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Beckman Coulter Announces Third Quarter 2008 Results
Date:10/28/2008

Revenue Increases 13.4%

On Target to Achieve Full Year Earnings Outlook

ORANGE COUNTY, Calif., Oct. 28 /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 third quarter ended September 30, 2008 results. Total revenue of $758.8 million increased 13.4% over third quarter 2007, or 10.2% in constant currency. The flow cytometry acquisition added approximately 1.2% to this growth rate. Net earnings were $26.1 million, or $0.41 per fully diluted share. Adjusted net earnings increased to $50.0 million, or $0.78 per fully diluted share.
(Logo: http://www.newscom.com/cgi-bin/prnh/20031202/BECLOGO)

Reported Results

(in millions, Three Months Ended Nine Months Ended

except amounts September 30 September 30

per share) 2008 2007 % Chg 2008 2007 % Chg

Revenue $758.8 $669.0 13.4% $2,287.6 $1,972.3 16.0%

Operating

Income $41.2 $67.5 (39.0%) $183.5 $197.8 (7.3%)

Diluted

Earnings per

Share $0.41 $0.93 (55.9%) $1.81 $2.61 (30.7%)

Adjusted Results

Operating

Income $79.7 $70.5 13.0% $240.4 $212.9 12.9%

Diluted

Earnings per

Share $0.78 $0.77 1.3% $2.35 $2.17 8.4%

See "Non-GAAP Financial Measures," where the impacts of certain items on reported results are discussed.

Scott Garrett, chairman, president and chief executive officer, said, "Strong revenue growth in the third quarter was led by continued gains in Clinical Diagnostics and international markets. In Clinical Diagnostics, which represents over 80% of total revenue, double-digit growth in each of our three product areas underscores the momentum and compelling advantage of our broad product offering, while solid recurring revenue growth demonstrates the stability of sector fundamentals."

Recurring revenue comprised of supplies, test kits, service revenue and operating-type lease payments, increased more than 10% to $594.7 million, or 78.4% of total revenue. Clinical Diagnostics' recurring revenue increased 10.8% over prior year quarter, led by Access-family Immunoassay growth of nearly 18%. Total company cash instrument sales increased more than 25%; continued strength in international markets, Life Sciences, and Chemistry and Clinical Automation product areas were the primary contributors.

On a geographic basis, third quarter revenue in the United States increased 6.8%. In constant currency, international revenue grew 13.9%, with each major region growing double-digits.

Garrett said, "In the quarter, we continued to expand our installed base and grow our emerging markets position, resulting in unusually high cash instrument sales. As we mentioned last quarter, growing our installed base shifts our product mix to lower-margin hardware. Although unfavorable in the short-term from a gross margin perspective, the associated recurring revenue in future periods positions the company for reliable and sustainable revenue and earnings growth. Within the quarter, rising transportation costs, adverse mix and currency shifts were effectively managed to deliver our targeted earnings. Despite these challenges, gross profit grew 12.9% to $352 million, while gross margin decreased 20 basis points to 46.4% versus third quarter 2007."

Operating income was $41.2 million. On an adjusted basis, operating income was $79.7 million, a 13% increase over adjusted third quarter 2007 results. Significant adjustments to 2008 operating expense included: (1) $7.8 million in restructuring charges due to various site consolidations, (2) a $19 million reserve for environmental remediation related to the Orange County site consolidation, and (3) an $11.7 million charge associated with buying out the future U.S. royalty for preeclampsia tests currently in development.

Non-operating expense was $11.9 million versus non-operating income of $10.8 million in the prior year period. Prior year period results included a $26.2 million gain on the sale of vacant land, from which a $9 million contribution was made to establish the Beckman Coulter Foundation. Excluding these items, third quarter 2008 non-operating expense was up $5.5 million versus prior year, due principally to currency related costs. Net earnings were $26.1 million or $0.41 per fully diluted share. Adjusted net earnings were $50.0 million, or $0.78 per fully diluted share.

Adjusted net earnings were negatively impacted by a 350 basis point increase in the adjusted tax rate, from 22.8% to 26.3%. The unusually low tax rate in the prior year was due to discrete items including a tax settlement, reductions of certain foreign tax rates and additional R&D tax credits.

Recent Developments

* Declared a $0.17 per share quarterly cash dividend payable on

November 17, 2008 to all stockholders of record on November 3, 2008,

representing the company's 78th consecutive, quarterly dividend

payout.

* Re-purchased in the third quarter approximately 300,000 shares of

Beckman Coulter stock at an average price of $68.74 per share.

* Announced the release of the REMISOL Advance, a next-generation data

management software that improves laboratory sample workflow by

communicating between the instruments, automation system and the

laboratory information system.

* Entered into an agreement with Nephromics LLC to buy out future U.S.

royalties for tests for the detection, monitoring and risk

assessment of preeclampsia, a leading cause of maternal death.

* Signed a new agreement with Adventist Health of Northern California

valued at approximately $36 million over six years to be the sole

supplier of Chemistry, Immunoassay and Hematology products to an

integrated health network that includes 18 hospitals, numerous

outpatient facilities and 15 home care agencies.

First Nine Months Summary

For the first nine months of 2008, revenue increased 16.0%, with the acquired flow cytometry products contributing approximately 1% to this growth. Revenue grew 11.9% in constant currency, compared to the first nine months of 2007. Year-to-date recurring revenue was up 12.2%, or 8.0% in constant currency. Year-to-date gross margin, reflecting unusually high levels of cash instrument and international sales, decreased 70 basis points to 46.2%. Adjusted operating margin decreased 30 basis points, while adjusted operating income increased by 12.9% to $240.4 million.

Adjusted operating income growth was achieved while absorbing dilution from: (1) $7.4 million related to the flow cytometry acquisition, (2) $3.6 million for changes in retirement vesting terms for new share-based compensation and (3) a payment of $4.6 million related to currency swap agreements embedded in the company's facility leases.

On an adjusted basis, net earnings increased 9.2%, and on a fully diluted share basis, earnings per share increased 8.4% over the same period 2007. Adjusted net earnings were negatively impacted by a 130 basis point increase in the adjusted tax rate, from 25.6% to 26.9%, as a result of fewer favorable discrete items in 2008.

For the first nine months of 2008, free cash flow was $40.7 million, approximately $20 million below prior year period, which included the break-up fee ($40.6 million) associated with the termination of the Biosite acquisition. On an adjusted basis year-to-date EBITDA increased by $60 million, or 16%, compared to 2007.

Full Year Outlook

Garrett continued, "I am encouraged by balanced, above-market revenue growth across all major regions outside the U.S. and diagnostics product areas. Robust topline growth allowed us to invest in acquisitions of promising new tests, our molecular diagnostics project and expansion of our emerging markets' sales and service infrastructure, while still delivering 13% growth in adjusted operating income. Demonstrating the flexibility of our operating model, adjusted operating income growth was achieved despite dilution from our flow cytometry acquisition, pressures from rising transportation costs and increasing raw materials prices.

"Based on current exchange rates, full year revenue growth should be in the range of 12% to 13%. We expect 2008 adjusted operating margin to be on par with prior year. The outlook for adjusted non-operating expense is about $45 million. Adjusted pretax profit growth should be around 10%, with an adjusted tax rate of 26% to 27%. Consequently, our adjusted EPS outlook remains at $3.55 to $3.65 based on a share count of about 64.5 million. Adjusted EBITDA should be about $625 million. Capital expenditures are expected to be approximately $300 million, and depreciation and amortization should be around $260 million.

"In the fourth quarter, we anticipate moderating total revenue growth largely due to slower growing cash instrument revenues. We should see improved gross and operating margins relative to prior year quarter driven by mix and operating efficiencies. Strong growth in Immunoassay as well as Chemistry and Clinical Automation should continue as new product introductions, including three additional work cells, support positive momentum. Launch of the DxH 800, next-generation cellular analysis system, and accelerating growth from our newly acquired flow cytometry products should sustain Cellular Analysis gains. While no company is fully insulated from vulnerable and volatile world markets, we expect strong growth of total and recurring revenue and continuing focus on operating excellence to drive delivery of our EPS objectives," Garrett concluded.

Investor Conference Call

As previously announced, there will be a conference call today, Tuesday, October 28, 2008 at 5:00 pm ET to discuss the third quarter ended September 30, 2008 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, November 15, 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% of the company's 2007 revenue of $2.76 billion. For more information, visit http://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," "estimate," "continue," "pursue," "plans," "should," "likely," "might," or the negative thereof or comparable terminology, and may include without limitation information regarding the company's expectations, goals or intentions regarding the future, including without limitation statements regarding the company's anticipated recurring revenue growth (and that such growth will support future revenue and earnings goals) and statements under the heading "Full Year Outlook," including expectations for revenue growth, adjusted operating margin, adjusted non-operating expense, adjusted pretax profit growth, adjusted tax rate, adjusted earnings per diluted share, adjusted earnings before interest, taxes, depreciation and amortization (" adjusted EBITDA"), capital expenditures, depreciation and amortization, growth in the Life Sciences, Immunoassay, Chemistry and Clinical Automation product areas, new product introductions and total and recurring revenue growth. The outlook provided is based on fiscal year ended 2007 and the three and nine months ended September 30, 2008 adjusted results and does not include special items that have or may occur in 2008.

This press release contains the Company's unaudited financial results for the three and nine months ended September 30, 2008. 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 third quarter 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, market demand for the Company's new and existing products and its ability to increase revenues; the Company's ability to maintain operating expenses within anticipated levels; the Company's ability to successfully and cost effectively establish and manage operations in foreign jurisdictions; the Company's ability to attract and retain qualified personnel; successful development and introduction of new products; the Company's ability to successfully integrate acquired businesses and realize the anticipated benefits from such acquisitions; pricing pressures and other competitive factors; industry consolidation; order and shipment uncertainty; changes in customers' inventory levels and inventory management practices; product defects; intellectual property infringement claims by others and the ability to protect the Company's intellectual property; competition; litigation; financial community and rating agency perceptions of the Company; changes in laws and regulations, including increased taxes; regulation, economic, credit and capital market conditions; and the effects of war, terrorist or similar activity. 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 29, 2008 as well as in the Company's Form 10-Qs filed since then and reports on Form 8-K that the Company may file from time to time. 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 may be required by the federal securities laws.

Changes in Presentation

In connection with the preparation of the Consolidated Financial Statements for the year ended December 31, 2007, management determined that the amounts previously reported on our Condensed Consolidated Statements of Cash Flows for additions to property, plant and equipment, changes in inventories, long-term lease receivables, other and depreciation and amortization expense were incorrect due to inadvertent errors in summarizing these amounts. These immaterial 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 Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Earnings as presented in our Form 10-Q for the three and nine months ended September 30, 2007 or for any other periods. The amounts presented in the Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2007, have been restated to correct these immaterial errors, as set forth in the following table:

Previously

Reported restated

Depreciation and amortization $156.7 $148.0

Change in inventories (46.7) (55.5)

Change in long-term lease receivables 14.5 11.7

Change in other (11.0) (9.4)

Net cash provided by operating activities 284.7 266.0

Additions to property, plant and equipment (223.4) (204.7)

Net cash used in investing activities (201.1) (182.4)

Change in Accounting for Convertible Debt Securities

In May 2008, the FASB issued FSP No. APB 14-1 "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("FSP APB 14-1")." Under this standard, convertible debt securities that may be settled in cash (or other assets), including partial cash settlement, would be separated into a debt and equity component. This change in methodology, which will become effective for us as of the beginning of 2009, will be applied retrospectively to previously issued convertible debt instruments as well as to new instruments. The adoption of this new accounting rule is estimated to increase our 2008 and 2007 non-cash interest expense by approximately $13 million per year, resulting in a reduction of our diluted earnings per share by approximately $0.13 in 2008 and $0.12 in 2007.

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 three and nine months ended September 30, 2008 and 2007 and with respect to Outlook for 2008. 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" and related "adjusted diluted earnings per share," "EBITDA," "adjusted EBITDA," "adjusted tax rate," "free cash flow" and "constant currency growth." The Company also provided its outlook for 2008 for "adjusted operating income," "adjusted operating margin," "adjusted pretax profit growth," "adjusted non-operating expense," "adjusted tax rate," "adjusted earnings per diluted share" and "adjusted EBITDA." 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, environmental remediation, restructuring, or relocations in connection with our supply chain improvement initiatives 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 continue to incur costs for its supply chain initiatives through 2009, management has not developed plans for those initiatives in sufficient detail to estimate the costs to be incurred in those periods and 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, 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. 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 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.

Adjusted tax rate excludes the incremental tax effect 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. A reconciliation of the tax rate, the GAAP measure most directly comparable to adjusted tax rate, 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 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 operating margin, adjusted pretax profit growth, adjusted non-operating expense, adjusted tax rate, adjusted earnings per diluted share and adjusted EBITDA excludes the impact of charges or write-offs associated with acquisitions, environmental remediation, 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 unable to forecast such items with reasonable predictability and do not include those items in our operating budgets. Although management expects to continue to incur costs for its supply chain initiatives through 2009, management has not developed plans for those initiatives in sufficient detail to estimate the costs to be incurred in those periods and 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 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.

Reconciling Items to Non-GAAP Financial Measures

The non-GAAP measures described above exclude the following items:

a) Restructuring expenses -- 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, for the three and nine months ended

September 30, 2008, we recorded net charges related to severance and

other costs of $7.8 million and $13.2 million, respectively.

Additionally, the nine months ended September 30, 2008 includes a

net gain of $3.2 million related to the sale of buildings and land

in Hialeah, Florida. Total supply chain relocation charges for the

three and nine months ended September 30, 2007 was $3.0 million and

$12.7 million, respectively. Also, during the second quarter of

2007, the Company recorded related asset impairment charges of $0.8

million.

b) Environmental remediation -- In September 2008, we recorded a

$19.0 million environmental remediation charge which relates to our

Orange County facility consolidation and planned closure of our

Fullerton, California site. In connection with this consolidation,

we have begun conducting environmental studies at the Fullerton

facility and detected certain contaminants in the soil and

groundwater at the site. The $19.0 million represents our best

estimate of future expenditures for evaluation and remediation at

the site.

c) Royalty buy out -- During the third quarter of 2008, we incurred an

$11.7 million charge related to buying out our future US royalty

payments under a license from Nephromics, LLC ("Nephromics").This

fully paid up license relates to future US sales of a number of

markers including a preeclampsia panel covered by patents licensed

exclusively to Nephromics. The products under the licensing

agreements have not received regulatory clearance and are still in

the development stage, therefore, the cost was charged to R&D.

d) HCV sublicense -- During the second quarter of 2008, we entered into

an agreement with Siemens Healthcare Diagnostics and recorded an R&D

charge of $12 million, for sublicense rights relating to testing for

the hepatitis C virus (HCV). Under the agreement, we can develop,

manufacture and sell a quantitative viral load HCV blood test for

use on our molecular diagnostic instrument, which is in development.

e) Miami vacant land sale -- In 2007, we sold vacant land adjacent to

our Miami, Florida facility for $30.0 million, with an additional

$1.2 million held in escrow for a portion of the land for which

title was in dispute. During the second quarter 2008, we received

the remaining amount held in escrow of $1.2 million and recorded a

gain on sale in other non-operating income. The gain on sale of

$26.2 million was recorded in other non-operating income during the

quarter ended September 30, 2007.

f) Fair market value inventory adjustment -- During the first quarter

of 2008, in connection with our acquisition of the flow cytometry

business of Dako A/S, we recorded a $1.0 million charge related to

the fair value of acquired inventory sold in the first quarter.

g) Rental tax dispute -- In 1998, the Company entered into a sale-

leaseback transaction with Cardbeck Miami Trust ("Cardbeck") in

connection with the Company's Miami facility. In May 2005, Cardbeck

notified the Company 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 the Company 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 June 2007, Cardbeck and the Company

subsequently entered into a settlement of the assessment under which

the Company paid $2.4 million ($1.6 million in sales tax and $0.8

million in interest) which was accrued at June 30, 2007. The

Company also has taken steps to obtain a determination that its

payments to Cardbeck are not subject to the rental tax.

h) Beckman Coulter Foundation -- Using proceeds from the Miami vacant

land sale the company made a $9 million contribution to establish

and fund the Beckman Coulter Foundation (the "Foundation"), during

the quarter ended September 30, 2007. The contribution was

classified under other non-operating expenses.

i) 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 the

Company a break up fee of $54 million. The Company 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.

j) Agencourt Personal Genomics ("APG") -- In 2006, the company sold its

non-controlling interest in APG. The company received approximately

$50 million in cash and recognized a gain from the sale. This gain

and the company's share of APG's operating results were included in

discontinued operations. In connection with the sale an additional

$6 million was held in escrow. In July 2007, pursuant to the terms

of the sale agreement, the company received its $2.6 million

proportionate share of the $6 million. The additional gain on sale

of $2.6 million ($1.6 million, net of taxes) was recorded in

discontinued operations for the third quarter ended 2007.

Contact: Cynthia Skoglund (714) 773-7620

Manager, Investor Relations

BECKMAN COULTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except amounts per share and share data)

(unaudited)

Three Months Ended Nine Months Ended

September 30, September 30,

2008 2007 2008 2007

Product revenue $641.7 $560.5 $1,940.7 $1,657.6

Service revenue 117.1 108.5 346.9 314.7

Total revenue 758.8 669.0 2,287.6 1,972.3

Cost of goods sold 316.3 279.1 967.2 815.1

Cost of service 90.5 78.0 264.0 231.5

Total cost of sales 406.8 357.1 1,231.2 1,046.6

Gross profit 352.0 311.9 1,056.4 925.7

Operating costs and

expenses

Selling, general and

administrative 209.2 181.5 625.5 537.9

Research and

development 74.8 59.9 215.2 176.5

Environmental

remediation 19.0 - 19.0 -

Restructuring 7.8 3.0 13.2 12.7

Asset impairment

charges - - - 0.8

Total operating

costs and expenses 310.8 244.4 872.9 727.9

Operating income 41.2 67.5 183.5 197.8

Non-operating (income)

expense

Interest income (2.4) (3.3) (8.6) (11.1)

Interest expense 13.3 12.2 34.5 38.9

Other, net 1.0 (19.7) 6.3 (58.4)

Total non-operating

expense (income) 11.9 (10.8) 32.2 (30.6)

Earnings from continuing

operations before income

taxes 29.3 78.3 151.3 228.4

Income taxes 3.2 19.9 34.5 63.5

Earnings from continuing

operations 26.1 58.4 116.8 164.9

Earnings from discontinued

operations, net of tax - 1.6 - 1.6

Net earnings $26.1 $60.0 $116.8 $166.5

Basic earnings per

share

Continuing operations $0.42 $0.93 $1.86 $2.64

Discontinued

operations - 0.03 - 0.03

Basic earnings per

share $0.42 $0.96 $1.86 $2.67

Diluted earnings per

share

Continuing operations $0.41 $0.91 $1.81 $2.58

Discontinued

operations - 0.02 - 0.03

Diluted earnings per

share $0.41 $0.93 $1.81 $2.61

Weighted average number of

shares outstanding

(in thousands):

Basic 62,789 62,889 62,931 62,379

Diluted 64,334 64,518 64,403 63,908

BECKMAN COULTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

(unaudited)

September 30, December 31,

2008 2007

Assets

Current assets

Cash and cash equivalents $71.4 $83.0

Trade and other receivables, net 696.8 726.5

Inventories 581.7 523.9

Deferred income taxes 70.7 79.2

Prepaids and other current assets 99.9 75.5

Total current assets 1,520.5 1,488.1

Property, plant and equipment, net 892.9 867.4

Goodwill 695.4 707.4

Other intangible assets, net 403.9 418.4

Other assets 104.1 113.0

Total assets $3,616.8 $3,594.3

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable $204.0 $224.8

Accrued expenses 415.4 438.2

Income taxes payable - 32.0

Short-term borrowings 66.9 89.4

Current maturities of long-term debt 4.2 12.8

Total current liabilities 690.5 797.2

Long-term debt, less current maturities 927.6 888.6

Deferred income taxes 81.5 73.4

Other liabilities 382.6 393.4

Total liabilities 2,082.2 2,152.6

Commitments and contingencies

Stockholders' equity

Preferred stock - -

Common stock 6.9 6.8

Additional paid-in capital 551.1 519.3

Retained earnings 1,331.2 1,246.2

Accumulated other comprehensive loss (15.5) (12.8)

Treasury stock, at cost (339.1) (317.8)

Common stock held in grantor trust, at cost (19.0) (17.8)

Grantor trust liability 19.0 17.8

Total stockholders' equity 1,534.6 1,441.7

Total liabilities and stockholders'

equity $3,616.8 $3,594.3

BECKMAN COULTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

Nine Months Ended

September 30,

restated

2008 2007

Cash flows from operating activities

Net earnings $116.8 $166.5

Less: Earnings from discontinued operations,

net of tax - 1.6

Earnings from continuing operations 116.8 164.9

Adjustments to reconcile net earnings to net

cash provided by operating activities

Depreciation and amortization 192.1 148.0

Provision for doubtful accounts receivable 6.6 4.1

Share-based compensation expense 27.0 19.9

Gain on sales of building and land (5.1) (26.2)

Asset impairment charges - 0.8

U.S. pension trust contributions (8.2) (9.3)

Deferred income taxes 8.1 (1.6)

Changes in assets and liabilities

Trade and other receivables 18.8 19.5

Inventories (57.4) (55.5)

Accounts payable and accrued expenses (29.5) 18.7

Income taxes payable (32.0) (18.6)

Long-term lease receivables 8.3 11.7

Other (1.6) (9.4)

Net cash provided by operating activities

of continuing operations 243.9 267.0

Net cash used in operating activities of

discontinued operations - (1.0)

Net cash provided by operating activities 243.9 266.0

Cash flows from investing activities

Additions to property, plant and equipment (203.2) (204.7)

Proceeds from sales of building and land 7.4 30.0

Payments for business acquisitions and

technology license assets (13.0) (10.3)

Net cash used in investing activities of

continuing operations (208.8) (185.0)

Net cash provided by investing activities

of discontinued operations - 2.6

Net cash used in investing activities (208.8) (182.4)

Cash flows from financing activities

Dividends to stockholders (31.9) (30.0)

Proceeds from issuance of stock 67.4 68.3

Repurchase of common stock as treasury stock (93.6) (19.9)

Repurchase of common stock held in grantor

trust (1.3) (0.7)

Excess tax benefits from share-based payment

transactions 11.6 18.4

Debt borrowings, net 44.8 8.0

Debt repayments (42.9) (122.1)

Net cash used in financing activities (45.9) (78.0)

Effect of exchange rates on cash and cash

equivalents (0.8) 4.0

Change in cash and cash equivalents (11.6) 9.6

Cash and cash equivalents-beginning of period 83.0 75.2

Cash and cash equivalents-end of period $71.4 $84.8

BECKMAN COULTER, INC

SEGMENT REVENUES*

(in millions)

(unaudited)

Three Months Ended Constant

September 30, Reported Currency

2008 2007 Growth % Growth % **

Clinical Diagnostics:

Chemistry and

Clinical Automation $220.4 $196.5 12.2% 9.0%

Cellular Analysis 233.1 203.0 14.8% 11.9%

Immunoassay and

Molecular Diagnostics 182.4 159.6 14.3% 10.7%

Total Clinical

Diagnostics 635.9 559.1 13.7% 10.5%

Life Sciences 122.9 109.9 11.9% 8.5%

Total revenues $758.8 $669.0 13.4% 10.2%

Nine Months Ended Constant

September 30, Reported Currency

2008 2007 Growth % Growth % **

Clinical Diagnostics:

Chemistry and

Clinical Automation $669.0 $585.4 14.3% 10.3%

Cellular Analysis 709.1 605.7 17.1% 13.2%

Immunoassay and

Molecular Diagnostics 548.7 461.2 19.0% 14.7%

Total Clinical

Diagnostics 1,926.7 1,652.3 16.6% 12.6%

Life Sciences 361.0 320.0 12.8% 8.2%

Total revenues $2,287.6 $1,972.3 16.0% 11.9%

* Amounts may not foot due to rounding.

** 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:

> Autochemistry

> Protein and rapid test products

> Clinical Automation

Cellular includes:

> Hematology

> Coagulation

> Flow cytometry and related products

Immunoassay and Molecular Diagnositcs includes:

> All immunoassay products

> Molecular diagnostics products

Life Sciences

Life Sciences includes:

> Life science tools: (All robotic automation, genetic

analysis products, centrifuge and analytical systems)

> Industrial particle characterization

BECKMAN COULTER, INC

SEGMENT REVENUES*

(in millions)

(unaudited)

2008

Qtr 1 Qtr 2 Qtr 3 Qtr 4 YTD

Clinical

Diagnostics:

Chemistry

and Clinical

Automation $215.6 $233.0 $220.4 $669.0

Cellular

Analysis 231.5 244.5 233.1 709.1

Immunoassay

and Molecular

Diagnostics 172.9 193.3 182.4 548.7

Total

Clinical

Diagnostics 620.0 670.8 635.9 1,926.7

Life Sciences 110.5 127.5 122.9 361.0

Total

revenues $730.5 $798.3 $758.8 $2,287.6

2007

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year

Clinical

Diagnostics:

Chemistry and

Clinical

Automation $183.9 $205.0 $196.5 $229.9 $815.3

Cellular

Analysis 194.4 208.3 203.0 235.2 840.9

Immunoassay

and Molecular

Diagnostics 141.9 159.7 159.6 165.9 627.1

Total

Clinical

Diagnostics 520.2 573.0 559.1 631.0 2,283.3

Life Sciences 93.4 116.7 109.9 158.0 478.0

Total

revenues $613.6 $689.7 $669.0 $789.0 $2,761.3

2006

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year

Clinical

Diagnostics:

Chemistry and

Clinical

Automation $163.9 $175.3 $180.9 $196.1 $716.2

Cellular

Analysis 184.0 196.6 202.8 223.0 806.4

Immunoassay

and Molecular

Diagnostics 119.4 131.2 127.4 140.4 518.4

Total

Clinical

Diagnostics 467.3 503.1 511.1 559.5 2,041.0

Life Sciences 101.7 113.2 120.1 152.5 487.5

Total

revenues $569.0 $616.3 $631.2 $712.0 $2,528.5

* Amounts may not foot due to rounding.

BECKMAN COULTER, INC

REVENUES BY GEOGRAPHY*

(in millions)

(unaudited)

Three Months Ended Constant

September 30, Reported Currency

2008 2007 Growth % Growth %

Revenues by geography:

United States $376.5 $352.4 6.8% 6.8%

Europe 165.4 138.6 19.3% 10.1%

Emerging Markets** 68.8 56.9 21.0% 17.0%

Asia Pacific 94.5 76.7 23.3% 17.4%

Other*** 53.6 44.3 20.9% 15.9%

Total revenues $758.8 $669.0 13.4% 10.2%

Nine Months Ended Constant

September 30, Reported Currency

2008 2007 Growth % Growth %

Revenues by geography:

United States $1,133.4 $1,044.4 8.5% 8.5%

Europe 511.8 427.9 19.6% 8.9%

Emerging Markets** 205.1 156.2 31.3% 26.6%

Asia Pacific 279.2 213.3 30.9% 23.5%

Other*** 158.1 130.5 21.1% 12.0%

Total revenues $2,287.6 $1,972.3 16.0% 11.9%

* Amounts may not foot due to rounding

** Includes Eastern Europe, Russia, Middle East, Africa and India

*** Includes Canada and Latin America

BECKMAN COULTER, INC

SALES MIX*

(in millions)

(unaudited)

2008

Qtr 1 Qtr 2 Qtr 3 Qtr 4 YTD

Cash

instrument

sales $151.2 $179.6 $164.2 $495.0

Recurring

revenue 579.3 618.7 594.7 1,792.7

Total

revenues $730.5 $798.3 $758.8 $2,287.6

2007

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year

Cash

instrument

sales $100.3 $143.7 $130.3 $208.5 $582.9

Recurring

revenue 513.3 546.0 538.6 580.5 2,178.4

Total

revenues $613.6 $689.7 $669.0 $789.0 $2,761.3

2006

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Year

Cash

instrument

sales $116.2 $123.4 $144.4 $197.6 $581.6

Recurring

revenue 452.8 492.9 486.8 514.3 1,946.8

Total

revenues $569.0 $616.3 $631.2 $711.9 $2,528.5

* Amounts may not foot due to rounding.

BECKMAN COULTER, INC.

RECONCILIATION OF GAAP OPERATING INCOME AND MARGIN TO

ADJUSTED OPERATING INCOME AND MARGIN*

(in millions)

(unaudited)

Three Months Ended

September 30,

2008 2007

GAAP operating income $41.2 $67.5

Reconciling items:

Restructuring expenses (a) 7.8 3.0

Environmental remediation (b) 19.0 -

Royalty buy out (c) 11.7 -

Adjusted operating income** $79.7 $70.5

GAAP operating margin 5.4% 10.1%

Impact of adjustments 5.1% 0.4%

Adjusted operating margin 10.5% 10.5%

Nine Months Ended

September 30,

2008 2007

GAAP operating income $183.5 $197.8

Reconciling items:

Restructuring expenses (a) 13.2 13.5

Environmental remediation (b) 19.0 -

Royalty buy out (c) 11.7 -

HCV sublicense (d) 12.0 -

Fair market value inventory adjustment (f) 1.0 -

Rental tax dispute (g) - 1.6

Adjusted operating income** $240.4 $212.9

GAAP operating margin 8.0% 10.0%

Impact of adjustments 2.5% 0.8%

Adjusted operating margin 10.5% 10.8%

* Amounts may not foot due to rounding.

** 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*

(in millions, except amounts per share)

(unaudited)

Three Months Ended September 30,

2008 2007

Per Per

Amount Diluted Share Amount Diluted Share

GAAP net earnings $26.1 $0.41 $60.0 $0.93

Less: Earnings from

discontinued operations,

net of tax (j) - - 1.6 0.02

Earnings from continuing

operations 26.1 0.41 58.4 0.91

Reconciling items:

Restructuring expenses (a) 7.8 0.12 3.0 0.05

Environmental

remediation (b) 19.0 0.30 - -

Royalty buy out (c) 11.7 0.18 - -

Miami vacant land

sale (e) - - (26.2) (0.41)

Beckman Coulter

Foundation (h) - - 9.0 0.14

Adjustment for income

taxes (14.6) (0.23) 5.3 0.08

Adjusted net earnings** $50.0 $0.78 $49.5 $0.77

Nine Months Ended September 30,

2008 2007

Per Per

Amount Diluted Share Amount Diluted Share

GAAP net earnings $116.8 $1.81 $166.5 $2.61

Less: Earnings from

discontinued operations,

net of tax (j) - - 1.6 0.03

Earnings from continuing

operations 116.8 1.81 164.9 2.58

Reconciling items:

Restructuring

expenses (a) 13.2 0.20 13.5 0.21

Environmental

remediation (b) 19.0 0.30 - -

Royalty buy out (c) 11.7 0.18 - -

HCV sublicense (d) 12.0 0.19 - -

Miami vacant land

sale (e) (1.2) (0.02) (26.2) (0.41)

Fair market value

inventory adjustment (f) 1.0 0.02 -

Rental tax dispute (g) - - 2.4 0.04

Beckman Coulter

Foundation (h) - - 9.0 0.14

Biosite break-up fee (i) - - (40.6) (0.64)

Adjustment for income

taxes (21.1) (0.33) 15.7 0.25

Adjusted net earnings** $151.4 $2.35 $138.7 $2.17

* Amounts may not foot due to rounding.

** See accompanying Non-GAAP Financial Measures section for description of

Non-GAAP adjustments.

BECKMAN COULTER, INC.

RECONCILIATION OF GAAP NET EARNINGS TO ADJUSTED EBITDA*

(in millions)

(unaudited)

Nine Months Ended

September 30,

2008 2007

GAAP net earnings $116.8 $166.5

Less: Earnings from discontinued operation,

net of tax (j) - 1.6

Earnings from continuing operations 116.8 164.9

Income taxes 34.5 63.5

Interest expense 34.5 38.9

Depreciation and amortization 192.1 148.0

EBITDA 377.9 415.3

Reconciling items:

Restructuring expenses (a) 13.2 13.5

Environmental remediation (b) 19.0 -

Royalty buy out (c) 11.7 -

HCV sublicense (d) 12.0 -

Miami vacant land sale (e) (1.2) (26.2)

Fair market value inventory adjustment (f) 1.0 -

Rental tax dispute (g) - 2.4

Beckman Coulter Foundation (h) - 9.0

Biosite break-up fee (i) - (40.6)

Adjusted EBITDA** $433.6 $373.4

* Amounts may not foot due to rounding.

** See accompanying Non-GAAP Financial Measures section for description of

Non-GAAP adjustments.

BECKMAN COULTER, INC.

RECONCILIATION OF GAAP EFFECTIVE TAX RATE TO ADJUSTED TAX RATE*

(in millions)

(unaudited)

Three Months Ended

September 30,

2008 2007

GAAP effective tax rate 10.9% 25.4%

Reconciling items:

Restructuring expenses (a) 3.1% 0.6%

Environmental remediation (b) 7.6% -

Royalty buy out (c) 4.7% -

Miami vacant land sale (e) - (4.8%)

Beckman Coulter Foundation (h) - 1.6%

Adjusted tax rate** 26.3% 22.8%

Nine Months Ended

September 30,

2008 2007

GAAP effective tax rate 22.8% 27.8%

Reconciling items:

Restructuring expenses (a) 1.0% 0.7%

Environmental remediation (b) 1.4% -

Royalty buy out (c) 0.8% -

HCV sublicense (d) 0.9% -

Miami vacant land sale (e) (0.1%) (1.4%)

Fair market value inventory adjustments (f) 0.1% -

Rental tax dispute (g) - 0.1%

Beckman Coulter Foundation (h) - 0.5%

Biosite break-up fee (i) - (2.1%)

Adjusted tax rate** 26.9% 25.6%

* Amounts may not foot due to rounding.

** See accompanying Non-GAAP Financial Measures section for description of

Non-GAAP adjustments.

BECKMAN COULTER, INC.

RECONCILIATION OF FREE CASH FLOW

(in millions)

(unaudited)

Nine Months Ended

September 30,

2008 2007

Net cash provided by operating activities $243.9 $266.0

Additions to property, plant and equipment (203.2) (204.7)

Free cash flow $40.7 $61.3


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SOURCE Beckman Coulter, Inc.
Copyright©2008 PR Newswire.
All rights reserved


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