Beckman Results Show 25% Decline : Earnings: The company attributed a poor second quarter to increased spending for product development and a drop in federal research grants.

Reflecting increased spending for new product development and a decline in federal grants for medical research, Beckman Instruments’ second-quarter earnings fell 25%, to $8.6 million from $11.4 million a year earlier, the company said Monday.

The Fullerton-based manufacturer of medical diagnostic and life science research instruments has struggled with declining sales and earnings since SmithKline Beckman Corp. spun off the unitas an independent public company in July, 1989.

Sales for the second quarter ended June 30 rose 1% to $202.9 million, from $200.5 million in the year-earlier period. Company executives said the sales gain, though small, is a sign that the company may be emerging from its problems.

“We think the worst is over,” said Louis T. Rosso, Beckman’s chief executive. He noted that federal budget proposals call for increased spending for medical research next year, which would translate into new orders for the equipment that Beckman makes and sells.

“We don’t expect there will be an explosive bounce-back of public funding,” Rosso said. “It just will be better.”

For the first six months of the year, Beckman’s earnings were $16.6 million, down from $22.1 million for the same period of 1989. Sales declined from $399.5 million to $388.4 million.

Not only have sales of scientific laboratory instruments suffered, but Beckman’s sales of diagnostic instruments have been hit by a trend among financially strapped hospitals to lease costly medical equipment rather than buy it.

Jay Steffenhagen, Beckman’s investor relations manager, said that while lease contracts are profitable and generate revenue over a number of years, they have a short-term depressive effect on earnings.

The company said the second-quarter decline in profits was due primarily to “strategic investment in new products,” noting that the company’s funding for research and development in that quarter was $20.8 million, or 21% greater than in the same period of 1989.

Rosso said the company is cutting back on investments in other business areas, such as marketing and administration, to bolster spending on research in order to develop products for the fast-developing biotechnology market. “We believe the explosion in biological sciences augurs very well for this business over the long term,” he said.

Rosso also said that while domestic sales of equipment for the life sciences market have been slumping, international sales of the same gear are on the upswing.

Beckman stock, traded on the New York Stock Exchange, closed Monday at $16.75 a share, down 50 cents from Friday’s close.

BECKMAN INSTRUMENTS’ PERFORMANCE

In the second quarter ended June 30, Beckman Instruments Inc. reported earnings of $8.6 million, down 25% from $11.4 million. The company attributed the declining profits to its increased spending on research and development and reduced demand. Figures in millions, except per share

2nd Qtr 2nd Qtr 6 Months 6 Months 1990 1989 1990 1989 Revenue $202.9 $200.5 $388.4 $399.5 Net income (loss) $8.6 $11.4 $16.6 $22.1 Per share (loss) $.30 $.40 $.58 $.78

Source: Beckman Instruments, Inc.