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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transistion period from to
-------- --------
COMMISSION FILE NUMBER: 1-7598
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER:
VARIAN ASSOCIATES, INC.
STATE OR OTHER JURISDICTION OF IRS EMPLOYER
INCORPORATION OR ORGANIZATION: IDENTIFICATION NO.:
DELAWARE 94-2359345
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES:
3050 Hansen Way, Palo Alto, California 94304-1000
(415) 493-4000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, New York Stock Exchange
$1 par value Pacific Stock Exchange
Preferred Stock New York Stock Exchange
Purchase Rights Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G)OF THE ACT:
None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES /X/ NO / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
The aggregate market value of the Registrant's voting stock held by
non-affiliates as of December 1, 1994 was $1,155,602,000.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of December 1, 1994: 33,933,000 shares of $1 par value common
stock.
An index of exhibits filed with this Form 10-K is located on pages 22
through 23.
DOCUMENTS INCORPORATED BY REFERENCE:
DOCUMENT DESCRIPTION 10-K PART
- - - -------------------- ---------
Certain sections, identified by caption and page number, of the
Registrant's Annual Report to Stockholders for the fiscal year ended
September 30, 1994 (the "Annual Report") .................................... I, II, IV
Certain sections, identified by caption, of the Proxy Statement for
Registrant's 1995 Annual Meeting of Stockholders (the "Proxy Statement") .... III
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PART I
Item 1. Business
Varian Associates, Inc. together with its subsidiaries (hereinafter referred to
as the "Company" or the "Registrant") is a high- technology enterprise which
was founded in 1948. It is engaged in the research, development, manufacture,
and marketing of products and services for the fields of communications, health
care, industrial production, scientific and industrial research, defense, and
environmental monitoring. The Company's principal products are health care
systems, analytical instruments, semiconductor production equipment, and
electron devices. Its foreign subsidiaries engage in some of the
aforementioned businesses and market the Company's products outside the United
States. As of September 30, 1994, the Company employed approximately 8,100
people worldwide.
The Company sells its products throughout the world and has 37 field sales
offices in the U.S. and 52 sales offices in other countries. In general, its
markets are quite competitive, characterized by the application of advanced
technology and by the development of new products and applications. Many of
the Company's competitors are large, well-known manufacturers, and no reliable
information is generally available on their sales of similar products.
There were no material changes in the kinds of products produced or in the
methods of distribution since the beginning of the fiscal year. The Company
anticipates adequate availability of raw materials.
The Company's sales to customers outside of the U.S. for 1994 were $732
million. The profitability of such sales is subject to greater fluctuation
than U.S. sales because of generally higher marketing costs and changes in the
relative value of currencies. Additional information concerning the method of
accounting for the Company's foreign currency translation is set forth under
the caption "Foreign Currency Translation" on page 26 of the Annual Report,
which information is incorporated herein by reference.
The Company's operations are grouped into four segments. These segments, their
products, and the markets they serve are described in the following paragraphs.
The Health Care Systems business manufactures and markets linear accelerators,
cancer treatment planning systems, and data management systems for radiotherapy
centers. It also designs and manufactures a wide range of X-ray generating
tubes for the medical diagnostic imaging market worldwide. Linear accelerators
are used in cancer therapy and for industrial radiographic applications. The
Company's leading CLINAC(R) series of medical linear accelerators, marketed to
hospitals and clinics worldwide, generates therapeutic X-rays and electron
beams for cancer treatment. LINATRON(R) linear accelerators are used in
industrial applications to X-ray heavy metallic structures for quality control.
The Company is active in four primary medical X-ray imaging market segments:
CT scanner; diagnostic radiographic/fluoroscopic; special procedures; and
mammography. Backlog for the Health Care Systems business amounted to $281
million and $274 million in fiscal 1994 and 1993, respectively.
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Item 1. (continued)
The Instruments business manufactures, sells, and services a variety of
scientific instruments for analyzing chemical substances including metals,
inorganic materials, organic compounds, polymers, natural substances, and
biochemicals. The products include liquid and gas chromatographs, gas
chromatograph/mass spectrometers, NMR spectrometers, ultraviolet visible-near
infrared spectrometers, atomic absorption spectrometers, inductively coupled
plasma spectrometers, inductively coupled plasma/mass spectrometers, data
systems, and small, disposable tools used to prepare chemical samples for
analysis. Typical applications are biochemical and organic chemical research,
measurement of the chemical composition of mixtures, studies of the chemical
structure of pure compounds, quality control of manufactured materials,
chemical analysis of natural products, and environmental monitoring and
measurement. The major markets served are environmental laboratories;
pharmaceutical and chemical industries; chemical, life science, and academic
research; government laboratories; and specific areas of the health care
industry. Backlog for this business amounted to $78 million and $84 million in
fiscal 1994 and 1993, respectively.
The Company's Semiconductor Equipment business manufactures processing systems
which are essential to making integrated circuits. A world leader in the
development, manufacture, and application of ion implantation and
sputter-coating systems, Varian equipment is operating in every major wafer
fabrication facility in the world, and its latest models are being used to
develop tomorrow's state- of-the-art devices. Backlog for this business
amounted to $245 million and $105 million in fiscal 1994 and 1993,
respectively. The discontinuance of the semiconductor equipment distribution
agreement with Tokyo Electron Limited in the U.S. and Europe was completed as
planned effective September 30, 1994. Semiconductor equipment orders and sales
growth will be moderated by discontinuation of the distribution of TEL
products. The impact on Semiconductor Equipment earnings is expected to be
minimal under the terms of the termination, which includes payments to the
Company for certain future TEL sales.
The Company's Electron Devices business holds world leadership positions in
microwave tube and power amplifiers used in satellite communications, radar,
radio and television broadcasting, and other communications applications, as
well as electronic countermeasures and medical diagnostics. Approximately
one-third of the segment's sales are for defense applications, including
electronic countermeasures, radar, and missile guidance. About one-half of its
sales are for communication applications, including radio and television
broadcasting and satellite communications. Industrial markets are also served.
Replacements and spares represent approximately 40 percent of the tube sales,
particularly those used for communications and defense applications. Backlog
for this segment amounted to $155 million and $142 million in fiscal 1994 and
1993, respectively. On October 20, 1994, the Company announced that it will
seek a buyer for the Electron Devices operations. The sale will not go forward
unless the selling price recognizes the increased profitability and improving
value attained in the business in recent years.
Additional information regarding the Company's lines of business and
international operations are incorporated herein by reference from the
information provided under the captions "Industry Segments" and "Geographic
Segments" on pages 34-35 of the Annual Report.
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Item 1. (continued)
The Company maintains in-house patent attorneys, holds numerous patents in the
United States and in other countries, and has many patent applications pending
in the U.S. and in other countries. The Company considers the development of
patents through creative research and the maintenance of an active patent
program to be advantageous in the conduct of its business, but does not regard
the holding of patents as essential to its operations. The Company grants
licenses to reliable manufacturers on various terms and cross-licensing
arrangements with other parties. Information regarding the Company's research
and development costs is incorporated herein by reference from the information
provided under the caption "Research and Development" on page 28 of the Annual
Report.
The Company's operations are subject to various federal, state and/or local
laws regulating the discharge of materials to the environment or otherwise
relating to the protection of the environment. The Company is also involved in
various stages of environmental investigation and/or remediation under the
direction of or in consultation with federal, state and/or local agencies at
certain current or former Company facilities (see the information provided
under the captions "Management's Discussion and Analysis" and "Contingencies"
on pages 19-20 and 33, respectively, of the Annual Report, which information is
incorporated herein by reference). The Company has established reserves for
these matters, which reserves management believes are adequate. Based on
information currently available, management believes that the Company's
compliance with laws which have been adopted regulating the discharge of
materials to the environment or relating to the protection of the environment
is otherwise not reasonably likely to have a material adverse effect on the
capital expenditures, earnings or competitive position of the Company. Also,
estimated capital expenditures for environmental control facilities are not
expected to be material in fiscal 1995, nor are they expected to be material in
fiscal 1996.
Executive Officers of the Registrant
The following table sets forth the names and ages of the Registrant's executive
officers, together with positions and offices held within the last five years
by such executive officers. Officers are appointed to serve until the meeting
of the Board of Directors following the next Annual Meeting of Stockholders and
until their successors have been elected and have qualified. Ages are as of
December 19, 1994.
Name Age Position Term
---- --- -------- ----
J. Tracy O'Rourke 59 Chairman of the Board and Chief Executive Officer 1990-Present
(Director) Executive Vice President and Chief Operating Officer, 1989-1990
Rockwell International Corporation (a diversified
electronics company)
Richard A. Aurelio 50 Executive Vice President 1992-Present
President, Semiconductor Equipment 1991-1992
Executive Vice President, ASM Lithography (a 1987-1991
semiconductor manufacturing company)
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Item 1. (continued)
Allen J. Lauer 57 Executive Vice President 1990-Present
Senior Vice President and President, Instruments 1989-1990
Richard M. Levy 56 Executive Vice President 1990-Present
Senior Vice President and President, Medical Equipment 1989-1990
Al D. Wilunowski 48 Executive Vice President 1990-Present
Vice President and President, Electron Devices 1989-1990
Timothy E. Guertin 45 Corporate Vice President 1992-Present
President, Medical Equipment 1990-Present
General Manager, Medical Equipment 1989-1990
Allen K. Jones 47 Vice President 1991-Present
Treasurer 1990-Present
Director, Investor Relations and Financial Services 1987-1990
Robert A. Lemos 53 Vice President, Finance and Chief Financial Officer 1986-Present
Joseph B. Phair 47 Secretary 1991-Present
Vice President and General Counsel 1990-Present
Associate General Counsel and Director, Legal 1987-1990
Department Operations
Wayne P. Somrak 49 Vice President 1991-Present
Controller 1985-Present
There is no family relationship between any of the executive officers.
5
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Item 2. Properties
The Company's executive offices and principal research and manufacturing
facilities are located in Palo Alto, California, on 71 acres of land held under
leaseholds which expire in the years 2012 through 2058. These facilities are
owned by the Company, and provide floor space totaling 1,160,000 square feet.
The following is a summary of the Company's properties at September 30, 1994:
Land (Acres) Buildings (000's Sq. Ft.)
------------ -------------------------
Owned Leased Owned Leased
----- ------ ----- ------
United States 142 91 2,446 559
International 35 6 422 331
--- -- ----- ---
177 97 2,868 890
=== == ===== ===
Utilization of facilities by segment is shown in the following table:
Buildings (000's Sq. Ft.)
-------------------------------------------------------------
Manufacturing, Administrative
and Research & Development
--------------------------
Marketing
U.S. Non-U.S. Total and Service Total
---- -------- ----- ------------ -----
Health Care Systems 419 40 459 171 672
Instruments 299 192 491 364 855
Semiconductor Equipment 286 41 327 139 466
Electron Devices 912 110 1,022 59 1,039
Other Operations 50 0 50 0 50
----- --- ----- --- -----
Total Operations 1,966 383 2,349 733 3,082
===== === ===== ===
Other 676
-----
Total 3,758
=====
Other Operations includes manufacturing support.
The capacity of these facilities is sufficient to meet current demand. The
Company owns substantially all of the machinery and equipment in use in its
plants. It is the Company's policy to maintain its plants and equipment in
excellent condition and at a high level of efficiency.
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Item 2. (continued)
Manufacturing sites by geographical location are as follows:
Health Care Systems California, Illinois, South Carolina, Utah,
England, Finland, Switzerland
Instruments California, Massachusetts, Australia, Italy
Semiconductor Equipment California, Massachusetts, Korea
Electron Devices California, Massachusetts, Arizona, Canada
Company-owned and staffed sales offices throughout the world are located in
North and South America: Brazil, Canada, Mexico, United States; Europe:
Austria, Belgium, Denmark, France, Italy, the Netherlands, Spain, Sweden,
Switzerland, Finland, England, Germany; and Pacific Basin: Australia, People's
Republic of China, Hong Kong, India, Japan, Korea, Singapore.
Item 3. Legal Proceedings
Information required by this Item is incorporated herein by reference from the
information provided under the caption "Contingencies" on page 33 of the Annual
Report.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters
The information required by this Item is incorporated herein by reference from
the information provided under the caption "Common Stock Prices (Unaudited)" on
page 36 of the Annual Report, and the information provided under the caption
"Long-Term Debt" on page 29 of the Annual Report.
The Company's common stock is listed on the New York and Pacific Stock
Exchanges under the trading symbol VAR.
There were 6,253 holders of record of the Company's common stock on December 1,
1994.
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ITEM 6. SELECTED FINANCIAL DATA
FISCAL YEARS
- - - ------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS) 1994 1993 1992 1991 1990
- - - ------------------------------------------------------------------------------------------------------------------------
SUMMARY OF OPERATIONS
Sales $ 1,552.5 1,311.0 1,288.0 1,377.9 1,264.8
---------- ---------- ---------- ---------- ----------
Earnings from Continuing Operations
before Taxes $ 128.0 73.9 62.3 92.8 20.7
Taxes on earnings $ 48.6 28.1 23.7 35.3 8.1
---------- ---------- ---------- ---------- ----------
Earnings from Continuing Operations $ 79.4 45.8 38.6 57.5 12.6
Loss from Discontinued Operations,
Net of Benefits $ - - - - (16.7)
--------- ---------- ---------- ---------- ----------
Earnings (Loss) before Cumulative Effect of 79.4 45.8 38.6 57.5 (4.1)
Change in Accounting for Income Taxes
Cumulative Effect of Accounting Change $ - - - (7.8) -
---------- ---------- ---------- ---------- ----------
NET EARNINGS (LOSS) $ 79.4 45.8 38.6 49.7 (4.1)
========== ========== ========= ========== ==========
EARNINGS (LOSS) PER SHARE - FULLY DILUTED
Earnings Continuing Operations $ 2.22 1.26 1.02 1.47 0.32
Loss Discontinued Operations $ - - - - (0.42)
---------- ---------- ---------- ---------- ----------
Earnings (Loss) Per Share Before
Cumulative Effect of Change in Accounting
for Income Taxes $ 2.22 1.26 1.02 1.47 (0.10)
Cumulative Effect of Accounting Change $ - - - (0.20) -
---------- ---------- ---------- ---------- ----------
NET EARNINGS (LOSS) PER SHARE $ 2.22 1.26 1.02 1.27 (0.10)
========== ========== ========== ========== ==========
DIVIDENDS DECLARED PER SHARE $ 0.230 0.195 0.175 0.153 0.130
========== ========== ========== ========== ==========
FINANCIAL POSITION AT YEAR END
Total assets $ 962.4 878.7 878.7 869.8 923.6
Long-term debt (excluding current portion) $ 60.4 60.5 49.7 68.0 76.8
Note: Certain amounts in prior years have been restated to reflect discontinued
operations.
This selected financial data should be read in conjunction with the
related consolidated financial statements and notes thereto, incorporated
herein by reference pursuant to Item 8.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by this Item is incorporated herein by reference from
the information provided under the caption "Management's Discussion and
Analysis" on pages 19-20 of the Annual Report.
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Item 8. Financial Statements and Supplementary Data
The information required by this Item is incorporated herein by reference from
the Report of Independent Accountants on page 37 of the Annual Report and the
Consolidated Financial Statements, Notes to the Consolidated Financial
Statements, and Supplementary Data on pages 22-36 of the Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
Part III
Item 10. Directors and Executive Officers of the Registrant
The information required by this Item with respect to the Company's executive
officers is incorporated herein by reference from the information under Item 1
of Part I of this Report. The information required by this Item with respect
to the Company's directors is incorporated herein by reference from the
information provided under the caption "Election of Directors" of the Proxy
Statement which will be filed with the Commission. The information required by
Item 405 of Regulation S-K is incorporated herein by reference from the
information provided under the caption "Securities Exchange Act of 1934" of the
Proxy Statement.
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference from
the information provided under the caption "Certain Executive Officer
Compensation and Other Information" of the Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this Item is incorporated herein by reference from
the information provided under the caption "Stock Ownership of Certain
Beneficial Owners" of the Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required by this Item is incorporated herein by reference from
the information provided under the captions "Management Indebtedness and
Certain Transactions", "Change in Control Arrangements" and "Arrangement with
Mr. Wilunowski" of the Proxy Statement.
9
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Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) The following documents are filed as a part of this report:
(1) Financial Statements: The following financial
statements of the Registrant and its subsidiaries, and
Report of Independent Accountants, are incorporated
herein by reference from pages 22 through 35, and page
37 of the Annual Report:
Consolidated Financial Statements:
Consolidated Statements of Earnings for fiscal
years 1994, 1993, and 1992
Consolidated Balance Sheets at fiscal year-end
1994 and 1993
Consolidated Statements of Stockholders'
Equity for fiscal years 1994, 1993, and 1992
Consolidated Statements of Cash Flows for
fiscal years 1994, 1993, and 1992
Notes to the Consolidated Financial Statements
Report of Independent Accountants
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Item 14. (continued)
(2) Financial Statement Schedules: The following financial statement
schedules of the Registrant and its subsidiaries for fiscal years 1994,
1993, and 1992, and the related Reports of Independent Accountants are
filed as a part of this Report and should be read in conjunction with the
Consolidated Financial Statements of the Registrant and its subsidiaries
which are incorporated herein by reference.
Schedule Page
- - - -------- ----
-- Report of Independent Accountants on Financial Statement Schedules 15
II Amounts Receivable from Related Parties and Underwriters, Promoters, 16
and Employees other than Related Parties
V Property, Plant and Equipment 17
VI Accumulated Depreciation, Depletion and Amortization of Property, 18
Plant and Equipment
VIII Valuation and Qualifying Accounts 19
IX Short-Term Borrowings 20
X Supplementary Income Statement Information 21
All other required schedules are omitted because of the absence of conditions
under which they are required or because the required information is given in
the financial statements or the notes thereto.
(3) Exhibits:
3-a Registrant's Restated Certificate of
Incorporation, dated June 26, 1987
(incorporated herein by reference to
Registrant's Form 10-K for the year
ended October 1, 1993).
3-b Registrant's Bylaws, dated May 15, 1992
(incorporated herein by reference to
the Registrant's Form 10-K for the
year ended October 2, 1992).
4 Registrant's Rights Agreement with the First
National Bank of Boston, dated August
25, 1986, and Amendment No. 1 dated
July 7, 1989 (incorporated herein by
reference to Registrant's Form 10-K
for the year ended October 1, 1993).
10.1 Registrant's Omnibus Stock Plan
(incorporated herein by reference to
Exhibit 4 to the Registration
Statement on Form S-8; File No.
33-4-0460).
11
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Item 14 (continued)
10.2 Registrant's 1982 Non-Qualified Stock Option
Plan (incorporated herein by reference
to Exhibit 4.6 to the Registration
Statement on Form S-8; File No.
33-33660).
10.3 Registrant's Restricted Stock Plan
(incorporated herein by reference to
Exhibit 4 to the Registration Statement
on Form S-8; File No. 33-33661).
10.4 Registrant's Management Incentive Plan
(incorporated herein by reference
to Registrant's Form 10-K for the year
ended October 1, 1993).
10.5 Registrant's Supplemental Retirement Plan
(incorporated herein by
reference to Registrant's Form 10-K for
the year ended October 1, 1993).
10.6 Registrant's form of Indemnity Agreement
with Directors and Executive
Officers (incorporated herein by
reference to Registrant's Form 10-K
for the year ended October 1, 1993).
10.7 Registrant's form of Change in Control
Agreement with Executive Officers
other than the Chief Executive Officer
(incorporated herein by reference to
Registrant's Form 10-K for the year
ended October 1, 1993).
10.8 Registrant's Change in Control Agreement
with J. Tracy O'Rourke
(incorporated herein by reference to
Registrant's Form 10-K for the year
ended October 1, 1993).
10.9 Description of Certain Compensatory
Arrangements between Registrant
and Directors (incorporated herein by
reference to Registrant's Form 10-Q
for the quarter ended December 31,
1993).
10.10 Description of Certain Compensatory
Arrangements between Registrant and
Executive Officers.
10.11 Description of Certain Relocation
Arrangements between Registrant and
Executive Officers (incorporated herein
by reference to Registrant's Form 10-K
for the year ended October 1, 1993).
10.12 Registrant's November 14,1994 Incentive and
Separation Agreement with Al D.
Wilunowski.(1)
11 Computation of earnings per share.
__________________________________
(1) Confidential treatment is being requested for portions of this exhibit.
12
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Item 14. (continued)
13 Registrant's 1994 Annual Report to Stockholders
(furnished for the information of the Securities
and Exchange Commission only and not deemed to be
filed except for those portions expressly
incorporated by reference herein).
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney by directors of the
Company authorizing certain
persons to sign this Annual Report on Form 10-K on
their behalf.
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fiscal quarter ended
September 30, 1994.
13
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Item 14. (continued)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Varian Associates, Inc. has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
VARIAN ASSOCIATES, INC.
(Registrant)
Dated: December 7, 1994 By: /s/ Robert A. Lemos
-------------------------------
Robert A. Lemos
Vice President, Finance
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated below.
Signature Title Date
--------- ----- ----
/s/ J. Tracy O'Rourke Chairman of the Board and Chief Executive Officer December 9, 1994
- - - --------------------- (Principal Executive Officer)
J. Tracy O'Rourke
/s/ Robert A. Lemos Vice President, Finance and Chief Financial Officer December 7, 1994
- - - ------------------- (Principal Financial Officer)
Robert A. Lemos
/s/ Wayne P. Somrak Vice President and Controller (Principal Accounting December 7, 1994
- - - ------------------- Officer)
Wayne P. Somrak
Ruth M. Davis * Director
Samuel Hellman * Director
Terry R. Lautenbach * Director
Angus A. MacNaughton * Director
David W. Martin, Jr.* Director
John G. McDonald * Director
William F. Miller * Director
Gordon E. Moore * Director
David E. Mundell * Director
Donald O. Pederson * Director
Philip J. Quigley Director
Burton Richter * Director
Paul G. Stern * Director
Richard W. Vieser * Director
* By /s/ Robert A. Lemos December 7, 1994
------------------------------------------
Robert A. Lemos, Attorney-in-Fact **
- - - ----------------------------------
** By authority of powers of attorney filed herewith.
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Report of Independent Accountants on
Financial Statement Schedules
To the Board of Directors and Stockholders of
Varian Associates, Inc.
Our report on the consolidated financial statements dated October 19,1994
appears on page 37 of the 1994 Annual Report to Stockholders of Varian
Associates, Inc. and subsidiary companies (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
form 10-K). In connection with our audits of such financial statements, we
have also audited the Financial Statement Schedules listed in the index on page
11 of this Form 10-K.
In our opinion, the financial statement schedules referred to above, when
considered in relation to the basic consolidated financial statements taken as
a whole, present fairly, in all material respects, the information required to
be included therein.
/s/ Coopers & Lybrand L.L.P.
-----------------------------
Coopers & Lybrand L.L.P.
San Jose, California
October 19, 1994
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SCHEDULE II
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS,
AND EMPLOYEES OTHER THAN RELATED PARTIES (1)
for the fiscal years ended 1994, 1993 and 1992
(Dollars in Thousands)
BALANCE AT BALANCE AT END
BEGINNING AMOUNTS OF PERIOD
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED CURRENT NONCURRENT
- - - ---------------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED 1994:
J. T. O'Rourke (2) $ 1,260 $ - $ - $ - $ 1,260
R. A. Aurelio (5) 500 - - - 500
-------- ------- ------- ------ ---------
$ 1,760 $ 0 $ 0 $ 0 $ 1,760
======== ======= ======= ====== =========
FISCAL YEAR ENDED 1993:
J. T. O'Rourke (2) $ 1,260 $ - $ - $ - $ 1,260
A. D. Wilunowski (4) 109 - 109 - -
R. A. Aurelio (5) 500 - - - 500
-------- ------- ------- ------ ---------
$ 1,869 $ 0 $ 109 $ 0 $ 1,760
======== ======= ======= ====== =========
FISCAL YEAR ENDED 1992:
J. T. O'Rourke (2) $ 1,260 $ - $ - $ - $ 1,260
R. A. Lemos (3) 52 - 52 - -
A. D. Wilunowski (4) - 123 14 12 97
R. A. Aurelio (5) 500 - - - 500
-------- ------- ------- ------ ---------
$ 1,812 $ 123 $ 66 $ 12 $ 1,857
======== ======= ======= ====== =========
(1) As to column omitted the answer is "none".
(2) The amount receivable is composed of two notes, each secured by a deed of
trust on residential real property. One is for $700,000 and contains
provisions for interest based on appreciation of the real property. The
other is for $560,000 and is interest free. Both are payable after 30
years, within one year of termination of employment, or upon sale of the
property, whichever occurs first, but may be converted to an 8%, 15 year
note upon Mr. O'Rourke's retirement. The security for the loans may be
replaced with a different residence if Mr. O'Rourke is employed by the
Company at the time.
(3) The amount receivable is supported by notes with interest rates of 6.75%
and 7.04% due through 1992, with common stock of the Company pledged as
collateral.
(4) The amount receivable is supported by a note with interest rate of 6.89%
due through 1997, with common stock of the Company pledged as collateral.
(5) The amount receivable is composed of a note, secured by a deed of trust on
residential real property. The note contains provisions for interest based
on appreciation of the real property. It is payable within one year or
three years of termination of employment (depending on the circumstances)
or upon sale of the real property, whichever occurs first.
- 16 -
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SCHEDULE V
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
PROPERTY, PLANT, AND EQUIPMENT
for the fiscal years ended 1994, 1993 and 1992
(Dollars in Millions)
BALANCE AT BALANCE AT
BEGINNING OTHER END OF
CLASSIFICATION OF PERIOD ADDITIONS RETIREMENTS CHANGES (1) PERIOD
- - - ---------------------------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED 1994:
Land and land leaseholds $ 11.3 $ 0.4 $ (0.9) $ - $ 10.8
Buildings 194.2 13.3 (6.6) 0.5 201.4
Machinery and equipment 331.1 41.6 (25.5) - 347.2
Construction in progress 7.7 7.3 - - 15.0
------- ------ -------- ------ -------
Total $ 544.3 $ 62.6 $ (33.0) $ 0.5 $ 574.4
======= ====== ======= ====== =======
FISCAL YEAR ENDED 1993:
Land and land leaseholds $ 9.9 $ 0.1 $ (0.2) $ 1.5 $ 11.3
Buildings 188.4 10.4 (4.0) (0.6) 194.2
Machinery and equipment 323.4 38.0 (29.9) (0.4) 331.1
Construction in progress 11.6 (3.4) - (0.5) 7.7
------- ------ -------- ------ -------
Total $ 533.3 $ 45.1 $ (34.1) $ 0.0 $ 544.3
======= ====== ======= ====== =======
FISCAL YEAR ENDED 1992:
Land and land leaseholds $ 9.4 $ 0.6 $ (0.1) $ - $ 9.9
Buildings 168.0 14.3 (1.3) 7.4 188.4
Machinery and equipment 305.3 43.9 (21.8) (4.0) 323.4
Construction in progress 24.8 (10.2) - (3.0) 11.6
------- ------ -------- ------ -------
Total $ 507.5 $ 48.6 $ (23.2) $ 0.4 $ 533.3
======= ====== ======= ====== =======
(1) Miscellaneous reclassifications.
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SCHEDULE VI
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY, PLANT, AND EQUIPMENT
for the fiscal years ended 1994, 1993 and 1992
(Dollars in Millions)
BALANCE AT BALANCE AT
BEGINNING OTHER END OF
CLASSIFICATION OF PERIOD ADDITIONS RETIREMENTS CHANGES (1) PERIOD
- - - ------------------------------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED 1994:
Land and land leaseholds $ 2.7 $ 0.3 $ (0.1) $ 0.4 $ 3.3
Buildings 88.9 9.1 (2.9) (0.3) 94.8
Machinery and equipment 222.3 38.6 (20.2) 0.3 241.0
------- ------ ------- ------- -------
Total $ 313.9 $ 48.0 $ (23.2) $ 0.4 $ 339.1
======= ====== ======= ======= =======
FISCAL YEAR ENDED 1993:
Land and land leaseholds $ 2.2 $ 0.4 $ (0.1) $ 0.2 $ 2.7
Buildings 82.9 8.5 (2.5) - 88.9
Machinery and equipment 210.0 36.4 (24.3) 0.2 222.3
------- ------ ------- ------- -------
Total $ 295.1 $ 45.3 $ (26.9) $ 0.4 $ 313.9
======= ====== ======= ======= =======
FISCAL YEAR ENDED 1992:
Land and land leaseholds $ 1.8 $ 0.4 $ - $ - $ 2.2
Buildings 71.7 8.6 (1.2) 3.8 82.9
Machinery and equipment 195.7 35.5 (17.3) (3.9) 210.0
------- ------ ------- ------- -------
Total $ 269.2 $ 44.5 $ (18.5) $ (0.1) $ 295.1
======= ====== ======= ======= =======
(1) Miscellaneous reclassifications.
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19
SCHEDULE VIII
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
VALUATION AND QUALIFYING ACCOUNTS (1)
for the fiscal years ended 1994, 1993, and 1992
(Dollars in Thousands)
BALANCE AT CHARGED TO DEDUCTIONS BALANCE AT
BEGINNING COSTS AND ------------------------------- END OF
DESCRIPTION OF PERIOD EXPENSES DESCRIPTION AMOUNT PERIOD
- - - ------------------------------------------------------------------------------------------------------------------------------
ALLOWANCE FOR DOUBTFUL NOTES
& ACCOUNTS RECEIVABLE:
Write-offs
Fiscal Year Ended 1994 $ 2,219 $ 762 & Adjustments $ 559 $ 2,422
======== ======== ======== ========
Write-offs
Fiscal Year Ended 1993 $ 2,202 $ 544 & Adjustments $ 527 $ 2,219
======== ======== ======== ========
Write-offs
Fiscal Year Ended 1992 $ 2,203 $ 789 & Adjustments $ 790 $ 2,202
======== ======== ======== ========
ESTIMATED LIABILITY FOR
PRODUCT WARRANTY:
Actual
Warranty
Fiscal Year Ended 1994 $ 35,615 $ 49,354 Expenditures $ 43,287 $ 41,682
======== ======== ======== ========
Actual
Warranty
Fiscal Year Ended 1993 $ 34,105 $ 41,773 Expenditures $ 40,263 $ 35,615
======== ======== ======== ========
Actual
Warranty
Fiscal Year Ended 1992 $ 33,950 $ 44,646 Expenditures $ 44,491 $ 34,105
======== ======== ======== ========
(1) As to column omitted the answer is "none".
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20
SCHEDULE IX
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
SHORT-TERM BORROWINGS
for the fiscal years ended 1994, 1993 and 1992
(Dollars in Millions)
WEIGHTED MAXIMUM AVERAGE AMT. WEIGHTED
BALANCE AVERAGE AMOUNT OUTSTANDING AVERAGE
CATEGORY OF AGGREGATE AT END INTEREST OUTSTANDING DURING INTEREST RATE
SHORT-TERM BORROWINGS (1) OF PERIOD RATE (2) DURING PERIOD PERIOD (3) DURING PERIOD (4)
- - - --------------------------------------------------------------------------------------------------------------------------
AMOUNTS PAYABLE TO BANKS (5):
Fiscal Year-End 1994 $ 4.7 6.2 % $ 64.4 $ 30.3 4.0 %
==== ==== ==== ==== ====
Fiscal Year-End 1993 $ 16.3 3.6 % $ 53.9 $ 20.3 3.5 %
==== ==== ==== ==== ====
Fiscal Year-End 1992 $ 1.7 17.5 % $ 30.0 $ 13.9 4.7 %
==== ==== ==== ==== ====
(1) "Notes payable" in the Company's consolidated balance sheet includes the
balances shown above and the current portion of long-term debt, amounting
to $0.1million, $6.5 million, and $8.6 million at fiscal year-end 1994,
1993, and 1992, respectively.
(2) The weighted average interest rate for fiscal year-end 1992 of 17.5%
represents overnight Italian Lira interest rate for one of the Company's
subsidiaries overdraft. United States dollar equivalent based on foreign
exchange forward points is approximately 5%.
(3) Average amounts outstanding based on balances at the end of each of the 12
months in the fiscal year.
(4) Weighted average interest rates based on the balance and applicable
interest rate for each amount payable at the end of each of the 12 months
in the fiscal year.
(5) The Company had total unused committed lines of credit of $50 million at
each fiscal year-end 1994, 1993, and 1992. Total borrowing is subject to
limitations included in long-term debt agreements. No compensating
balances were maintained in 1994, 1993, or 1992 under credit agreements in
effect during these years.
- 20 -
21
SCHEDULE X
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
for the fiscal years ended 1994, 1993, and 1992
(Dollars in thousands)
- - - -------------------------------------------------------------------------------------------------
Item 1994 1993 1992
- - - -------------------------------------------------------------------------------------------------
Maintenance and repairs $ 28,616 $ 28,168 $ 28,775
Depreciation expense is included in Schedule VI.
Amounts for advertising costs, amortization of intangible assets and other
deferrals, taxes other than payroll and income taxes, and royalties are not
presented as such amounts are less than 1% of total sales.
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22
INDEX OF EXHIBITS
Exhibit
Number
- - - ------
3-a Registrant's Restated Certificate of Incorporation, dated June 26, 1987
(incorporated herein by reference to Registrant's Form 10-K for the year ended
October 1, 1993).
3-b Registrant's Bylaws, dated May 15, 1992 (incorporated herein by reference to the
Registrant's Form 10-K for the year ended October 2, 1992).
4 Registrant's Rights Agreement with the First National Bank of Boston, dated August
25, 1986, and Amendment No. 1 dated July 7,1989 (incorporated herein by reference to
Registrant's Form 10-K for the year ended October 1, 1993).
10.1 Registrant's Omnibus Stock Plan (incorporated herein by reference to Exhibit 4 to
the Registration Statement on Form S-8; File No. 33-4-0460).
10.2 Registrant's 1982 Non-Qualified Stock Option Plan (incorporated herein by reference
to Exhibit 4.6 to the Registration Statement on Form S-8; File No. 33-33660).
10.3 Registrant's Restricted Stock Plan (incorporated herein by reference to Exhibit 4
to the Registration Statement on Form S-8; File No. 33-33661).
10.4 Registrant's Management Incentive Plan (incorporated herein by reference to
Registrant's Form 10-K for the year ended October 1, 1993).
10.5 Registrant's Supplemental Retirement Plan (incorporated herein by reference to
Registrant's Form 10-K for the year ended October 1, 1993).
10.6 Registrant's form of Indemnity Agreement with Directors and Executive Officers
(incorporated herein by reference to Registrant's Form 10-K for the year ended
October 1, 1993).
10.7 Registrant's form of Change in Control Agreement with Executive Officers other than
the Chief Executive Officer (incorporated herein by reference to Registrant's Form
10-K for the year ended October 1, 1993).
10.8 Registrant's Change in Control Agreement with J. Tracy O'Rourke (incorporated herein
by reference to Registrant's Form 10-K for the year ended October 1, 1993).
22
23
INDEX OF EXHIBITS
10.9 Description of Certain Compensatory Arrangements between Registrant and Directors
(incorporated herein by reference to Registrant's Form 10-Q for the quarter ended
December 31, 1993).
10.10 Description of Certain Compensatory Arrangements between Registrant and Executive
Officers.
10.11 Description of Certain Relocation Arrangements between Registrant and Executive
Officers (incorporated herein by reference to Registrant's Form 10-K for the year
ended October 1, 1993).
10.12 Registrant's November 14,1994 Incentive and Separation Agreement with Al D.
Wilunowski.(1)
11 Computation of earnings per share.
13 Registrant's 1994 Annual Report to Stockholders (furnished for the information of
the Securities and Exchange Commission only and not deemed to be filed except for
those portions expressly incorporated by reference herein).
21 Subsidiaries of the Registrant.
23 Consent of Independent Accountants.
24 Power of Attorney by directors of the Company authorizing certain persons to sign
this Annual Report on Form 10-K on their behalf.
27 Financial Data Schedule
__________________________________
(1) Confidential treatment is being requested for portions of this exhibit.
23