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Beckman Coulter Announces Second Quarter 2010 Results
22 Jul, 2010 @ 04:05 pm EDT
ORANGE COUNTY, Calif., July 22 /PRNewswire-FirstCall/ -- Beckman Coulter, Inc. (NYSE: BEC), a leading developer, manufacturer and marketer of products that simplify, automate and innovate complex biomedical testing, announced today second quarter and first half ended June 30, 2010 results. Reported second quarter revenue, including $116.6 million from the recent Olympus Diagnostics acquisition (Olympus), was $902.0 million, up 19.2% over prior year quarter, or 17.9% in constant currency. On a constant currency basis, recurring revenue increased 17.5%. Recurring revenue, excluding the impact of Olympus, grew 3.2% in constant currency. Reported net earnings were $44.6 million, or $0.63 per fully diluted share. Adjusted for special items related primarily to restructuring charges and acquisition-related costs, and excluding Olympus intangibles amortization, net earnings were $60.1 million, or $0.84 per fully diluted share, a decrease of 15.2% from prior year quarter (See "Non-GAAP Financial Measures" and "Reconciling Items to Non-GAAP Financial Measures".)
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Six Months Ended
Three Months Ended
June 30 June 30
------- -------
2010 2009 % Chg 2010 2009 % Chg
---- ---- ----- ---- ---- -----
Reported Results (in millions,
except per share)
------------------------------
Total
Revenue $902.0 $756.7 19.2% $1,783.1 $1,448.2 23.1%
Recurring
Revenue $747.2 $629.0 18.8% $1,478.5 $1,202.7 22.9%
Operating
Income $79.5 $75.9 4.7% $159.4 $115.5 38.0%
Diluted
Earnings
per Share $0.63 $0.94 (33.0%) $1.17 $1.26 (7.1%)
Adjusted Results (revenue growth in
constant currency)
-----------------------------------
Total Revenue
Growth 17.9% 20.6%
Recurring Revenue
Growth 3.2% 5.7%
(Excluding Olympus)
Operating
Income(1) $104.0 $97.5 6.7% $207.6 $163.5 27.0%
Diluted
Earnings
per
Share(1) $0.84 $0.99 (15.2%) $1.71 $1.70 0.6%
See "Non-GAAP Financial Measures," where the impact of certain items
on reported results are
discussed.
(1) Excluding Olympus intangibles amortization and other items noted
in "Non-GAAP Financial
Measures"
Management Commentary & Outlook
"High points in the second quarter included another strong contribution from the Olympus business, continued strength in Asia Pacific, 6% growth in International recurring revenue, solid instrument placements, and 28% growth in trailing twelve month adjusted EBITDA," said Scott Garrett, Chairman, President and Chief Executive Officer. "At the same time, second quarter revenues, excluding Olympus, reflected continued softness in developed markets, only 1% growth in recurring revenue in the U.S., and difficult prior year comparisons. Earnings per share were lower than the year-ago quarter, which benefitted from a low tax rate due to discrete items and fewer shares outstanding.
"Although customer satisfaction and service always has been a hallmark of Beckman Coulter, recent compliance and quality challenges in the U.S. have prompted significant additional focus and investment in this area to ensure that we live up to the standards our customers expect. We have conducted a detailed assessment of our quality system and completed hundreds of customer site visits and 18 regional meetings in the U.S. with another 200 customers. We have identified root causes and developed remediation plans. Implementation is underway with some projects continuing through 2011. With customer satisfaction and retention our foremost focus, we have deferred some other initiatives pending resolution of the aforementioned issues. In addition, rather than scale operating expenses to short-term revenue trends, we are instead increasing investment in our customer-facing personnel and operations to enhance customer satisfaction and drive future revenue growth. These investments are expected to continue through 2011," he said.
"First half 2010 results largely met our expectations, but quality challenges in the U.S. market, weakness in demand from life science markets and reduced expectations for our cellular business, lead us to lower revenue and earnings expectations for the full year. Although we continue to gain new customers in the U.S., partially offsetting accounts lost, recurring revenue in the U.S. is expected to be relatively flat until our quality challenges are behind us. We expect constant currency recurring revenue growth, excluding Olympus, to be about 5%, comprised of about 1% growth for the U.S. and around 9% growth outside the U.S. We are now projecting total 2010 revenue of between $3.65 billion to $3.70 billion. For 2010, our operating margin should be approximately 12.7% due to lower recurring revenue growth, increased staffing in our customer facing organization, and a stronger U.S. dollar. Earnings per fully diluted share are expected to be between $3.90 to $4.00 per share. Our 2010 outlook excludes Olympus intangibles amortization of approximately $23 million, purchase accounting adjustment of $6 million, restructuring charges associated with the Olympus acquisition and other site consolidation costs of approximately $31 million and the $8 million charge for the tax change on the Medicare subsidy. Our April 28, 2010 outlook for Olympus, non-operating expense, tax rate, share count, CAPEX and depreciation and amortization remain unchanged. (See complete 2010 outlook in the slides for our Second Quarter 2010 Earnings Conference Call and Webcast accessible on the company's website).
"We are working hard to address recent issues and are confident that, as we move through the second half of 2010 and restore affected customers to full value, we will emerge as an even better and stronger company. Despite the macroeconomic environment, our current challenges, and unfavorable currency trends, Beckman Coulter has a strong installed base of customers, an enviable new product pipeline, and a 75-year history of meeting the needs of customers," Garrett said.
Q2 2010 Summary
Recurring revenue increased 17.5% in constant currency, including 14.3% due to the Olympus acquisition. Excluding Olympus, recurring revenue increased 3.2% in constant currency when compared to strong growth in prior year quarter. Automated Immunoassay recurring revenue grew 7.6% in constant currency in the quarter as strong demand in Europe and Asia Pacific was offset by weakness in the U.S. and Emerging Markets.
Cash instrument sales increased 19.9% in constant currency, due to the Olympus acquisition and a 27% increase in Flow Cytometry.
In the quarter, Clinical Diagnostics revenues increased 21.5% in constant currency due to Olympus and robust growth in Asia Pacific. Sales to life science customers decreased 3.2% in constant currency reflecting softer demand in developed markets, particularly Europe.
On a geographic basis, second quarter revenue in the U.S. increased 10%, due to Olympus. In constant currency, international revenue increased 25.7% as a result of Olympus and continued strong performance in Asia Pacific.
Operating income in the quarter was $79.5 million. On an adjusted basis, operating income totaled $104 million, an increase of 6.7% over prior year quarter. Adjusted operating margin was 11.5%, a 140 basis point reduction relative to prior year quarter, due to lower than expected recurring revenue growth and changes in product mix partially offset by a lower operating expense rate.
Non-operating expense was $19.6 million (including $8.3 million of interest expense associated with the Olympus acquisition) compared to $2.5 million in non-operating income in the prior year quarter, which included a foreign currency gain of $20.5 million related to hedging the Olympus purchase. The tax rate in the quarter was 25.5% compared to 22.4% in the prior year quarter. The adjusted tax rate was 28.8% compared to 22.7% in the prior year quarter. The prior year quarter benefited from discrete items.
Net earnings were $44.6 million, or $0.63 per fully diluted share. Excluding Olympus intangibles amortization, restructuring and acquisition-related costs and other items described in the accompanying tables, second quarter adjusted net earnings were $60.1 million or $0.84 per fully diluted share, down from prior year quarter due to the higher tax rate and a higher share count.
Recent Developments
-- Declared an $0.18 per share quarterly cash dividend payable on August
20, 2010 to all stockholders of record on August 6, 2010, representing
the 87th consecutive quarterly cash dividend payout.
-- Re-purchased 1.5 million shares of Beckman Coulter stock at an average
price of $61.96 per share completing the company's 2010 share repurchase
program.
-- Product Compliance and Quality
-- We continue to provide troponin test kits to U.S. laboratories which
had an Access/Access 2 instrument in place as of March 23, 2010
running troponin; those laboratories may acquire additional Access 2
instruments for back-up or workload management.
-- We completed Stage One--study design--of the troponin clinical
trial, which was reviewed with FDA in late May. We are now in Stage
Two and identifying potential sites that meet the requirements for
patient recruitment. We anticipate completing the study in time to
file 510(k) submissions in the first half of 2011.
-- We received and responded to a Warning Letter from FDA related to
our troponin recall.
First Half Summary
For the first six months of 2010, revenue increased 23.1%, or 20.6% in constant currency, versus first half 2009 due primarily to the Olympus acquisition. Year-to-date recurring revenue was up 22.9%, or 20.5% in constant currency, including 14.8% from Olympus. Excluding Olympus, recurring revenue increased 5.7% in constant currency when compared to the prior year period.
Operating income for the first six months was $159.4 million. On an adjusted basis, operating income grew to $207.6 million, a 27% increase over prior year due largely to operating leverage from the Olympus acquisition. Adjusted operating margin increased 30 basis points to 11.6%.
Non-operating expense was $42.1 million (including $16.7 million of interest expense associated with the Olympus acquisition) compared to $18.9 million in the prior year period (which included a net foreign currency gain of $8.7 million related to hedging the Olympus purchase and $3.2 million of incremental interest expense for financing the Olympus acquisition). The tax rate in the first six months was 29% compared to 15.7% in the prior year period. The adjusted tax rate was 26.3% (compared to 21.4% in the prior year period), in line with the company's full year expectations. The tax rate for the first half of 2009 benefited from discrete items related primarily to tax settlements. Net earnings were $83.3 million, or $1.17 per fully diluted share. Excluding Olympus intangibles amortization, restructuring and acquisition-related costs and other items described in the accompanying tables, second half adjusted net earnings were $121.9 million or $1.71 per fully diluted share, up $0.01 from the prior year period due to the higher non-operating expense, tax rate and increased share count.
Investor Conference Call
There will be a conference call and webcast presentation of accompanying slides accessible on the company's website today, Thursday, July 22, 2010 at 6:00 p.m. ET to discuss the second quarter and first half 2010 results. The call may be accessed by dialing (877) 516-3365 or (706) 679-3246 and asking for the Beckman Coulter conference call or reservation number 66344949. The presentation webcast will be available live and is accessible to all investors through Beckman Coulter's website at www.beckmancoulter.com. When accessing the webcast through the Beckman Coulter site, select "go to IR" under Investor Relations and find the call listed under "What's Ahead." The webcast will be archived on both websites for future on-demand replay through Friday, August 13, 2010.
About Beckman Coulter
Beckman Coulter, Inc., based in Orange County, California, develops, manufactures and markets products that simplify, automate and innovate complex biomedical tests. More than 200,000 Beckman Coulter systems operate in laboratories around the world, supplying critical information for improving patient health and reducing the cost of care. Recurring revenue, consisting of consumable supplies (including reagent test kits), service and operating-type lease payments, represent about 80% of the company's 2009 revenue of $3.3 billion. For more information, visit www.beckmancoulter.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements contain words such as "may," "will," "might," "expect," "believe," "anticipate," "could," "would," "should," "estimate," "continue," "pursue," or the negative thereof or comparable terminology, and may include information regarding the company's expectations, goals or intentions regarding the future, including without limitation statements regarding expectations or estimates of full-year earnings outlook, recurring revenue growth, risk management, product mix, expense management, constant currency, earnings growth, operating margins, currency exchange rates, pension expense, adjusted non-operating expense, expense management, providing service, restructuring and acquisition-related costs, hedging activities, tax rate, adjusted earnings per diluted share, capital expenditures, product and geographic leadership, stability of our sector, growth opportunities, quality, and depreciation and amortization. The outlook provided in this press release reflects Beckman Coulter's current analysis of existing trends and information only as of the date of this press release, is based on the fiscal year ended 2009 and the quarter and six months ended June 30, 2010 adjusted results and does not include special items that have occurred or may occur in 2010.
This press release contains the company's preliminary unaudited financial results for the quarter and six months ended June 30, 2010, and are subject to completion of our financial statements for these periods. These results may change as a result of further review by the company's independent accountants and management. The completion of the review of our financial statements could result in additional changes to our financial results and could result in the identification of issues relating to the effectiveness of our internal control over financial reporting. Final second quarter 2010 results will be provided in the company's quarterly report to the SEC on Form 10-Q.
Forward-looking statements included in this press release involve certain risks and uncertainties and are based on management's current expectations, estimates, forecasts and projections about the company and are subject to risks and uncertainties, some of which may be beyond the company's control, that could cause actual results and events to differ materially from those stated in the forward-looking statements. These risks and uncertainties include, but are not limited to, legal and regulatory changes, oversight or other activities, product quality and regulatory compliance requirements, including new 510K clearances for the use of our Troponin I test on our immunoassay systems, and the cost and time factors involved, FDA actions including recalls, warning letters and fines, failures in our internal processes and systems, the effects of healthcare reform; our ability to compete effectively; changes in laws and regulations; market demand for the company's new and existing products; intellectual property infringement claims by others and our ability to protect the company's intellectual property; difficulty in obtaining materials and components for our products; consolidation of our customer base, formation of group purchasing organizations and changes in customer inventory levels and inventory management practices; reductions in government funding to our customers; foreign currency exchange fluctuations; global market, economic and political conditions and natural disasters; costs associated with our supply chain initiatives; tax risks and regulations; changes in the value of our investment in marketable securities; and our ability to successfully acquire and integrate acquired businesses and realize the anticipated benefits from such acquisitions. Additional factors that could cause actual results to differ are discussed in Part I, Item 1A (Risk Factors) of the company's Form 10-K filed with the SEC on February 22, 20010 as well as in the company's quarterly report on form 10-Q filed since then and reports on Form 8-K. Therefore, the reader is cautioned not to rely on these forward-looking statements. Forward-looking statements contained in this press release are made only as of the date hereof, and we undertake no obligation to update these disclosures except as required by law.
Non-GAAP Financial Measures
"GAAP" refers to financial information presented in accordance with generally accepted accounting principles in the United States.
To supplement the condensed consolidated financial statements and discussion presented on a GAAP basis, this press release includes non-GAAP financial measures with respect to the quarter and first half ended June 30, 2010 and 2009 and with respect to Outlook for 2010. Management uses non-GAAP financial measures because it believes the appropriate analysis of our profitability cannot be effectively considered while incorporating the effect of unusual items and charges that have not been experienced consistently in prior periods. Also, management believes these non-GAAP measures facilitate our comparison of our historical results to our competitors. The Company reported the following non-GAAP financial measures: "adjusted operating income," "adjusted operating margin," "adjusted net earnings," "adjusted diluted earnings per share," "adjusted tax rate," "adjusted earnings before interest, taxes and depreciation and amortization" ("EBITDA"), "return on invested capital" ("ROIC"), "free cash flow" and "constant currency growth." The Company also provided its outlook for 2010 for "adjusted operating margin," "adjusted tax rate" and "adjusted earnings per diluted share." These non-GAAP financial measures are not in accordance with or an alternative to GAAP.
Adjusted operating income excludes the impact of charges associated with restructuring or relocations in connection with our supply chain improvement initiatives, acquisition and integration related expenses, environmental remediation, charges associated with acquisitions and upfront license fees, and other operating expense items, including the incremental amortization of intangible assets related to the Olympus acquisition. Some of the items excluded may be beyond the control of management and are less predictable than our core performance. We incurred restructuring costs associated with the Olympus acquisition and other site consolidation costs, however, management believes those costs do not reflect the ongoing performance of the core business. Management uses adjusted operating income to prepare operating budgets and forecasts and to measure our performance against those budgets and forecasts. Additionally, the Company uses adjusted operating income to evaluate management performance for compensation purposes. A reconciliation of operating income, the GAAP measure most directly comparable to adjusted operating income, is provided on the attached schedule.
Adjusted operating margin is calculated using adjusted operating income, as described above, divided by revenue. Management uses adjusted operating margin in its analysis of operating budgets and forecasts and to measure our performance against those budgets and forecasts, since this measure is reflective of our operating costs on an ongoing basis and excludes transactions or events that may be beyond the control of management or which are unpredictable. Management uses adjusted operating margin when evaluating the performance trends of our Company compared to others. A reconciliation of operating margin, the GAAP measure most directly comparable to adjusted operating margin, is provided on the attached schedule.
Adjusted net earnings excludes the impact of income and expense items excluded from adjusted operating income and non-operating income and expense items which are considered unusual and the related incremental tax effect of these items. Additionally, adjusted net earnings excludes the impact of a non-recurring charge for deferred tax assets associated with the recently enacted US health care reform legislation related to the Medicare drug subsidy. Adjusted diluted earnings per share exclude the effect of the same items described above from diluted earnings per share. Reconciliations of net earnings, the GAAP measure most directly comparable to adjusted net earnings, and earnings per share, the GAAP measure most directly comparable to adjusted earnings per share, are provided on the attached schedule.
Adjusted tax rate excludes the incremental tax effect of income and expense items excluded from adjusted net earnings, as described above. A reconciliation of the tax rate, the GAAP measure most directly comparable to adjusted tax rate, is provided on the attached schedule.
Adjusted EBITDA is a non-GAAP measure that management believes provides useful supplemental information for management and investors. Adjusted EBITDA is a tool that provides a measure of the adjusted net earnings, as described above, of the business before considering the impact of interest, taxes, depreciation and amortization. We believe adjusted EBITDA provides management with a means to analyze and evaluate the profitability of our business and its ability to generate cash flow before the effect of interest, taxes, depreciation and amortization. A reconciliation of net earnings, the GAAP measure most directly comparable to adjusted EBITDA, is provided on the attached schedule.
ROIC is a non-GAAP measure that management believes is useful to investors as a measure of performance and effectiveness of the use of capital in our operations. We use ROIC as one measure to monitor and evaluate performance and as a factor in evaluating management performance for long-term incentive compensation purposes. ROIC is not a measure of financial performance under GAAP and may not be defined and calculated by other companies in the same manner. The measure is calculated based upon the trailing twelve months earnings before income taxes, interest expense and non-GAAP reconciling items, but after estimated taxes, divided by average invested capital, calculated as the average of invested capital for the current period and the twelve months prior period using a two point average. Invested capital is calculated as total assets less cash, investments and current liabilities. A reconciliation of net income, the GAAP measure most directly comparable to adjusted ROIC, is provided on the attached schedule.
Free cash flow is a non-GAAP measure that management believes provides useful supplemental information for management and investors, because it reports the cash provided by operating activities after cash invested in property, plant and equipment. We believe this measure provides management and investors with a measure to determine the health of the business and cash flow generated by the business in excess of the cash needed to be reinvested in the business. A reconciliation of cash provided by operating activities, the GAAP measure most directly comparable to free cash flow, is provided on the attached schedule.
Our discussion of international revenue includes comparisons on a constant currency basis, which we have previously defined in our annual report on Form 10-K. We believe use of this measure aids in the understanding of our operations without the impact of foreign currency. This presentation is consistent with our internal use of the measure, which we use to measure the changes in our operating results against prior periods and against our internally developed targets. We believe our investors also use this measure to analyze the underlying trends in our international operations.
Our Outlook for 2010 adjusted operating income, adjusted operating margin, adjusted tax rate, and adjusted earnings per diluted share exclude the impact of charges or write-offs associated with acquisitions, environmental remediation, restructuring, including relocations in connection with our supply chain improvement initiatives, acquisition and integration related costs, gains or losses upon sale of assets or businesses, the deferred tax charge as a result of healthcare reform and other items that we do not expect to be recurring, because we are unable to forecast such items with reasonable predictability and do not include those items in our operating budgets. Management believes those costs do not reflect the ongoing performance of the core business. The Company is not able to provide a reconciliation of projected non-GAAP financial measures to expected reported results due to our inability to forecast charges associated with future transactions and initiatives. However, management believes our Outlook for 2010, using the non-GAAP measures indicated, reflects management's expectation of the performance of the core operations of the Company and believes this information is useful to investors to view our operations through the eyes of management.
The presentation of historical non-GAAP financial measures is not meant to be considered in isolation from or as a substitute for results prepared in accordance with GAAP. We use these non-GAAP measures to supplement net earnings and other corresponding measures on a basis prepared in conformance with GAAP. These non-GAAP financial measures reflect additional ways of viewing aspects of our operations that when viewed with our GAAP results provide a more complete understanding of factors and trends affecting our business. However, investors should understand that the excluded items are actual income and expenses that may impact the cash available to us for other uses. We strongly encourage investors to consider both net earnings and cash flows determined under GAAP as compared to the non-GAAP measures presented and to perform their own analysis, as appropriate.
Reconciling Items to Non-GAAP Financial Measures
The non-GAAP measures described above exclude the following items:
1. Restructuring and acquisition related costs - For the quarter and six
months ended June 30, 2010 and 2009, we recorded restructuring and
acquisition related charges of $13.0 million and $21.6 million and $31.2
million and $48.0 million, respectively. The charges during 2010 were
primarily associated with integration costs related to our acquisition of
Olympus and completion of supply chain improvement initiatives, while
during 2009, the charges were primarily related to supply chain
improvement initiatives, the Orange County consolidation project, and
related charges for severance, relocation, asset impairment and other
duplicative exit costs, and $10.9 million and $20.7 million for the
quarter and six months ended June 30, 2009, respectively, of acquisition
related expenses, primarily pertaining to legal and consulting services.
2. Olympus intangible asset amortization - $5.6 million and $11.1 million
for the quarter and six months ended June 30, 2010, respectively.
3. Fair market value inventory adjustment - We recorded a charge of $5.9
million during the quarter ended June 30, 2010, related to the fair value
of acquired inventory in connection with the Olympus acquisition, as the
acquired inventory was sold.
4. Forward contract gain - acquisition - Consideration for the acquisition
of the lab-based diagnostics business of Olympus Corporation was paid in
Japanese Yen. To mitigate unfavorable fluctuation in the movement of the
Yen in relation to the U.S. dollar, we entered into forward contracts to
purchase Japanese Yen at the spot rate to effectively fix the U.S. dollar
cost of the closing payment to approximately $780 million. These business
acquisition related forward contracts cannot be designated as hedged
instruments under accounting rules. Gains or losses on derivative
contracts not designated as a hedged instrument are recognized in
earnings. As a result, we recognized a gain of approximately $20.5
million and $8.7 million for the quarter and six months ended June 30,
2009, respectively, which is reflected within non-operating income in our
consolidated statements of earnings.
5. Interest expense on debt offering - On May 26, 2009, we issued $250
million principal amount of the Company's 6% Senior Notes due 2015 and
$250 million principal amount of the Company's 7% Senior Notes due 2019
(the "Notes"). The proceeds from the Notes were used in the third quarter
to partially fund the acquisition of the lab-based diagnostics business
of Olympus Corporation. During the second quarter of 2009, we incurred
approximately $3.2 million in net interest expense associated with these
Notes.
6. Deferred tax asset charge - For the six months ended June 30, 2010, we
recorded an $8.0 million charge resulting from the recently enacted U.S.
health care reform legislation. This new legislation eliminated the
Federal income tax deduction for the portion of the prescription drug
expenses of retirees for which companies receive reimbursement under the
Medicare Part D drug subsidy program.
Contact: Cynthia Skoglund (714) 961-6320
Investor Relations
BECKMAN COULTER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except amounts per share and share data)
(unaudited)
Three Months
Ended Six Months Ended
June 30, June 30,
-------- --------
2010 2009 2010 2009
---- ---- ---- ----
Recurring revenue -
supplies, service
and lease
payments $747.2 $629.0 $1,478.5 $1,202.7
Cash instrument
sales 154.8 127.7 304.6 245.5
----- ----- ----- -----
Total revenue 902.0 756.7 1,783.1 1,448.2
----- ----- ------- -------
Cost of recurring
revenue 365.1 285.0 719.6 553.3
Cost of cash
instrument sales 139.8 114.8 261.4 218.9
----- ----- ----- -----
Total cost of sales 504.9 399.8 981.0 772.2
----- ----- ----- -----
Operating costs and
expenses
Selling, general
and administrative 226.8 191.2 449.7 377.1
Research and
development 63.9 60.7 134.0 120.6
Amortization of
intangible assets 13.9 7.5 27.8 14.8
Restructuring and
acquisition
related costs 13.0 21.6 31.2 48.0
---- ---- ---- ----
Total operating
costs and expenses 317.6 281.0 642.7 560.5
----- ----- ----- -----
Operating income 79.5 75.9 159.4 115.5
---- ---- ----- -----
Non-operating
expense (income)
Interest income (1.3) (1.3) (2.6) (2.6)
Interest expense 24.6 17.5 48.7 28.4
Other, net (3.7) (18.7) (4.0) (6.9)
---- ----- ---- ----
Total non-
operating expense
(income) 19.6 (2.5) 42.1 18.9
---- ---- ---- ----
Earnings before
income taxes 59.9 78.4 117.3 96.6
Income tax
provision 15.3 17.6 34.0 15.2
---- ---- ---- ----
Net earnings $44.6 $60.8 $83.3 $81.4
===== ===== ===== =====
Basic earnings per
share $0.63 $0.95 $1.18 $1.28
Diluted earnings
per share $0.63 $0.94 $1.17 $1.26
Weighted average
number of shares
outstanding
(in thousands)
Basic 70,599 63,841 70,461 63,693
Diluted 71,360 64,828 71,408 64,428
BECKMAN COULTER, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
June December
30, 31,
2010 2009
---- ----
Assets
Current assets
Cash and cash equivalents $268.5 $288.8
Trade and other receivables, net 789.1 827.9
Inventories 575.5 596.8
Deferred income taxes 59.4 79.0
Prepaids and other current assets 142.6 77.4
----- ----
Total current assets 1,835.1 1,869.9
Property, plant and equipment, net 619.3 621.9
Customer leased instruments, net 486.9 523.0
Long term investments available for sale,
at fair value 69.8 -
Goodwill 1,042.2 1,041.9
Other intangible assets, net 533.9 561.8
Other assets 61.4 58.6
---- ----
Total assets $4,648.6 $4,677.1
======== ========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $256.6 $235.7
Accrued expenses 492.0 540.1
Income taxes payable - 5.6
Short-term borrowings 3.8 1.8
Current maturities of long-term debt 8.7 24.1
--- ----
Total current liabilities 761.1 807.3
Long-term debt, less current maturities 1,336.0 1,305.9
Deferred income taxes 47.2 50.1
Other liabilities 525.8 552.6
----- -----
Total liabilities 2,670.1 2,715.9
------- -------
Commitments and contingencies
Stockholders' equity
Preferred stock - -
Common stock 7.4 7.4
Additional paid-in capital 890.4 886.8
Retained earnings 1,540.6 1,482.7
Accumulated other comprehensive loss (254.6) (176.8)
Treasury stock, at cost (205.3) (238.9)
Common stock held in grantor trust, at
cost (22.8) (21.3)
Grantor trust liability 22.8 21.3
---- ----
Total stockholders' equity 1,978.5 1,961.2
------- -------
Total liabilities and stockholders' equity $4,648.6 $4,677.1
======== ========
BECKMAN COULTER, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Six Months Ended
June 30,
----------------
2010 2009
---- ----
Cash flows from operating activities
Net earnings $83.3 $81.4
Adjustments to reconcile net earnings
to net cash
provided by operating activities
Depreciation and amortization 179.9 138.8
Provision for doubtful accounts
receivable 4.1 0.2
Share-based compensation expense 14.9 18.7
Gain on sale of business (1.0) -
Accreted interest on convertible debt 7.5 7.1
Amortization of pension and
postretirement costs 9.6 7.9
U.S. pension trust contributions (20.0) (24.0)
Deferred income taxes 15.0 (10.0)
Changes in assets and liabilities, net
of acquisitions
Trade and other receivables (8.4) 24.5
Prepaid and other current assets (27.2) (12.9)
Inventories (12.3) (50.4)
Accounts payable and accrued expenses 28.8 40.8
Income taxes payable (7.2) 14.4
Long-term lease receivables 3.1 7.6
Other (3.6) (18.6)
---- -----
Net cash provided by operating
activities 266.5 225.5
----- -----
Cash flows from investing activities
Additions to property, plant and
equipment (76.9) (66.0)
Additions to customer leased
instruments (85.8) (72.7)
Purchase of investments (130.5) -
Proceeds from sale of investments 33.8 -
Proceeds from sale of business 3.0 -
Payments for business acquisitions and
technology licenses, net of cash
acquired (27.6) (18.8)
----- -----
Net cash used in investing activities (284.0) (157.5)
------ ------
Cash flows from financing activities
Dividends to stockholders (25.4) (21.7)
Proceeds from issuance of stock 42.4 28.9
Repurchase of common stock as treasury
stock (14.8) -
Repurchase of common stock held in
grantor trust - (1.7)
Excess tax benefits from share-based
payment transactions 3.1 1.3
Net borrowings (payments) on lines of
credit 2.0 (18.9)
Proceeds from issuance of long-term
debt, net - 497.8
Debt borrowings 22.4 -
Debt repayments (16.2) -
Debt issuance costs - (9.0)
--- ----
Net cash provided by financing
activities 13.5 476.7
---- -----
Effect of exchange rates on cash and
cash equivalents (16.3) 0.8
----- ---
Change in cash and cash equivalents (20.3) 545.5
Cash and cash equivalents-beginning of
period 288.8 120.0
----- -----
Cash and cash equivalents-end of period $268.5 $665.5
====== ======
BECKMAN COULTER, INC.
SEGMENT REVENUES (1)
(in millions)
(unaudited)
Three Months Ended
June 30, Constant
--------
Reported Currency
Growth
2010 2009 Growth % %(2)
---- ---- -------- -------
Clinical Diagnostics
Chemistry and Clinical
automation $333.9 $218.7 52.6% 51.5%
Cellular Analysis 239.2 226.4 5.7% 3.9%
Immunoassay and
Molecular Diagnostics 222.4 202.7 9.7% 8.6%
----- -----
Total Clinical
Diagnostics 795.5 647.8 22.8% 21.5%
Life Sciences 106.5 108.8 -2.1% -3.2%
----- -----
Total revenues $902.0 $756.7 19.2% 17.9%
====== ======
Six Months Ended
June 30, Constant
--------
Reported Currency
Growth
2010 2009 Growth % %(2)
---- ---- -------- -------
Clinical Diagnostics
Chemistry and Clinical
automation $656.8 $425.7 54.3% 51.7%
Cellular Analysis 478.3 439.9 8.7% 6.1%
Immunoassay and
Molecular Diagnostics 436.2 379.6 14.9% 12.7%
----- -----
Total Clinical
Diagnostics 1,571.3 1,245.1 26.2% 23.7%
Life Sciences 211.8 203.0 4.3% 1.9%
----- -----
Total revenues $1,783.1 $1,448.2 23.1% 20.6%
======== ========
(1) Amounts may not foot due to rounding
(2) Constant currency growth as presented herein represents -Current
period constant currency revenue less
prior year reported revenue / Prior year reported revenue
Clinical Diagnostics
--------------------
Chemistry and Clinical Automation includes:
-- Protein and rapid test products
-- Clinical Automation
Cellular includes:
-- Hematology
-- Coagulation
-- Flow cytometry and related products
Immunoassay and Molecular Diagnostics includes:
-- All immunoassay products
-- Molecular diagnostics products
Life Sciences includes:
-----------------------
-- Life science tools: (All robotic automation, genetic analysis
products, centrifuge and analytical systems)
-- Industrial particle characterization
BECKMAN COULTER, INC.
REVENUE BY GEOGRAPHY (1)
(in millions)
(unaudited)
Three Months Ended
June 30, Constant
--------
Reported Currency
Growth
2010 2009 Growth % %(2)
---- ---- -------- -------
Revenue by geography:
United States $414.5 $376.7 10.0% 10.0%
Europe 199.2 166.1 19.9% 22.5%
Emerging Markets (3) 80.2 62.2 28.9% 23.7%
Asia Pacific 150.1 102.9 45.9% 40.5%
Other (4) 58.1 48.7 19.2% 7.9%
---- ----
Total revenues $902.0 $756.7 19.2% 17.9%
====== ======
Six Months Ended
June 30, Constant
--------
Reported Currency
Growth
2010 2009 Growth % %(2)
---- ---- -------- -------
Revenue by geography:
United States $816.5 $732.8 11.4% 11.4%
Europe 404.8 310.9 30.2% 28.4%
Emerging Markets (3) 151.7 113.1 34.1% 27.7%
Asia Pacific 299.5 199.6 50.0% 43.9%
Other (4) 110.6 91.7 20.6% 8.6%
----- ----
Total revenues $1,783.1 $1,448.2 23.1% 20.6%
======== ========
(1) Amounts may not foot due to rounding
(2) Constant currency growth as presented herein represents -
Current period constant currency
revenue less prior year reported revenue /Prior year reported
revenue
(3) Includes Eastern Europe, Russia, Middle East, Africa and India
(4) Includes Canada and Latin America
BECKMAN COULTER, INC.
SALES MIX (1)
(in millions)
(unaudited)
2010
----
Qtr 1 Qtr 2
----- -----
Recurring revenue $731.3 $747.2
Cash instrument sales 149.8 154.8
----- -----
Total revenues $881.1 $902.0
====== ======
2009
----
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year
----- ----- ----- ----- ----
Recurring revenue $573.7 $629.0 $676.1 $766.4 $2,645.2
Cash instrument sales 117.8 127.7 146.7 223.2 615.4
----- ----- ----- ----- -----
Total revenues $691.5 $756.7 $822.8 $989.6 $3,260.6
====== ====== ====== ====== ========
2008
----
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year
----- ----- ----- ----- ----
Recurring revenue $579.3 $618.7 $594.6 $610.0 $2,402.6
Cash instrument sales 151.2 179.6 164.2 201.3 696.3
----- ----- ----- ----- -----
Total revenues $730.5 $798.3 $758.8 $811.3 $3,098.9
====== ====== ====== ====== ========
(1) Amounts may not foot due to rounding
BECKMAN COULTER, INC.
RECONCILIATION OF GAAP OPERATING INCOME AND MARGIN TO
ADJUSTED OPERATING INCOME AND MARGIN (1) (2)
(in millions)
(unaudited)
Three Months
Ended
June 30,
--------
2010 2009
---- ----
GAAP operating income $79.5 $75.9
Reconciling items:
------------------
Restructuring and acquisition
related costs (a) 13.0 21.6
Olympus intangible asset
amortization (b) 5.6 -
Fair market value inventory
adjustment (c) 5.9 -
--- ---
Adjusted operating income $104.0 $97.5
====== =====
GAAP operating margin 8.8% 10.0%
Impact of adjustments 2.7% 2.9%
--- ---
Adjusted operating margin 11.5% 12.9%
==== ====
Six Months Ended
June 30,
--------
2010 2009
---- ----
GAAP operating income $159.4 $115.5
Reconciling items:
------------------
Restructuring and acquisition
related costs (a) 31.2 48.0
Olympus intangible asset
amortization (b) 11.1 -
Fair market value inventory
adjustment (c) 5.9 -
--- ---
Adjusted operating income $207.6 $163.5
====== ======
GAAP operating margin 8.9% 8.0%
Impact of adjustments 2.7% 3.3%
--- ---
Adjusted operating margin 11.6% 11.3%
==== ====
(1) Amounts may not foot due to rounding.
(2) See accompanying Non-GAAP Financial Measures section for
description of Non-GAAP adjustments.
BECKMAN COULTER, INC.
RECONCILIATION OF GAAP NET EARNINGS TO ADJUSTED NET EARNINGS (1) (2)
(in millions, except amounts per share)
(unaudited)
Three Months Ended June 30,
---------------------------
2010 2009
---- ----
Per Diluted Per Diluted
Amount Share Amount Share
------ ------------ ------ ------------
GAAP net earnings $44.6 $0.63 $60.8 $0.94
Reconciling items:
------------------
Restructuring and
acquisition related
costs (a) 13.0 0.17 21.6 0.35
Olympus intangible
asset amortization
(b) 5.6 0.08 - -
Fair market value
inventory
adjustment (c) 5.9 0.08 - -
Forward contract
gain - acquisition
(d) - - (20.5) (0.33)
Interest expense on
debt offering (e) - - 3.2 0.05
Adjustment for
income taxes (9.0) (0.12) (1.2) (0.02)
---- ----- ---- -----
Adjusted net
earnings $60.1 $0.84 $63.9 $0.99
===== ===== ===== =====
Six Months Ended June 30,
-------------------------
2010 2009
---- ----
Per Diluted Per Diluted
Amount Share Amount Share
------ ------------ ------ ------------
GAAP net earnings $83.3 $1.17 $81.4 $1.26
Reconciling items:
------------------
Restructuring and
acquisition related
costs (a) 31.2 0.44 48.0 0.75
Olympus intangible
asset amortization
(b) 11.1 0.16 - -
Fair market value
inventory
adjustment (c) 5.9 0.08 - -
Forward contract
gain - acquisition
(d) - - (8.7) (0.13)
Interest expense on
debt offering (e) - - 3.2 0.05
Adjustment for
income taxes (17.6) (0.25) (14.5) (0.23)
Deferred tax asset
write-off (f) 8.0 0.11 - -
--- ---- --- ---
Adjusted net
earnings $121.9 $1.71 $109.4 $1.70
====== ===== ====== =====
(1) Amounts may not foot due to rounding.
(2) See accompanying Non-GAAP Financial Measures section for
description of Non-GAAP adjustments.
BECKMAN COULTER, INC.
RECONCILIATION OF GAAP TAX RATE TO ADJUSTED TAX RATE (1) (2)
(in millions)
(unaudited)
Three Months
Ended
June 30,
--------
2010 2009
---- ----
GAAP tax rate 25.5% 22.4%
Reconciling items:
------------------
Restructuring and acquisition related
costs (a) 1.8% 1.8%
Olympus intangible asset amortization (b) 0.7% -
Fair market value inventory adjustment
(c) 0.8%
Forward contract gain - acquisition (d) - (1.8)%
Interest expense on debt offering (e) - 0.3%
--- ---
Adjusted tax rate 28.8% 22.7%
==== ====
Six Months
Ended
June 30,
--------
2010 2009
---- ----
GAAP tax rate 29.0% 15.7%
Reconciling items:
------------------
Restructuring and acquisition related
costs (a) 2.7% 6.5%
Olympus intangible asset amortization (b) 0.9% -
Fair market value inventory adjustment
(c) 0.5% -
Forward contract gain - acquisition (d) - (1.3)%
Interest expense on debt offering (e) - 0.5%
Deferred tax asset write-off (f) (6.8)% -
----- ---
Adjusted tax rate 26.3% 21.4%
==== ====
(1) Amounts may not foot due to rounding.
(2) See accompanying Non-GAAP Financial Measures section for
description of Non-GAAP adjustments.
BECKMAN COULTER, INC.
RECONCILIATION OF GAAP NET EARNINGS TO ADJUSTED EBITDA (1) (2)
(in millions)
(unaudited)
Three Months
Ended
June 30,
--------
2010 2009
---- ----
GAAP net earnings $44.6 $60.8
Income taxes 15.3 17.6
Interest expense 24.6 17.5
Depreciation and amortization 90.8 71.3
---- ----
EBITDA 175.3 167.2
Reconciling items:
------------------
Restructuring and acquisition related
costs (a) 13.0 21.6
Fair market value inventory adjustment
(c) 5.9 -
Forward contract gain - acquisition (d) - (20.5)
--- -----
Adjusted EBITDA $194.2 $168.3
====== ======
Six Months
Ended
June 30,
--------
2010 2009
---- ----
GAAP net earnings $83.3 $81.4
Income taxes 34.0 15.2
Interest expense 48.7 28.4
Depreciation and amortization 179.9 138.8
----- -----
EBITDA 345.9 263.8
Reconciling items:
------------------
Restructuring and acquisition related
costs (a) 31.2 48.0
Fair market value inventorFor more iinformation, go to www.prnewswire.com
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