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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended October 1, 2004

OR

For the transition period from              to             

Commission File No. 000-25393

VARIAN, INC.

(Exact Name of Registrant as Specified in its Charter)

(650) 213-8000

(Telephone number)

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value

Preferred Stock Purchase Rights

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 that the 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.  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).    Yes  x    No  ¨

The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant based upon the closing sale price of the Common Stock on April 2, 2004, as reported by the Nasdaq National Market, was approximately $1,452,044,000.

The number of shares of the registrant’s common stock outstanding as of December 3, 2004 was 35,050,025.

Documents Incorporated by Reference:

An index of exhibits filed with this Form 10-K is located on page 41.

Table of Contents

VARIAN, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED OCTOBER 1, 2004

TABLE OF CONTENTS

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PART I

Caution Regarding Forward-Looking Statements

Throughout this Report, and particularly in Item 1—Business and Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, there are forward-looking statements that are based upon our current expectations, estimates, and projections, and that reflect our beliefs and assumptions based on information available to us at the date of this Report. In some cases, you can identify these statements by words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or other similar terms. These forward-looking statements include those relating to the timing and amount of anticipated restructuring costs and related cost savings, whether and when backlog will result in actual sales, our current expectations relating to our effective income tax rate, anticipated capital expenditures, and anticipated Sarbanes-Oxley Act Section 404 compliance costs in fiscal year 2005.

We caution investors that forward-looking statements are only predictions, based upon our current expectations about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions that are difficult to predict. Our actual results, performance, or achievements could differ materially from those expressed or implied by the forward-looking statements. Some of the important factors that could cause our results to differ are discussed in Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Certain Subsequent Events and —Risk Factors. We encourage you to read those sections carefully.

Other risks and uncertainties that could cause actual results to differ materially from those in our forward-looking statements include, but are not limited to, the following: whether we will succeed in new product development, commercialization, performance, and acceptance; whether we can achieve continued growth in sales in life science applications; risks arising from the timing of shipments, installations, and the recognition of revenues on leading-edge nuclear magnetic resonance (“NMR”) and magnetic resonance (“MR”) imaging systems and superconducting magnets; whether we can increase margins on newer leading-edge NMR and MR imaging systems and superconducting magnets; the impact of shifting product mix on profit margins in the Scientific Instruments segment; whether we will see continued strong demand for vacuum products and for electronics manufacturing services; competitive products and pricing; economic conditions in the Company’s product and geographic markets; whether we will see continued and timely delivery of key raw materials and components by suppliers; foreign currency fluctuations that could adversely impact revenue growth and earnings; whether we will see sustained or improved market investment in capital equipment; whether we will see reduced demand from customers that operate in cyclical industries; the impact of any delay or reduction in government funding for research; our ability to successfully integrate acquisitions; the actual cost of anticipated restructuring activities and their timing and impact on future costs; the timing and amount of discrete tax events; whether the actual cost of complying with the requirements of Section 404 of the Sarbanes-Oxley Act will exceed our current estimates; and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission. We disclaim any intent or obligation to update publicly any forward-looking statements, whether in response to new information, future events, or otherwise.

Item 1. Business

GENERAL

Overview and History

Varian, Inc., together with its subsidiaries (collectively, the “Company” or the “Registrant”), is a technology company engaged in the design, development, manufacture, sale, and service of scientific instruments (including related consumable products) and vacuum products, and in contract electronics manufacturing. The Company’s operations are grouped into three corresponding segments: Scientific Instruments, Vacuum Technologies, and Electronics Manufacturing. These segments, their products, and the markets they serve are described below.

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Varian, Inc. became a separate, public company on April 2, 1999. Until that date, the business of the Company was operated as the Instruments business of Varian Associates, Inc. (“VAI”). The Instruments business (which included the business units that designed, developed, manufactured, sold, and serviced scientific instruments and vacuum technologies, and a business unit that provided contract electronics manufacturing services) was contributed by VAI to the Company. On that date, VAI distributed to holders of its common stock one share of common stock of the Company and one share of common stock of Varian Semiconductor Equipment Associates, Inc. (“VSEA”), which was formerly operated as the Semiconductor Equipment business of VAI, for each share of VAI common stock outstanding on April 2, 1999. VAI retained its Health Care Systems business and changed its name to Varian Medical Systems, Inc. (“VMS”). These transactions were accomplished under the terms of an Amended and Restated Distribution Agreement dated as of January 14, 1999 by and among the Company, VAI, and VSEA (the “Distribution Agreement”). For purposes of providing an orderly transition and to define certain ongoing relationships between and among the Company, VMS and VSEA after Distribution, the Company, VMS, and VSEA also entered into certain other agreements which include an Employee Benefits Allocation Agreement, Intellectual Property Agreement, and Tax Sharing Agreement.

Business Segments and Products

The Company’s products and services can be classified into the following three categories, which correspond to the Company’s three business segments: Scientific Instruments, Vacuum Technologies, and Electronics Manufacturing.

Scientific Instruments

The Company’s Scientific Instruments business designs, develops, manufactures, sells, and services chromatography, optical spectroscopy, mass spectroscopy, dissolution testing, nuclear magnetic resonance equipment, and consumable products for a broad range of life science and chemical analysis applications requiring identification, quantification, and analysis of the elemental, molecular, physical, or biological composition or structure of liquids, solids, or gases.

Chromatography is a technique for separating, identifying, and quantifying the individual chemical components of substances based on the physical and chemical characteristics specific to each component. The Company’s chromatography instruments include gas chromatographs (“GCs”), high-performance liquid chromatographs (“HPLCs”), sample automation products, and data analysis systems. For certain applications, mass spectrometers are sold as a detector for GC or HPLC systems. In addition to these instruments, the Company also offers related accessories and consumable products.

Optical spectroscopy is a technique for analyzing the individual chemical components of substances based on the absorption or emission of electromagnetic radiation of a specific wavelength of light. The Company’s optical spectroscopy instruments include atomic absorption (“AA”) spectrometers, inductively coupled plasma-optical emissions spectrometers, inductively coupled plasma-mass spectrometers (“ICP-MS”), fluorescence spectrophotometers, ultraviolet-visible (“UV-Vis”), Fourier Transform infrared (“FT-IR”) imaging and near-infrared spectrophotometers, Raman spectrometers, sample automation products, and data analysis systems. The Company also offers related accessories and consumable products.

Mass spectrometry is a technique for analyzing the individual chemical components of substances by breaking molecules into multiple electrically charged ions that are then sorted for analysis according to their mass-to-charge ratios. The Company combines mass spectrometers with other instruments to create high-performance instruments such as liquid chromatograph/mass spectrometers, liquid chromatograph-nuclear magnetic resonance/mass spectrometers, gas chromatograph/mass spectrometers, and inductively coupled plasma-mass spectrometers, and offers related accessories and consumable products.

Dissolution testing is a technique for in-vitro analysis of the rate of release of a drug under controlled conditions. The Company’s dissolution testing products include systems for analyzing the rate of release and equipment for testing the physical characteristics of different dosage forms.

NMR is a non-destructive instrumental technique that uses electromagnetic fields to interact with the magnetic property of atomic nuclei in order to determine and analyze the molecular content and structure

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of liquids and solids. NMR spectroscopy is used in the study of liquids containing chemical substances including proteins, nucleic acids (DNA and RNA), carbohydrates, membranes, and solid materials such as crystals, plastics, rubbers, ceramics, and polymers. NMR imaging systems are used to obtain non-invasive images of, primarily, biological materials and to probe the chemical processes within these materials. The Company’s NMR systems include NMR spectrometers and liquid chromatograph-NMR/mass spectrometers. The Company’s MR imaging systems include human and other imaging systems used in research. The Company also offers probes and console upgrades to customers seeking to enhance NMR and MR imaging performance.

On November 3, 2004, the Company acquired Magnex Scientific Limited (“Magnex”). Magnex designs, develops, manufactures, sells, and services superconducting magnets for human and other MR imaging, NMR, and Fourier Transform mass spectroscopy (“FTMS”), and gradients for MR microscopy. These magnets are used in the Company’s NMR and MR imaging systems, and are also sold to original equipment manufacturers (“OEMs”) and end-users.

Consumable products are used in many laboratory applications and include sample preparation consumables used to clean up and extract complex samples, like biological and environmental specimens, for further analysis; solid phase extraction (“SPE”) and filtration products used in tube formats for toxicology and environmental extractions, and in 96-well plate formats for drug discovery and clinical research applications; micro volume SPE pipette tips used in protein research; HPLC and GC stationary phase chemistries used to separate target analytes prior to UV detection or mass spectrometry analysis; HPLC columns used in health science applications for the analysis of thermally labile compounds; GC columns used in industrial applications for the analysis of thermally stabile compounds; and other HPLC and GC stationary phase chemistries and column dimensions for a wide range of life science and industrial science applications. Consumable products also include scientific instrument parts and supplies such as filters and fittings for GC and HPLC systems; xenon lamps and cuvettes for UV-Vis-NIR, fluorescence, FT-IR, and Raman spectroscopy instruments; and graphite furnace tubes, hollow cathode lamps, and specialized sample introduction glassware for AA, ICP, and ICP-MS spectroscopy instruments. Other consumable products include on-site screening and laboratory-based kits for drugs of abuse testing from urine or saliva samples, such as in pre-employment screening, criminal justice, and toxicology testing.

Scientific Instruments’ chromatography, optical spectroscopy, mass spectrometry, dissolution testing, NMR, and consumable products can be generally categorized as either those used principally in life science applications or those used principally in chemical analysis applications (although many products are used in both applications). Life science applications include the study of biological processes, the testing of biological materials, and the diagnosis, treatment, or development of treatments of diseases. In fiscal years 2004, 2003 and 2002, Scientific Instruments sales into life science applications accounted for nearly half of the segment’s total sales (these are estimates based on assumptions of how the Company’s products are likely to be used by customers, and are provided only as an indication of a historical trend).

All of the products described above are or can be used in life science applications, such as by pharmaceutical companies in drug development, manufacturing, and quality control; by biotechnology and biopharmaceutical companies in studying biomolecules and the prevention, diagnosis, and treatment of diseases; by government and private laboratories, employers, and law enforcement and correctional agencies in drug testing; and by research hospitals and universities in basic chemistry, biological, biochemistry, and health care research. Life science customers include branded and generic pharmaceutical companies, biotechnology and toxicology companies, governmental agencies, and numerous academic institutions and research hospitals.

All of the products described above are or can also be used in chemical analysis applications, such as by environmental laboratories in testing water, soil, air, solids, and food products; by petroleum and natural gas companies in refining and quality control; by petroleum, agriculture, chemical, mining and metallurgy, and food and beverage processing companies in research and quality control; and by other industrial, governmental, and academic research laboratories in forensic analysis, materials science, and general research.

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Vacuum Technologies

The Company’s Vacuum Technologies business designs, develops, manufactures, sells, and services a broad range of products used to create, control, measure, and test vacuum environments in life science, industrial, research, semiconductor, and scientific applications where ultra-clean, high-vacuum environments are needed. Vacuum Technologies’ customers are typically OEMs that manufacture equipment for these applications. Products include a wide range of high and ultra-high vacuum pumps (diffusion, turbomolecular, and ion getter), intermediate vacuum pumps (rotary vane, sorption, and dry scroll), vacuum instrumentation (vacuum control instruments, sensor gauges, and meters), and vacuum components (valves, flanges, and other mechanical hardware). Its products also include helium mass spectrometry and helium-sensing leak detection equipment for use in identifying and measuring leaks in hermetic or vacuum environments. In addition to product sales, the Company also offers a wide range of services including assistance with the design and integration of vacuum systems, a pump exchange and repair program, applications support, and training in basic and advanced vacuum technology.

Vacuum Technologies products are or can be used in a broad range of life science applications, such as in mass spectrometers for mass analysis; and in linear accelerators for cancer therapy.

Vacuum Technologies products are or can also be used in a broad range of industrial applications, such as in the manufacture of flat-panel displays, television tubes, decorative coating, architectural glass, optical lenses, light bulbs, and automobile components; in food packaging; in the testing of aircraft components, automobile airbags, refrigeration components, and industrial processing equipment; in high-energy physics research; and in the manufacture of semiconductors, and fabrication and metrology equipment.

Electronics Manufacturing

The Company’s Electronics Manufacturing business is a contract manufacturer of electronic assemblies and subsystems such as printed circuit boards for OEMs. For some customers, the business provides total manufacturing services including design support, prototype assembly, product test development, customized manufacturing (such as just-in-time and inventory management), and post-manufacturing services (such as direct end-user shipping and repair depots).

The Electronics Manufacturing business serves customers in a wide range of industries, including life science products (which includes medical equipment), aerospace equipment and communications equipment (e.g., satellite, networking, telephony, and voice and data transfer), and general industrial products. The business focuses on customers in these industries who have low- to medium-volume, high-mix manufacturing needs. The business also supplies products to the Company’s Scientific Instruments and Vacuum Technologies businesses.

For financial information about industry segments including foreign and domestic operations and export sales, see Note 18 of the Notes to the Consolidated Financial Statements.

Marketing and Sales

In the United States, the Company markets the largest portion of its products directly through its own sales and distribution organizations, although a few products and services are marketed through independent distributors and sales representatives. Sales to major markets outside the United States are generally made by the Company’s foreign-based sales and service staff, although some export sales are made directly from the United States to foreign customers. In addition, in certain foreign countries, sales are made through various representative and distributorship arrangements. The Company maintains sales and service offices in strategic regional locations in the United States and, through its sales subsidiaries, in key foreign locations.

The markets in which the Company competes are, for the most part, global. Sales outside of North America accounted for 46%, 44%, and 39% of sales for fiscal years 2004, 2003, and 2002, respectively. As a result, the Company’s customers increasingly require service and support on a worldwide basis. In addition to the United States, the Company has sales and service offices located throughout Europe, Asia, and Latin America. The Company has invested substantial financial and management resources to develop an international infrastructure to meet the needs of its customers worldwide.

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Demand for the Company’s products depends on many factors, including the level of capital expenditures of the Company’s customers, the rate of economic growth in the Company’s major markets, and competitive considerations. No single customer accounted for 10% or more of the Company’s sales in fiscal year 2004, 2003, or 2002.

The Company experiences some cyclical patterns in sales of its products. Generally, sales and earnings in the first quarter of the Company’s fiscal year are lower when compared to the preceding fourth fiscal quarter, primarily because there are fewer working days in the first fiscal quarter (October to December) and many customers defer December deliveries until the next calendar year, the Company’s second fiscal quarter. The Company’s fourth fiscal quarter sales and earnings are often the highest in the fiscal year compared to the other three quarters, primarily because many customers spend budgeted money before their own fiscal years end. This cyclical pattern can be influenced by other factors, including general economic conditions, acquisitions, and new product introductions.

The Company believes that it differentiates its products from those of its competitors by its responsiveness to customer requirements, as determined through market research. Although specific customer requirements can vary depending on applications, customers generally demand superior performance, high quality, high productivity, and low cost of ownership. The Company has responded to these customer demands by introducing new products focused on these requirements in the markets it serves. For example, customers of Scientific Instruments products have demanded higher levels of analytical throughput to support their research programs aimed at drug discovery and advanced life sciences. The Company has responded to these needs by introducing products with higher levels of automation and computerized data analysis routines.

Backlog

The Company’s recorded backlog (including deferred revenue included in the Consolidated Balance Sheet) was $222 million at October 1, 2004, $206 million at October 3, 2003, and $234 million at September 27, 2002. Backlog increased from October 3, 2003 to October 1, 2004 primarily due to the receipt of a large amount of longer lead time orders by the Electronics Manufacturing segment late in fiscal year 2004. Backlog decreased from September 27, 2002 to October 3, 2003 primarily due to the recognition of revenue during fiscal year 2003 on several leading-edge NMR and MR imaging systems and accessories that were previously deferred pending delivery and/or customer acceptance.

The Company includes in backlog purchase orders or production releases under blanket purchase orders that have firm delivery dates. Recorded backlog in U.S. dollars is impacted by foreign currency fluctuations. In addition, recorded backlog might not result in sales because of cancellations or other factors. Most of the Company’s products are shipped soon after they are ordered by customers, with the time between order receipt and shipment being as short as a few days for some products and less than a fiscal quarter for most others. However, certain other products, in particular leading-edge NMR and MR imaging systems, can have significantly longer lead times, sometimes in excess of one year. Significant shipments often occur in the last month of each quarter, in part because of how customers place orders and schedule shipments.

The Company believes that over 95% of orders included in the backlog at October 1, 2004 will result in revenue before the end of fiscal year 2005. However, this percentage should not be taken as an indicator for orders received after October 1, 2004 because of the longer lead times associated with the magnets now supplied by the Company as a result of the Magnex acquisition.

Competition

Competition in markets served by the Scientific Instruments and Vacuum Technologies segments is primarily based upon the performance capabilities of products, technical support, and after-market service, the manufacturer’s reputation as a technological leader, and product pricing. The Company believes that performance capabilities are the most important of these criteria.

With respect to markets served by the Electronics Manufacturing segment, competition is primarily based upon assembly and test capabilities, technical expertise and support, flexibility and responsiveness of

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logistics management capabilities, the manufacturer’s financial stability, and product pricing. The Company believes that technical expertise and support are the most important of these criteria.

The markets in which the Company competes are highly competitive and are characterized by the application of advanced technology. There are numerous companies that specialize in, and a number of larger companies that devote a significant portion of their resources to, the development, manufacture, sale, and service of products that compete with those manufactured, sold, or serviced by the Company. Many of the Company’s competitors are well-known manufacturers with a high degree of technical proficiency. In addition, competition is intensified by the ever-changing nature of the technologies in the industries in which the Company is engaged. The markets for the Company’s products are characterized by specialized manufacturers that often have strength in narrow segments of these markets. While the absence of reliable statistics makes it difficult to determine the Company’s relative market position in its industry segments, the Company is one of the principal manufacturers in its primary fields.

Each of the Company’s major business segments competes with many companies that address the same markets. The Company’s Scientific Instruments business competes with Agilent Technologies; Bruker; JEOL; PerkinElmer; Shimadzu; Thermo Electron; Waters; and other smaller suppliers. The Company’s Vacuum Technologies business competes with Adixen (Alcatel); BOC Edwards High Vacuum; Inficon; Leybold Vacuum; Pfeiffer Vacuum Technology; Ulvac; and other smaller suppliers. The Company’s Electronics Manufacturing business competes with numerous other companies that provide high-mix, low-volume contract manufacturing services, including Pemstar; PLEXUS; Sigmatron International; Suntron; and privately-owned regional and off-shore manufacturers.

Manufacturing

The Company’s principal manufacturing activities consist of precision assembly, test, calibration, and certain specialized machining activities. The Company subcontracts a portion of its assembly and machining. All other assembly, test, and calibration functions are performed by the Company.

The Company believes that the ability to manufacture reliable products in a cost-effective manner is critical to meeting the “just-in-time” delivery and other demanding requirements of its OEM and end-user customers. The Company monitors and analyzes product lead times, warranty data, process yields, supplier performance, field data on mean time between failures, inventory turns, repair response time, and other indicators so that it can continuously improve its manufacturing processes.

As of October 1, 2004, the Company operated 14 significant manufacturing facilities located throughout the world. Scientific Instruments had manufacturing facilities in Palo Alto, California; Walnut Creek, California; Lake Forest, California; Harbor City, California; Ft. Collins, Colorado; Cary, North Carolina; Melbourne, Australia; Middelburg, Netherlands; and Grenoble, France. Vacuum Technologies had manufacturing facilities in Lexington, Massachusetts, and Turin, Italy. Electronics Manufacturing had manufacturing facilities in Tempe, Arizona; Poway, California; and Rocklin, California.

All of the Company’s significant manufacturing facilities, other than Lake Forest, California, and Grenoble, France, have been certified as complying with the International Organization for Standardization Series 9000 Quality Standards (“ISO 9000”).

Subsequent to October 1, 2004, the Company acquired Magnex, which operates a manufacturing facility in Oxford, United Kingdom.

Raw Materials

There are no specialized raw materials that are particularly essential to the operation of the Company’s business. The Company’s manufacturing operations require a wide variety of raw materials, electronic and mechanical components, chemical and biochemical materials, and other supplies, some of which are occasionally in short supply. In addition, use of certain of the Company’s products requires reliable and cost-effective supply of certain raw materials. For example, end-users of the Company’s NMR and MR imaging systems and superconducting magnets require helium to operate those systems; shortages

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of helium could result in higher helium prices, and thus higher operating costs for NMR and MR imaging systems and superconducting magnets, which could impact demand for those products.

Some components used in the Company’s products are manufactured by the Company. Other components, including certain superconducting magnets and electronic components, are purchased from other manufacturers. Most of the raw materials, components, and supplies purchased by the Company are available from a number of different suppliers; however, a number of items—in particular, certain superconducting magnets for NMR systems and wire used in superconducting magnets—are purchased from limited or single sources of supply, and disruption of these sources could cause delays or reductions in shipment of our products or increases in our costs, which could have an adverse effect on the Company’s financial condition or results of operations.

Research and Development

The Company is actively engaged in basic and applied research, development, and engineering programs designed to develop new products and to improve existing products. During fiscal years 2004, 2003, and 2002, the Company spent $48.7 million, $45.7 million, and $39.9 million, respectively, on research, development, and engineering activities. Over this period, the focus of the Company’s research and development activities has been shifting more toward products that serve life science applications. The Company intends to continue to conduct extensive research and development activities, with a continued emphasis on NMR and MR imaging, mass spectroscopy, and consumable products, with a bias toward life science applications. There can be no assurance that it will be able to develop and market new products on a cost-effective and timely basis, that such products will compete favorably with products developed by others, or that the Company’s existing technology will not be superseded by new discoveries or developments.

Customer Support and Service

The Company believes that its customer service and support are an integral part of its competitive strategy. As part of its support services, the Company’s technical support staff provides individual assistance in solving analysis problems, integrating vacuum components, designing circuit boards, etc., depending on the business. The Company offers training courses and periodically sends its customers information on applications development. The Company’s products generally include a 90-day to one-year warranty. Service contracts may be purchased by customers to cover equipment no longer under warranty. Service work not performed under warranty or service contract is generally performed on a time-and-materials basis. The Company installs and services its products primarily through its own field service organization, although certain distributors and sales representatives are capable of performing some field services.

Patent and Other Intellectual Property Rights

The Company has a policy of seeking patent, copyright, trademark, and trade secret protection in the United States and other countries for developments, improvements, and inventions originating within its organization that are incorporated in the Company’s products or that fall within its fields of interest. As of October 1, 2004, the Company owned approximately 293 patents in the United States and approximately 471 patents throughout the world, and had numerous patent applications on file with various patent agencies worldwide. The Company intends to continue to file patent applications, as it deems appropriate.

The Company relies on a combination of copyright, trade secret, and other legal, as well as contractual, restrictions on disclosure, copying, and transferring title to protect its proprietary rights. The Company has trademarks, both registered and unregistered, that are maintained and enforced to provide customer recognition for its products in the marketplace. The Company also has agreements with third parties that provide for licensing of patented or proprietary technology. These agreements include royalty-bearing licenses and technology cross-licenses.

Environmental Matters

The Company’s operations are subject to various foreign, federal, state, and local laws regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.

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These regulations increase the costs and potential liabilities of the Company’s operations. However, the Company’s compliance with these regulations is not expected to have a material effect upon the Company’s capital expenditures, earnings, or competitive position. For additional information on environmental matters, see Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Risk Factors—Certain Subsequent Events and —Environmental Matters.

Employees

At October 1, 2004, the Company had approximately 4,400 full-time and temporary employees and contract laborers worldwide—approximately 2,700 in North America, 900 in Europe, 300 in Asia, 400 in Australia, and 100 in Latin America.

Risk Factors

For additional information on risks relating to the Company and its business, see Caution Regarding Forward-Looking Statements at the beginning of Part I and Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Certain Subsequent Events—Risk Factors.

Executive Officers

The following table sets forth the names and ages of the Company’s executive officers, together with positions and offices held within the last five years by such executive officers.

Investor Information

Financial and other information relating to the Company can be accessed on its Investor Relations website. This can be reached from the Company’s main Internet website (http://www.varianinc.com) by clicking on “Investors.” On its Investor Relations website, the Company makes available, free of charge,

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copies of its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC.

Item 2. Properties

The Company has manufacturing, warehouse, research and development, sales, service, and administrative facilities that have an aggregate floor space of approximately 989,000 and 652,000 square feet in the United States and abroad, respectively, for a total of approximately 1,641,000 square feet worldwide. Of these facilities, aggregate floor space of approximately 573,000 square feet is leased, and the Company owns the remainder. The Company believes that its facilities and equipment generally are well maintained, in good operating condition, suitable for the Company’s purposes, and adequate for current operations.

As of October 1, 2004, the Company owned or leased 14 significant manufacturing facilities located throughout the world. Scientific Instruments had manufacturing facilities in Palo Alto, California; Walnut Creek, California; Lake Forest, California; Harbor City, California; Ft. Collins, Colorado; Cary, North Carolina; Melbourne, Australia; Middelburg, Netherlands; and Grenoble, France. Vacuum Technologies had manufacturing facilities in Lexington, Massachusetts; and Turin, Italy. Electronics Manufacturing had manufacturing facilities in Tempe, Arizona; Poway, California; and Rocklin, California. The Company owns or leases 47 sales and service facilities located throughout the world, 42 of which are located outside the United States, including in Argentina, Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Korea, Mexico, Netherlands, Russia, Spain, Sweden, Switzerland, Taiwan, and the United Kingdom.

Subsequent to October 1, 2004, the Company acquired Magnex and assumed leases relating to its manufacturing facility in Oxford, United Kingdom.

Item 3. Legal Proceedings

The Company is involved in pending legal proceedings that are ordinary, routine, and incidental to its business. While the ultimate outcome of these and other legal matters is not determinable, the Company believes that these matters are not reasonably likely to have a material adverse effect on the Company’s financial condition or results of operations.

Item 4. Submission of Matters to a Vote of Security Holders

None.

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PART II

(a) The Company’s high and low common stock selling prices in each of the four quarters of fiscal year 2004 and 2003 follow:

The Company’s common stock is traded on the Nasdaq National Market under the trading symbol VARI.

The Company has never paid cash dividends on its capital stock. The Company currently intends to retain any earnings for use in its business and does not anticipate paying any cash dividends in the foreseeable future.

There were 3,301 holders of record of the Company’s common stock on December 3, 2004.

(b) Not applicable.

(c) The following tables summarize information relating to stock repurchases by the Company under our stock repurchase plans during the fiscal quarter ended October 1, 2004.

November 2001 Stock Repurchase Plan.

May 2004 Stock Repurchase Plan.

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Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Until April 2, 1999, the business of Varian, Inc. (the “Company”) was operated as the Instruments business of Varian Associates, Inc. (“VAI”). The Instruments business (which included the business units that designed, developed, manufactured, sold, and serviced scientific instruments and vacuum technologies, and a business unit that provided contract electronics manufacturing services) was contributed by VAI to the Company. On that date, VAI distributed to the holders of its common stock one share of common stock of the Company and one share of common stock of Varian Semiconductor Equipment Associates, Inc. (“VSEA”), which was formerly operated as the Semiconductor Equipment business of VAI, for each share of VAI common stock outstanding on April 2, 1999 (the “Distribution”). VAI retained its Health Care Systems business and changed its name to Varian Medical Systems, Inc. (“VMS”). These transactions were accomplished under the terms of an Amended and Restated Distribution Agreement dated as of January 14, 1999 by and among the Company, VAI, and VSEA (the “Distribution Agreement”). For purposes of providing an orderly transition and to define certain ongoing relationships between and among the Company, VMS, and VSEA after the Distribution, the Company, VMS, and VSEA also entered into certain other agreements which include an Employee Benefits Allocation Agreement, an Intellectual Property Agreement, and a Tax Sharing Agreement.

The Company’s fiscal years reported are the 52- or 53-week periods that ended on the Friday nearest September 30. Fiscal year 2004 comprised the 52-week period ended on October 1, 2004. Fiscal year 2003 comprised the 53-week period ended on October 3, 2003. Fiscal year 2002 comprised the 52-week period ended on September 27, 2002.

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Results of Operations

Fiscal Year 2004 Compared to Fiscal Year 2003

Segment Results

Our operations are grouped into three reportable business segments: Scientific Instruments, Vacuum Technologies, and Electronics Manufacturing. The following table presents comparisons of our sales and operating earnings for each of our three segments and in total for fiscal years 2004 and 2003:

Scientific Instruments.    The increase in Scientific Instruments sales was primarily attributable to higher volume, particularly in Europe. To a lesser extent, the weaker U.S dollar also contributed to the increase in sales, principally in Europe. General economic improvement and increased customer demand for our newer products drove increased sales in both life science and industrial applications.

Scientific Instruments operating earnings reflect pretax restructuring and other related costs of $4.5 million and $5.7 million in fiscal years 2004 and 2003, respectively (see Restructuring Activities below). Excluding the impact of these restructuring and other related costs, the decrease in operating earnings as a percentage of sales resulted primarily from lower gross profit margins, which were adversely affected by a mix shift toward lower margin high-field NMR systems and leading-edge cold probes for NMR and away from higher margin low-field NMR systems, and by higher sales and marketing costs. Sales and marketing costs were higher as a percentage of sales due to higher order-based commissions and the weaker U.S. dollar, which increased costs for most non-U.S. operations. The decrease in operating earnings as a percentage of sales from these factors was partially offset by stronger sales of higher margin mass spectrometry products.

Vacuum Technologies.    The sales increase in Vacuum Technologies resulted primarily from an increase in the volume of products sold into both life science and industrial applications. In life science applications, sales growth was driven by increased demand for turbomolecular pumps for use in OEM mass spectrometers. Industrial sales growth came from higher demand for pumps for broad industrial uses including semiconductor applications. To a lesser extent, the weaker U.S. dollar also contributed to the increase in sales, particularly in Europe. The increase in Vacuum Technologies operating earnings as a percentage of sales in fiscal year 2004 was primarily attributable to higher gross profit margins due to sales volume leverage and a mix shift toward higher margin products as well as approximately $1.1 million in a patent suit settlement and approximately $0.8 million of pretax restructuring costs that were incurred in fiscal year 2003. Vacuum Technologies operating costs were also lower as a percentage of sales in fiscal year 2004, primarily due to sales volume leverage.

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Electronics Manufacturing.    The increase in Electronics Manufacturing sales was primarily due to higher volume from industrial customers as well as approximately $4.2 million in incremental revenues from new customers obtained through an acquisition completed during the third quarter of fiscal year 2003. The decrease in Electronics Manufacturing operating earnings as a percentage of sales was primarily due to lower gross margins in fiscal year 2004. These lower gross margins were attributable to higher start-up costs relating to new business from existing customers and a mix shift toward some lower margin industrial equipment products in fiscal year 2004, partially offset by the impact of approximately $0.5 million in pretax transition costs associated with the acquisition completed in fiscal year 2003.

Consolidated Results

The following table presents comparisons of our sales and other selected consolidated financial results for fiscal years 2004 and 2003:

Sales.    As shown above, fiscal year 2004 sales by the Scientific Instruments, Vacuum Technologies, and Electronics Manufacturing segments increased by 6.0%, 19.5%, and 7.0%, respectively, compared to fiscal year 2003 sales. The improvement in sales was primarily attributable to general economic improvement and continued acceptance of our newer products, which was partially offset by the shorter fiscal year 2004 (which comprised 52 weeks) compared to fiscal year 2003 (which comprised 53 weeks).

Geographically, sales in North America of $498.5 million, Europe of $272.7 million, and the rest of the world of $144.8 million in fiscal year 2004 represented increases of 5.2%, 16.1%, and 4.1%, respectively, compared to fiscal year 2003. All three segments experienced an increase in sales across all major geographic regions that they served except for Scientific Instruments sales into North America, which were flat, and the Pacific Rim, which were lower. The decrease in sales in the Pacific Rim in fiscal year 2004 was primarily due to lower sales of high-field NMR systems into that region as compared to fiscal year 2003. This decrease was partially offset by continued growth in sales of other Scientific Instruments and Vacuum Technologies products into the Pacific Rim and higher Scientific Instruments sales into Latin America. The overall increase in North America sales was primarily due to higher demand for products from the Vacuum Technologies and Electronics Manufacturing segments. The increase in Europe was driven by improved Scientific Instruments and Vacuum Technologies sales; in part, this reflects the currency effect of the stronger Euro in fiscal year 2004.

Gross Profit.    Gross profit as a percentage of sales was basically flat. Higher start-up costs relating to new business from existing customers and a mix shift toward some lower margin industrial equipment

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products in the Electronics Manufacturing segment reduced the gross profit percentage by approximately one-half of one percent. In the Scientific Instruments segment, the adverse impact of a mix shift toward lower margin high-field NMR systems and NMR cold probes and away from higher margin low-field NMR systems was only partially offset by the impact of stronger sales of higher margin mass spectrometry products and application-based consumable products in fiscal year 2004; the net impact of these factors was a reduction in the overall gross profit percentage of around one-half of one percent. These decreases were substantially offset by a higher gross profit percentage in the Vacuum Technologies segment, primarily as a result of sales volume leverage and a mix shift toward higher margin products.

Sales and Marketing.    The slight increase in sales and marketing expenses as a percentage of sales was due primarily to the weaker U.S. dollar, which increased costs for most non-U.S. operations, and higher order-based commissions.

Research and Development.    Research and development spending was relatively constant as a percentage of sales, as the Company increased its investment in research and development, particularly in the areas of NMR and MR imaging, mass spectroscopy, and consumable products, with a bias toward life science applications.

General and Administrative.    General and administrative expenses in fiscal year 2004 included approximately $4.6 million in pretax restructuring and other related costs as well as pretax gains of approximately $1.5 million relating to the curtailment of defined benefit pension plans in Australia and the Netherlands (these curtailment gains were offset by a related defined benefit plan settlement loss of approximately $1.5 million in the first quarter of fiscal year 2005). In comparison, general and administrative expenses in fiscal year 2003 included approximately $6.9 million in pretax restructuring costs and a pretax patent suit settlement of $1.1 million. Excluding the impact of these items, general and administrative expenses as a percentage of sales decreased in fiscal year 2004 primarily as a result of lower administrative costs in the Electronics Manufacturing segment.

We currently anticipate that general and administrative expenses will be adversely impacted in fiscal year 2005 by the cost of complying with the requirements of Section 404 of the Sarbanes-Oxley Act.

Restructuring Activities.

Fiscal Year 2004 Plans.    During fiscal year 2004, we undertook certain restructuring actions to reorganize the management structure in our Scientific Instruments factories in Australia and the Netherlands. These actions were undertaken to narrow the strategic and operational focus of these factories and involved the termination of three senior managers. These actions were initiated in the fourth quarter of fiscal year 2004. All severance and other employee-related costs relating to this restructuring plan were recorded and included in general and administrative expenses in the fourth quarter of fiscal year 2004 and are currently expected to be settled by the end of fiscal year 2005. This restructuring plan did not involve any non-cash components. The following table sets forth changes in the Company’s liability relating to the foregoing restructuring plan during fiscal year 2004:

Also during fiscal year 2004, we committed to a separate plan to reorganize our Scientific Instruments and corporate marketing organizations and to consolidate certain Scientific Instruments administrative functions in North America. This plan, which involves the termination of approximately 20 employees, was undertaken to more closely align the strategic and operational focus of these organizations across different product lines and to improve efficiency and reduce operating costs. These actions were initiated in

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the fourth quarter of fiscal year 2004 and are expected to be completed by the end of the second quarter of fiscal year 2005. All severance and other employee-related costs relating to this restructuring plan were recorded and included in general and administrative expenses in the fourth quarter of fiscal year 2004 and are currently expected to be settled during the first half of fiscal year 2005. This restructuring plan did not involve any non-cash components. The following table sets forth changes in the Company’s liability relating to the foregoing restructuring plan during fiscal year 2004:

Fiscal Year 2003 Plan.    During fiscal year 2003, we undertook certain restructuring actions to improve efficiency and more closely align employee skill sets and other resources with our evolving product mix as a result of our continued emphasis on NMR, mass spectroscopy, and consumable products, with a bias toward life science applications. In addition, actions were undertaken to create a more efficient consumable products operation. These actions primarily impacted the Scientific Instruments segment and involved the termination of approximately 160 employees (principally in our sales and marketing, administration, service, and manufacturing functions), the closure of three sales offices and the consolidation of three consumable products factories into one in Southern California. Substantially all of these activities were completed during fiscal year 2003 except for the termination of approximately 20 employees, which took place in the second and third quarters of fiscal year 2004, and the Southern California facility consolidation, which was initiated in the third quarter of fiscal year 2003 and is expected to be substantially completed in the first quarter of fiscal year 2005. Costs relating to these restructuring activities have been included in general and administrative expenses. The following table sets forth changes in the Company’s liability relating to the foregoing restructuring plan during fiscal years 2003 and 2004:

We expect to settle all employee-related balances by the end of fiscal year 2006, while facility-related payments are currently expected to run through fiscal year 2010. The non-cash portion of restructuring costs recorded in the fiscal years 2004 and 2003 was not significant, either in the aggregate or for any single period presented.

During fiscal year 2004, we incurred approximately $2.2 million in other costs relating directly to the Southern California facility consolidation that were in addition to the restructuring costs described above. These costs included approximately $1.7 million of non-cash charges for accelerated depreciation of assets to be disposed of upon the closure of facilities, approximately $0.1 million in facility relocation costs, and approximately $0.4 million in employee retention and relocation costs.

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We currently anticipate that general and administrative expenses for the first quarter of fiscal year 2005 will include approximately $0.5 million in pretax restructuring costs and approximately $0.3 million in other related costs (comprised of anticipated non-cash charges for accelerated depreciation of assets to be disposed) in connection with the completion of the Southern California facility consolidation.

Restructuring Cost Savings.    When they were initiated, each of the foregoing restructuring plans was eventually expected to result in a reduction of annual operating expenses. The following table sets forth the estimated annual cost savings for each plan as well as where those cost savings were expected to be realized:

These estimated costs savings are primarily expected to impact selling, general, and administrative expenses and, to a lesser extent, cost of sales. Some of these cost savings have been and will continue to be reinvested in other parts of our business, for example, as part of our continued emphasis on NMR and MR imaging, mass spectroscopy, and consumable products, with a bias toward life science applications. In addition, unrelated cost increases in other areas of our operations such as corporate compliance costs could offset some of these cost savings. Although it is difficult to quantify with any precision our actual cost savings to date from these activities, many of which are still ongoing, we currently believe that the ultimate savings realized will not differ materially from our initial estimate.

Purchased In-Process Research and Development.    In connection with the acquisition of certain assets of Digilab, LLC (the “Digilab Business”) in September 2004, the Company recorded a one-time pretax charge of $0.1 million for purchased in-process research and development relating to several new Digilab Business products that were in process at the time of the acquisition. No such charges were recorded during fiscal year 2003.

Interest Income.    Interest income was $3.1 million (representing 0.3% of sales) in fiscal year 2004, compared to $1.5 million (representing 0.2% of sales) in fiscal year 2003. The increase in interest income in fiscal year 2004 resulted primarily from higher levels of invested cash and some increase in interest rates on invested cash.

Income Tax Expense.    The effective income tax rate was 35.0% in both fiscal year 2004 and fiscal year 2003, and the estimated annual effective income tax rate is expected to remain at 35.0% in fiscal year 2005 excluding any discrete items. However, the Company currently anticipates recording a discrete, one-time reduction in income tax expense during the first quarter of fiscal year 2005 as a result of a change in the treatment of foreign tax credits under new U.S. law enacted during the quarter. The amount of this reduction cannot currently be estimated, but could be significant.

Net Earnings.    Net earnings in fiscal year 2004 reflect the impact of approximately $4.6 million in pretax restructuring and other related costs and pretax gains of approximately $1.5 million relating to the curtailment of defined benefit pension plans in Australia and the Netherlands (these curtailment gains were offset by a related defined benefit plan settlement loss of approximately $1.5 million in the first quarter of fiscal year 2005). Net earnings in fiscal year 2003 included approximately $6.9 million in pretax restructuring costs. Excluding the impact of these items, the increase in net earnings resulted primarily from increased sales.

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Fiscal Year 2003 Compared to Fiscal Year 2002

Segment Results

The following table presents comparisons of our sales and operating earnings for each of our three segments and in total for fiscal years 2003 and 2002:

Scientific Instruments.    The revenue growth in Scientific Instruments was primarily driven by increased sales of chromatography, spectroscopy, and high-end NMR systems into life science applications, the impact of a stronger Euro, and the acquisition of ANSYS Technologies, Inc. (“ANSYS”) in February 2002 and the non-clinical, drugs of abuse testing business (the “DAT Business”) from Roche Diagnostics Corporation in January 2003. Earnings from operations include $5.7 million of pretax restructuring costs in fiscal year 2003 and a one-time pretax charge of $0.9 million for purchased in-process research and development relating to the acquisition of ANSYS in fiscal year 2002. In addition, amortization of acquisition-related intangible assets relating to the Scientific Instruments segment increased to $2.6 million, compared to $1.5 million in fiscal year 2002, as a result of the ANSYS and DAT Business acquisitions. Excluding the impact of these costs, the decrease in operating earnings as a percentage of sales resulted primarily from lower gross profit margins and increased general and administrative expenses.

Vacuum Technologies.    Vacuum Technologies sales increased primarily as a result of higher sales of products into life science applications in fiscal year 2003. Vacuum Technologies operating earnings for fiscal year 2003 include pretax restructuring costs of $0.8 million and a pretax patent suit settlement of $1.1 million. Excluding the impact of these costs, the decrease in operating earnings as a percentage of sales in fiscal year 2003 resulted primarily from increased spending on research and development, legal expenses relating to the patent suit, and some impact of a weaker U.S. dollar.

Electronics Manufacturing.    The increase in Electronics Manufacturing sales in fiscal year 2003 was due primarily to approximately $5 million in revenue from new customers obtained through an acquisition completed during the third quarter of fiscal year 2003 and increased sales to industrial customers. Operating earnings for fiscal year 2003 reflect $0.5 million in pretax acquisition-related transition costs. Excluding the impact of these costs, the increase in operating earnings as a percentage of sales in fiscal year 2003 was due to improved operational efficiencies in fiscal year 2003.

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Consolidated Results

The following table presents comparisons of our sales and other selected consolidated financial results for fiscal years 2003 and 2002: