Higher R&D; Costs Keep Net Earnings Down at Beckman

Citing greater research and development expenditures, Beckman Instruments Inc. said Monday that net earnings increased only 2.1% to $9.6 million in the third quarter from $9.4 million for the same three-month period in 1989.

At the same time, Beckman, a manufacturer of medical diagnostic equipment, said sales increased to $201 million for the quarter ended Sept. 30, up 7.7% from $186.7 million in the third quarter of last year.

Net earnings for the first three quarters of the year dropped to $26.2 million from $31.5 million. Sales for the nine months were up slightly to $589.4 million from $586.2 million last year.

The company blamed slow sales this year on limited budgets at publicly funded research laboratories, which are some of the Fullerton-based company’s biggest customers. There are fewer research grants available to those labs, the company said, so they’re not purchasing as much equipment.

Some labs, too, are leasing equipment from Beckman rather than purchasing it outright, which “has had the effect of stretching out sales revenues” over longer periods of time, said Beckman President Lou Rosso in a statement.

Net income for the first nine months of the year was down in part because the company has increased its research and development budget to $59.7 million during the first three quarters, a 17% increase from last year.

New products from this research should help Beckman expand its market share “during a time of relatively weak demand” for diagnostic equipment, Rosso said.

The company’s stock closed at $12.75, up 12.5 cents in trading Monday on the New York Stock Exchange.

BECKMAN’S FINANCIAL PERFORMANCE

In the third quarter, Beckman Instruments reported a 7.7% increase in revenues and a 2.1% increase in net earnings. Figures are in millions, except amounts per share

Figures are in thousands except per share data.

3rd Qtr 3rd Qtr 12 Months 12 Months 1990 1989 1990 1989 Revenue $201.0 $186.7 $589.4 $586.2 Net income (loss) 9.6 9.4 26.2 31.5 Per share (loss) $0.33 $0.33 $0.91 $1.11

Source: Beckman Instruments Inc.