Beckman Coulter's 4th Quarter and Full Year 2007 Revenue Grows 10.8% and 9.2%, Respectively; 2007 Earnings Per Share Beat Outlook
Board Increases Dividend, Authorizes New Share Repurchase, Names Garrett Chairman
r>FULLERTON, Calif., Feb. 8 /PRNewswire-FirstCall/ -- Beckman Coulter, Inc.
(NYSE), a leading developer, manufacturer and marketer of products that
simplify, automate and innovate complex biomedical testing, announced today
fourth quarter and year ended December 31, 2007 results. For the fourth
quarter, revenue was $789 million, rising on strong sales to clinical
diagnostics customers partially offset by softness in demand for life science
products. In constant currency, revenue increased 6.8%. Reported net
earnings were $44.8 million, or $0.69 per fully diluted share.
(Logo: http://www.newscom.com/cgi-bin/prnh/20031202/BECLOGO)
Quarter Ended Year Ended
December 31 December 31
2007 2006 % Chg 2007 2006 % Chg
Reported Results
(in millions)
Revenue $789.0 $712.0 10.8% $2,761.3 $2,528.5 9.2%
Earnings per
Diluted Share:
Continuing
Operations $0.69 $0.97 (28.9%) $3.27 $2.47 32.4%
Discontinued
Operations - - - 0.03 0.45 (93.3%)
Net $0.69 $0.97 (28.9%) $3.30 $2.92 13.0%
Adjusted Results
Excluding Special Items
Earnings per
Diluted Share $1.08 $1.03 4.9% $3.25 $2.88 12.8%
See "Non-GAAP Financial Measures," where the impacts of certain items on
reported results are discussed. Total revenue from clinical diagnostics products increased 12.8% over
prior year quarter, or 8.8% in constant currency. Within clinical
diagnostics, revenue was driven by increases in Immunoassay of 19.2%,
Chemistry of 12.8% and Cellular of 5.5%. Clinical Automation systems revenue
grew more than 75% over prior year quarter. Markets for the company's life science products continued to be soft in
most geographies. Compared to fourth quarter 2006, sales of life science
products grew 3.7%. In constant currency, life science product sales declined
0.7%. The company's consumables sales grew 10.9%, or 7% in constant currency.
The fourth quarter 2006 acquisition of Lumigen, Inc. contributed about 1.0% to
this growth. Access immunoassay consumables grew 18.2%, or 14.4% in constant
currency, over prior year quarter. Recurring revenue, comprised of supplies,
test kits, service revenue and operating-type lease payments, increased 12.9%
to $576 million and represented 73.0% of total revenue. Compared to prior year quarter, revenue in the United States increased
4.2%, with sales of clinical diagnostics products growing 7.4% partially
offset by a 10.6% decline in revenue from life science markets. In constant
currency, international revenue increased 9.5%. International revenue from
clinical diagnostics products increased 10.4%, and life science product sales
were up 6.7% over prior year quarter. Scott Garrett, president and chief executive officer, said, "Fourth
quarter results demonstrate the ongoing strength of our clinical diagnostics
business worldwide. We continue to gain market share in both Clinical
Chemistry and Immunoassay. Sales of our Immunoassay systems grew at more than
twice the market rate with placements of the new mid-range Immunoassay system,
the UniCel® DxI 600, contributing to this growth." Gross profit margin was consistent with prior year quarter. Operating
income was $74.6 million. Adjusted operating income was $114.2 million, or
14.5% of revenue, excluding expenses for supply chain restructuring and the
write off of in-process R&D associated with the acquisition of NexGen
Diagnostics LLC, a spin out of Lumigen, Inc. The tax rate for the quarter was approximately 30.3%. Net earnings were
$44.8 million, or $0.69 per fully diluted share. Excluding the in-process R&D
write off and supply chain restructuring, adjusted net earnings were $69.6
million and adjusted earnings per fully diluted share were $1.08.
Fourth Quarter Business Developments
-- Declared, in October, a $0.16 per share quarterly cash dividend, the
last quarterly dividend for 2007 which represents the 16th
consecutive increase in annual dividend payout.
-- Re-purchased approximately 537,000 shares of Beckman Coulter stock
at an average price of $69.71 per share, completing the company's
2.5 million share repurchase authorization.
-- Signed agreements with Johns Hopkins University, a leader in cancer
genomics research, that provide Beckman Coulter exclusive options to
license cancer genomics intellectual property that may arise from
its studies of multiple types of cancer including breast, colon and
six other cancers.
-- Acquired the remaining 80.1% of NexGen Diagnostics LLC, affording
access to technologies with the potential to greatly simplify future
immunoassay and molecular diagnostics testing.
-- Acquired the flow cytometry business of Dako Denmark AS,
significantly broadening Beckman Coulter's flow cytometry product
line offering.
-- Renewed agreements valued at approximately $94 million per year with
MedAssets Supply Chain Systems, one of the nation's largest
healthcare group purchasing organizations, serving more than 125
health systems, including 2,500 hospitals.
-- Entered into a two-year research project to be carried out at Thomas
Jefferson University in Philadelphia and Laboraf Diagnostica e
Ricerca San Raffaele SpA in Milan. This research will seek to
discover genetic signatures for cardiovascular disease and obesity-
related hypertension, which would yield exclusive proprietary
content for Beckman Coulter's molecular diagnostics system.
-- Elected Susan R. Nowakowski, chief executive officer, president, and
director of AMN Healthcare Services, Inc., to the company's Board of
Directors.
Post-Quarter Developments
-- Named Scott Garrett, the company's current President and Chief
Executive Officer, as Chairman of the Board, President and Chief
Executive Officer, effective April 24, 2008.
-- Named Betty Woods, the company's current non-executive Chairman, as
Lead Independent Director, effective April 24, 2008.
-- Declared a $0.17 per share quarterly cash dividend, a $0.01 per
share, or 6.3% increase, payable on March 7, 2008 to all
stockholders of record on February 22, 2008. This payout represents
the 75th consecutive quarterly dividend.
-- Announced that the company's Board of Directors authorized the
repurchase of up to 2.5 million shares of the company's outstanding
common stock.
-- Entered into agreements with the National University of Ireland,
Galway, to direct assay research and acquire licenses for
intellectual property as part of the development of infectious
disease tests for Beckman Coulter's molecular diagnostics
instrument.
Full Year 2007 Discussion Revenue for full year 2007 was $2,761.3 million, up 9.2% over prior year,
or 6.8% in constant currency. The 2006 acquisition of Lumigen contributed
0.8% to this growth. Compared to prior year, Clinical Diagnostics revenue
grew 11.9%, while sales to life sciences markets declined 2%. Consumables revenue grew 10.6%, or 8.3% in constant currency. The Lumigen
contribution to consumables sales growth was 1.4%. Access Immunoassay
consumables grew 21.5% accelerating from 2006. Full year 2007 recurring
revenue was up 11.8% to $2,162.8 million, or 78.3% of total revenue. Gross profit margin declined 40 basis points from prior year to 46.9%,
driven primarily by a temporary increase in distribution costs largely
resulting from the 2007 implementation of the U.S. ERP program and printed
circuit board supply issues. Operating income for the year was $272.4 million. Adjusted operating
income was $327.1 million, or 11.8% of revenue. Non-operating income was $20.3 million, including a gain of $26.2 million
from the company's Miami land sale and the Biosite transaction break up fee of
$40.6 million. These gains were partially offset by a $9 million contribution
to establish the Beckman Coulter Foundation. Non-operating expense excluding
these items was approximately $37 million, compared to $40 million in 2006. The tax rate for the year was 28.4%, up from 26.6% in the prior year
period primarily due to a shift in geographic profit mix in 2007 and the phase
out of certain manufacturing tax credits. Earnings per fully diluted share were $3.30, up 13% over prior year.
Adjusted earnings per fully diluted share were $3.25, exceeding the company's
outlook range of $3.15 to $3.22. (See "Non-GAAP Financial Measures.") Garrett continued, "For the full year 2007, free cash flow improved by
$116.2 million to $122.7 million. EBITDA increased 24% over 2006. These
improvements were driven in large part by the growing benefits of moving to an
operating-type lease business model. The positive trends in free cash flow
and EBITDA will continue going forward, as we close the gap between capital
expenditures for operating-type leases and the associated depreciation." Garrett stated, "The continued above-market growth of our clinical
diagnostics business was fueled by the introduction of our new UniCel® DxI
600 Immunoassay system and a third straight year of record placements of the
UniCel® DxC 600 and 800 clinical chemistry systems. Demand for our
chemistry / immunoassay work cells continues at a rapid pace as demonstrated
by a 20% increase in placements for the year. In Clinical Automation,
placements accelerated and revenue grew almost 70%." Full Year 2008 Outlook The following outlook is based on 2007 adjusted results and does not
include special items that may occur in 2008. "Assuming stable currency, our outlook for full year 2008 revenue growth
is 7% to 9%," Garrett continued. "Our goal for the Clinical Diagnostics
business is to continue to exceed 10% revenue growth in 2008. We expect
revenue from life science products to be about flat with prior year. "Operating margin for the year should expand to around 12.5%, reflecting
our commitment to operating excellence. Non-operating expense is expected to
be approximately $11 to $12 million per quarter. Pretax profit growth should
be between 13% to 16% and even though we expect a tax rate of 30% to 31%,
earnings per diluted share should be $3.50 to $3.65. Capital expenditures are
expected to be $290 to $310 million, and depreciation and amortization should
be between $240 and $260 million. We expect cash flow to be strong in 2008 as
it was in 2007 providing a source for share repurchase." "In the first quarter, we expect to commercialize our next chemistry /
immunoassay work cell, the UniCel® DxC 880i, the first of four new work
cells coming in 2008. The new UniCel DxH, our next generation hematology
system, should be introduced at the end of 2008, and we continue to make solid
progress with the development of our DxN 'sample-to-result' instrument for
molecular diagnostics. The acquisition of the Dako flow cytometry business
and the acquired portfolio of technology from NexGen provide significant new
capability in the high-value arenas of Immunoassay, Molecular Diagnostics and
Flow Cytometry. "Strength in clinical systems, assay development, work cell solutions and
automation will continue to identify Beckman Coulter as a leader in the
clinical diagnostics market, while our continued investment in new
technologies and emerging markets create a pathway to sustain above market
growth well into the next decade. We are focused on creating shareholder
value through growth, quality and operating excellence. Through our
comprehensive approach to simplifying, automating and innovating laboratory
processes, we are dedicated to improving patient health and reducing the cost
of care," Garrett said. Investor Conference Call As previously announced, there will be a conference call today, Friday,
February 8, 2008 at 8:30 am ET to discuss the fourth quarter and full year
ended December 31, 2007 results. The call will also be webcast live. The
call is accessible to all investors through Beckman Coulter's website at
http://www.beckmancoulter.com or at http://www.streetevents.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, February 22, 2008.
About Beckman Coulter Beckman Coulter, Inc., based in Fullerton, 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 supplies, test kits, service and operating-type lease payments, represent
more than 78 percent of the company's 2007 revenue of $2.76 billion. For more
information, visit www.beckmancoulter.com.
Forward Looking Statements This press release contains the company's unaudited financial results for
the fourth quarter of 2007. These results may change as a result of further
review by the company's independent accountants and management. The completion
of the audit 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 fourth quarter and annual results will be provided in the
company's annual report to the SEC on Form 10-K. This press release also contains forward-looking statements regarding the
company's outlook for 2008, including expectations for revenue growth,
operating margin, non-operating expense, pretax profit growth, tax rate,
earnings per diluted share, capital expenditures, and depreciation and
amortization. In addition, the press release contains statements about the
company's expectations regarding effects on free cash flow and EBITDA
resulting from the Company's move from sales-type leases to an operating-type
lease business model, commercialization of its UniCel DxC 880i work cell and
UniCel DxH hematology system, and the effects of new technologies and emerging
markets on the Company's market growth. These statements are based on information available at the time they are
made and are subject to a number of risks and uncertainties. Actual results
could differ materially from those anticipated by these forward-looking
statements as a result of a number of factors, some of which may be beyond the
company's control. Risk factors that affect the company are discussed in Part
I, Item 1A (Risk Factors) of the Company's report to the SEC on Form 10-K
filed with the SEC on February 26, 2007 and its reports to the SEC on Form 10-
Q filed with the SEC during 2007. We undertake no obligation to update these
disclosures except as may be required by the federal securities laws. Changes in Presentation In connection with the preparation of our consolidated financial
statements for 2007, we made certain corrections related to our consolidated
statements of cash flows due to inadvertent errors in summarizing the amounts.
More specifically, corrections have been made to previously reported additions
to property, plant and equipment, depreciation expense and changes in
inventory. These errors resulted in an overstatement of cash flows provided by
operating activities, with an equal overstatement of cash flows used in
investing activities, but had no effect on our consolidated balance sheets,
consolidated statements of earnings or consolidated statements of
stockholders' equity. The amounts presented in the 2007 consolidated statement
of cash flows reflect a reduction of $2.1 million to previously reported
depreciation and amortization and a reduction of $24.6 million to previously
reported change in inventories for the nine months ended September 30, 2007.
This correction also reduced additions to property, plant and equipment
presented in the 2007 consolidated statement of cash flows by $26.7 million
for the nine months ended September 30, 2007. The amounts presented in the
consolidated statement of cash flows for the years ended December 31, 2006
reflect a reduction of $11.8 million to previously reported depreciation and
amortization and a reduction of $28.0 million to previously reported change in
inventories, reducing operating cash flows from $322.6 million to $282.8
million. This correction also reduced additions to property, plant and
equipment for the year ended December 31, 2006 by $39.8 million reducing
investing cash flows from $460.5 million to $420.7 million. 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 quarters and years ended December 31,
2007 and 2006 and with respect to Outlook for 2008. The company reported the
following non-GAAP financial measures: "adjusted operating income," "adjusted
operating income as a percentage of revenue," "adjusted net earnings" and
related "adjusted diluted earnings per share," "EBITDA," "free cash flow" and
"constant currency growth." The company also provided its outlook for 2008
for "adjusted operating margin," "adjusted pretax profit growth," "adjusted
tax rate" and "adjusted earnings per diluted share." These non-GAAP financial
measures are not in accordance with, or an alternative for, GAAP. Adjusted operating income excludes the impact of charges or write-offs
associated with acquisitions, restructuring, or relocations in connection with
our supply chain improvement initiatives, licenses for research and
development as described above, gains or losses upon sale of assets or
businesses and other operating income and expense items that we do not expect
to be recurring. Some of the items excluded may be beyond the control of
management and are less predictable than our core performance. Although
management expects to incur costs for its supply chain initiatives in 2008 and
2009, management has not developed plans for those initiatives in sufficient
detail to estimate the costs to be incurred in those periods and believes that
those costs are not reflective of 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 for
evaluating 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 income as a percentage of revenue (also referred to as
adjusted operating income margin) is calculated using adjusted operating
income, as described above, divided by revenue. Management uses adjusted
operating income as a percentage of revenue 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 income margin when evaluating the performance trends of our company
compared to others. A reconciliation of operating income margin, the GAAP
measure most directly comparable to adjusted operating income margin, is
provided on the attached schedule. Adjusted net earnings excludes the impact of income and expense items
excluded from adjusted operating income, as described above, and non-operating
income and expense items that we do not expect to be recurring. Adjusted net
earnings also exclude the related incremental tax effect of these items.
Adjusted diluted earnings per share exclude the effect of those same items
from diluted earnings per share. 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. 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. Earnings before interest, taxes, depreciation and amortization ("EBITDA")
is a non-GAAP measure that management believes provides useful supplemental
information for management and investors. EBITDA is a tool that provides a
measure of the earnings of the business before considering the impact of
interest, taxes, depreciation and amortization. We believe 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 EBITDA, 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 the 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 also is
consistent with our internal use of the measure, which we use to measure the
profitability of ongoing 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 2008 adjusted operating income, adjusted pretax profit
growth, adjusted tax rate, adjusted net earnings and adjusted net earnings per
share excludes the impact of charges or write-offs associated with
acquisitions, restructuring, including relocations in connection with our
supply chain improvement initiatives, gains or losses upon sale of assets or
businesses and other items that we do not expect to be recurring because we
are not able to forecast such items with reasonable predictability and do not
include those items in our operating budgets. Although management expects to
incur costs for its supply chain initiatives in 2008 and 2009, management has
not developed plans for those initiatives in sufficient detail to estimate the
costs to be incurred in those periods and believes that those costs are not
reflective of 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 the unknown effect, timing and potential
significance of special charges and our inability to forecast charges
associated with future transactions and initiatives. However, management
believes our Outlook for 2008, 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.
BECKMAN COULTER, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions, except amounts per share and share data)
(unaudited)
Quarter Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Product revenue $674.3 $608.0 $2,331.9 $2,130.5
Service revenue 114.7 104.0 429.4 398.0
Total revenue 789.0 712.0 2,761.3 2,528.5
Cost of goods sold 338.6 307.2 1,153.7 1,048.2
Cost of service 80.9 71.2 312.4 283.3
Total cost of sales 419.5 378.4 1,466.1 1,331.5
Gross profit 369.5 333.6 1,295.2 1,197.0
Operating costs and
expenses
Selling, general
and administrative 193.2 172.6 731.1 687.6
Research and
development 97.5 57.6 274.0 264.9
Restructuring 4.2 2.6 16.9 14.3
Asset impairment
charges - - 0.8 2.3
Litigation settlement - - - (35.0)
Total operating
costs and expenses 294.9 232.8 1,022.8 934.1
Operating income 74.6 100.8 272.4 262.9
Non-operating (income)
expense
Interest income (3.3) (3.1) (14.4) (14.0)
Interest expense 10.4 11.7 49.3 48.0
Debt extinguishment
loss - 5.0 - 7.7
Other, net 3.2 3.3 (55.2) 6.0
Total non-operating
expense (income) 10.3 16.9 (20.3) 47.7
Earnings from continuing
operations before
income taxes 64.3 83.9 292.7 215.2
Income taxes 19.5 21.6 83.0 57.0
Earnings from continuing
operations 44.8 62.3 209.7 158.2
Earnings from discontinued
operations, net of tax - - 1.6 28.7
Net earnings $44.8 $62.3 $211.3 $186.9
Basic earnings per share:
Continuing operations $0.71 $1.00 $3.35 $2.53
Discontinued
operations - - 0.03 0.46
Basic earnings per
share $0.71 $1.00 $3.38 $2.99
Diluted earnings per
share:
Continuing operations $0.69 $0.97 $3.27 $2.47
Discontinued operations - - 0.03 0.45
Diluted earnings per
share $0.69 $0.97 $3.30 $2.92
Weighted average number
of shares outstanding
(in thousands)
Basic 62,879 62,397 62,505 62,575
Diluted 64,535 63,919 64,066 63,971
BECKMAN COULTER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions) (unaudited)
Year Ended December 31,
2007 2006
Cash flows from operating activities
Net earnings $211.3 $186.9
Less: earnings from discontinued
operations, net of tax 1.6 28.7
Earnings from continuing operations 209.7 158.2
Adjustments to reconcile net earnings
from continuing operations to net cash
provided by operating activities
Depreciation and amortization 205.5 169.7
Provisions for doubtful accounts receivable 4.7 6.2
Share-based compensation expense 24.5 23.4
Tax benefits from exercises of share-based
payment awards 20.7 8.1
Excess tax benefits from share-based
payment transactions (20.7) (7.9)
Gain on sales of land (26.8) -
Asset impairment charges 0.8 2.3
U.S. pension trust contributions (9.3) (46.0)
In-process research and development 35.4 -
Deferred income taxes (19.3) (13.3)
Changes in assets and liabilities:
Trade and other receivables (25.5) (26.8)
Inventories (51.7) (0.4)
Accounts payable and accrued expenses 64.4 (21.2)
Income taxes payable (1.4) 12.5
Long-term lease receivables 14.0 46.6
Other (24.0) (7.0)
Net cash provided by operating
activities of continuing operations 401.0 304.4
Net cash used in operating activities
of Discontinued operations (1.0) (21.6)
Net cash provided by operating
activities 400.0 282.8
Cash flows from investing activities
Additions to property, plant and equipment (277.3) (276.3)
Proceeds from sale of land 30.9 -
Sale of marketable securities 17.7 -
Payments for business acquisitions and
technology
Licenses, net of cash acquired (118.2) (194.6)
Net cash used in investing activities
of continuing operations (346.9) (470.9)
Net cash provided by investing
activities of discontinued operations 2.6 50.2
Net cash used in investing activities (344.3) (420.7)
Cash flows from financing activities
Dividends to stockholders (40.4) (37.7)
Distribution to minority (14.2) -
Proceeds from issuance of stock 88.0 54.0
Repurchase of common stock as treasury stock (57.3) (188.4)
Repurchase of common stock held in grantor
trust (1.0) (1.1)
Excess tax benefits from share-based payment
transactions 20.7 7.9
Tax benefit on distribution of stock 1.2 12.0
Debt borrowings, net 8.8 788.2
Debt repayments (57.1) (482.9)
Debt acquisition costs (1.5) (2.1)
Net cash (used in) provided by financing
activities (52.8) 149.9
Effect of exchange rates on cash and cash
equivalents 4.9 5.6
Change in cash and cash equivalents 7.8 17.6
Cash and cash equivalents - beginning of period 75.2 57.6
Cash and cash equivalents - end of period $83.0 $75.2
* Prior period amounts have been adjusted due to an immaterial error,
as previously reported, related to depreciation expense and
additions to property, plant, and equipment as well as additional
errors relating to these items and the change in inventories, all of
which, individually and in the aggregate, are immaterial.
BECKMAN COULTER, INC.
CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
December 31, December 31,
2007 2006
Assets
Current assets
Cash and cash equivalents $83.0 $75.2
Trade and other receivables, net 726.5 671.5
Inventories 523.9 455.8
Deferred income taxes 79.2 83.2
Prepaids and other current assets 75.5 52.4
Total current assets 1,488.1 1,338.1
Property, plant and equipment, net 867.4 721.0
Goodwill 707.4 672.7
Other intangible assets, net 418.4 397.4
Other assets 113.0 162.5
Total assets $3,594.3 $3,291.7
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $224.8 $180.3
Accrued expenses 438.2 387.9
Income taxes payable 32.0 60.9
Notes payable 89.4 73.2
Current maturities of long-term debt 12.8 9.3
Total current liabilities 797.2 711.6
Long-term debt, less current maturities 888.6 952.0
Deferred income taxes 73.4 110.1
Other liabilities 393.4 363.7
Total liabilities 2,152.6 2,137.4
Commitments and contingencies
Stockholders' equity
Preferred stock - -
Common stock 6.8 6.8
Additional paid-in capital 519.3 488.0
Retained earnings 1,246.2 1,076.4
Accumulated other comprehensive loss (12.8) (55.4)
Treasury stock, at cost (317.8) (361.5)
Common stock held in grantor trust, at cost (17.8) (16.8)
Grantor trust liability 17.8 16.8
Total stockholders' equity 1,441.7 1,154.3
Total liabilities and stockholders' equity $3,594.3 $3,291.7
BECKMAN COULTER, INC
KEY PRODUCT AREA AND GEOGRAPHICAL REVENUE
(in millions)
(unaudited)
Quarter Ended Year Ended
December 31, 2007 December 31, 2007
Constant Constant
Reported Currency Reported Currency
$ Growth % Growth %* $ Growth % Growth %*
Revenue by key
product areas:
Chemistry Systems $206.1 12.8 8.6 $749.5 10.7 8.2
Cellular Systems 235.2 5.5 1.7 840.9 4.3 2.3
Immunoassay
Systems 157.6 19.2 15.0 595.8 23.0 20.2
Discovery and
Automation
Systems 190.1 9.2 4.9 575.1 2.6 -
$789.0 10.8 6.8 $2,761.3 9.2 6.8
Revenue by
geographic area:
United States $380.6 4.2 4.2 $1,425.0 7.1 7.1
International 408.4 17.8 9.5 1,336.3 11.5 6.4
$789.0 10.8 6.8 $2,761.3 9.2 6.8
* Constant currency growth as presented herein and as discussed in
this release represents:
Current period constant currency revenue less prior year reported revenue
Prior year reported revenue
Chemistry Systems include:
-- Autochemistry
-- Protein and rapid test products
Cellular Systems include:
-- Hematology
-- Coagulation
-- Flow cytometry and related products
Immunoassay Systems include:
-- All immunoassay products
Discovery and Automation Systems include:
-- Life science tools (All robotic automation, genetic analysis
products, centrifuge and analytical systems)
-- Industrial particle characterization
-- Clinical automation
BECKMAN COULTER, INC
Revenue - By Market
Clinical Diagnostics and Life Science
(in millions)
(unaudited)
2007
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year
Revenue by
market areas:
Clinical
Diagnostics
Business $520.3 $573.0 $559.1 $631.0 $2,283.4
Life Science
Business 93.3 116.7 109.9 158.0 477.9
All
Products $613.6 $689.7 $669.0 $789.0 $2,761.3
Cash instrument
sales $103.9 $147.4 $134.2 $213.0 $598.5
Recurring
revenue 509.7 542.3 534.8 576.0 2,162.8
Total $613.6 $689.7 $669.0 $789.0 $2,761.3
2006
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year
Revenue by
market areas:
Clinical
Diagnostics
Business $467.3 $503.1 $511.1 $559.5 $2,041.0
Life Science
Business 101.7 113.2 120.1 152.5 487.5
All
Products $569.0 $616.3 $631.2 $712.0 $2,528.5
Cash instrument
sales $117.5 $126.1 $147.7 $201.8 $ 593.1
Recurring
revenue 451.5 490.2 483.5 510.2 1,935.4
Total $569.0 $616.3 $631.2 $712.0 $2,528.5
Clinical Diagnostics Business:
-- Autochemistry
-- Protein and rapid test products
-- Clinical automation
-- All Immunoassay products
-- Molecular Diagnostics products
-- Hematology
-- Coagulation
-- Flow Cytometry and related products
Life Science Business:
-- Life Science Tools: (All robotic automation, genetic analysis
products, centrifuge and analytical systems)
-- Industrial particle characterization
Reconciling Items to Non-GAAP Financial Measures Certain disclosures in this release, prepared in accordance with GAAP, are
accompanied by disclosures not prepared in conformity with GAAP. Management
believes these disclosures provide investors a more complete understanding of
the company's results, as these income and expense items are not expected to
recur in subsequent periods, or in the case of restructuring and supply chain
initiatives, could vary significantly based upon the project or initiative.
Given the significance and unusual nature of these items relative to the
operating results for the periods presented, these items have been excluded in
the measures reported for adjusted operating income, adjusted net earnings and
adjusted earnings per share. These non-GAAP measures exclude the following
items: a) Biosite Break-Up Fee - On May 17, 2007 the merger agreement to
acquire Biosite, Inc. was terminated by Biosite in accordance with
its terms. Pursuant to the terms of the agreement, Biosite paid us
a break up fee of $54 million. We recorded a gain of $40.6 million
(net of associated expenses of $13.4 million) in other non-operating
income during the second quarter 2007.
b) Rental Tax Dispute - In 1998, we entered into a sale-leaseback
transaction with Cardbeck Miami Trust ("Cardbeck") in connection
with our Miami facility. In May 2005, Cardbeck notified us that it
had received an assessment from the State of Florida in the amount
of $4.4 million for rental tax, interest and penalties related to
payments made by us to Cardbeck from June 2000 to February 2005. The
State of Florida has asserted that this transaction is subject to
commercial rental tax in accordance with applicable state laws and
requested Cardbeck to pay this assessment. During the second
quarter 2007, we recorded an accrual of $2.4 million ($1.6 million
sales tax and $.8 million in interest) for the anticipated amount of
the settlement.
c) NexGen Acquisition - In November 2007, we acquired the remaining
80.1% interest in NexGen for a total purchase price of $36 million.
NexGen is a development stage enterprise, which was formed in
connection with the acquisition of Lumigen in the prior year.
Approximately $35 million of the purchase price was allocated to in-
process research and development ("IPR&D") during the fourth quarter
since the acquired IPR&D technology is currently at the beginning of
the applied research phase and will require significant costs to
bring it out of the research stage.
d) Miami Vacant Land Sale - In 2007, we sold vacant land adjacent to
our Miami, Florida facility for $30.0 million. An additional $1.2
million remains in escrow for a portion of the land for which title
is in dispute. We acquired the parcel of vacant land as part of our
1997 acquisition of Coulter Corporation. The gain on sale of $26.2
million was recorded in other non-operating income during the third
quarter 2007.
e) Beckman Coulter Foundation - Using proceeds from the Miami vacant
land sale, we made a $9 million contribution to establish and fund
the Beckman Coulter Foundation, during the third quarter 2007. The
purpose of the non-profit Beckman Coulter Foundation is to benefit
research and educational purposes. The donation is classified under
other non-operating expense.
f) Supply Chain Relocation - In January 2007, as part of our previously
announced strategic supply chain management initiative, we announced
the closure and relocation of certain manufacturing and distribution
sites, mainly in the United States. In connection with these
closures and relocations, we recorded charges related to severance
and other costs of $4.2 million in the fourth quarter of 2007.
Total supply chain relocation charges for full year 2007 were $16.9
million. During the second quarter of 2007 we recorded related
asset impairment charges of $0.8 million.
g) Agencourt Personal Genomics ("APG") - In July 2006, we sold our non-
controlling interest in APG, a developer of next-generation genetic
technologies. We received approximately $50 million in cash and
recognized a gain from the sale. This gain and our share of APG's
operating results of $28.7 million, net of taxes, are included in
discontinued operations. Also, in connection with the sale an
additional $6.0 million ($1.6 million, net of taxes) was held in
escrow. In July 2007, pursuant to the terms of the sale agreement,
we received $2.6 million, our proportional share of $6.0 million
held in escrow. The additional gain on sale of $2.6 million was
recorded in discontinued operations for the third quarter 2007.
h) Restructuring Related Charges - In July 2005, we announced a
strategic reorganization of our business to combine our Biomedical
Research Division and Diagnostics Division into a single company
structure. During 2006, we incurred charges of $13.2 million for
severance and other restructuring costs and $2.3 million for asset
impairment.
i) Roche Research and Development Charge - During the third quarter
2006, we paid Roche Diagnostic a license fee in the amount of $27.5
million for rights to certain technologies in the clinical
diagnostic field. The payment was recorded as a research and
development charge.
j) Pension Curtailment - During the third quarter 2006, we amended our
pension plans by freezing benefits for certain employees effective
December 31, 2006. As a result of this amendment, we incurred a net
curtailment charge of approximately $4.0 million.
k) Applera - In April 2006, a settlement was reached in a legal dispute
with Applera Corporation, and the parties granted royalty-bearing
licenses to each other for certain patents. Applera's Applied
Biosystems Group made a $35.0 million special payment to us, and we
will pay Applera $20 million over 10 quarters for rights to certain
technologies in the diagnostics market. As a result, we recorded a
$35 million gain and an $18.9 million research and development
charge in connection with this settlement in the second quarter of
2006.
l) Investigation Charges - During the second quarter 2006, the Audit
and Finance Committee of our Board of Directors oversaw an
investigation of claims made by a former employee. The Audit and
Finance Committee retained outside counsel and an independent
accounting firm to assist in the investigation and concluded that
the allegations were not substantiated and that our financial
statements and disclosures did not require revision. Approximately
$2.9 million in legal, consulting and independent accounting firm
fees were incurred in connection with this investigation.
m) Debt Extinguishment - On June 1, 2006, approximately $56 million of
our $100 million debentures were tendered by the holders of the
debentures. In connection with this redemption, we incurred
approximately $2.7 million in debt extinguishment costs in the
second quarter 2006. During the fourth quarter of 2006, we used
proceeds obtained from our convertible notes offering to redeem our
$240 million senior notes. We recorded debt extinguishment costs of
$5 million as a result of this redemption.
BECKMAN COULTER, INC.
RECONCILIATION OF GAAP NET EARNINGS TO ADJUSTED NET EARNINGS
(in millions except amounts per share)
(unaudited)
Quarter Ended December 31,
2007 2006
Amount Per Amount Per
Diluted Diluted
Share Share
GAAP net earnings $44.8 $0.69 $62.3 $0.97
Reconciling items:
NexGen acquisition(c) 35.4 0.55 - -
Supply chain relocation(f) 4.2 0.07 - -
Restructuring related
charges(h) - - 2.6 0.04
Debt extinguishment(m) - - 5.0 0.08
Adjustment for income
taxes (14.8) (0.23) (4.1) (0.06)
Adjusted net earnings $69.6 $1.08 $65.8 $1.03
Year Ended December 31,
2007 2006
Amount Per Amount Per
Diluted Diluted
Share Share
GAAP net earnings $211.3 $3.30 $186.9 $2.92
Reconciling items:
Biosite break-up fee(a) (40.6) (0.64) - -
Rental tax dispute(b) 2.4 0.04 - -
NexGen acquisition(c) 35.4 0.55 - -
Beckman Coulter
Foundation(e) 9.0 0.14 - -
Miami vacant land
sale(d) (26.2) (0.41) - -
Supply chain
relocation(f) 16.9 0.28 - -
Impairment charges(h) 0.8 0.01 2.3 0.04
Discontinued operation
(APG)(g) (1.6) (0.03) (28.7) (0.45)
Restructuring related
charges(h) - - 13.2 0.20
Roche research and
development charge(i) - - 27.5 0.43
Pension curtailment(j) - - 4.0 0.06
Applera settlement(k) - - (16.1) (0.25)
Investigation charges(l) - - 2.9 0.05
Debt extinguishment(m) - - 7.7 0.12
Adjustment for income
taxes 0.9 0.01 (15.6) (0.24)
Adjusted net earnings $208.3 $3.25 $184.1 $2.88
See "Non-GAAP Financial Measures," where the impacts of certain items on
reported results are discussed.
BECKMAN COULTER, INC.
RECONCILIATION OF GAAP OPERATING INCOME AND MARGIN TO
ADJUSTED OPERATING INCOME AND MARGIN
(in millions)
(unaudited)
Quarter Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
GAAP operating income $74.6 $100.8 $272.4 $262.9
Reconciling items:
Rental tax dispute(b) - - 1.6 -
NexGen acquisition(c) 35.4 - 35.4 -
Supply chain
relocation(f) 4.2 - 16.9 -
Impairment charges(h) - - 0.8 2.3
Restructuring related
charges(h) - 2.6 - 13.2
Roche research and
development charge(i) - - - 27.5
Pension curtailment(j) - - - 4.0
Applera settlement(k) - - - (16.1)
Investigation charges(l) - - - 2.9
Adjusted operating
income $114.2 $103.4 $327.1 $296.7
GAAP operating margin 9.5% 14.2% 9.9% 10.4%
Impact of adjustments 5.0% 0.3% 1.9% 1.3%
Adjusted operating
margin 14.5% 14.5% 11.8% 11.7%
See "Non-GAAP Financial Measures," where the impacts of certain items on
reported results are discussed.
BECKMAN COULTER, INC.
RECONCILIATION OF GAAP NET EARNINGS TO EBITDA
(in millions)
(unaudited)
Year Ended
December 31,
2007 2006
GAAP net earnings $211.3 $186.9
Discontinued operations (1.6) (28.7)
Income taxes 83.0 57.0
Interest expense 49.3 55.7
Depreciation and amortization 205.5 169.7
EBITDA $547.5 $440.6
BECKMAN COULTER, INC.
RECONCILIATION OF FREE CASH FLOW
(in millions)
(unaudited)
Year Ended
December 31,
2007 2006
Net cash provided by operating activities $ 400.0 $ 282.8
Additions to property, plant and equipment (277.3) (276.3)
Free cash flow $ 122.7 $6.5
See "Non-GAAP Financial Measures," where the impacts of certain items on
reported results are discussed. |
