall be
treated as additional compensation income to Maker as of the
earlier of (i) the date of such relief, or (ii) the date Maker is
Retirement eligible. Any imputed interest arising as a result of
this Note shall also be treated as additional compensation income
to Maker as determined in accordance with the Internal Revenue
Code of 1986, as amended, and any applicable state law. Any such
compensation income shall be included in Maker's Form W-2 for the
appropriate calendar year and will be subject to any applicable
payroll taxes and federal and state income tax withholding
requirements. As a condition precedent for any relief of Maker's
payment obligations hereunder, Maker shall be required to pay any
applicable payroll taxes and federal and state income tax
withholding amounts arising from such relief. Such amounts shall
be due to Holder immediately prior to any relief of any obligation
hereunder. Maker hereby authorizes Holder to offset any such
payroll taxes and withholding obligations against any monies
otherwise due to Maker. If such monies are not available to fully
extinguish all of Maker's obligations hereunder, Maker shall make
payment to Holder in immediately available funds of any such
shortfall.
5. ACCELERATION. An occurrence of either of the following shall be deemed to be
an "EVENT of ACCELERATION" under this Note:
(e) the termination of Maker's employment by Holder,
(b) the failure of Maker to comply with any other covenant or
obligation under this Note.
6. REMEDIES. Upon the occurrence of an Event of Acceleration hereunder, Holder
may, in its sole and absolute discretion and without demand or notice to Maker,
(a) declare the entire Principal Balance immediately due and payable, (b) cease
making any advances hereunder, and (c) exercise any and
<PAGE> 9
all rights and powers and pursue any and all remedies now or hereafter available
under applicable law. No delay or omission on the part of Holder in exercising
any right or remedy under this Note shall operate as a waiver of such right or
remedy.
7. WAIVERS. Maker hereby waives diligence, presentment, protest and demand,
notice of protest, demand, dishonor and nonpayment of this Note, and notice of
intention to accelerate the maturity of this Note, and expressly agrees that,
without in any way affecting the liability of Maker hereunder, Holder may extend
any date or time for payment hereunder, accept security or release any party
liable hereunder and release any security now or hereafter securing this Note.
Maker further waives, to the fullest extent permitted by law, the right to plead
any and all statutes of limitations as a defense to demand on this Note, or on
any deed of trust, security agreement, lease assignment, guaranty or other
agreement now or hereafter securing this Note. Maker hereby waives all rights of
setoff and counterclaim with respect to this Note, including rights of setoff
and counterclaim with respect to this Note which may arise from claims
heretofore unknown to Maker.
8. AT WILL EMPLOYMENT. Maker agrees that nothing in this Note shall alter the
"at will" nature of Maker's employment with Holder nor shall this Note be
construed as a guarantee of employment for any specific time period. Maker
understands and agrees that this Note is not an employment contract, and nothing
in this Note creates any right to Maker's continuous employment by Holder, or to
Maker's employment for any particular term. Nothing in this Note shall affect in
any manner whatsoever the right or power of Holder to terminate Maker's
employment, for any reason, with or without cause.
9. NOTICES. Any notice, request, demand, instruction or other communication to
be given to any party hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by registered or certified mail,
return receipt requested, as follows:
If to Maker:
---------------------------------
---------------------------------
---------------------------------
If to Holder: Beckman Coulter, Inc.
4300 North Harbor Boulevard
Fullerton, California 92834-3100
Attn: Vice President Human Resources
And copy to: Vice President, General Counsel
& Secretary
The addressees for the purpose of this Note may be changed by giving written
notice of such change in the manner provided for giving such notice. However,
unless and until such written notice of change is actually received, the last
address and addressees as stated by written notice, or provided herein if no
notice of change has been received, shall be deemed to continue in effect for
all purposes hereunder.
10. ATTORNEYS' FEES. If Holder seeks legal advice following a default by Maker
hereunder or refers this Note to collection or to reclaim, protect, preserve or
enforce this Note, then Maker shall pay all fees, expenses and any other costs
associated with such default (including, without limitation,
<PAGE> 10
all attorneys' fees, expenses and costs).
11. SEVERABILITY. Every provision of this Note is intended to be severable. In
the event any term or provision hereof is declared by a court of competent
jurisdiction to be illegal or invalid for any reason whatsoever, such illegality
or invalidity shall not affect the balance of the terms and provisions, which
shall remain binding and enforceable.
12. NUMBER AND GENDER. In this Note the singular shall include the plural and
the masculine shall include the feminine and vice versa, if the context so
requires.
13. ASSIGNMENT. This Note may be assigned, transferred, hypothecated or
otherwise conveyed, in whole or in part, by Holder without the prior written
consent of Maker. Maker may not assign, transfer, hypothecate or otherwise
convey his or her rights, duties or obligations under this Note.
14. CHOICE OF LAW. This Note shall be governed and construed in accordance with
the laws of the State of California.
MAKER
By:
-------------------------------------
<PAGE> 11
EXHIBIT A
MELLON PROMISSORY NOTE
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-13
<SEQUENCE>5
<FILENAME>a69813ex13.txt
<DESCRIPTION>EXHIBIT 13
<TEXT>
<PAGE> 1
BECKMAN COULTER 2000 ANNUAL REPORT [DRAFT 3]
EXHIBIT 13
WORDS ON NUMBERS
Section of our
Annual Report to Stockholders
For the Year Ended
December 31, 2000
TABLE OF CONTENTS
Selected Financial Information
Financial Review
Management's Discussion and Analysis
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Quarterly Information
Report by Management
Independent Auditors' Report
Other Information
Board of Directors
Bar Chart: Working Capital (millions)
<TABLE>
<CAPTION>
Year 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
Working Capital $300.1 $81.8 $237.3 $390.5 $426.7
</TABLE>
Bar Chart: Income from Operations* (millions)
<TABLE>
<CAPTION>
Year 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
Income from Operations $122.5 $104.4 $133.9 $216.3 $230.2
</TABLE>
Bar Chart: EBITDA* (millions)
<TABLE>
<CAPTION>
Year 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
EBITDA $217.4 $228.0 $305.9 $372.0 $387.5
</TABLE>
Bar Chart: Dividends Paid Per Share of Common Stock
<TABLE>
<CAPTION>
Year 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
Dividends Paid
($ Per Share) $0.260 $0.300 $0.305 $0.320 $0.325
</TABLE>
*Excludes pre-tax special items in 1997, 1998, 1999 and 2000
-1-
<PAGE> 2
SELECTED FINANCIAL INFORMATION
Dollars in millions, except amounts per share
<TABLE>
<CAPTION>
Years Ended December 31, 2000 1999 1998 1997 1996
- ----------------------------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Summary of Operations
Sales $ 1,886.9 $ 1,808.7 $ 1,718.2 $ 1,198.0 $ 1,028.0
Operating income before special
items(1) $ 230.2 $ 216.3 $ 133.9 $ 104.4 $ 122.5
Earnings before special items, after
taxes $ 124.1 $ 105.9 $ 44.7 $ 54.0 $ 74.7
Special items:
In-process research and
development -- -- -- (282.0) --
Restructure credit (charge), net of
tax 1.4 0.1 (11.2) (36.4) --
- ----------------------------------------------- ----------- ----------- ----------- ----------- -----------
Net earnings (loss) $ 125.5 $ 106.0 $ 33.5 $ (264.4) $ 74.7
- ----------------------------------------------- ----------- ----------- ----------- ----------- -----------
Diluted earnings per
share before special items $ 2.01 $ 1.79 $ 0.76 $ 0.98 $ 1.29
Diluted earnings (loss) per share $ 2.03 $ 1.79 $ 0.57 $ (4.79) $ 1.29
Dividends paid per share of
common stock $ 0.325 $ 0.320 $ 0.305 $ 0.300 $ 0.260
Shares outstanding (millions) 59.7 57.9 56.8 55.3 56.0
Weighted average common shares and dilutive
common share equivalents (millions)(2) 61.8 59.3 58.7 55.2 57.8
Other Information:
Total assets $ 2,018.2 $ 2,110.8 $ 2,133.3 $ 2,331.0 $ 960.1
Long-term debt, less current
maturities $ 862.8 $ 980.7 $ 982.2 $ 1,181.3 $ 176.6
Working capital $ 426.7 $ 390.5 $ 237.3 $ 81.8 $ 300.1
EBIT before special items(1)(3) $ 251.4 $ 228.3 $ 153.5 $ 118.9 $ 129.6
Depreciation and amortization
expense $ 136.1 $ 143.7 $ 152.4 $ 109.1 $ 87.8
EBITDA before special items(1)(3) $ 387.5 $ 372.0 $ 305.9 $ 228.0 $ 217.4
EBITDA(3) $ 389.9 $ 372.2 $ 286.8 $ (113.4) $ 217.4
Debt to EBITDA before special
items(1)(3) 2.4 2.8 3.7 5.5 0.9
Capital expenditures $ 141.3 $ 134.9 $ 165.2 $ 100.9 $ 110.5
Number of employees at December 31, 9,695 9,520 10,064 11,171 6,079
- ----------------------------------------------- ----------- ----------- ----------- ----------- -----------
</TABLE>
(1) Excludes pre-tax special items. Special items include: 1) net
restructure (credits) charges of $(2.4), $(0.2), $19.1, and $59.4, in
2000, 1999, 1998, and 1997, respectively, and 2) a one time write-off
of $282.0 of acquired in-process research and development relating to
the Coulter acquisition in 1997. Including these special items, we
reported operating income (loss) of $232.6, $216.5, $114.8, and
($237.0), in 2000, 1999, 1998, and 1997, respectively. We did not incur
any special items in 1996.
(2) Under Generally Accepted Accounting Principles ("GAAP"), as we were in
a net loss position in 1997, 2.1 million common share equivalents were
not used to compute diluted loss per share, as the effect was
antidilutive.
(3) EBIT is earnings before interest expense and taxes; EBITDA is EBIT
before depreciation and amortization expense.
-2-
<PAGE> 3
FINANCIAL REVIEW
Dollars in millions, except amounts per share
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the results of
operations as a percentage of sales and on a comparative basis:
<TABLE>
<CAPTION>
2000 1999
Years ended % of % of % of Compared Compared
December 31, 2000 Sales 1999 Sales 1998 Sales to 1999(2) to 1998(2)
--------- ----- --------- ----- --------- ----- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales:
Clinical
diagnostics $ 1,472.2 78.0 $ 1,418.2 78.4 $ 1,342.5 78.1 $ 54.0 $ 75.7
Life science
research 414.7 22.0 390.5 21.6 375.7 21.9 24.2 14.8
--------- ----- --------- ----- --------- ----- ------ ------
Total sales $ 1,886.9 100.0 $ 1,808.7 100.0 $ 1,718.2 100.0 $ 78.2 $ 90.5
Cost of sales 995.6 52.8 942.1 52.1 920.6 53.6 53.5 21.5
--------- ----- --------- ----- --------- ----- ------ ------
Gross profit 891.3 47.2 866.6 47.9 797.6 46.4 24.7 69.0
Selling, general
& administrative 476.1 25.2 476.9 26.4 492.3 28.7 (0.8) (15.4)
Research &
development 185.0 9.8 173.4 9.5 171.4 10.0 11.6 2.0
--------- ----- --------- ----- --------- ----- ------ ------
Operating
income(1) 230.2 12.2 216.3 12.0 133.9 7.8 13.9 82.4
Net nonoperating
expense 50.7 2.7 61.8 3.4 68.2 4.0 (11.1) (6.4)
--------- ----- --------- ----- --------- ----- ------ ------
Earnings before
income taxes(1) 179.5 9.5 154.5 8.6 65.7 3.8 25.0 88.8
Income tax
provision(1) 55.4 2.9 48.6 2.7 21.0 1.2 6.8 27.6
--------- ----- --------- ----- --------- ----- ------ ------
Earnings before
special items,
after taxes(1) $ 124.1 6.6 $ 105.9 5.9 $ 44.7 2.6 $ 18.2 $ 61.2
Net earnings $ 125.5 6.7 $ 106.0 5.9 $ 33.5 1.9 $ 19.5 $ 72.5
========= ===== ========= ===== ========= ===== ====== ======
- --------------------------------------------------------------------------------------------------------------
Diluted earnings per
share before
special items $ 2.01 $ 1.79 $ 0.76 $ 0.22 $ 1.03
Diluted earnings
per share $ 2.03 $ 1.79 $ 0.57 $ 0.24 $ 1.22
Dividends paid per
share of common
stock $ 0.325 $ 0.320 $ 0.305 $0.005 $0.015
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts exclude special items. Special items include net restructure
(credits) charges of $(2.4), (0.1)% of sales in 2000; $(0.2), (0.01)% of sales
in 1999; and $19.1, 1.1% of sales in 1998. Including these special items: 1)
operating income was $232.6, 12.3% of sales in 2000; $216.5, 12.0% of sales in
1999; and $114.8, 6.7% of sales in 1998, and 2) earnings before income taxes was
$181.9, 9.6% of sales in 2000; $154.7, 8.6% of sales in 1999; and $46.6, 2.7% of
sales in 1998.
(2) Parentheses indicate decreases from the comparative period.
-3-
<PAGE> 4
Bar Chart: Sales per employee (thousands)
<TABLE>
<CAPTION>
Year 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
Sales per employee $169 $107 $171 $190 $195
</TABLE>
Bar Chart: SG&A as a % of Sales
<TABLE>
<CAPTION>
Year 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
SG&A (% of Sales) 31.1 30.1 28.7 26.4 25.2
</TABLE>
Bar Chart: R&D Expenses (millions)
<TABLE>
<CAPTION>
Year 1996 1997 1998 1999 2000
<S> <C> <C> <C> <C> <C>
R&D Expenses $108.4 $123.6 $171.4 $173.4 $185.0
</TABLE>
-4-
<PAGE> 5
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following review should be read in conjunction with the consolidated
financial statements and related notes included on pages 42 through 68.
Historical results and percentage relationships are not necessarily indicative
of operating results for any future periods.
OVERVIEW
Beckman Coulter simplifies and automates laboratory processes used in all phases
of the battle against disease. We design, manufacture, and market systems which
consist of instruments, chemistries, software, and supplies that meet a variety
of laboratory needs. Our products are used in a range of applications, from
instruments used for pioneering medical research, drug discovery and clinical
trials to diagnostic tools found in hospitals and physicians' offices. Beckman
Coulter competes in market segments that total approximately $31 billion in
annual sales worldwide and currently has products which address approximately
half of that market.
Beckman Coulter's product lines include virtually all blood tests routinely
performed in hospital laboratories and a range of systems for medical and
pharmaceutical research. We have more than 125,000 systems operating in
laboratories around the world, with approximately two-thirds of annual revenues
coming from after-market customer purchases of operating supplies, chemistry
kits, and service. Beckman Coulter markets its products in approximately 130
countries, generating approximately 45% of revenues outside the United States.
Our strategy is to maintain our position as a leading provider of laboratory
systems. To this end, we achieved the following significant milestones in 2000:
- Realized record sales volume of $1.887 billion.
- Launched several key products, including the Biomek(R) FX laboratory
automation workstation, the CEQ(TM) 2000XL DNA analysis system and
the Avanti(R) J-20XP high performance centrifuge.
- Received FDA clearance and began shipping the Access(R) Hybritech(R)
PSA and free PSA tests for automation on the Access(R) immunoassay
system.
- Entered into a distribution and collaboration agreement with
Cellomics, Inc. to offer customers high-content cell screening
technologies paired with Beckman Coulter's automated drug discovery
systems.
- Signed a distribution agreement with Promega Corporation to sell
their plasmid DNA purification system for use on our Biomek(R) liquid
handling workstations.
- Established the Immunomics Operation based in San Diego, California
to focus on developing MHC tetramers for cellular immune response
testing and shipped the first ready-to-use iTAg(TM) MHC tetramer
reagents for HIV and melanoma research.
1. Acquisition Activities
The primary focus of our acquisition strategy is to broaden our product
offerings. The following table lists some of our acquisitions:
<TABLE>
<CAPTION>
COMPANY PRODUCT/TECHNOLOGY ACQUIRED ACQUISITION DATE
------- --------------------------- ----------------
<S> <C> <C>
Coulter Corporation ("Coulter") Hematology & flow cytometry October 1997
Sanofi Diagnostics Pasteur ("Sanofi")* Access(R) immunoassay product line April 1997
Sagian, Inc. ("Sagian")** High-throughput screening & December 1996
robotics technology
Genomyx, Inc. DNA sequencing technology October 1996
Hybritech Incorporated ("Hybritech") Immunoassays & cancer January 1996
diagnostics
</TABLE>
* Only the Access(R) immunoassay product line of Sanofi was acquired.
** Only the Laboratory Robotics Division of Sagian was acquired.
On October 31, 1997, we acquired all of the outstanding capital stock of Coulter
for $850.2 million, net of Coulter's cash on hand of $24.8 million at the
acquisition date. Coulter is the leading manufacturer of in vitro diagnostic
systems for blood cell analysis. This acquisition and the related financing
caused a substantial increase in interest expense, amortization of intangible
-5-
<PAGE> 6
assets and goodwill and various other adjustments resulting from purchase
accounting. In April 1998, our stockholders approved the change of our name to
Beckman Coulter, Inc.
2. Events Impacting Comparability
Operating Periods Reported:
Our financial statements include the assets and liabilities and the operating
results of subsidiaries operating outside the United States and Canada. Balance
sheet amounts for these subsidiaries are as of November 30. The operating
results for these subsidiaries are for twelve-month periods ending November 30.
However, in order to be consistent with the way we have historically reported
our international results, the reporting of the results of operations for
Coulter's international subsidiaries were lagged by one month in 1998.
Therefore, the results for the year 1998 include only January through November
sales and expenses for Coulter subsidiaries outside the United States and
Canada. The exclusion of one month's results for Coulter's international
subsidiaries was not significant.
Restructure Charges:
In the fourth quarters of 1999, 1998 and 1997, we recorded restructuring charges
of $4.3 million, $19.1 million and $59.4 million, respectively, related to
certain reorganization activities. In the fourth quarters of 2000 and 1999, we
reversed $2.4 million and $4.5 million, respectively, of excess restructure
charges taken in prior years. These charges and reversals resulted in net
restructuring credits of $(2.4) million and $(0.2) million in 2000 and 1999,
respectively. On an after-tax basis, the net restructure (credits) charges were
$(1.4) million or $(0.02) per share in 2000, $(0.1) million with no impact on
earnings per share in 1999 and $11.2 million or $0.19 per share in 1998. A more
detailed discussion of the restructure charges is provided in Note 4 "Provision
for Restructuring Operations" of the Notes to Consolidated Financial Statements.
Sale-leaseback of Real Estate:
During the second quarter of 1998, we sold our interest in properties located in
Brea, California; Palo Alto, California; Chaska, Minnesota; and Miami, Florida
and leased them back from the buyers. The aggregate proceeds from the sale of
the four properties totaled $242.8 million before closing costs and transaction
expenses. We used the cash from this sale primarily to reduce the debt incurred
in financing the acquisition of Coulter. Refer to the detailed discussion of
these transactions under Note 6 "Sale-leaseback of Real Estate" of the Notes to
Consolidated Financial Statements.
Sale of Assets:
During 2000, we sold certain sales-type lease receivables as part of our plan to
reduce debt. The net book value of financial assets sold was $73.4 million for
which we received approximately $74.1 million in cash proceeds. In 1999 and
1998, we sold similar assets with a net book value of $72.4 million and $67.7
million, respectively, for cash proceeds of $74.0 million and $68.9 million,
respectively.
In 2000, 1999 and 1998, as a result of our Coulter integration activities, we
reduced excess facilities outside the United States, which added $3.2 million,
$3.9 million and $3.0 million, respectively, to non-operating income.
3. Results of Operations
2000 Compared with 1999:
Sales in 2000 were $1,886.9 million, an increase of 4.3% (6.6% excluding the
effect of foreign currency rate changes) compared to $1,808.7 million reported
in 1999. In 2000, clinical diagnostics sales were $1,472.2 million and life
science research sales were $414.7 million, an increase of 3.8% and 6.2%,
respectively, compared to $1,418.2 million and $390.5 million, respectively, in
1999. After adjusting for currency, clinical diagnostics and life science
research sales increased 6.0% and 8.8% in 2000 as compared to 1999,
respectively.
-6-
<PAGE> 7
<TABLE>
<CAPTION>
Constant
Reported Currency
2000 1999 Growth % Growth %
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Routine Chemistry $ 527.1 $ 471.3 11.8 13.1
Immunodiagnostics 346.1 338.1 2.4 5.6
-------- --------- -------- -------
Total Chemistry 873.2 809.4 7.9 10.0
Hematology 397.3 413.1 (3.8) (1.8)
Cytometry 162.7 157.5 3.3 6.8
-------- --------- -------- -------
Total Cellular Analysis 560.0 570.6 (1.9) 0.6
Particle Characterization 39.0 38.2 2.1 3.4
-------- --------- -------- -------
Total Clinical Diagnostics 1,472.2 1,418.2 3.8 6.0
-------- --------- -------- -------
Robotic Automation/Genetic Analysis 126.0 90.8 38.8 42.3
Centrifuge/Analytical Systems 288.7 299.7 (3.7) (1.3)
-------- --------- -------- -------
Total Life Science Research 414.7 390.5 6.2 8.8
-------- --------- -------- -------
Total Beckman Coulter $1,886.9 $ 1,808.7 4.3 6.6
======== ========= ======== =======
</TABLE>
In the first quarter of 2000, we realigned our geographic reporting structure.
Our Latin America operations, which were formerly reported with the "Asia and
Rest of World" geographic area, are now reported in the "Americas" geographic
area along with our North America operations. Prior year amounts have been
reclassified to conform to the current year presentation. Sales in the various
geographical segments of our business were as follows (in millions):
<TABLE>
<CAPTION>
Constant
Reported Currency
2000 1999 Growth % Growth %
-------- --------- --------- --------
<S> <C> <C> <C> <C>
Clinical Diagnostics
Americas $ 924.7 $ 835.9 10.6 10.6
Europe 380.3 409.7 (7.2) 1.7
Asia 167.2 172.6 (3.1) (5.9)
-------- --------- -------- -------
Total Clinical Diagnostics 1,472.2 1,418.2 3.8 6.0
Life Science Research
Americas 243.0 221.8 9.6 9.5
Europe 101.4 106.9 (5.1) 6.4
Asia 70.3 61.8 13.8 10.4
-------- --------- -------- -------
Total Life Science Research 414.7 390.5 6.2 8.8
Total Beckman Coulter
Americas 1,167.7 1,057.7 10.4 10.4
Europe 481.7 516.6 (6.8) 2.7
Asia 237.5 234.4 1.3 (1.6)
-------- --------- -------- -------
Total Beckman Coulter $1,886.9 $ 1,808.7 4.3 6.6
======== ========= ======== =======
</TABLE>
-7-
<PAGE> 8
Sales growth during 2000 was affected by the following:
- The clinical diagnostics segment, led by the Americas, experienced
strong sales growth in routine chemistry, driven by record placements
of SYNCHRON(R) LX20's and Power Processors. Immunodiagnostics sales
growth was led by Access(R) immunoassay system unit placements and
corresponding orders for consumables, including PSA and free PSA
tests, offset by declines in protein testing in Europe due to
government reimbursement changes. Hematology sales declined due to
significant backlog shipments of GEN S(TM) slidemakers in 1999.
Cytometry growth was driven by new system sales and strong reagent
demand.
- The life science research segment was led by our robotic automation/
genetic analysis products, including placements of our Biomek(R) 2000
and new Biomek(R) FX liquid handling systems, and our new CEQ(TM)
2000XL capillary electrophoresis-based DNA sequencer, partially
offset by decreased sales of analytical systems.
- Europe reported sales decreased 6.8% in 2000 versus 1999, as compared
to a constant currency growth rate of 2.7% for the same period as a
result of the weakening euro compared to the U.S. dollar.
- Asia sales were dampened due to softness in the Japanese market.
Gross profit as a percentage of sales in 2000 was 47.2%, 0.7 percentage points
lower than the prior year. The decrease in gross profit percentage was due to
three factors. First, the effects of foreign currency exchange rates resulted in
a gross profit decrease of approximately $30 million or 0.6 percentage points.
Second, we had a slightly higher mix of instruments to after-market sales of
supplies, chemistry kits and services. Instruments typically have lower gross
margins as compared to after-market sales. Third, we had a one-time $16.6
million sale of clinical chemistry assets in Spain in the first quarter of 2000
which contributed a lower gross margin than historical company levels. On a
constant currency basis, and excluding the aforementioned one-time transaction,
gross profit would have been 48.1% in 2000.
Selling, general and administrative ("SG&A") expenses declined $0.8 million to
$476.1 million or 25.2% of sales in 2000 from $476.9 million or 26.4% of sales
in the prior year. The improvement in SG&A as a percentage of sales is due to
further synergies from the Coulter integration.
Research and development ("R&D") expenses increased $11.6 million to $185.0
million or 9.8% of sales in 2000 from $173.4 million or 9.6% of sales in the
prior year. The increase in R&D is due to investments in new technologies, such
as MHC tetramers.
During 2000 and 1999, we reversed $2.4 million and $4.5 million, respectively,
of excess restructuring charges that were taken in prior years. These reversals
resulted in net restructuring credits of $2.4 million and $0.2 million in 2000
and 1999, respectively, which are included in "Restructure (credit) charge" on
the Consolidated Statements of Operations. See Note 4 "Provision for
Restructuring Operations" of the Notes to Consolidated Financial Statements for
additional discussion.
Interest expense declined $1.9 million to $71.9 million in 2000 compared to
$73.8 million in 1999 primarily due to $115.8 million reduction in debt,
partially offset by increased interest rates.
Other non-operating income increased $10.7 million to $14.9 million in 2000
compared to $4.2 million in 1999. The increase in other non-operating income is
primarily due to increased foreign currency hedging gains as a result of our
hedging programs.
Net earnings for 2000 were $125.5 million or $2.03 per diluted share compared to
$106.0 million or $1.79 per diluted share in 1999. The increase in net earnings
was primarily due to the various reasons discussed previously.
-8-
<PAGE> 9
1999 Compared with 1998:
Sales in 1999 were $1,808.7 million, an increase of 5.3% (5.0% excluding the
effect of foreign currency rate changes) compared to $1,718.2 million reported
in 1998. In 1999, clinical diagnostics sales were $1,418.2 million and life
science research sales were $390.5 million, an increase of 5.6% and 3.9%,
respectively, compared to $1,342.5 million and $375.7 million, respectively, in
1998. Sales (in millions) in the various geographical segments of our market
were as follows:
<TABLE>
<CAPTION>
1999 % INCREASE 1998
-------- ----------- --------
<S> <C> <C> <C>
Americas $1,057.7 6.1% $ 996.7
Europe 516.6 3.4% 499.8
Asia 234.4 5.7% 221.7
------- ---- --------
Total $1,808.7 5.3% $1,718.2
======== ==== ========
</TABLE>
Sales growth during 1999 was driven by the following:
- The clinical diagnostics segment was led by placements of the
clinical chemistry, immunodiagnostics and cellular analysis
instrument systems.
- The life science research segment was led by our robotic
automation/genetic analysis products, driven by biotechnology and
pharmaceutical company purchases of SAGIAN(TM) Core Systems for
high-throughput screening of candidate drug compounds and the newly
introduced sequencing and fragment analysis on the CEQ(TM) 2000 DNA
analysis systems.
- European sales growth was dampened by continued softness in the
German market.
- Asia sales growth was the result of a stronger economy in the Asia
Pacific region, led primarily by Japan during the second half of
1999, where placements of cellular analysis systems and life science
research products increased compared to 1998.
- Americas sales increased due to synergies from the integration of the
Beckman and Coulter organizations, as a result of our global
strategy. In addition to giving us scale for profitability, the
Coulter acquisition has allowed Beckman Coulter to offer a broad
spectrum of product offerings to clinical diagnostics laboratories,
covering nearly all routine blood tests.
Gross profit as a percentage of sales in 1999 was 47.9%, 1.5 percentage points
higher than the prior year. The increase in gross profit percentage was due to
synergies from the integration of the Beckman and Coulter organizations,
partially offset by increased service costs related to Year 2000 issues during
the second half of 1999.
Selling, general and administrative ("SG&A") expenses declined $15.4 million to
$476.9 million or 26.4% of sales in 1999 from $492.3 million or 28.7% of sales
in the prior year. The decline in SG&A expenses both in absolute dollars and as
a percentage of sales in 1999 compared to the prior year was due to continued
progress with our integration activities.
Interest expense decreased $14.0 million or 16.0% between 1998 and 1999
primarily due to a lower average debt balance. Interest income declined $5.6
million or 41.8% from 1998 to 1999 as a result of the sale of customer lease
receivables (see "Sale of Assets" discussed previously).
In accordance with our integration plans, we continue to move manufacturing of
certain products from various Beckman Coulter facilities to Ireland. We expect
the additional expenses associated with these moves to be offset by tax savings,
which will result from manufacturing in a lower tax rate jurisdiction.
Net earnings for 1999 were $106.0 million or $1.79 per diluted share compared to
$33.5 million or $0.57 per diluted share ($44.7 million or $0.76 per diluted
share before restructure charge) in 1998. The increase in net earnings was
primarily due to the various reasons discussed previously.
4. Financial Condition
Liquidity and Capital Resources:
Liquidity is our ability to generate sufficient cash flows from operating
activities to meet our obligations and commitments. In addition, liquidity
includes the ability to obtain appropriate financing and to convert those assets
that are no longer required to meet existing strategic and financing objectives
into cash flows. Therefore, liquidity cannot be considered separately from
-9-
<PAGE> 10
capital resources that consist of current and potentially available funds for
use in achieving long-range business objectives and meeting debt service
commitments.
Currently, our liquidity needs arise primarily from:
- debt service on the substantial indebtedness we incurred in
connection with the Coulter acquisition;
- working capital requirements; and
- capital expenditures.
In 2000, cash provided by operations was $209.1 million compared to $212.6
million provided by operations in 1999 and $1.8 million used by operations in
1998. The decrease between 2000 and 1999 of $3.5 million is primarily due to
increased payments related to accounts payable and accrued expenses, offset by
an increase in earnings before depreciation and amortization of $11.9 million
and a $29.5 million improvement in converting accounts receivable into cash. The
increase between 1999 and 1998 is primarily due to a $63.8 million increase in
net earnings, after adding back the effects of depreciation and amortization.
Also contributing to the increase in cash provided by operations were the
relatively low 1999 payments related to accounts payable and accrued expenses as
compared to 1998. In 1998, a major portion of the payments was related to
purchased and assumed liabilities recorded as part of the Coulter acquisition.
The improvements were partially offset by increases in receivables and
inventories due to increased sales. Additionally, the 2000, 1999 and 1998
results included $74.1 million, $74.0 million and $68.9 million, respectively,
in cash proceeds from the sale of lease receivables.
Investing activities used $113.4 million of cash in 2000 compared to $118.6
million used in 1999 and $123.4 million provided in 1998. In 1998, we received
cash proceeds of $242.8 million from the sale-leaseback of four real estate
properties. Excluding this, 1998 cash used in investing activities was $119.4
million. In 2000, we sold certain clinical chemistry assets in Spain to a third
party distributor for $16.6 million, of which we have received $15.4 million in
cash proceeds through December 31, 2000.
Financing activities used $97.1 million of cash flows in 2000 compared to $84.2
million in 1999 and $130.0 million in 1998. Net cash paid to reduce our debt
amounted to $113.7 million, $90.4 million and $141.5 million in 2000, 1999 and
1998, respectively. Additionally, we paid $19.3 million, $18.4 million and $17.1
million in dividends to our stockholders in 2000, 1999 and 1998, respectively.
These amounts were partially offset by proceeds received from the issuance of
stock of $35.9 million, $24.6 million and $28.6 million, in 2000, 1999 and 1998,
respectively.
Based upon current levels of operations, anticipated cost savings and future
growth, we believe our cash flow from operations, together with available
borrowings under the credit facility ($255.0 million as of December 31, 2000;
see further discussion at Note 7 "Debt Financing" of the Notes to Consolidated
Financial Statements) and other sources of liquidity (including other credit
facilities, leases and any other available financing sources) will be adequate
to meet our anticipated requirements for interest payments and other debt
service obligations, working capital, capital expenditures, lease payments and
other operating needs, until the maturity of the credit facility in 2002. Given
our history of debt reductions, we expect that we will have paid down a
substantial amount of our credit facility by its maturity. As such, we expect
that we will have the flexibility to look at various types of financing
including, but not limited to, various forms of debt and/or commercial paper.
There can be no assurance, however, that our business will continue to generate
cash flow at or above current levels or that estimated cost savings or growth
can be achieved. Future operating performance and our ability to service or
refinance existing indebtedness, including the credit facility, will be subject
to future economic conditions and to financial, business and other factors, many
of which are beyond our control.
Financial Risk Management:
Our risk management program, developed by senior management and approved by the
board of directors, seeks to minimize the potentially negative effects of
changes in foreign exchange rates and interest rates on the results of
operations. Our primary exposures to fluctuations in the financial markets are
to changes in foreign exchange risk and interest rates.
Foreign exchange risk arises because our reporting currency is the U.S. dollar
and we generate approximately 45% of our revenues in various foreign currencies.
U.S. dollar-denominated costs and expenses as a percentage of total operating
costs and expenses are much greater than U.S. dollar-denominated sales as a
percentage of total net sales. As a result, appreciation of the U.S. dollar
against our major trading currencies has a negative impact on our results of
operations, and depreciation of the U.S. dollar against such currencies has a
positive impact.
-10-
<PAGE> 11
We seek to minimize our exposure to changes in exchange rates by denominating
costs and expenses in foreign currencies. When these opportunities are
exhausted, we use derivative financial instruments to function as "hedges". We
use forward contracts, purchased option contracts, and complex option contracts
(consisting of purchased and sold options), to hedge transactions with our
foreign customers. We do not use these instruments for speculative or trading
purposes.
On January 1, 2000, the countries of the European Union adopted a single
currency, the "euro". The euro will, after January 1, 2002, be the only official
currency in the European Union countries. Although the effect of this conversion
on the results of our operations may be significant from a foreign currency or
product pricing perspective, we are unable to measure such impact at this time.
See details on the euro conversion under "Euro - the New European Currency".
Our exposure to interest rate risk arises out of our long-term debt obligations.
We do not use derivative instruments to hedge our investment portfolio, which
consists of short-term investments (maturity of less than a year). Under the
guidance of our risk management policies, we use derivative contracts on certain
borrowing transactions. With the aid of these contracts, we seek to reduce the
negative effects of changes in interest rates by changing the character of the
interest rate on our long-term debt, converting a variable rate to a fixed rate
and vice versa.
The Securities and Exchange Commission requires that registrants include
information about potential effects of changes in currency exchange and interest
rates in their annual reports. Several alternatives, all with some limitations,
have been offered. The following discussion is based on a sensitivity analysis,
which models the effects of fluctuations in currency exchange rates and interest
rates. This analysis is constrained by several factors, including the following:
- it is based on a single point in time; and
- it does not include the effects of other complex market reactions
that would arise from the changes modeled.
Although the results of the analysis may be useful as a benchmark, they should
not be viewed as forecasts.
We estimated the sensitivity of the fair value of all derivative foreign
exchange contracts to a hypothetical 10% strengthening and 10% weakening of the
spot exchange rates for the U.S. dollar against the foreign currencies at
December 31, 2000. The analysis showed that a 10% strengthening of the U.S.
dollar would result in a gain in fair value of $14.4 million and a 10% weakening
of the U.S. dollar would result in a loss in fair value of $13.5 million in
these instruments. Losses and gains on the underlying transactions being hedged
would largely offset any gains and losses on the fair value of derivative
contracts. These offsetting gains and losses are not reflected in the above
analysis.
Similarly, we performed a sensitivity analysis on our variable rate debt
instruments and derivatives. A one percentage point increase or decrease in
interest rates was estimated to decrease or increase next year's pre-tax
earnings by $6.4 million based on the amount of debt outstanding at year-end.
For further discussion of this topic, see Note 7 "Debt Financing" and Note 8
"Derivatives" of the Notes to Consolidated Financial Statements.
Inflation:
We continually monitor inflation and the effects of changing prices. Inflation
increases the cost of goods and services used. Competitive and regulatory
conditions in many markets restrict our ability to fully recover the higher
costs of acquired goods and services through price increases. We attempt to
mitigate the impact of inflation by implementing continuous process improvement
solutions to enhance productivity and efficiency and, as a result, lower costs
and operating expenses. The effects of inflation have, in our opinion, been
managed appropriately and as a result have not had a material impact on our
operations and the resulting financial position.
Environmental Matters:
We are subject to federal, state, local and foreign environmental laws and
regulations. Although we continue to make expenditures for environmental
protection, we do not anticipate any significant expenditures to comply with
such laws and regulations that would have a material impact on our
-11-
<PAGE> 12
results of operations, financial position or liquidity. We believe our
operations comply in all material respects with applicable federal, state, and
local environmental laws and regulations.
To address contingent environmental costs, we establish reserves when such costs
are probable and can be reasonably estimated. Based on current information and
regulatory compliance (taking third party indemnities into consideration), we
believe we have established adequate reserves for environmental expenditures. We
may incur additional costs that exceed the reserves. However, based on current
knowledge, we do not expect such amounts to have a material impact on our
results of operations, financial position or liquidity, although we do not give
any assurance in this regard. See further discussion in Note 13 "Commitments and
Contingencies" of the Notes to Consolidated Financial Statements.
Litigation:
We are currently, and are from time to time, subject to claims and lawsuits
arising in the ordinary course of our business. Some examples of the types of
claims are:
- intellectual property;
- contractual obligations;
- competition; and
- employment matters.
In certain such actions, the plaintiffs may request punitive or other damages or
nonmonetary relief, which may not be covered by insurance. If granted,
nonmonetary relief could materially affect the conduct of our business. We
accrue for probable liabilities involved in these matters as they become known
and can be reasonably estimated. In our opinion (taking third party indemnities
into consideration), the various asserted claims and litigation in which we are
currently involved are not reasonably likely to have a material adverse effect
on our business, results of operations, financial position or liquidity.
However, we do not give any assurance as to the ultimate outcome of such claims
and litigation. The resolution of such claims and litigation could be material
to our operating results for any particular period, depending on the level of
income for such period. See further discussion of these matters in Note 13
"Commitments and Contingencies" of the Notes to Consolidated Financial
Statements.
Euro - the New European Currency:
The countries of the European Union have adopted a single currency, the "euro".
The euro came into existence on January 1, 2000, and can be used for
transactions within and between the countries of the Economic and Monetary Union
(Austria, Belgium, Finland, France, Germany, Holland, Ireland, Italy,
Luxembourg, Portugal and Spain), with national currencies expressed as a
denomination (national currency units) of the euro. During the three-year
transition period following its introduction, countries will be allowed to
transact business both in the euro and in their own currencies at fixed exchange
rates. On January 1, 2002, the euro will be the only currency in Economic and
Monetary Union countries.
We conduct business in approximately 130 countries, generating nearly 45% of
revenues outside the United States. A significant portion of our business is
conducted in Europe. The introduction of the euro requires that we make
modifications to our internal operations as well as to our external business
arrangements. For example, product pricing and sales proposals are now available
in the euro. Similarly, our billing and disbursement functions have been
modified to reflect the use of the euro.
We established a six-member task force that identified the issues related to the
introduction of the euro and developed and implemented a plan to address those
issues. Major initiatives resulting from the recommendations of the task force
are to:
- create a "Beckman Coulter Euro Information Center" to facilitate
worldwide communication related to the euro;
- accommodate our customers' preferences for their national currency or
the euro during the transition period;
- operate in a multi-currency environment (including the euro, national
currency and the U.S. dollar), during the transition period, in all
the European countries in which we do business; and
- adopt the euro for internal systems and reporting as of December 1,
2001.
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<PAGE> 13
We do not expect the cost of this effort to have a material effect on our
business, results of operations, financial position or liquidity. However, we
cannot guarantee that all problems will be foreseen and corrected, or that no
material disruption of our business will occur. There is also likely to be
competitive implications on our pricing and marketing strategies related to the
conversion to the euro; however, we do not know the effects of any such impact
at this time.
Recent Accounting Developments:
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities"("SFAS 133"). The provisions of the statement
require the recognition of all derivatives as either assets or liabilities in
the consolidated balance sheet and the measurement of those instruments at fair
value. The accounting for changes in the fair value of a derivative depends on
the intended use of the derivative and the resulting designation. Pursuant to
SFAS 133, we intend on designating our derivatives as either 1) hedges for
exposures to changes in fair values of recognized assets or liabilities, or 2)
as hedges for cash flow exposures of forecasted transactions. This statement, as
amended, is effective in the first quarter of 2001. The adoption of SFAS 133 on
January 1, 2001 resulted in a charge representing the cumulative effect of an
accounting change of $3.1 million (net of tax). This charge will be included in
our consolidated statements of operations during the quarter ended March 31,
2001.
In September 2000, the FASB issued Statement of Financial Accounting Standards
No. 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 140"). The statement replaces Statement
of Financial Accounting Standards No. 125 and is effective for us in the second
quarter of 2001. SFAS 140 revises the accounting for securitizations and other
transfers of financial assets. The adoption of SFAS 140 is not expected to have
a material effect on our financial position or results of operations.
5. Business Climate
The clinical diagnostics and life science research markets are highly
competitive with many manufacturers around the world. These markets continue to
be unfavorably impacted by the economic weakness in parts of Europe and Asia and
government and healthcare cost containment initiatives in general. The life
science research market also continues to be affected by governmental
constraints on research and development spending outside the United States.
In the clinical diagnostics market, attempts to lower costs and to increase
productivity have led to further consolidation among healthcare providers in the
United States, resulting in more powerful provider groups that continue to
leverage their purchasing power to contain costs. Preferred supplier
arrangements and combined purchases are becoming more commonplace. Consequently,
it has become essential for manufacturers to provide cost-effective diagnostic
systems to remain competitive. Cost containment initiatives in the United States
and in the European healthcare systems will continue to be factors which may
affect our ability to maintain or increase sales. Future profitability may also
be adversely affected if the relative value of the U.S. dollar strengthens
against certain currencies.
The continuing consolidation trend among United States healthcare providers,
mentioned previously, has increased pressure on diagnostic equipment
manufacturers to broaden their product offerings to encompass a wider range of
testing capability, greater automation and higher volume capacity at a lower
cost. Our acquisition of Coulter was a clear indicator of our resolve to become
a broad-based world leader in in vitro diagnostic testing by expanding our
product offerings. Beckman Coulter is now the world's leading manufacturer of
hematology systems for the clinical analysis of blood cells, where we have a
market share twice the size of our next largest competitor. In addition, Beckman
Coulter is considered a technology leader in cell counting and characterization
and has a number two position in flow cytometry, which is used for both research
and clinical applications.
With our leadership position in cellular analysis and our extensive capabilities
in routine chemistry and immunodiagnostics, we are able to offer a broad range
of automated systems that together can perform more than 75% of a hospital
laboratory's test volume and essentially 100% of the blood tests that are
considered routine. We believe we are able to provide significant value-added
benefits, enhanced through our expertise in simplifying and automating
laboratory processes, to our customers.
Our new products originate from four sources:
- internal research and development programs;
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<PAGE> 14
- external collaborative efforts with individuals in academic
institutions and technology companies;
- devices and techniques that are generated in customers' laboratories;
and
- business and technology acquisitions.
During 2000, we made a commitment to the commercialization of a new Tetramer
technology, which operates on flow cytometry platforms. This new cellular immune
response technology has the potential to establish an entirely new testing
category for measuring and monitoring the immune response system. We have
established an Immunomics operation to focus on this technology with shipments
of our first ready-to-use iTAg MHC Tetramer reagents for HIV and melanoma
occuring in the fourth quarter of 2000. We also provided custom Tetramer
reagents to several bio-pharma companies for use in clinical trials.
The size and growth of our markets are influenced by a number of factors,
including:
- 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;
- healthcare spending; and
- physician practice.
We expect worldwide healthcare expenditures and diagnostic testing to increase
over the long-term, primarily as a result of the following:
- growing demand for services generated by the increasing size and
aging of the world population;
- increasing expenditures on diseases requiring costly treatment and
monitoring (for example, AIDS and cancer); and
- expanding demand for improved healthcare services in developing
countries.
In addition to the business climate factors discussed previously, the following
economic factors may influence our business:
- Currency fluctuations - as approximately 45% of our revenues are
generated outside the United States and given the recent fluctuations
in foreign currencies, we may experience volatility in sales and
operating income; and
- Interest rates - as approximately 70% of our debt is under variable
interest rate terms. This percentage includes the effect of our
reverse interest rate swap derivatives which change the character of
the interest rate on our long-term debt by effectively converting a
fixed rate to a variable rate. See Note 8 "Derivatives" of the Notes
to Consolidated Financial Statements.
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<PAGE> 15
6. Taxes
We are subject to income taxation in many jurisdictions throughout the world.
Our effective tax rate and income tax liabilities will be affected by a number
of factors, such as:
- the amount of taxable income in particular jurisdictions;
- the tax rate in particular jurisdictions;
- tax treaties between jurisdictions;
- the extent to which income is repatriated; and
- future changes in the law.
Generally, our income tax liability in a particular jurisdiction is determined
either on an entity-by-entity (non-consolidated) basis or on a consolidated
basis including only those entities incorporated in the same jurisdiction. In
those jurisdictions where consolidated tax reporting is not permitted, we may
pay income taxes even though, on an overall basis, we may have incurred a net
loss for the tax year.
7. Forward-Looking Statements
This annual report contains forward-looking statements, including statements
regarding, among other items:
- our business strategy;
- anticipated trends in our business and plans to reduce indebtedness;
- our liquidity requirements and capital resources;
- anticipated proceeds from sales of assets;
- the effects of euro conversion and inflation on our operations; and
- earnings and sales growth.
These forward-looking statements are based on our expectations and are subject
to a number of risks and uncertainties, some of which are beyond our control.
These risks and uncertainties include, but are not limited to:
- complexity and uncertainty regarding development of new
high-technology products;
- loss of market share through aggressive competition in the clinical
diagnostics and life science research markets;
- our dependence on capital spending policies and government funding;
- the effects of potential healthcare reforms;
- fluctuations in foreign exchange rates and interest rates;
- reliance on patents and other intellectual property;
- unanticipated reductions in cash flows and difficulty in sales of
assets;
- future effective tax rate;
- unanticipated euro problems; and
- other factors that cannot be identified at this time.
Although we believe we have the product offerings and resources required to
achieve our objectives, actual results could differ materially from those
anticipated by these forward-looking statements. There can be no assurance that
events anticipated by these forward-looking statements will in fact transpire as
expected.
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<PAGE> 16
CONSOLIDATED BALANCE SHEETS
In millions, except amounts per share
<TABLE>
<CAPTION>
December 31,
- ---------------------------------------------------------- ----------------------------------
2000 1999
-------- --------
<S> <C> <C>
Assets
Current assets
Cash and equivalents $ 29.6 $ 34.4
Trade and other receivables 536.7 566.4
Inventories 332.1 313.1
Deferred income taxes -- 21.5
Other current assets 29.4 31.0
-------- --------
Total current assets 927.8 966.4
Property, plant and equipment, net 298.2 305.9
Goodwill, less accumulated amortization of $37.2
in 2000 and $26.3 in 1999 331.7 344.7
Other intangibles, less accumulated amortization
of $66.1 in 2000 and $46.8 in 1999 382.7 399.9
Other assets 77.8 93.9
-------- --------
Total assets $2,018.2 $2,110.8
======== ========
- ---------------------------------------------------------- ----------------- ----------------
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 95.2 $ 131.4
Notes payable 42.9 39.0
Current maturities of long-term debt 9.2 11.0
Accrued expenses 281.3 342.7
Income taxes 58.3 51.8
Deferred income taxes 14.2 -
-------- --------
Total current liabilities 501.1 575.9
Long-term debt, less current maturities 862.8 980.7
Deferred income taxes 28.8 38.7
Other liabilities 281.6 287.6
-------- --------
Total liabilities 1,674.3 1,882.9
Commitments and contingencies (see Note 13)
Stockholders' equity
Preferred stock, $0.10 par value; authorized 10.0
shares; none issued -- --
Common stock, $0.10 par value; authorized 300.0
shares; shares issued 59.7 and 58.2 at 2000 and
1999, respectively; shares outstanding 59.7 and
57.9 at 2000 and 1999, respectively 6.0 5.8
Additional paid-in capital 170.0 134.5
Retained earnings 226.3 120.1
Accumulated other comprehensive loss:
Cumulative foreign currency translation
adjustments (58.4) (24.3)
Treasury stock, at cost -- (8.2)
-------- --------
Total stockholders' equity 343.9 227.9
-------- --------
Total liabilities and stockholders' equity $2,018.2 $2,110.8
======== ========
- ---------------------------------------------------------- ----------------- ----------------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 17
CONSOLIDATED STATEMENTS OF OPERATIONS
In millions, except amounts per share
<TABLE>
<CAPTION>
Years ended December 31,
- ------------------------------------------------------- --------------------------------------------
2000 1999 1998
-------- -------- --------
<S> <C> <C> <C>
Sales $1,886.9 $1,808.7 $1,718.2
Cost of sales 995.6 942.1 920.6
-------- -------- --------
Gross profit 891.3 866.6 797.6
-------- -------- --------
Operating costs and expenses
Selling, general and administrative 476.1 476.9 492.3
Research and development 185.0 173.4 171.4
Restructure (credit) charge (2.4) (0.2) 19.1
-------- -------- --------
658.7 650.1 682.8
-------- -------- --------
Operating income 232.6 216.5 114.8
-------- -------- --------
Nonoperating (income) expense
Interest income (6.3) (7.8) (13.4)
Interest expense 71.9 73.8 87.8
Other, net (14.9) (4.2) (6.2)
-------- -------- --------
50.7 61.8 68.2
-------- -------- --------
Earnings before income taxes 181.9 154.7 46.6
Income taxes 56.4 48.7 13.1
-------- -------- --------
Net earnings $ 125.5 $ 106.0 $ 33.5
======== ======== ========
- ------------------------------------------------------- --------------------------------------------
Basic earnings per share $ 2.13 $ 1.85 $ 0.60
======== ======== ========
Weighted average number of shares outstanding 58.8 57.3 56.1
======== ======== ========
- ------------------------------------------------------- --------------------------------------------
Diluted earnings per share $ 2.03 $ 1.79 $ 0.57
======== ======== ========
Weighted average number of shares and dilutive
securities outstanding 61.8 59.3 58.7
======== ======== ========
- ------------------------------------------------------- --------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 18
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
In millions, except amounts per share
<TABLE>
<CAPTION>
Total
Accumulated Total Compre-
Additional Other Stock- hensive
Common Paid-in Retained Comprehensive Treasury holders' (Loss)
Stock Capital Earnings Loss Stock Equity Income
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Stockholders' equity at
December 31, 1997 $ 5.8 $126.6 $ 16.1 $ (13.8) $(52.9) $ 81.8
- ----------------------------------------------------------------------------------------------------------------
Net earnings 33.5 33.5 $ 33.5
Foreign currency
translation adjustments (0.1) (0.1) (0.1)
- ----------------------------------------------------------------------------------------------------------------
Comprehensive income for
the year ended
December 31, 1998 33.5 (0.1) $ 33.4
Dividends to
stockholders,
$0.305 per share (17.1) (17.1)
Employee stock purchases 5.3 23.5 28.8
- ----------------------------------------------------------------------------------------------------------------
Stockholders' equity at
December 31, 1998 $ 5.8 $131.9 $ 32.5 $ (13.9) $(29.4) $126.9
- ----------------------------------------------------------------------------------------------------------------
Net earnings 106.0 106.0 $106.0
Foreign currency
translation adjustments (10.4) (10.4) (10.4)
- ----------------------------------------------------------------------------------------------------------------
Comprehensive income for
the year ended
December 31, 1999 106.0 (10.4) $ 95.6
Dividends to
stockholders,
$0.320 per share (18.4) (18.4)
Employee stock purchases 2.6 21.2 23.8
- ----------------------------------------------------------------------------------------------------------------
Stockholders' equity at
December 31, 1999 $ 5.8 $134.5 $ 120.1 $ (24.3) $ (8.2) $227.9
- ----------------------------------------------------------------------------------------------------------------
Net earnings 125.5 125.5 $125.5
Foreign currency
translation adjustments (34.1) (34.1) (34.1)
- ----------------------------------------------------------------------------------------------------------------
Comprehensive income for
the year ended
December 31, 2000 125.5 (34.1) $ 91.4
Dividends to
stockholders,
$0.325 per share (19.3) (19.3)
Employee stock purchases 0.2 27.5 8.2 35.9
Tax benefit from
exercise of non-
qualified stock options 8.0 8.0
- ----------------------------------------------------------------------------------------------------------------
Stockholders' equity at
December 31, 2000 $ 6.0 $170.0 $ 226.3 $ (58.4) $ $343.9
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
-18-
<PAGE> 19
CONSOLIDATED STATEMENTS OF CASH FLOWS
In millions
<TABLE>
<CAPTION>
Years ended December 31,
- --------------------------------------------------------- -------------------------------------------
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net earnings $ 125.5 $ 106.0 $ 33.5
Adjustments to reconcile net earnings to net
cash provided (used) by operating activities:
Depreciation and amortization 136.1 143.7 152.4
Gain on sale of property, plant and equipment (3.2) (3.9) (3.0)
Net deferred income taxes 18.6 34.8 (5.0)
Proceeds from sale of sales-type lease
receivables 74.1 74.0 68.9
Changes in assets and liabilities:
Trade and other receivables (53.7) (83.2) (58.3)
Inventories (5.1) (11.2) 23.9
Accounts payable and accrued expenses (78.3) (30.0) (204.8)
Other (4.9) (17.6) (9.4)
------- ------- -------
Net cash provided (used) by operating
activities 209.1 212.6 (1.8)
------- ------- -------
Cash Flows from Investing Activities
Additions to property, plant and equipment (141.3) (134.9) (165.2)
Proceeds from disposal of property, plant and
equipment 19.4 16.3 45.4
Proceeds from sale of certain clinical
chemistry assets 15.4 - -
Proceeds from sale-leaseback of real estate - - 242.8
Sales of short-term investments - - 0.4
Purchase of investments (6.9) - -
------- -------- --------
Net cash (used) provided by investing
activities (113.4) (118.6) 123.4
------- ------- -------
Cash Flows from Financing Activities
Dividends to stockholders (19.3) (18.4) (17.1)
Proceeds from issuance of stock 35.9 24.6 28.6
Net notes payable (reductions) borrowings 4.7 (72.1) 56.6
Long-term debt borrowings - 41.6 411.2
Long-term debt reductions (118.4) (59.9) (609.3)
------- ------- -------
Net cash used by financing activities (97.1) (84.2) (130.0)
Effect of exchange rates on cash and equivalents (3.4) (0.1) -
------- ------- --------
Increase (decrease) in cash and equivalents (4.8) 9.7 (8.4)
Cash and equivalents-beginning of year 34.4 24.7 33.1
------- ------- -------
Cash and equivalents-end of year $ 29.6 $ 34.4 $ 24.7
======= ======= =======
- --------------------------------------------------------- -------------------------------------------
Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Cash payments for interest $ 69.8 $ 76.5 $ 88.4
Cash payments for income taxes $ 31.8 $ 23.0 $ 20.4
Non-cash investing and financing activities:
Purchase of equipment under capital lease $ 3.4 $ 3.0 $ 9.7
Receivable from sale of certain clinical
chemistry assets $ 1.2 $ - $ -
Issuance of restricted stock as employee
compensation $ - $ (0.8) $ 0.3
- --------------------------------------------------------- -------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
-19-
<PAGE> 20
BECKMAN COULTER, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tabular dollar amounts in millions, except amounts per share
1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business
Beckman Coulter simplifies and automates laboratory processes used in all phases
of the battle against disease. The Company designs, manufactures, and markets
systems which consist of instruments, chemistries, software, and supplies that
meet a variety of laboratory needs. Its products are used in a range of
applications, from instruments used for pioneering medical research, drug
discovery and clinical trials to diagnostic tools found in hospitals and
physicians' offices. Beckman Coulter competes in market segments that total
approximately $31 billion in annual sales worldwide and currently has products
which address approximately half of that market.
Beckman Coulter's product lines include virtually all blood tests routinely
performed in hospital laboratories and a range of systems for medical and
pharmaceutical research. The Company has more than 125,000 systems operating in
laboratories around the world, with approximately two-thirds of annual revenues
coming from after-market customer purchases of operating supplies, chemistry
kits, and service. Beckman Coulter markets its products in approximately 130
countries, generating approximately 45% of revenues outside the United States.
Principles of Consolidation
The consolidated financial statements include the accounts of Beckman Coulter,
Inc., and its wholly owned subsidiaries (the "Company"). All significant
intercompany transactions have been eliminated from the consolidated financial
statements. Balance sheet amounts for subsidiaries operating outside the United
States and Canada are as of November 30. The operating results for the Company's
international subsidiaries (except Canada) are for the twelve-month periods
ending on November 30, with one exception: Coulter Corporation ("Coulter") was
acquired October 31, 1997 and the results of Coulter and its international
subsidiaries are included subsequent to that date. However, in order to be
consistent with the way the Company reports its international results, the
reporting of Coulter's international subsidiaries' results of operations were
lagged by one month in 1998. Therefore, the results of 1998 include only January
through November sales and expenses for Coulter's subsidiaries outside the
United States and Canada. The exclusion of one month's results for Coulter's
international subsidiaries in 1998 was not significant.
Use of Estimates
The preparation of financial statements in conformity with Generally Accepted
Accounting Principles ("GAAP") requires management to make estimates and
assumptions, including accounts receivable and inventory valuations, warranty,
value of long-lived assets, pension obligations, environmental and litigation
obligations, income taxes, etc. These estimates and assumptions affect the
amounts reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Financial Instruments
The carrying values of the Company's financial instruments approximate their
fair value at December 31, 2000 and 1999, with the exception of certain
derivative financial instruments discussed in Note 8. Management estimates are
used to determine the market value of cash and equivalents, trade and other
receivables, notes payable, accounts payable, and amounts included in other
current assets, other assets and accrued expenses meeting the definition of a
financial instrument. Quotes from financial institutions are used to determine
market values of the Company's debt and derivative financial instruments.
-FN1-
<PAGE> 21
Foreign Currency Translation
Non-U.S. assets and liabilities are translated into U.S. dollars using year-end
exchange rates. Operating results are translated at exchange rates prevailing
during the year. The resulting translation adjustments are accumulated as a
separate component of stockholders' equity. Gains and losses from translation
remeasurements relating to foreign entities deemed to be operating in U.S.
dollar functional currency or in highly inflationary economies are included in
the Consolidated Statements of Operations.
Cash and Equivalents
Cash and equivalents include cash in banks, time deposits and investments having
maturities of three months or less from the date of acquisition.
Inventories
Inventories are valued at the lower of cost or market using the first-in,
first-out method.
Property, Plant and Equipment and Depreciation
Land, buildings and machinery and equipment are carried at cost. The cost of
additions and improvements are capitalized, while maintenance and repairs are
expensed as incurred. Depreciation is computed generally on the straight-line
basis over the estimated useful lives of the related assets. Buildings are
depreciated over 20 to 40 years, machinery and equipment over 3 to 10 years and
instruments subject to lease over the lease term but not in excess of 7 years.
Leasehold improvements are amortized over the lesser of the life of the asset or
the term of the lease but not in excess of 20 years.
Goodwill and Other Intangibles
Goodwill represents the excess of the purchase price over the estimated fair
value of the tangible and intangible net assets acquired. Goodwill is amortized
on a straight-line basis over 40 years. Other intangibles consist primarily of
patents, trademarks and customer base arising from business combinations. Other
intangibles are amortized on a straight-line basis over periods ranging from 15
to 30 years.
Accounting for Long-Lived Assets
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying value of an asset may not be
recoverable. If the fair value is less than the carrying amount of the asset, a
loss is recognized for the difference.
Revenue Recognition
Revenue is recognized when it is realizable and earned. For products, revenue is
recognized when a product is shipped, except when a customer enters into an
operating-type lease agreement, revenue is recognized over the life of the
lease. Under a sales-type lease agreement, revenue is recognized at the time of
shipment with interest income recognized over the life of the lease. Service
revenues are recognized ratably over the life of the service agreement or as
service is performed, if not under contract. For those equipment sales which
include other obligations, such as providing after market supplies and/or
service, we allocate revenue based on the relative fair values of the individual
components. Credit is extended based upon the evaluation of the customer's
financial condition and generally does not require collateral.
In December 1999, the SEC issued Staff Accounting Bulletin No. 101 ("SAB 101").
SAB 101, as amended, provides the SEC's views in applying Generally Accepted
Accounting Principles to selected revenue recognition issues. The adoption of
SAB 101 did not cause a material change to the Company's existing revenue
recognition policies.
-FN2-
<PAGE> 22
Nonoperating Income and Expenses
The Company's nonoperating income and expenses are generally comprised of four
items: (i) interest income, (ii) interest expense, (iii) foreign exchange gains
or losses, and (iv) income (loss) from investments that are non-core or are
accounted for as a minority interest. Interest income typically includes income
from sales-type leases and interest on cash equivalents and other investments.
Foreign exchange gains or losses are primarily the result of the Company's
hedging activities and are recorded net of any premiums paid. Other nonoperating
gains and losses are most frequently the result of one-time items such as asset
sales.
Recent Accounting Developments
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities"("SFAS 133"). The provisions of the statement
require the recognition of all derivatives as either assets or liabilities in
the consolidated balance sheet and the measurement of those instruments at fair
value. The accounting for changes in the fair value of a derivative depends on
the intended use of the derivative and the resulting designation. Pursuant to
SFAS 133, the Company intends on designating its derivatives as either 1) hedges
for exposures to changes in fair values of recognized assets or liabilities, or
2) as hedges for cash flow exposures of forecasted transactions. This statement,
as amended, is effective in the first quarter of 2001. The adoption of SFAS 133
on January 1, 2001 resulted in a charge representing the cumulative effect of an
accounting change of $3.1 million (net of tax). This charge will be included in
our consolidated statements of operations during the quarter ended March 31,
2001.
In September 2000, the FASB issued Statement of Financial Accounting Standards
No. 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS 140"). The statement replaces Statement
of Financial Accounting Standards No. 125 and is effective for the Company in
the second quarter of 2001. SFAS 140 revises the accounting for securitizations
and other transfers of financial assets. The adoption of SFAS 140 is not
expected to have a material effect on the Company's financial position or
results of operations.
-FN3-
<PAGE> 23
2. Composition of Certain Financial Statement Captions
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Trade and other receivables
Trade receivables $ 501.2 $ 540.9
Other receivables 40.5 35.7
Current portion of lease receivables 20.1 21.3
Less allowance for doubtful accounts (25.1) (31.5)
------- -------
$ 536.7 $ 566.4
======= =======
Inventories
Raw materials, parts and assemblies $ 95.7 $ 87.2
Work in process 22.4 15.0
Finished products 214.0 210.9
------- -------
$ 332.1 $ 313.1
======= =======
Property, plant and equipment, net
Land $ 9.4 $ 18.5
Buildings 116.4 128.1
Machinery and equipment 375.0 372.3
Instruments subject to lease(a) 273.1 297.7
------- -------
773.9 816.6
Less accumulated depreciation
Building, machinery and equipment (306.3) (326.7)
Instruments subject to lease(a) (169.4) (184.0)
------- -------
$ 298.2 $ 305.9
======= =======
Accrued expenses
Purchase and assumed liabilities (see Note 3) $ 32.6 $ 52.5
Unrealized service income 69.1 65.0
Accrued compensation 86.0 79.2
Accrued restructure costs (see Note 4) 3.0 22.5
Other 90.6 123.5
------- -------
$ 281.3 $ 342.7
======= =======
</TABLE>
(a) Includes instruments leased to customers generally under three- to five-year
cancelable operating leases.
3. Acquisitions
On October 31, 1997, the Company acquired all of the outstanding capital stock
of Coulter for $850.2 million, net of Coulter's cash on hand of $24.8 million at
the date of acquisition. The acquisition was accounted for using the purchase
method of accounting. This acquisition resulted in $336.6 million of goodwill
(including post-acquisition adjustments), which reflected the excess of the
purchase price and purchase and assumed liabilities over the fair value of net
identifiable assets and in-process research and development projects acquired.
Other acquired intangibles amounted to $404.0 million including $170.0 million
attributable to the installed customer base and $116.0 million of developed
technology. At the time of the acquisition of Coulter, the Company assumed
certain liabilities and estimated certain other liabilities associated with
consolidating and restructuring certain functions of Coulter and the Company
(collectively referred to as "purchase and assumed liabilities"). These purchase
and assumed liabilities amounted to $286.0 million.
-FN4-
<PAGE> 24
Details of total purchase and assumed liabilities recorded and activity in these
accounts through December 31, 2000 are as follows:
<TABLE>
<CAPTION>
Purchase &
Assumed
Liability
- ------------------------------------------------ -------------
<S> <C>
Balance at December 31, 1997 $ 285.9
================================================ =============
1998 ACTIVITY:
Personnel $ (125.0)
Other (50.9)
- ------------------------------------------------ -------------
Total 1998 activity $ (175.9)
================================================ =============
BALANCE AT DECEMBER 31, 1998
Personnel $ 70.4
Tax issues 16.6
Other 23.0
- ------------------------------------------------ -------------
Balance at December 31, 1998 $ 110.0
================================================ =============
1999 ACTIVITY:
Personnel $ (55.2)
Tax issues (0.4)
Other (1.9)
- ------------------------------------------------ -------------
Total 1999 activity $ (57.5)
================================================ =============
BALANCE AT DECEMBER 31, 1999:
Personnel $ 15.2
Tax issues 16.2
Other 21.1
- ------------------------------------------------ -------------
Balance at December 31, 1999 $ 52.5
================================================ =============
2000 ACTIVITY:
Personnel $ (4.5)
Tax issues (1.4)
Other (5.5)
Reversal of excess purchase liabilities (8.5)
- ------------------------------------------------ -------------
Total 2000 activity $ (19.9)
================================================ =============
BALANCE AT DECEMBER 31, 2000:
Personnel $ 5.8
Tax issues 14.1
Other 12.7
- ------------------------------------------------ -------------
Balance at December 31, 2000 $ 32.6
================================================ =============
</TABLE>
The reversal of excess purchase liabilities in 2000 of $8.5 million, partially
offset by a related reversal of $2.8 million of deferred income tax assets, was
recorded as a reduction to goodwill. Additionally, the reversal of certain
deferred tax assets related to the acquisition of Coulter resulted in a $3.6
million increase in goodwill during 2000.
Management estimates that the purchase and assumed liabilities for "personnel"
and "other" in the amounts of $5.8 million and $12.7 million, respectively, will
be utilized during 2001 and 2002. Management estimates that "tax issues"
totaling $14.1 million will be utilized as various tax audits of Coulter are
completed.
-FN5-
<PAGE> 25
4. Provision for Restructuring Operations
In the fourth quarters of 1999, 1998 and 1997, the Company recorded
restructuring charges of $4.3 million, $19.1 million and $59.4 million,
respectively, related to certain reorganization activities. In the fourth
quarters of 2000 and 1999, the Company reversed $2.4 million and $4.5 million,
respectively, of excess restructure charges taken in prior years. These
reversals resulted in net restructuring credits of $(2.4) million and $(0.2)
million in 2000 and 1999, respectively, which are included in "Restructure
(credit) charge" on the Consolidated Statements of Operations. The following
provides additional details for the 1999, 1998 and 1997 restructure charges.
1999 Restructure:
The Company recorded a restructure charge of $4.3 million, $2.6 million after
taxes, in the fourth quarter of 1999 for consolidation of selling, general,
administrative and technical functions. This charge included $2.7 million for
personnel related costs and $1.0 million for dealer termination costs. The work
force reductions under this plan totaled 55 positions in Europe and North
America in selling, general, administrative ("SG&A") and technical functions and
production related areas. At December 31, 2000, the remaining obligation related
to the 1999 restructure charges was $0.2 million, which is included in "Accrued
expenses."
<TABLE>
<CAPTION>
Facility
Consolidation
Personnel and Asset
and Related
Other Write-offs Total
- -------------------------------------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
PROVISION $ 3.7 $ 0.6 $ 4.3
1999 utilization (0.7) -- (0.7)
- -------------------------------------------------- ---------------- ----------------- ----------------
BALANCE AT DECEMBER 31, 1999 $ 3.0 $ 0.6 $ 3.6
- -------------------------------------------------- ---------------- ----------------- ----------------
2000 utilization (2.7) (0.6) (3.3)
Reversal of excess reserves (0.1) -- (0.1)
- -------------------------------------------------- ---------------- ----------------- ----------------
Total 2000 activity $(2.8) $(0.6) $(3.4)
- -------------------------------------------------- ---------------- ----------------- ----------------
BALANCE AT DECEMBER 31, 2000 $ 0.2 $ -- $ 0.2
================================================== ================ ================= ================
</TABLE>
-FN6-
<PAGE> 26
1998 Restructure:
The Company recorded a restructure charge of $19.1 million, $11.2 million after
taxes, in the fourth quarter of 1998. This charge included $4.1 million for
personnel related and $9.2 million for dealer termination costs. The work force
reductions under this plan totaled 75 positions in Europe, Asia and North
America in SG&A and technical functions and production related areas. The $5.8
million provided for facility consolidation and asset related write-offs
included $2.4 million for lease termination payments, and $3.4 million for the
write-off of machinery, equipment and tooling associated with those functions to
be consolidated. At December 31, 2000, the remaining obligation related to the
1998 restructure charges was $1.8 million, which is included in "Accrued
expenses."
<TABLE>
<CAPTION>
Facility
Consolidation
Personnel and Asset
and Related
Other Write-offs Total
- -------------------------------------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
PROVISION
Consolidation of SG&A and technical
functions $ 10.1 $ -- $ 10.1
Changes in manufacturing operations 3.2 5.8 9.0
- ------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 $ 13.3 $ 5.8 $ 19.1
======================================================================================================
1999 ACTIVITY
Consolidation of SG&A and technical
functions $ (1.4) $ -- $ (1.4)
Changes in manufacturing operations (1.1) (0.5) (1.6)
Reversal of excess reserves (1.4) (0.8) (2.2)
- ------------------------------------------------------------------------------------------------------
Total 1999 activity $ (3.9) $ (1.3) $ (5.2)
======================================================================================================
BALANCE AT DECEMBER 31, 1999
Consolidation of SG&A and technical
functions $ 8.3 $ -- $ 8.3
Changes in manufacturing operations 1.1 4.5 5.6
- ------------------------------------------------------------------------------------------------------
Balance at December 31, 1999 $ 9.4 $ 4.5 $ 13.9
======================================================================================================
2000 ACTIVITY
Consolidation of SG&A and technical
functions $ (4.7) $ -- $ (4.7)
Changes in manufacturing operations (0.8) (4.3) (5.1)
Reversal of excess reserves (2.3) -- (2.3)
- ------------------------------------------------------------------------------------------------------
Total 2000 activity $ (7.8) $ (4.3) $(12.1)
======================================================================================================
BALANCE AT DECEMBER 31, 2000
Consolidation of SG&A and technical
functions $ 1.5 $ -- $ 1.5
Changes in manufacturing operations 0.1 0.2 0.3
- ------------------------------------------------------------------------------------------------------
Balance at December 31, 2000 $ 1.6 $ 0.2 $ 1.8
======================================================================================================
</TABLE>
-FN7-
<PAGE> 27
1997 Restructure:
In the fourth quarter of 1997, the Company recorded a restructure charge of
$59.4 million, $36.4 million after taxes. This charge included $37.3 million for
personnel related costs. The work force reductions under this plan, some of
which occurred prior to the 1997 year-end totaled approximately 500 positions in
Europe, Asia and North America in selling, general, administrative and technical
functions and approximately 100 positions in production related areas. The $22.1
million provided for facility consolidation and asset related write-offs
included $2.5 million for lease termination payments, $12.2 million for the
write-off of machinery, equipment and tooling associated with those functions to
be consolidated, and $7.4 million for exiting non-core investment activities. At
December 31, 2000, the Company's remaining obligation related to the prior
restructuring charges was $1.0 million, which is included in "Accrued expenses."
<TABLE>
<CAPTION>
Facility
Consolidation
Personnel and Asset
and Related
Other Write-offs Total
- ---------------------------------------------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31, 1997
Consolidation of SG&A and technical
functions $ 26.5 $ 13.2 $ 39.7
Changes in manufacturing operations 3.0 3.9 6.9
- ---------------------------------------------------- ---------------- ----------------- ----------------
Balance at December 31, 1997 $ 29.5 $ 17.1 $ 46.6
==================================================== ================ ================= ================
1998 ACTIVITY
Consolidation of SG&A and technical
functions $(13.7) $ (9.3) $(23.0)
Changes in manufacturing operations (1.1) -- (1.1)
- ---------------------------------------------------- ---------------- ----------------- ----------------
Total 1998 activity $(14.8) $ (9.3) $(24.1)
==================================================== ================ ================= ================
BALANCE AT DECEMBER 31, 1998
Consolidation of SG&A and technical
functions $ 12.8 $ 3.9 $ 16.7
Changes in manufacturing operations 1.9 3.9 5.8
- ---------------------------------------------------- ---------------- ----------------- ----------------
Balance at December 31, 1998 $ 14.7 $ 7.8 $ 22.5
==================================================== ================ ================= ================
1999 ACTIVITY
Consolidation of SG&A and technical
functions $(11.1) $ (2.2) $(13.3)
Changes in manufacturing operations (0.3) (1.6) (1.9)
Reversal of excess reserves -- (2.3) (2.3)
- ---------------------------------------------------- ---------------- ----------------- ----------------
Total 1999 activity $(11.4) $ (6.1) $(17.5)
==================================================== ================ ================= ================
BALANCE AT DECEMBER 31, 1999
Consolidation of SG&A and technical
functions $ 1.7 $ 1.7 $ 3.4
Changes in manufacturing operations 1.6 -- 1.6
- ---------------------------------------------------- ---------------- ----------------- ----------------
Balance at December 31, 1999 $ 3.3 $ 1.7 $ 5.0
==================================================== ================ ================= ================
2000 ACTIVITY
Consolidation of SG&A and technical
functions $ (1.6) $ (0.8) $ (2.4)
Changes in manufacturing operations (1.6) -- (1.6)
- ---------------------------------------------------- ---------------- ----------------- ----------------
Total 2000 activity $ (3.2) $ (0.8) $ (4.0)
==================================================== ================ ================= ================
BALANCE AT DECEMBER 31, 2000
Consolidation of SG&A and technical
functions $ 0.1 $ 0.9 $ 1.0
Changes in manufacturing operations -- -- --
- ---------------------------------------------------- ---------------- ----------------- ----------------
Balance at December 31, 2000 $ 0.1 $ 0.9 $ 1.0
==================================================== ================ ================= ================
</TABLE>
-FN8-
<PAGE> 28
5. Sale of Assets
During 2000, the Company sold certain sales-type lease receivables as part of
its plan to reduce debt. The net book value of financial assets sold was $73.4
million for which the Company received approximately $74.1 million in cash
proceeds. In 1999 and 1998, the Company sold similar assets with a net book
value of $72.4 million and $67.7 million, respectively, for cash proceeds of
$74.0 million and $68.9 million, respectively. These transactions were accounted
for as sales and as a result the related receivables have been excluded from the
accompanying Consolidated Balance Sheets. The sales are subject to certain
recourse and servicing provisions, and as such the Company has established
reserves for these probable liabilities.
In 2000, 1999 and 1998, as a result of Coulter integration activities, the
Company reduced excess facilities outside the United States, which added $3.2
million, $3.9 million and $3.0 million, respectively, to non-operating income.
6. Sale-leaseback of Real Estate
On June 25, 1998, the Company sold its interest in four of its properties
located in Brea, California; Palo Alto, California; Chaska, Minnesota; and
Miami, Florida. At the same time, the Company entered into long-term leases for
each of these properties.
The initial term of each of the leases is twenty years, with options to renew
for up to an additional thirty years. As provided by the leases, the Company
pays the rents in Japanese yen. Annual rentals are approximately $19.2 million
at 2000 year-end rates. At the closing of the sale-leaseback transaction, the
Company became guarantor of a currency swap agreement between its landlord and
its banks to convert the yen payments to U.S. dollars. As long as this swap
agreement is in place, the Company's obligation is to pay the rents in yen. If
this agreement ceases to exist, the Company's obligation reverts to U.S. dollar
payments. The Company expects to pay the rents as they come due out of cash
generated by its Japanese operation. Obligations under the operating lease
agreements are included in Note 13 "Commitments and Contingencies".
The aggregate proceeds from the sale of the four properties totaled $242.8
million (received in cash at closing) before closing costs and transaction
expenses. In accordance with the accounting rules for transactions in which a
property is sold and immediately leased back from the buyer (sale-leaseback),
the Company has postponed recognizing the gain from this transaction in its
earnings and included it in "Other liabilities". The gain is being amortized
over the initial lease term of twenty years. The remaining unrecognized gain was
$123.1 and $130.1 million at December 31, 2000 and 1999, respectively.
7. Debt Financing
Notes payable consists primarily of short-term bank borrowings by the Company's
subsidiaries outside the United States under local lines of credit. At December
31, 2000 approximately $73.9 million of unused uncommitted short-term lines of
credit were available to the Company's subsidiaries outside the United States at
various interest rates. Within the United States, $1.0 million in unused
uncommitted short-term lines of credit at market rates were available.
Long-term debt consisted of the following at December 31:
<TABLE>
<CAPTION>
Average Rate of
Interest 2000 1999
--------------- ------- -------
<S> <C> <C> <C>
Revolving credit facility 7.02% $ 295.0 $ 397.0
Senior Notes, unsecured, due 2003 7.10% 160.0 160.0
Senior Notes, unsecured, due 2008 7.45% 240.0 240.0
Debentures 7.05% 100.0 100.0
Other long-term debt 3.47% 77.0 94.7
------- -------
872.0 991.7
Less current maturities 9.2 11.0
------- -------
Long-term debt, less current maturities $ 862.8 $ 980.7
======= =======
</TABLE>
The aggregate maturities of long-term debt for the five years subsequent to
December 31, 2000 are $9.2 million in 2001, $343.5 million in 2002, $174.2
million in 2003, $4.5 million in 2004, $0.1 million in 2005 and $340.5 million
thereafter.
-FN9-
<PAGE> 29
Revolving Credit Facility
In October 1997, the Company entered into a credit agreement (the "Credit
Agreement") with a group of financial institutions. The Company can borrow up to
$550.0 million through an unsecured revolving credit facility (the "Credit
Facility"). Borrowings under the Credit Facility generally bear interest at
current market rates plus a margin based upon the Company's senior unsecured
debt rating or debt to earnings ratio, whichever is more favorable.
Additionally, the Company pays a quarterly facility fee on the average Credit
Facility commitment (0.125% per annum at December 31, 2000). The Credit
Agreement requires mandatory prepayment of the Credit Facility borrowings (and,
to the extent provided, reductions in commitments) thereunder from excess cash
flow (as defined in the Credit Agreement), and from proceeds of certain equity
or debt offerings, asset sales and extraordinary receipts. The Credit Facility,
which matures in October 2002, is not subject to any scheduled principal
amortization. Approximately $6.8 million of fees paid to enter the Credit
Agreement are being amortized to interest expense over the term of the Credit
Agreement. As of December 31, 2000, the Company's remaining borrowing
availability under the Credit Facility is $255.0 million. Amounts may be drawn
under the Credit Facility to meet future working capital and other business
needs of the Company.
Senior Notes
In March 1998, the Company issued $160.0 million of 7.10% and $240.0 million of
7.45% unsecured Senior Notes due March 4, 2003 and 2008 (the "Senior Notes"),
respectively. Interest is payable semi-annually in March and September. Discount
and issuance costs approximated $6.7 million and are being amortized to interest
expense over the term of the Senior Notes. The Senior Notes may be redeemed in
whole or in part, at the Company's option at any time at a redemption price
equal to the greater of:
- the principal amount of the Senior Notes; or
- the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the redemption date on a
semi-annual basis at a comparable treasury issue rate plus a margin
of 0.25% for Senior Notes due 2003 and 0.375% for Senior Notes due
2008.
In connection with the issuance of the Senior Notes, certain of the Company's
subsidiaries guaranteed such notes. See Note 16 "Guarantor Subsidiaries".
Debentures
In June 1996, the Company issued $100.0 million of debentures bearing an
interest rate of 7.05% per annum due June 1, 2026. Interest is payable
semi-annually in June and December. Discount and issuance costs of approximately
$1.5 million are being amortized to interest expense over the term of the
debentures. The debentures may be repaid on June 1, 2006 at the option of the
holders of the debentures. In March 1998, the debenture agreement was amended to
increase the June 1, 2006 redemption price to 103.9% of the principal amount,
together with accrued interest to June 1, 2006. The debentures may be redeemed,
in whole or in part, at the Company's option at any time after June 1, 2006, at
a redemption price equal to the greater of:
- the principal amount of the debentures; or
- the sum of the present values of the remaining scheduled payments of
principal and interest thereon discounted to the redemption date on a
semi-annual basis at a comparable treasury issue rate plus a margin
of 0.1%.
-FN10-
<PAGE> 30
Other Long-term Debt
Other long-term debt at December 31, 2000 consists principally of $70.8 million
of notes used to fund the operations of the Company's international
subsidiaries. Some of the notes issued by the Company's international
subsidiaries are secured by their assets. Notes used to fund its international
subsidiaries amounted to $86.4 million at December 31, 1999. Capitalized lease
obligations of $6.2 million in 2000 and $8.3 million in 1999 are also included
in other long-term debt.
Covenants
Certain of the Company's borrowing agreements contain covenants that the Company
must comply with, for example: minimum net worth, maximum capital expenditures,
a debt to earnings ratio, a minimum interest coverage ratio and a maximum amount
of debt incurrence. At December 31, 2000, the Company was in compliance with all
such covenants.
8. Derivatives
The Company uses derivative financial instruments to hedge foreign currency and
interest rate exposures of underlying assets, liabilities and other obligations.
The Company does not speculate in derivative instruments in order to profit from
foreign currency exchange or interest rate fluctuations; nor does the Company
enter into trades for which there are no underlying exposures. Instruments used
as hedges must be effective at reducing the risk associated with the exposure
being hedged and are designated as a hedge at the inception of the contract.
Accordingly, changes in market values of hedge instruments are highly correlated
with changes in market values of underlying hedged items both at the inception
of the hedge and over the life of the hedge contract.
The counterparties to the Company's derivative instruments are major financial
institutions. The Company is exposed to credit risk in the event of
non-performance of these counterparties, an event which the Company believes is
remote. Nevertheless, the Company monitors its counterparty credit risk and
utilizes internal policies to mitigate this risk. The market value of all
derivative instruments amounted to an unrecognized gain of $2.3 million and an
unrecognized loss of $11.3 million at December 31, 2000, and 1999, respectively.
The following discusses in more detail the Company's foreign currency and
interest rate exposures and related derivative instruments.
Foreign Currency
The Company manufactures its products principally in the United States, but
generates approximately 45% of its revenues from sales made outside the United
States by its international subsidiaries. Sales generated by the international
subsidiaries generally are denominated in the subsidiary's local currency,
thereby exposing the Company to the risk of foreign currency fluctuations. In
order to mitigate the impact of changes in foreign currency exchange rates on
operations, the Company uses derivative financial instruments (or "foreign
currency contracts") to hedge its foreign currency exposures.
-FN11-
<PAGE> 31
Various foreign currency contracts are used to hedge firm commitments
denominated in foreign currencies and to mitigate the impact of changes in
foreign currency exchange rates on the Company's operations. Foreign currency
contracts used include forward contracts, purchased option contracts, and
complex option contracts, consisting of purchased and sold options. The hedge
instruments mature at various dates approximating the transaction dates. The
table below summarizes the notional amounts of contracts afforded hedge
accounting treatment at December 31:
<TABLE>
<CAPTION>
Notional Amounts*
---------------------
2000 1999
----- ------
<S> <C> <C>
Forward Contracts $56.5 $166.1
Purchased Option Contracts $ - $ 54.9
Complex Option Contracts $73.8 $ 49.6
</TABLE>
* Notional amounts represent the amounts of the items on which the foreign
currency contracts are based and not the actual amounts exchanged by the
parties.
When the Company uses foreign currency contracts and the dollar strengthens
against foreign currencies, the decline in the value of future foreign currency
cash flows is partially offset by the recognition of gains (net of any premiums
paid to acquire options) in the value of the foreign currency contracts
designated as hedges of the transactions. Conversely, when the dollar weakens,
the increase in the value of future foreign currency cash flows is reduced by:
- the recognition of any net premiums paid to acquire option contracts;
- the recognition of any loss in the value of the forward contracts
designated as hedges of the transactions; and
- the recognition of any loss on sold options.
Market value gains and losses and premiums on these foreign currency contracts
are recognized in "Other, net nonoperating expense" when the hedged transaction
is recognized. The net premiums paid for purchased and complex options are
reported in current assets.
The Company also uses foreign currency swap contracts to hedge loans between
subsidiaries. At December 31, 2000, the Company had foreign currency swap
contracts totaling $53.5 million expiring at various dates through January 2001.
At December 31, 1999, the Company had foreign currency swap contracts totaling
$125.8 million. As monetary assets and liabilities are marked to market and
recorded in earnings, foreign currency swap contracts designated as hedges of
the monetary assets and liabilities are also marked to market with the resulting
gains and losses similarly recognized in earnings. Gains and losses on foreign
currency swap contracts are included in "Other, net nonoperating expense" and
offset losses and gains on the hedged monetary assets and liabilities. The
carrying value of foreign currency swap contracts is reported in current assets
and current liabilities.
The Company occasionally uses foreign currency contracts to hedge the market
risk of a subsidiary's net asset position. At December 31, 1999, the Company had
$22.5 million in foreign currency contracts related to net asset positions and
none at December 31, 2000. Market value gains and losses on foreign currency
contracts used to hedge the market risk of a subsidiary's net asset position are
recognized in "Cumulative foreign currency translation adjustments" and are only
recognized in "Other, net nonoperating expense" upon liquidation of the
subsidiary. At December 31, 2000 and 1999, the cumulative market value gains for
net asset positions included in "Cumulative foreign currency translation
adjustment" amounted to $0.9 million and $3.9 million at December 31, 2000 and
1999, respectively.
Interest Rate
The Company uses interest rate derivative contracts on certain borrowing
transactions to hedge fluctuating interest rates. Interest rate derivative
contracts are intended to be an integral part of borrowing transactions and,
therefore, are not recognized at fair value. Interest differentials paid or
received under these contracts are recognized as adjustments to the effective
yield of the underlying financial instruments hedged. Interest rate derivative
contracts would only be recognized at fair value if the hedged relationship were
terminated. Gains or losses accumulated prior to termination of the hedged
relationship are amortized as a yield adjustment over the shorter of the
remaining life of the contract or the remaining period to maturity of the
underlying instrument hedged. If the contract remained outstanding after
termination of the hedged
-FN12-
<PAGE> 32
relationship, subsequent changes in market value of the contract would be
recognized in interest expense.
In March 1998, the Company entered into reverse interest rate swap contracts
totaling $300.0 million associated with the issuance of the $400.0 million
Senior Notes. Pursuant to the reverse interest rate swap agreements, as amended,
the Company receives an average fixed interest rate of 6.2% and pays a floating
interest rate (6.7% at December 31, 2000).
At December 31, 1999, the Company had $350.0 million in interest rate swap
contracts associated with its Senior Notes. Pursuant to the interest rate swap
agreements, the Company received an average floating rate (6.2% at December 31,
1999) and paid an average fixed rate of 6.2%. In October 2000, the Company
terminated these interest rate swap contracts, resulting in a gain of $1.4
million, which is being amortized to interest expense over the original term of
the swap agreements.
As discussed in Note 1, the Company is required to adopt the provisions of SFAS
133 on January 1, 2001. The disclosures herein regarding the Company's foreign
currency and interest rate exposures and related derivative instruments comply
with pre-SFAS 133 disclosure requirements. During the quarter ended March 31,
2001, the Company's disclosures will be modified to conform with SFAS 133
requirements.
9. Income Taxes
The Company uses the asset and liability method of accounting for income taxes.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled.
The components of earnings before income taxes were:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ -----
<S> <C> <C> <C>
U.S. $121.6 $ 62.9 $10.2
Non-U.S. 60.3 91.8 36.4
------ ------ -----
$181.9 $154.7 $46.6
====== ====== =====
</TABLE>
The provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
2000 1999 1998
----- ----- -----
<S> <C> <C> <C>
Current
U.S. federal $21.1 $ -- $ 4.0
Non-U.S. 14.5 10.1 9.1
U.S. state 2.7 1.7 0.3
Puerto Rico - 1.8 (1.4)
----- ----- -----
Total current 38.3 13.6 12.0
----- ----- -----
Deferred
U.S. federal 19.0 25.8 8.2
Non-U.S. (0.9) 9.3 (7.1)
----- ----- -----
Total deferred, net 18.1 35.1 1.1
----- ----- -----
Total $56.4 $48.7 $13.1
===== ===== =====
</TABLE>
-FN13-
<PAGE> 33
The reconciliation of the U.S. federal statutory tax rate to the consolidated
effective tax rate is as follows:
<TABLE>
<CAPTION>
2000 1999 1998
----- ----- ------
<S> <C> <C> <C>
Statutory tax rate 35.0% 35.0% 35.0%
State taxes, net of U.S. tax benefit 1.1 0.7 0.4
Ireland income (3.2) (2.5) (10.3)
Puerto Rico income - (1.0) (10.8)
Goodwill 1.9 2.3 14.1
Non-U.S. taxes (0.9) 0.9 (0.2)
Foreign income taxed in the U.S.,
net of credits 3.0 3.5 9.0
Other (5.9) (7.4) (9.1)
---- ---- ----
Effective tax rate 31.0% 31.5% 28.1%
==== ==== ====
</TABLE>
Certain income of subsidiaries operating in Puerto Rico and Ireland is taxed at
substantially lower income tax rates than the U.S. federal statutory tax rate.
The lower tax rate reduced expected taxes by approximately $5.8 million in 2000,
$5.5 million in 1999 and $6.9 million in 1998. Although the lower Puerto Rico
income tax rate was not scheduled to expire until July 2003, the closure of the
Puerto Rico manufacturing operations in October 1999 (as part of the Company's
restructuring plan) shortened the period of benefit.
The components of the provision for deferred income taxes are:
<TABLE>
<CAPTION>
2000 1999 1998
------ ------ ------
<S> <C> <C> <C>
Accelerated depreciation $(14.5) $ (0.4) $ -
Accrued expenses 23.9 (10.0) 16.6
Compensation (2.5) (1.4) 22.1
Deferred service contracts 0.8 4.1 (1.4)
Intangibles (6.2) - (5.7)
International (0.8) 9.2 (7.1)
Inventories 4.8 3.0 (2.0)
Leases (10.9) 4.4 (1.3)
Net operating loss carryforwards 6.2 31.6 (16.6)
Postemployment/retirement benefits (7.5) (11.8) (0.7)
Purchase and assumed liabilities 4.2 20.1 -
Restructuring costs 8.4 6.2 2.6
Tax credits (primarily research and
development) 9.4 (6.8) 9.0
Other 2.8 (13.1) (14.4)
------ ------ ------
Total $ 18.1 $ 35.1 $ 1.1
====== ====== ======
</TABLE>
-FN14-
<PAGE> 34
The tax effect of temporary differences which give rise to significant portions
of deferred tax assets and liabilities consists of the following at December 31:
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
Deferred tax assets
Accrued expenses $ 36.4 $ 60.3
Compensation 5.2 2.7
International 22.8 27.9
Inventories 4.7 9.5
Net operating loss carryforwards - 6.2
Postemployment/retirement benefits 51.9 44.4
Purchase and assumed liabilities 12.2 45.2
Restructuring costs 1.2 9.6
Tax credits 26.8 36.2
Other 41.4 17.9
------- -------
202.6 259.9
Less: Valuation allowance (59.2) (59.2)
------- -------
Total deferred tax assets 143.4 200.7
------- -------
Deferred tax liabilities
Accelerated depreciation (4.3) (18.8)
Deferred service contracts (6.7) (5.9)
Intangibles (123.4) (129.6)
International (7.3) (13.2)
Leases (2.1) (13.0)
Other (42.6) (37.4)
------- -------
Total deferred tax liabilities (186.4) (217.9)
------- -------
Net deferred tax liability $ (43.0) $ (17.2)
======= =======
</TABLE>
The intangible asset component in deferred income tax liabilities of $123.4
million and $129.6 million at December 31, 2000 and 1999, respectively, will
continue to be reduced as the intangible assets are amortized, since such
amortization is not deductible for income tax purposes.
At December 31, 2000 and 1999, the Company has a valuation allowance of $59.2
million associated with certain deferred tax assets due to uncertainties
regarding their realizability. The Company believes that the remaining deferred
income tax assets will be realized based upon its historical pre-tax earnings,
adjusted for significant items such as non-recurring charges. Certain tax
planning or other strategies will be implemented, if necessary, to supplement
income from operations to fully realize these deferred tax assets.
Non-U.S. withholding taxes and U.S. taxes have not been provided on
approximately $236.6 million of unremitted earnings of certain non-U.S.
subsidiaries because such earnings are or will be reinvested in operations or
will be offset by credits for foreign income taxes paid.
10. Stockholders' Equity
On October 5, 2000, the Board of Directors declared a two-for-one stock split in
the form of a 100% stock dividend. The split entitled each stockholder of record
on November 15, 2000 to receive an additional share of common stock for every
share held on that date. All share and per share amounts have been retroactively
restated to reflect this two-for-one stock split.
On April 6, 2000, the Company's stockholders approved an amendment to the
Certificate of Incorporation to increase the authorized shares of common stock
from 150,000,000 to 300,000,000.
11. Employee Benefits
Incentive Compensation Plan
In 1998, the Company adopted the 1998 Incentive Compensation Plan ("1998 Plan"),
which replaced a 1990 Plan. An initial 4.0 million shares were reserved under
the 1998 Plan. Granted options typically vest over three or four year periods
and expire ten years from the date of grant. Each year, commencing January 1,
1999, the number of shares available under the 1998 Plan will increase by 1.5%
of the number for voting purposes of common stock issued and outstanding as of
the prior December 31. As of January 1, 2001, 3.8 million shares remain
available for grant under this plan.
-FN15-
<PAGE> 35
The following is a summary of the option activity, including weighted average
option information (in thousands, except per option information):
<TABLE>
<CAPTION>
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Price Per Price Per Price Per
Options Option Options Option Options Option
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of year 7,514 $18.33 6,484 $16.20 5,790 $14.30
Granted 1,603 $26.29 1,514 $26.38 1,406 $21.28
Exercised (1,423) $14.79 (410) $12.96 (644) $12.10
Canceled (53) $25.41 (74) $24.16 (68) $19.47
- -----------------------------------------------------------------------------------------------------------
Outstanding at end
of year 7,641 $20.61 7,514 $18.33 6,484 $16.20
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Weighted Weighted
Options Average Weighted Average Options Average
Range of Exercise Outstanding at Exercise Remaining Exercisable at Exercise
Price December 31, Price Per Contractual Life December 31, Price Per
2000 Option (Years) 2000 (a) Option
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 0.00 to $11.48 849 $10.25 1.1 849 $10.25
$11.49 to $14.34 741 $13.22 2.5 741 $13.22
$14.35 to $17.21 472 $14.63 3.3 472 $14.63
$17.22 to $20.08 723 $19.78 4.6 723 $19.78
$20.09 to $22.95 1,912 $20.74 5.2 1,583 $20.69
$22.96 to $25.82 1,427 $25.30 8.4 51 $25.10
$25.83 to $28.69 1,302 $26.90 7.3 479 $26.99
$28.70 to $40.16 215 $32.57 9.1 48 $31.92
- ----------------------------------------------------------------------------------------------------------
7,641 4,946
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Options exercisable at December 31, 1999 and 1998 (in thousands) were 5,256
and 4,626, respectively.
The Company continues to follow the guidance of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25").
Additionally, the Company adopted Financial Accounting Standards Board
Interpretation No. 44 "Accounting for Certain Transactions Involving Stock
Compensation" ("FIN 44") on July 1, 2000. The adoption of FIN 44 did not have a
material effect on the Company's financial position or results of operations.
-FN16-
<PAGE> 36
Pursuant to APB 25, compensation related to stock options is the difference
between the grant price and the fair market value of the underlying common
shares at the grant date. Generally, the Company issues options to employees
with a grant price equal to the market value of its common stock on the grant
date. Accordingly, the Company has recognized no compensation expense on its
stock option plans. The Company also does not recognize compensation expense on
stock issued to employees under its stock purchase plan (see page 59 for
discussion), where the discount from the market value is not material. The
following represents pro forma information as if the Company recorded
compensation cost using the fair value of the issued compensation instrument
under Statement of Financial Accounting Standards No.
123, "Accounting for Stock Based Compensation":
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Net earnings as reported $ 125.5 $ 106.0 $ 33.5
Assumed stock compensation cost, net of tax (8.0) (7.7) (6.2)
------- ------- -------
Pro forma net earnings $ 117.5 $ 98.3 $ 27.3
======= ======= =======
Diluted earnings per share as reported $ 2.03 $ 1.79 $ 0.57
Pro forma diluted earnings per share $ 1.90 $ 1.66 $ 0.47
</TABLE>
The Company uses the Black-Scholes valuation model for estimating the fair value
of the options. The following represents the estimated fair value of options
granted and the assumptions used for calculation:
<TABLE>
<CAPTION>
2000 1999 1998
------- ------- -------
<S> <C> <C> <C>
Weighted average estimated fair value per
option granted $ 11.26 $ 11.96 $ 8.33
Average exercise price per option granted $ 26.29 $ 26.38 $ 21.28
Stock volatility 30.9% 26.9% 33.0%
Risk-free interest rate 5.2% 6.7% 4.7%
Option term - years 9.6 9.6 7.8
Stock dividend yield 1.3% 1.4% 1.4%
</TABLE>
Stock Purchase Plan
The Company has a stock purchase plan that operates in accordance with section
423 of the Internal Revenue Code whereby all United States employees and
employees of certain subsidiaries outside the Unites States can purchase the
Company's common stock at favorable prices. Under the plan, eligible employees
are permitted to apply salary withholdings to purchase shares of common stock at
a price equal to 90% of the lower of the market value of the stock at the
beginning or end of each six-month option period ending June 30 and December 31.
Employees purchased 0.4 million shares during 2000 and 3.3 million shares remain
available for use in the plan at December 31, 2000.
Stock Appreciation Rights
The Company periodically awards stock appreciation rights to certain employees
of its international subsidiaries. These rights vest over three or four years.
Compensation expense for these rights is based on changes between the grant
price and the fair market value of the rights.
Postemployment Benefits
Pursuant to Statement of Financial Accounting Standards No. 112 "Employers
Accounting for Postemployment Benefits," the Company recognizes an obligation
for certain benefits awarded to individuals after employment but before
retirement. During 2000, 1999 and 1998, the Company recorded charges of $0.6
million, $2.0 million and $1.7 million, respectively, associated with its
postemployment obligations.
12. Retirement Benefits
-FN17-
<PAGE> 37
Defined Benefit Pension Plans
The Company provides pension benefits covering the majority of its employees.
Pension benefits for Beckman Coulter's domestic employees are based on age,
years of service and compensation rates. The Company's funding policy is to
provide currently for accumulated benefits, subject to federal regulations.
Assets of the plans consist principally of government fixed income securities
and corporate stocks and bonds.
Certain of the Company's international subsidiaries have separate pension plan
arrangements, which include both funded and unfunded plans. Unfunded foreign
pension obligations are recorded as a liability on the Company's consolidated
balance sheets.
Consolidated pension expense was $11.8 million in 2000, $22.0 million in 1999,
and $16.3 million in 1998. Pension expense for international plans was $4.6
million in 2000, $4.7 million in 1999, and $6.6 million in 1998.
Postretirement Plan
The Company's Postretirement Plan provides certain healthcare and life insurance
benefits for retired United States employees and their dependents. Eligibility
under the Postretirement Plan and participant cost sharing is dependent upon the
participant's age at retirement, years of service and retirement date.
The following represents required disclosures regarding benefit obligations and
plan assets of the Pension and Postretirement Plans determined by independent
actuarial valuations:
<TABLE>
<CAPTION>
Postretirement
Pension Plans Plan
--------------------- ----------------------
2000 1999 2000 1999
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year $422.9 $480.7 $ 91.0 $ 91.2
Service cost 13.1 17.3 2.5 3.5
Interest cost 32.8 30.5 6.4 6.4
Actuarial (gain) loss 21.7 (82.8) (3.6) (6.2)
Benefits paid (25.1) (22.8) (5.8) (5.2)
Amendments 10.6 -- -- --
Plan participant contribution -- -- 1.6 1.3
----------------------- ------------------------
Benefits obligation at end of year $476.0 $422.9 $ 92.1 $ 91.0
----------------------- ------------------------
Change in plan assets:
Fair value of plan assets at beginning
of year $495.5 $462.6 $ -- $ --
Employer contribution 1.5 1.4 4.2 3.9
Plan participant contribution -- -- 1.6 1.3
Actual return on plan assets (3.0) 54.3 -- --
Benefits paid (25.1) (22.8) (5.8) (5.2)
----------------------- ------------------------
Fair value of plan assets at end of year $468.9 $495.5 $ -- $ --
----------------------- ------------------------
Funded status $ (7.1) $ 72.6 $ (92.1) $ (91.0)
Unrecognized net actuarial gain (16.9) (82.0) (13.8) (10.7)
Unrecognized net obligation at
transition -- 0.4 -- --
Unrecognized prior service cost 14.5 5.2 (0.9) (1.0)
----------------------- ------------------------
Accrued benefit cost $ (9.5) $ (3.8) $(106.8) $(102.7)
----------------------- ------------------------
Amounts recognized in the balance sheets
consist of:
Prepaid benefit cost $ 7.0 $ 11.3 $ -- $ --
Accrued benefit liability (16.5) (15.1) (106.8) (102.7)
----------------------- ------------------------
Net amount recognized $ (9.5) $ (3.8) $(106.8) $(102.7)
----------------------- ------------------------
</TABLE>
The following table lists the components of the net periodic benefit cost of the
plans and the weighted-average assumptions as of December 31 for the periods
indicated:
-FN18-
<PAGE> 38
<TABLE>
<CAPTION>
Pension Plans Postretirement Plans
----------------------- -----------------------
2000 1999 1998 2000 1999 1998
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Service cost $13.1 $17.3 $12.1 $ 2.5 $ 3.5 $ 2.5
Interest cost 32.8 30.5 28.3 6.4 6.4 5.3
Expected return on plan assets (40.8) (37.2) (34.3) - - -
Amortization of transition obligation 0.4 0.5 0.5 - - -
Amortization of prior service costs 1.2 1.0 1.0 (0.1) (0.1) (0.1)
Amortization of actuarial gain (loss) 0.5 5.2 2.1 (0.6) - (0.6)
----- ----- ----- ----- ----- -----
Net periodic benefit cost $ 7.2 $17.3 $ 9.7 $ 8.2 $ 9.8 $ 7.1
===== ===== ===== ===== ===== =====
Discount rate 7.5% 7.8% 6.3% 7.5% 7.8% 6.3%
Expected return on plan assets 9.8% 9.8% 9.8% - - -
Rate of compensation increase 4.3% 4.3% 4.3% - - -
</TABLE>
The projected benefit obligation and the accumulated benefit obligation for the
pension plans with accumulated benefit obligations in excess of plan assets were
$23.6 million and $18.7 million, respectively, as of December 31, 2000 and $20.9
million and $17.7 million, respectively, as of December 31, 1999. These pension
plans have no plan assets.
The assumed healthcare trend rate used in measuring the postretirement cost for
2000 is 10.5%, gradually declining to 5.0% by the year 2006 and remaining at
that level thereafter. Assumed healthcare cost trend rates have a significant
effect on the amounts reported for postretirement benefits. A 1.0% increase in
assumed healthcare cost trend rates would increase the totals of the service and
interest cost components for 2000 and the postretirement benefit obligation as
of December 31, 2000 by $1.4 million and $11.7 million, respectively. A 1.0%
decrease in assumed healthcare cost trend rates would decrease the total of the
service and interest cost components for 2000 and the postretirement benefit
obligation as of December 31, 2000 by $1.1 million and $11.7 million,
respectively.
Defined Contribution Benefit Plan
The Company has a defined contribution plan available to its domestic employees.
Under the plan, eligible employees may contribute a portion of their
compensation. Employer contributions are primarily based on a percentage of
employee contributions and vest immediately. However, certain former Coulter
employees are eligible for additional employer contributions based on the age
and salary levels, which become fully vested after five years of service. The
Company contributed $13.6 million in 2000, $13.2 million in 1999, and $14.9
million in 1998 to the plan.
13. Commitments and Contingencies
Environmental Matters
The Company is subject to federal, state, local and foreign environmental laws
and regulations. Although the Company continues to make expenditures for
environmental protection, the Company does not anticipate any significant
expenditure in order to comply with such laws and regulations, which would have
a material impact on its operations, financial position or liquidity. The
Company believes that its operations comply in all material respects with
applicable federal, state, local and foreign environmental laws and regulations.
To address contingent environmental costs, the Company establishes reserves when
the costs are probable and can be reasonably estimated. The Company believes,
based on current information and regulatory requirements (and taking third party
indemnities into consideration), the reserves established for environmental
expenditures are adequate. Based on current knowledge, to the extent that
additional costs may be incurred that exceed the reserves, the amounts are not
expected to have a material adverse effect on the Company's operations,
financial position or liquidity, although no assurance can be given in this
regard.
In 1987, soil and groundwater contamination was discovered on property in
Irvine, California (the "property") formerly owned by the Company. In 1988, The
Prudential Insurance Company of America ("Prudential"), which purchased the
property from the Company, filed suit against the Company in the U.S. District
Court in California for recovery of costs and other alleged damages with respect
to the soil and groundwater contamination. In 1990, the Company entered into an
agreement with
-FN19-
<PAGE> 39
Prudential for settlement of the lawsuit and for sharing current and future
costs of investigation, remediation and other claims.
Soil and groundwater remediation of the property has been in process since 1988.
During 1994, the County agency overseeing the site soil remediation formally
acknowledged completion of remediation of a major portion of the soil, although
there remain other areas of soil contamination that may require further
remediation. During 1998, two additional areas of soil requiring remediation
were identified. Work on one area was completed in 1998. Work on the second area
was completed in 2000. In July 1997, the California Regional Water Quality
Control Board, the agency overseeing the site groundwater remediation, issued a
closure letter for the upper water-bearing unit. The Company and Prudential
continued to operate a groundwater treatment system throughout most of 1999. In
October 1999, the Regional Water Quality Control Board agreed that the system
could be shut down. Continued monitoring will be necessary for a period of time
to verify that groundwater conditions remain acceptable. The Company believes
that additional remediation costs, if any, beyond those already provided for the
contamination discovered by the current investigation will not have a material
adverse effect on its results of operations, financial position or liquidity.
However, the Company gives no assurance that further investigation will not
reveal additional soil or groundwater contamination or result in additional
costs.
Litigation
The Company is involved in a number of lawsuits, which the Company considers
ordinary and routine in view of its size and the nature of its business. The
Company does not believe that any ultimate liability resulting from any such
lawsuits will have a material adverse effect on its results of operations,
financial position or liquidity. However, the Company does not give any
assurance to the ultimate outcome with respect to such lawsuits. The resolution
of such lawsuits could be material to the Company's operating results for any
particular period, depending upon the level of income for such period.
In December 1999, Streck Laboratories, Inc. ("Streck") served Beckman Coulter
and Coulter with a complaint filed in the United States District Court for the
District of Nebraska. The complaint alleges that control products sold by
Beckman Coulter and/or Coulter infringe each of five patents owned by Streck,
and seeks injunctive relief, damages, attorneys' fees and costs. The Company, on
behalf of itself and on behalf of Coulter has answered the complaint and has
filed a counterclaim against Streck for patent infringement. The Company
continues to believe that there is no reasonable basis to conclude that this
litigation could lead to an outcome that would have a material adverse effect on
its operations or financial position.
Lease Commitments
The Company leases certain facilities, equipment and automobiles under operating
lease arrangements. Certain of the leases provide for payment of taxes,
insurance and other charges by the lessee. Rent expense was $81.3 million in
2000, $78.1 million in 1999, and $59.8 million in 1998.
As of December 31, 2000, minimum annual rentals payable under non-cancelable
operating leases aggregate $495.8 million, which is payable $61.8 million in
2001, $52.0 million in 2002, $47.3 million in 2003, $41.0 million in 2004, $41.0
million in 2005, and $252.7 million thereafter.
-FN20-
<PAGE> 40
14. Earnings Per Share
Basic EPS is calculated by dividing net earnings by the weighted-average common
shares outstanding during the period. Diluted EPS reflects the potential
dilution to basic EPS that could occur upon conversion or exercise of
securities, options, or other such items, to common shares using the treasury
stock method based upon the weighted-average fair value of the Company's common
shares during the period. The following is a reconciliation of the numerators
and denominators of the basic and diluted EPS computations.
Year Ended December 31, 2000
<TABLE>
<CAPTION>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS
Net earnings $ 125.5 58.8 $ 2.13
Effect of dilutive stock options -- 3.0 (0.10)
------- ---- ------
Diluted EPS
Net earnings $ 125.5 61.8 $ 2.03
======= ==== ======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1999
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS
Net earnings $ 106.0 57.3 $ 1.85
Effect of dilutive stock options -- 2.0 (0.06)
------- ---- ------
Diluted EPS
Net earnings $ 106.0 59.3 $ 1.79
======= ==== ======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1998
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS
Net earnings $ 33.5 56.1 $ 0.60
Effect of dilutive stock options -- 2.6 (0.03)
------- ---- ------
Diluted EPS
Net earnings $ 33.5 58.7 $ 0.57
======= ==== ======
</TABLE>
In 2000, 1999 and 1998, 0.1 million, 1.4 million and 0.1 million shares,
respectively, relating to the possible exercise of outstanding stock options
were not included in the computation of diluted earnings per share as their
effect would have been anti-dilutive.
15. Business Segment Information
The Company is engaged primarily in the design, manufacture and sale of
laboratory instrument systems and related products. The Company's organization
has two reportable segments: (1) clinical diagnostics and (2) life science
research. The clinical diagnostics segment encompasses diagnostic applications,
principally in hospital laboratories. The life science research segment includes
life sciences and drug discovery applications in universities, medical schools,
and pharmaceutical and biotechnology companies. All corporate activities
including financing transactions are captured in a central services "Center",
which is reflected in the tables below. The Company evaluates performance based
on profit or loss from operations. Although primarily operating in the same
industry, reportable segments are managed separately, since each business
requires different marketing strategies and has different customers.
In the first quarter of 2000, the Company realigned its geographic reporting
structure. The Company's Latin America operations, which were formerly reported
with the "Asia and Rest of World" geographic area, are now reported in the
"Americas" geographic area along with its North America operations. Prior year
amounts have been reclassified to conform to the current year presentation.
-FN21-
<PAGE> 41
<TABLE>
<CAPTION>
For the year ended December 31,
-------------------------------------------
2000 1999 1998
--------- --------- ---------
<S> <C> <C> <C>
Net sales
Clinical diagnostics $ 1,472.2 $ 1,418.2 $ 1,342.5
Life science research 414.7 390.5 375.7
Center -- -- --
--------- --------- ---------
Consolidated $ 1,886.9 $ 1,808.7 $ 1,718.2
========= ========= =========
Operating income (loss)
Clinical diagnostics $ 253.4 $ 255.1 $ 172.6
Life science research 75.1 60.4 44.0
Center(a) (95.9) (99.0) (101.8)
--------- --------- ---------
Consolidated(a) $ 232.6 $ 216.5 $ 114.8
========= ========= =========
Interest income
Clinical diagnostics $ (1.4) $ (3.6) $ (9.8)
Life science research -- -- --
Center (4.9) (4.2) (3.6)
--------- --------- ---------
Consolidated $ (6.3) $ (7.8) $ (13.4)
========= ========= =========
Interest expense
Clinical diagnostics $ -- $ -- $ --
Life science research -- -- --
Center 71.9 73.8 87.8
--------- --------- ---------
Consolidated $ 71.9 $ 73.8 $ 87.8
========= ========= =========
Sales to external customers
Americas $ 1,167.7 $ 1,057.7 $ 996.7
Europe 481.7 516.6 499.8
Asia 237.5 234.4 221.7
--------- --------- ---------
Consolidated $ 1,886.9 $ 1,808.7 $ 1,718.2
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 2000 December 31, 1999
----------------- -----------------
<S> <C> <C>
Long-lived assets
Americas $ 997.7 $ 1,010.7
Europe 72.8 97.8
Asia 19.9 35.9
--------- ---------
Consolidated $ 1,090.4 $ 1,144.4
========= =========
Total assets
Clinical diagnostics $ 1,356.8 $ 1,460.8
Life science research 201.7 178.4
Center 459.7 471.6
--------- ---------
Consolidated $ 2,018.2 $ 2,110.8
========= =========
</TABLE>
(a) Includes restructure (credits) charges of $(2.4) million in 2000, $(0.2)
million in 1999 and $19.1 million in 1998.
-FN22-
<PAGE> 42
16. Guarantor Subsidiaries
As discussed in Note 7, certain of the Company's subsidiaries ("Guarantor
Subsidiaries") guaranteed the Company's outstanding Senior Notes. Pursuant to
Securities and Exchange Commission ("SEC") regulations, certain condensed
financial information about the Parent, Guarantor, and Non-Guarantor
Subsidiaries is required to be disclosed. The following provides this required
financial information. Note that the Company used the equity method of
accounting for its investments in subsidiaries and the Guarantor Subsidiaries'
investments in Non-Guarantor Subsidiaries.
<TABLE>
<CAPTION>
Non-
Guarantor Guarantor
Subsi- Subsi- Elimina- Consoli-
Parent diaries diaries tions dated
--------- --------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Condensed Consolidated
Balance Sheet
December 31, 2000
Assets:
Cash and equivalents $ (28.3) $ (4.3) $ 62.2 $ -- $ 29.6
Trade and
other receivables 258.6 3.7 274.4 -- 536.7
Inventories 221.7 38.2 103.3 (31.1) 332.1
Other current assets 814.1 1,028.4 51.7 (1,864.8) 29.4
--------- --------- ------- ---------- --------
Total current assets 1,266.1 1,066.0 491.6 (1,895.9) 927.8
Property, plant and
equipment, net 172.1 86.3 109.9 (70.1) 298.2
Goodwill, net 10.7 321.0 -- -- 331.7
Other intangibles, net 26.9 350.2 5.6 -- 382.7
Other assets 1,308.2 22.3 300.8 (1,553.5) 77.8
--------- --------- ------- ---------- --------
Total assets $ 2,784.0 $ 1,845.8 $ 907.9 $ (3,519.5) $2,018.2
========= ========= ======= ========== ========
Liabilities:
Notes payable and
current maturities of
long-term debt $ 32.8 $ 0.1 $ 19.2 $ -- $ 52.1
Accounts payable and
accrued expenses 280.7 24.5 71.3 -- 376.5
Other current liabilities 852.5 539.4 104.8 (1,424.2) 72.5
--------- --------- ------- ---------- --------
Total current liabilities
1,166.0 564.0 195.3 (1,424.2) 501.1
Long-term debt, less
current maturities 806.9 -- 55.9 -- 862.8
Other liabilities 473.5 581.0 41.7 (785.8) 310.4
--------- --------- ------- ---------- --------
Total liabilities 2,446.4 1,145.0 292.9 (2,210.0) 1,674.3
Total stockholders' equity 337.6 700.8 615.0 (1,309.5) 343.9
--------- --------- ------- ---------- --------
Total liabilities and
stockholders' equity $ 2,784.0 $ 1,845.8 $ 907.9 $ (3,519.5) $2,018.2
========= ========= ======= ========== ========
</TABLE>
-FN23-
<PAGE> 43
<TABLE>
<CAPTION>
Non-
Guarantor Guarantor
Subsi- Subsi- Elimina- Consoli-
Parent diaries diaries tions dated
---------- ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Condensed Consolidated
Balance Sheet
December 31, 1999
Assets:
Cash and equivalents $ (5.3) $ 3.7 $ 36.0 $ -- $ 34.4
Trade and
other receivables 255.8 6.0 304.6 -- 566.4
Inventories 201.0 32.1 122.7 (42.7) 313.1
Other current assets 455.4 725.7 95.4 (1,224.0) 52.5
---------- ---------- -------- ----------- ---------
Total current assets 906.9 767.5 558.7 (1,266.7) 966.4
Property, plant and
equipment, net 152.4 84.6 142.3 (73.4) 305.9
Goodwill, net 10.3 325.6 8.8 -- 344.7
Other intangibles, net 30.2 366.2 3.5 -- 399.9
Other assets 1,457.9 35.8 279.2 (1,679.0) 93.9
---------- ---------- -------- ----------- ---------
Total assets $ 2,557.7 $ 1,579.7 $ 992.5 $ (3,019.1) $2,110.8
========= ========= ======= ========== ========
Liabilities:
Notes payable and
current maturities of
long-term debt $ 4.4 $ 1.1 $ 44.5 $ -- $ 50.0
Accounts payable and
accrued expenses 368.3 32.7 95.6 (22.5) 474.1
Other current liabilities 530.9 213.1 131.0 (823.2) 51.8
---------- ---------- -------- ----------- ---------
Total current
liabilities 903.6 246.9 271.1 (845.7) 575.9
Long-term debt, less
current maturities 913.0 0.1 67.6 -- 980.7
Other liabilities 513.2 647.9 213.0 (1,047.8) 326.3
---------- ---------- -------- ----------- ---------
Total liabilities 2,329.8 894.9 551.7 (1,893.5) 1,882.9
Total stockholders' equity 227.9 684.8 440.8 (1,125.6) 227.9
---------- ---------- -------- ----------- ---------
Total liabilities and
stockholders' equity $ 2,557.7 $ 1,579.7 $ 992.5 $ (3,019.1) $2,110.8
========= ========= ======= ========== ========
</TABLE>
-FN24-
<PAGE> 44
<TABLE>
<CAPTION>
Non-
Guarantor Guarantor
Subsi- Subsi- Elimina- Consoli-
Parent diaries diaries tions dated
-------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Condensed Consolidated
Statement of Operations
Year ended December 31, 2000
Sales $1,414.8 $ 360.0 $ 998.9 $ (886.8) $1,886.9
Operating costs and
expenses:
Cost of sales 953.7 210.3 727.3 (895.7) 995.6
Selling, general and
administrative 258.5 45.7 171.7 0.2 476.1
Research and development 113.3 67.7 4.0 -- 185.0
Restructure credit (2.4) -- -- -- (2.4)
-------- ------- ------- -------- --------
Operating income 91.7 36.3 95.9 8.7 232.6
Nonoperating (income)
expense (42.4) 13.1 (7.0) 87.0 50.7
-------- ------- ------- -------- --------
Earnings before income taxes 134.1 23.2 102.9 (78.3) 181.9
Income taxes 14.6 7.2 31.9 2.7 56.4
-------- ------- ------- -------- --------
Net earnings $ 119.5 $ 16.0 $ 71.0 $ (81.0) $ 125.5
======== ======= ======= ======== ========
</TABLE>
<TABLE>
<CAPTION>
Non-
Guarantor Guarantor
Subsi- Subsi- Elimina- Consoli-
Parent diaries diaries tions dated
-------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Condensed Consolidated
Statement of Operations
Year Ended December 31, 1999
Sales $1,179.9 $ 443.4 $ 991.0 $ (805.6) $1,808.7
Operating costs and
expenses:
Cost of sales 823.9 228.9 692.3 (803.0) 942.1
Selling, general and
administrative 231.6 54.2 196.5 (5.4) 476.9
Research and development 96.3 73.1 4.0 -- 173.4
Restructure credit (0.2) -- -- -- (0.2)
-------- ------- ------- -------- --------
Operating income 28.3 87.2 98.2 2.8 216.5
Nonoperating (income)
expense (99.1) 3.5 (3.0) 160.4 61.8
-------- ------- ------- -------- --------
Earnings before income taxes 127.4 83.7 101.2 (157.6) 154.7
Income taxes 24.3 5.4 19.0 -- 48.7
-------- ------- ------- -------- --------
Net earnings $ 103.1 $ 78.3 $ 82.2 $ (157.6) $ 106.0
======== ======= ======= ======== ========
</TABLE>
-FN25-
<PAGE> 45
<TABLE>
<CAPTION>
Non-
Guarantor Guarantor
Subsi- Subsi- Elimina- Consoli-
Parent diaries diaries tions dated
-------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Condensed Consolidated
Statement of Operations
Year ended December 31, 1998
Sales $ 845.8 $ 508.7 $ 857.0 $ (493.3) $1,718.2
Operating costs and
expenses:
Cost of sales 531.9 289.1 590.9 (491.3) 920.6
Selling, general and
administrative 181.4 114.5 196.4 -- 492.3
Research and development 96.2 71.2 4.0 -- 171.4
Restructure charge 19.1 -- -- -- 19.1
-------- ------- ------- -------- --------
Operating income 17.2 33.9 65.7 (2.0) 114.8
Nonoperating (income)
expense (36.1) (19.1) 13.7 109.7 68.2
-------- ------- ------- -------- --------
Earnings before income taxes 53.3 53.0 52.0 (111.7) 46.6
Income taxes 4.6 6.6 1.9 -- 13.1
-------- ------- ------- -------- --------
Net earnings $ 48.7 $ 46.4 $ 50.1 $ (111.7) $ 33.5
======== ======= ======= ======== ========
</TABLE>
-FN26-
<PAGE> 46
<TABLE>
<CAPTION>
Non-
Guarantor Guarantor
Subsi- Subsi- Consoli-
Parent diaries diaries dated
------- --------- --------- --------
<S> <C> <C> <C> <C>
Condensed Consolidated
Statement of Cash Flows
Year ended December 31, 2000
Net cash provided (used) by operating
activities $ 126.7 $ (7.6) $ 90.0 $ 209.1
------- ------- ------- -------
Cash flows from investing activities:
Additions to property, plant and
equipment (78.1) (8.7) (54.5) (141.3)
Proceeds from disposal of property,
plant and equipment -- 2.3 17.1 19.4
Proceeds from sale of certain
clinical chemistry assets -- -- 15.4 15.4
Purchase of investments (6.2) -- (0.7) (6.9)
------- ------- ------- -------
Net cash used by investing
activities (84.3) (6.4) (22.7) (113.4)
------- ------- ------- -------
Cash flows from financing activities:
Dividends to stockholders (19.3) -- -- (19.3)
Proceeds from issuance of stock 35.9 -- -- 35.9
Net notes payable borrowings
(reductions) 29.0 (0.8) (23.5) 4.7
Net intercompany borrowings
(reductions) (6.2) 6.9 (0.7) --
Long-term debt reductions (104.8) (0.1) (13.5) (118.4)
------- ------- ------- -------
Net cash (used) provided by
financing activities (65.4) 6.0 (37.7) (97.1)
Effect of exchange rates on cash and
equivalents -- -- (3.4) (3.4)
------- ------- ------- -------
(Decrease) increase in cash and
equivalents (23.0) (8.0) 26.2 (4.8)
Cash and equivalents - beginning of year (5.3) 3.7 36.0 34.4
------- ------- ------- -------
Cash and equivalents - end of year $ (28.3) $ (4.3) $ 62.2 $ 29.6
======= ======= ======= =======
</TABLE>
-FN27-
<PAGE> 47
<TABLE>
<CAPTION>
Non-
Guarantor Guarantor
Subsi- Subsi- Consoli-
Parent diaries diaries dated
------- --------- --------- --------
<S> <C> <C> <C> <C>
Condensed Consolidated
Statement of Cash Flows
Year ended December 31, 1999
Net cash provided (used) by operating
activities $ 227.8 $(104.7) $ 89.5 $ 212.6
------- ------- ------- -------
Cash flows from investing activities:
Additions to property, plant and
equipment (58.4) (5.0) (71.5) (134.9)
Proceeds from disposal of property,
plant and equipment -- -- 16.3 16.3
------- ------- ------- -------
Net cash used by investing
activities (58.4) (5.0) (55.2) (118.6)
------- ------- ------- -------
Cash flows from financing activities:
Dividends to stockholders (18.4) -- -- (18.4)
Proceeds from issuance of stock 24.6 -- -- 24.6
Net notes payable reductions (13.4) -- (58.7) (72.1)
Net intercompany (reductions)
borrowings (133.1) 115.3 17.8 --
Long-term debt (reductions) borrowings (38.6) (1.8) 22.1 (18.3)
------- ------- ------- -------
Net cash (used)provided by
financing activities (178.9) 113.5 (18.8) (84.2)
Effect of exchange rates on cash and
equivalents -- -- (0.1) (0.1)
------- ------- ------- -------
(Decrease) increase in cash and
equivalents (9.5) 3.8 15.4 9.7
Cash and equivalents - beginning of year 4.2 (0.1) 20.6 24.7
------- ------- ------- -------
Cash and equivalents - end of year $ (5.3) $ 3.7 $ 36.0 $ 34.4
======= ======= ======= =======
</TABLE>
-FN28-
<PAGE> 48
<TABLE>
<CAPTION>
Non-
Guarantor Guarantor
Subsi- Subsi- Elimina- Consoli-
Parent diaries diaries tions dated
------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Condensed Consolidated
Statement of Cash Flows
Year ended December 31, 1998
Net cash provided (used) by operating
activities $ (23.2) $ (85.3) $ 106.7 $ -- $ (1.8)
------- -------- -------- ------ --------
Cash flows from investing activities:
Additions to property, plant and
equipment (84.5) (11.0) (69.7) -- (165.2)
Proceeds from disposal of property,
plant and equipment 2.0 -- 43.4 -- 45.4
Sale of short-term investments -- -- 0.4 -- 0.4
Proceeds from sale-leaseback
transactions 186.1 -- -- 56.7 242.8
------- -------- -------- ------ --------
Net cash (used) provided by
investing activities 103.6 (11.0) (25.9) 56.7 123.4
------- -------- -------- ------ --------
Cash flows from financing activities:
Dividends to stockholders (17.1) -- -- -- (17.1)
Proceeds from issuance of stock 28.6 -- -- -- 28.6
Net notes payable borrowings 11.4 -- 45.2 -- 56.6
Net intercompany borrowings
(reductions) 59.2 93.8 (96.3) (56.7) --
Long-term debt borrowings (reductions) (172.2) (4.9) (21.0) -- (198.1)
------- -------- -------- ------ --------
Net cash provided (used) by
financing activities (90.1) 88.9 (72.1) (56.7) (130.0)
------- -------- -------- ------ --------
(Decrease) increase in cash and
equivalents (9.7) (7.4) 8.7 -- (8.4)
Cash and equivalents - beginning of year 13.9 7.3 11.9 -- 33.1
------- -------- -------- ------ --------
Cash and equivalents - end of year $ 4.2 $ (0.1) $ 20.6 $ -- $ 24.7
======= ======== ======== ====== ========
</TABLE>
-FN29-
<PAGE> 49
Quarterly INFORMATION (Unaudited)
Tabular dollar amounts in millions, except amounts per share
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter Full Year
--------------- --------------- ---------------- ---------------- -------------------
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
------ ------ ------ ------ ------ ------ ------ ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $434.4 $405.1 $469.4 $446.2 $457.8 $440.1 $525.3 $517.3 $1,886.9 $1,808.7
Cost of sales 231.5 211.2 245.8 234.1 243.2 231.2 275.1 265.6 995.6 942.1
Gross profit 202.9 193.9 223.6 212.1 214.6 208.9 250.2 251.7 891.3 866.6
Selling,
general and
administrative 115.2 111.8 117.4 115.5 116.4 117.4 127.1 132.2 476.1 476.9
Research and
development 40.9 38.8 45.8 42.5 43.3 42.0 55.0 50.1 185.0 173.4
Restructure
credit -- -- -- -- (2.4) (0.2) (2.4) (0.2)
Operating
income 46.8 43.3 60.4 54.1 54.9 49.5 70.5 69.6 232.6 216.5
Earnings before
income taxes 30.4 25.1 47.0 38.1 42.2 35.2 62.3 56.3 181.9 154.7
Net earnings $21.0 $17.1 $32.4 $25.9 $29.1 $24.4 $43.0 $38.6 $125.5 $106.0
Basic earnings
per share $0.36 $0.30 $0.55 $0.45 $0.49 $0.42 $0.72 $0.67 $2.13 $1.85
Diluted
earnings per
share $0.35 $0.29 $0.53 $0.44 $0.46 $0.41 $0.69 $0.65 $2.03 $1.79
Dividends per
share $0.080 $0.080 $0.080 $0.080 $0.080 $0.080 $0.085 $0.080 $0.325 $0.320
Stock price --
High $32.10 $27.56 $32.44 $26.63 $40.84 $24.63 $41.94 $25.69 $41.94 $27.56
Stock price --
Low $23.66 $20.00 $28.81 $21.72 $28.94 $20.56 $33.91 $20.47 $23.66 $20.00
</TABLE>
-FN30-
<PAGE> 50
Bar Chart: Stock Price By Quarter 2000
<TABLE>
<CAPTION>
Quarter 1st 2nd 3rd 4th
------ ------ ------ ------
<S> <C> <C> <C> <C>
High $32.10 $32.44 $40.84 $41.94
Low $23.66 $28.81 $28.94 $33.91
</TABLE>
Bar Chart: Stock Price By Quarter 1999
<TABLE>
<CAPTION>
Quarter 1st 2nd 3rd 4th
------ ------ ------ ------
<S> <C> <C> <C> <C>
High $27.56 $26.63 $24.63 $25.69
Low $20.00 $21.72 $20.56 $20.47
</TABLE>
Bar Chart: Sales By Quarter 2000 (millions)
<TABLE>
<CAPTION>
Quarter 1st 2nd 3rd 4th
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales $434.4 $469.4 $457.8 $525.3
</TABLE>
Bar Chart: Sales By Quarter 1999 (millions)
<TABLE>
<CAPTION>
Quarter 1st 2nd 3rd 4th
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales $405.1 $446.2 $440.1 $517.3
</TABLE>
-FN31-
<PAGE> 51
REPORT BY MANAGEMENT
The consolidated financial statements and related information for the years
ended December 31, 2000, 1999, and 1998 were prepared by management in
accordance with accounting principles generally accepted in the United States of
America. Financial data included in other sections of this Annual Report are
consistent with that in the consolidated financial statements.
Management maintains a system of internal accounting controls, which is designed
to provide reasonable assurance, at appropriate costs, that its financial and
related records fairly reflect transactions, that proper accountability for
assets exists, and that established policies and procedures are followed. A
professional staff of internal auditors reviews compliance with corporate
policies. Among these policies is an ethics policy, which requires employees to
maintain high standards in conducting the Company's affairs, and requires
management level employees to submit certificates of compliance annually.
Management continually monitors the system of internal accounting controls for
compliance and believes the system is appropriate to accomplish its objectives.
Our independent auditors examine our consolidated financial statements in
accordance with auditing standards generally accepted in the United States of
America. Their report expresses an independent opinion on the fairness of our
reported operating results and financial position. In performing this audit, the
auditors consider the internal control structure and perform such other tests
and auditing procedures as they deem necessary.
The Board of Directors, through its Audit Committee, reviews both internal and
external audit results and internal controls. The Audit Committee consists of
four outside Directors and meets periodically with management, internal auditors
and the independent auditors to review the scope and results of their
examinations. Both the independent auditors and the internal auditors have free
access to this Committee, with and without management being present, to discuss
the results of their audits.
JOHN P. WAREHAM AMIN I. KHALIFA
John P. Wareham Amin I. Khalifa
Chairman, President and Vice President, Finance
Chief Executive Officer and Chief Financial Officer
-FN32-
<PAGE> 52
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of Beckman Coulter, Inc.:
We have audited the accompanying consolidated balance sheets of Beckman Coulter,
Inc. and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the years in the three-year period ended December 31, 2000. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Beckman Coulter,
Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2000 in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
Orange County, California
January 25, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>6
<FILENAME>a69813ex21.txt
<DESCRIPTION>EXHIBIT 21
<TEXT>
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES
The following table lists current subsidiaries of the Company whose results are
included in the Company's combined financial statements. The list of
subsidiaries does not include certain subsidiaries which, when considered in the
aggregate, do not constitute a significant subsidiary of the Company.
<TABLE>
<CAPTION>
JURISDICTION
NAME OF COMPANY OF INCORPORATION
- --------------- ----------------
<S> <C>
Beckman Coulter Canada Inc. Canada
Beckman Coulter Eurocenter S.A. Switzerland
Beckman Coulter Espana S.A. Spain
Beckman Coulter France S.A. France
Beckman Coulter G.m.b.H. Germany
Beckman Coulter Holdings G.m.b.H. Germany
Beckman Coulter Hong Kong Ltd. Hong Kong
Beckman Coulter International S.A. Switzerland
Beckman Coulter Ireland Inc. Panama
Beckman Coulter K.K. Japan
Beckman Coulter S.p.A. Italy
Beckman Coulter United Kingdom Ltd. England
Coulter Corporation Delaware
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>7
<FILENAME>a69813ex23.txt
<DESCRIPTION>EXHIBIT 23
<TEXT>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT AND REPORT ON
SUPPLEMENTARY FINANCIAL SCHEDULE
The Stockholders and Board of Directors
Beckman Coulter, Inc.:
The audits referred to in our report dated January 25, 2001 included the related
financial statement schedule as of December 31, 2000 and for each of the years
in the three-year period ended December 31, 2000. This financial statement
schedule is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement schedule based on our
audits. In our opinion, such financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
We consent to incorporation by reference in the registration statements (No.
333-02317) on Form S-3 and (Nos. 333-24851, 333-37429, 33-31573, 33-41519,
33-51506, 33-66990, 33-66988, 333-69291, 333-59099, 333-69249 and 333-69251) on
Form S-8 of Beckman Coulter, Inc. of our report dated January 25, 2001, relating
to the consolidated balance sheets of Beckman Coulter, Inc. and subsidiaries as
of December 31, 2000 and 1999, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 2000, which report appears in the December
31, 2000 annual report on Form 10-K of Beckman Coulter, Inc.
KPMG LLP
Orange County, California
March 12, 2001
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>8
<FILENAME>a69813ex99-1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<PAGE> 1
EXHIBIT 99.1
II. VALUATION AND QUALIFYING ACCOUNTS
Allowance for Doubtful Accounts (in millions)
<TABLE>
<CAPTION>
Balance at Additions Balance at
Beginning of Charged to End of
Period Cost and Expenses Deductions Other Period
=======================================================================================
<S> <C> <C> <C> <C> <C>
December 31, 2000 $31.5 $ 1.0(a) $4.4(b) $1.0(c) $25.1
2.0(d)
=======================================================================================
December 31, 1999 20.7 14.4(a) 2.9(b) 0.7(c) 31.5
=======================================================================================
December 31, 1998 17.4 8.3(a) 5.0(b) -- 20.7
=======================================================================================
</TABLE>
(a) Provision charged to earnings.
(b) Accounts written-off.
(c) Adjustments from translating at current exchange rates.
(d) Adjustments to provision credited to income.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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