Moody's affirms Beckman Coulter

Moody's Investors Service confirmed the ratings of Beckman Coulter, parent of Diagnostic Systems Laboratories Corp., including its Baa3 senior universal shelf registration, Ba1subordinate universal shelf registration, Baa3 $240 million 7.45% senior notes due 2008, Baa3 $235 million 6 7/8% senior notes due 2011 and Baa3 $100 million 7.05% senior debentures due 2026.

The outlook is stable. This concludes a review for possible upgrade begun on May 25, 2005.

The confirmation reflects Moody's forecast that reported or unadjusted free cash flow will fall from $135 million in 2005 to between $85 million and $90 million in 2006 and then rebound to between $115 million and $120 million in 2007.

Beckman's free cash flow from 2005 to 2010 is negatively affected by a shift from sales-type-leases to operating leases, which is a customer preference in which the company will spend substantially more to finance the use of equipment by customers, particularly in 2006 through 2010.

Moody's predicted that the impact on cash flow will be minimized by the company's expected and continued growth and that the company will generate around $320 million in fully adjusted cash flow from operations in both 2005 and 2006. Also mitigating these concerns are a large and growing market for equipment for diagnostic testing and research, as well as Beckman's strong position as the number one or number two player in most of its segments, the agency said.

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