-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RSNIBmrr5NjJmFkA0fYTQaxzsChpu8I8bhg/L2QqQpSmclVAhV3EiQ6wQZGxzzHr qh4QqcsUsgDIhRtOICQTJA== 0000891618-95-000761.txt : 19951227 0000891618-95-000761.hdr.sgml : 19951227 ACCESSION NUMBER: 0000891618-95-000761 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19950929 FILED AS OF DATE: 19951226 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARIAN ASSOCIATES INC /DE/ CENTRAL INDEX KEY: 0000203527 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 942359345 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-07598 FILM NUMBER: 95604304 BUSINESS ADDRESS: STREET 1: 3100 HANSEN WAY STREET 2: MAIL STOP E 224 CITY: PALO ALTO STATE: CA ZIP: 94304-1030 BUSINESS PHONE: 4154934000 MAIL ADDRESS: STREET 1: 3100 HANSEN WAY STREET 2: MAIL STOP E 224 CITY: PALO ALTO STATE: CA ZIP: 94304-1030 FORMER COMPANY: FORMER CONFORMED NAME: VARIAN DELAWARE INC DATE OF NAME CHANGE: 19761123 10-K 1 FORM 10-K FOR THE YEAR ENDED SEPTEMBER 29, 1995 1 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 29, 1995 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, 1995 was $1,490,292,000. Indicate the number of shares outstanding of each of the issuer's classes of common stock as of December 1, 1995: 31,420,000 shares of $1 par value common stock. An index of exhibits filed with this Form 10-K is located on pages 16 through 17. 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 29, 1995 (the "Annual Report") ....................................... I, II, IV Certain sections, identified by caption, of the Proxy Statement for the Registrant's 1996 Annual Meeting of Stockholders (the "Proxy Statement")........ III
2 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 health care, industrial production, scientific and industrial research, and environmental monitoring. The Company's principal products are health care systems, analytical instruments, and semiconductor production equipment. Its foreign subsidiaries engage in some of the aforementioned businesses and market the Company's products outside the United States. As of September 29, 1995, the Company employed approximately 6,900 people worldwide. The Company sells its products throughout the world and has 34 field sales offices in the U.S. and 53 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 other than the completion of the sale of the Electron Devices business as described under the caption "Discontinued Operation" on page 32 of the Annual Report, which information is incorporated herein by reference. The Company anticipates adequate availability of raw materials. The Company's sales to customers outside of the U.S. for 1995 were $797 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 24 of the Annual Report, which information is incorporated herein by reference. The Company's operations are grouped into three 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, simulators for planning cancer treatments, brachytherapy systems and data management systems for radiation oncology 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 $293 million and $281 million in fiscal 1995 and 1994, respectively. 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 2 3 Item 1. (continued) 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. The Instruments business includes a facility located in Tempe, Arizona, that fabricates circuit boards and sub-assemblies for customers inside and outside the Company. This facility was formerly a part of the Electron Devices business which was sold as of August 11, 1995. Backlog for the Instruments business amounted to $111 million and $97 million in fiscal 1995 and 1994, 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 sputtercoating 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 $248 million and $245 million in fiscal 1995 and 1994, respectively. The discontinuance of the semiconductor equipment distribution agreement with Tokyo Electron Limited in the U.S. and Europe was completed effective September 30, 1994. 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 32-33 of the Annual Report. 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 pages 25-26 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 17-19 and 30-32 , 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 3 4 Item 1. (continued) 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 1996, nor are they expected to be material in fiscal 1997. 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 18, 1995.
Name Age Position Term - ---- --- -------- ---- J. Tracy O'Rourke (Director) 60 Chairman of the Board and Chief Executive 1990-Present Officer Richard A. Aurelio 51 Executive Vice President 1992-Present President, Semiconductor Equipment 1991-1992 Executive Vice President, ASM Lithography (a 1987-1991 semiconductor manufacturing company) Allen J. Lauer 58 Executive Vice President 1990-Present Richard M. Levy 57 Executive Vice President 1990-Present Timothy E. Guertin 46 Corporate Vice President 1992-Present President, Medical Equipment 1990-Present Robert A. Lemos 54 Vice President, Finance and Chief Financial 1986-Present Officer Treasurer 1995-Present Joseph B. Phair 48 Secretary 1991-Present Vice President and General Counsel 1990-Present Wayne P. Somrak 50 Vice President 1991-Present Treasurer 1995 Controller 1985-1994, 1995-Present
There is no family relationship between any of the executive officers. 4 5 Item 2. Properties The Company's executive offices and principal research and manufacturing facilities are located in Palo Alto, California, on 55 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 735,400 square feet. The following is a summary of the Company's properties at September 29, 1995:
Land (Acres) Buildings (000's Sq. Ft.) ------------ ------------------------- Owned Leased Owned Leased ----- ------ ----- ------ United States 102 55 1,556 475 International 24 - 312 325 --- -- ----- --- 126 55 1,868 800 === == ===== ===
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 487 52 539 163 702 Instruments 397 197 594 357 951 Semiconductor Equipment 349 52 401 148 549 Other Operations 50 - 50 - 50 ----- --- ----- --- ----- Total Operations 1,283 301 1,584 668 2,252 ===== === ===== === Other 416 ----- Total 2,668 =====
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. 5 6 Item 2. (continued) Manufacturing sites by geographical location are as follows: Health Care Systems California, Illinois, South Carolina, Utah, England, Finland, France, Switzerland Instruments California, Massachusetts, Arizona, Australia, Italy Semiconductor Equipment California, Massachusetts, Korea 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, Taiwan. Item 3. Legal Proceedings Information required by this Item is incorporated herein by reference from the information provided under the caption "Contingencies" on pages 30-32 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 34 of the Annual Report, and the information provided under the caption "Long-Term Debt" on page 27 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 6,083 holders of record of the Company's common stock on December 1, 1995. 6 7 ITEM 6. SELECTED FINANCIAL DATA
FISCAL YEARS - -------------------------------------------------------------------------------------------- (DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS) 1995 1994 1993 1992 1991 - -------------------------------------------------------------------------------------------- SUMMARY OF OPERATIONS Sales $1575.7 1313.4 1061.9 1025.2 1055.3 ------- ------ ------ ------ ------ Earnings from Continuing Operations before Taxes $ 165.3 109.1 60.1 59.3 70.1 Taxes on earnings $ 59.5 41.5 22.8 22.6 26.6 ------- ------ ------ ------ ------ Earnings from Continuing Operations $ 105.8 67.6 37.3 36.7 43.5 Earnings from Discontinued Operations, Net of Taxes $ 33.5 11.8 8.5 1.9 14.0 ------- ------ ------ ------ ------ Earnings (Loss) before Cumulative Effect of Change in Accounting for Income Taxes 139.3 79.4 45.8 38.6 57.5 Cumulative Effect of Accounting Change $ - - - - (7.8) ------- ------ ------ ------ ------ NET EARNINGS $ 139.3 79.4 45.8 38.6 49.7 ======= ====== ====== ====== ====== EARNINGS PER SHARE - FULLY DILUTED Earnings Continuing Operations $ 3.01 1.90 1.03 0.97 1.11 Earnings Discontinued Operations $ 0.95 0.32 0.23 0.05 0.36 ------- ------ ------ ------ ------ Earnings Per Share Before Cumulative Effect of Change in Accounting for Income Taxes $ 3.96 2.22 1.26 1.02 1.47 Cumulative Effect of Accounting Change $ - - - - (0.20) ------- ------ ------ ------ ------ Net Earnings Per Share $ 3.96 2.22 1.26 1.02 1.27 ======= ====== ====== ====== ====== DIVIDENDS DECLARED PER SHARE $ 0.270 0.230 0.195 0.175 0.153 ======= ====== ====== ====== ====== FINANCIAL POSITION AT YEAR END TOTAL ASSETS $1003.8 962.4 878.7 878.7 869.8 Long-term debt (excluding current portion) $ 60.3 60.4 60.5 49.7 68.0
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. 7 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 17-19 of the Annual Report. 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 35 of the Annual Report and the Consolidated Financial Statements, Notes to the Consolidated Financial Statements, and Supplementary Data on pages 20-34 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. 8 9 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" and "Change in Control Arrangements" of the Proxy Statement. 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 20 through 33 and page 35 of the Annual Report: Consolidated Financial Statements: Consolidated Statements of Earnings for fiscal years 1995, 1994, and 1993 Consolidated Balance Sheets at fiscal year-end 1995 and 1994 Consolidated Statements of Stockholders' Equity for fiscal years 1995, 1994, and 1993 Consolidated Statements of Cash Flows for fiscal years 1995, 1994, and 1993 Notes to the Consolidated Financial Statements Report of Independent Accountants 9 10 Item 14. (continued) (2) Financial Statement Schedules The following financial statement schedule of the Registrant and its subsidiaries for fiscal years 1995, 1994, and 1993, 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 14 Schedules II Valuation and Qualifying Accounts 15
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 3-b Registrant's Bylaws (incorporated herein by reference to the Registrant's Form 10-K for the year ended October 2, 1992). 4.1 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). 4.2 Second Amendment to Registrant's Rights Agreement, dated as of November 3, 1995 (incorporated herein by reference to Registrant's Form 8-A/A Registration Statement filed with the Securities and Exchange Commission on November 6, 1995). 10.1 Registrant's Omnibus Stock Plan (incorporated herein by reference to Registrant's Form 10-Q for the quarter ended March 31, 1995). 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 11 Item 14. (continued) 10.4 Registrant's Management Incentive Plan (incorporated herein by reference to Registrant's Form 10-Q for the quarter ended March 31, 1995). 10.5 Registrant's Supplemental Retirement Plan (incorporated herein by reference to Registrant's Form 10-Q for the quarter ended June 30, 1995). 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 (incorporated herein by reference to Registrant's Form 10-K for the year ended September 30, 1994). 10.11 Description of Certain Relocation Arrangements between Registrant and Executive Officers (incorporated herein by reference to Registrant's Form 10-Q for the quarter ended December 30, 1994). 10.12 Registrant's September 14,1994 Incentive and Separation Agreement with Al D. Wilunowski (incorporated herein by reference to Registrant's Form 10-K for the year ended September 30, 1994).(1) 11 Computation of earnings per share. - -------- (1) Confidential treatment was requested of and granted by the Commission with respect to portions of this exhibit. 11 12 Item 14. (continued) 13 Registrant's 1995 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 for the fiscal year ended September 29, 1995. 27.1 Restated Financial Data Schedule for the fiscal year ended September 30, 1994. 27.2 Restated Financial Data Schedule for the quarter ended December 30, 1994 27.3 Restated Financial Data Schedule for the quarter ended March 31, 1995. 27.4 Restated Financial Data Schedule for the quarter ended June 30, 1995. (b) Reports on Form 8-K: A report on Form 8-K was filed on August 23, 1995, regarding the Registrant's sale of its Electron Devices business to a company formed at the direction of Leonard Green & Partners, L.P. 12 13 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 14, 1995 By: /s/ Robert A. Lemos -------------------- Robert A. Lemos Vice President, Finance, Chief Financial Officer, and Treasurer 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 December 14, 1995 - --------------------- Officer (Principal Executive Officer) J. Tracy O'Rourke /s/ Robert A. Lemos Vice President, Finance, Chief Financial December 14, 1995 - ------------------- Officer and Treasurer (Principal Financial Robert A. Lemos Officer) /s/ Wayne P. Somrak Vice President and Controller (Principal December 14, 1995 - ------------------- Accounting 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 Wayne R. Moon* Director Gordon E. Moore * Director David E. Mundell * Director Donald O. Pederson * Director Philip J. Quigley Director Burton Richter * Director Richard W. Vieser * Director * By /s/ Robert A. Lemos December 14, 1995 --------------------- Robert A. Lemos, Attorney-in-Fact
- ------------------------------------- ** By authority of powers of attorney filed herewith. 13 14 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 18,1995 appears on page 35 of the 1995 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 Schedule listed in the index on page 10 of this Form 10-K. In our opinion, the financial statement schedule 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 18, 1995 14 15 SCHEDULE II VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS (1) for the fiscal years ended 1995, 1994, and 1993 (Dollars in Thousands)
DEDUCTIONS BALANCE AT CHARGED TO ----------------------------- 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 1995 $ 2,422 $ 330 & Adjustments $ 436 $ 2,316 ======= ======= ======= ======= 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 ======= ======= ======= ======= ESTIMATED LIABILITY FOR PRODUCT WARRANTY: Actual Warranty Fiscal Year Ended 1995 $41,682 $61,954 Expenditures $55,560 $48,076 ======= ======= ======= ======= 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 ======= ======= ======= =======
(1) As to column omitted the answer is "none". -15- 16 INDEX OF EXHIBITS
Exhibit Number - ------- 3-a Registrant's Restated Certificate of Incorporation. 3-b Registrant's Bylaws (incorporated herein by reference to the Registrant's Form 10-K for the year ended October 2, 1992). 4.1 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). 4.2 Second Amendment to Registrant's Rights Agreement, dated as of November 3, 1995 (incorporated herein by reference to Registrant's Form 8-A/A Registration Statement filed with the Securities and Exchange Commission on November 6, 1995). 10.1 Registrant's Omnibus Stock Plan (incorporated herein by reference to Registrant's Form 10-Q for the quarter ended March 31, 1995). 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-Q for the quarter ended March 31, 1995). 10.5 Registrant's Supplemental Retirement Plan (incorporated herein by reference to Registrant's Form 10-Q for the quarter ended June 30, 1995). 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)
16 17 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 (incorporated herein by reference to Registrant's Form 10-K for the year ended September 30, 1994). 10.11 Description of Certain Relocation Arrangements between Registrant and Executive Officers (incorporated herein by reference to Registrant's Form 10-Q for the quarter ended December 30, 1994). 10.12 Registrant's September 14,1994 Incentive and Separation Agreement with Al D. Wilunowski (incorporated herein by reference to Registrant's Form 10-K for the year ended September 30, 1994). (1) 11 Computation of earnings per share. 13 Registrant's 1995 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 for the fiscal year ended September 29, 1995. 27.1 Restated Financial Data Schedule for the fiscal year ended September 30, 1994. 27.2 Restated Financial Data Schedule for the quarter ended December 30, 1994 27.3 Restated Financial Data Schedule for the quarter ended March 31, 1995. 27.4 Restated Financial Data Schedule for the quarter ended June 30, 1995.
- ----------- (1) Confidential treatment was requested of and granted by the Commission with respect to portions of this exhibit. 17 EX-3.(A) 2 RESTATED CERTIFICATE OF INCORPORATION 1 EXHIBIT 3-a RESTATED CERTIFICATE OF INCORPORATION OF VARIAN ASSOCIATES, INC. This corporation was originally incorporated under the name "VARIAN DELAWARE, INC." on January 22, 1976. ARTICLE I This name of this corporation is VARIAN ASSOCIATES, INC. ARTICLE II Its registered office is located at No. 1209 Orange Street, City of Wilmington, County of New Castle, State of Delaware. The name of its registered agent at that address is The Corporation Trust Company. ARTICLE III The nature of the business or purposes to be conducted or promoted by this corporation is to engage in research, development, manufacture, service and sale of electronic and related products and to engage in any other act or activity for which corporations may be organized under the General Corporation Law of Delaware. ARTICLE IV This corporation shall be authorized to issue two classes of stock to be designated, respectively, "Common" and "Preferred." The total number of shares which this corporation shall have authority to issue shall be one hundred million (100,000,000). The total number of shares of Common Stock shall be ninety-nine million (99,000,000) and the par value of each share of Common Stock shall be One Dollar ($1). The total number of shares of Preferred Stock shall be one million (1,000,0000) and the par value of each share of Preferred Stock shall be One Dollar ($1). The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby expressly vested with authority to fix by resolution or resolutions the designations and the powers, preferences and relative, participating, optional or other special rights, and the qualifications, limitations or restrictions thereof (including, without limitation, the voting powers if any, the dividend rate, conversion rights, redemptive price, or liquidation preference of any series of Preferred Stock), to fix the number of shares constituting any such series, and to increase or decrease the number of shares of any such 18 2 Exhibit 3-a (continued) series (but not below the number of shares thereof then outstanding). In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution or resolutions originally fixing the number of shares of such series. The number of authorized shares of any class or classes of stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the corporation entitled to vote in the election of directors. ARTICLE V The number of directors which shall constitute the whole Board of Directors of this corporation shall be 15. The directors shall be divided into three classes, Class I, Class II and Class III. The number of directors in each class shall be 5. Directors of each class shall serve for a term ending on the third annual meeting of stockholders following the annual meeting at which such class was elected, except that the term of office of the initial Class I directors shall expire on the date of the annual meeting in 1977, the term of office of the initial Class II directors shall expire on the date of the annual meeting in 1978, the term of office of the initial Class III directors shall expire on the date of the annual meeting in 1979. The foregoing notwithstanding, each director shall serve until his successor shall have been duly elected and qualified, unless he shall die, resign or be removed. At each annual election the directors chosen to succeed those which terms then expire shall be identified as being of the same class as the directors they succeed. If for any reason the number of directors in the various classes shall not conform with the formula set forth in the preceding paragraph, the Board of Directors may redesignate any director into a different class in order that the balance of directors in such classes shall conform thereto. At all elections of directors of this corporation, each holder of Common Stock shall be entitled to as many votes as shall equal the number of votes which, except for this provision as to cumulative voting, he would be entitled to cast for the election of directors with respect to his shares of Common Stock, multiplied by the number of directors to be elected, and he may cast all of such votes for a single nominee for director or may distribute them among the number to be voted for, or for any two or more of them as he sees fit. Eight (8) directors shall constitute a quorum for the transaction of business, and if at any meeting of the Board of Directors there shall be less than a quorum of (8), a majority of those present may adjourn the meeting from time to time. Every act or decision done or made by a majority of the whole Board of Directors, acting at a meeting duly held at which a quorum is present, or acting by written consent, shall be regarded as the act of the Board of Directors unless a greater number be required by law or by this Certificate of Incorporation. 19 3 Exhibit 3-a (continued) ARTICLE VI In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized, by resolution passed by a majority of the whole board, to make, amend, alter or repeal the Bylaws of this corporation. ARTICLE VII This corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in any manner now or hereafter prescribed by law, and all rights herein conferred upon the stockholders are granted subject to this reservation. ARTICLE VIII Whenever a compromise or arrangement is proposed between this corporation and its creditors or any class of them and/or between this corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this corporation or of any creditor of stockholder thereof, or on the application of any receiver or receivers appointed for this corporation under the provisions of section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this corporation under the provisions of section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or the stockholders or class of stockholders of this corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this corporation as consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this corporation, as the case may be, and also on this corporation. ARTICLE IX Meetings of stockholders may be held outside the State of Delaware, if the Bylaws so provide. The books of this corporation may be kept (subject to any provision of law) outside the State of Delaware. Elections of directors need not be by ballot unless the Bylaws of this corporation shall so provide. 20 4 Exhibit 3-a (continued) ARTICLE X A director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for any matter in respect of which such director shall be liable under Section 174 of the General corporation Law of the State of Delaware or shall be liable by reason that, in addition to any and all other requirements for such liability, be (i) shall have breached his duty of loyalty to the corporation or its stockholders, (ii) shall not have acted in good faith or, in failing to act, shall not have acted in good faith, (iii) shall have acted in a manner involving intentional misconduct or a knowing violation of the law, or (iv) hall have derived an improper personal benefit. Neither the amendment nor repeal of this Article X, nor the adoption of any provision of the certificate or incorporation inconsistent with this Article X shall eliminate or reduce the effect of this article X in respect of the matter occurring, or any cause of action, suit or claim that but for this Article X would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. THIS RESTATED CERTIFICATE OF INCORPORATION OF VARIAN ASSOCIATES, INC. was adopted by the Board of Directors of this corporation in accordance with Section 245 of the General Corporation Law of the State of Delaware. It only restates and integrates and does not further amend the provisions of this corporation's Restated Certificate of Incorporation as heretofore amended, and there is no discrepancy between those provisions and the provisions of this Restated Certificate of Incorporation. VARIAN ASSOCIATES, INC. Dated: June 26, 1987 By: /s/ Thomas D. Sege --------------------------------- Thomas D. Sege Chairman of the Board Attest: /s/ William R. Moore ----------------------------- William R. Moore Secretary 21 5 Exhibit 3-a (continued) CERTIFICATE OF CORRECTION FILED TO CORRECT A CERTAIN ERROR IN THE RESTATED CERTIFICATE OF INCORPORATION OF VARIAN ASSOCIATES, INC. FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE ON JUNE 29, 1987 Varian Associates, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: 1. The name of the corporation is Varian Associates, Inc. 2. A Restated Certificate of Incorporation of Varian Associates, Inc. was filed by the Secretary of State of Delaware on June 29, 1987, and said Restated Certificate of Incorporation requires correction as permitted by subsection (f) of Section 103 of the General Corporation Law of the State of Delaware. 3. The inaccuracy or defect of said Restated Certificate of Incorporation to be corrected was the inadvertent omission from Article IV of said Restated Certificate of Incorporation of the provisions of the Certificate of Designations of Series A Junior Participating Preferred Stock of Varian Associates, Inc., dated August 26, 1986, and filed with the Secretary of State of Delaware on September 2, 1986, which provides for the designation and amount of Series A Junior Participating Preferred Stock of the corporation and the powers, preferences and relative, participating, optional or other special rights of the shares of such series of Preferred Stock, and the qualifications, limitations or restrictions thereof. 4. Article IV of said Restated Certificate of Incorporation is corrected to add to the end of the existing text of said Article IV the following: Pursuant to the authority vested in the Board of Directors of the Company in accordance with the provisions of its Restated Certificate of Incorporation, a series of Preferred Stock of the Company be, and hereby is, created and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional or other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof are as follows: Section 1. Designation and Amount. The shares of such series shall be designated as "Series A Junior Participating Preferred Stock" (the "Series A Preferred Stock") and the number of shares constituting such series shall be 280,000. Section 2. Dividends and Distributions. (A) Subject to the provisions for adjustment hereinafter set forth, the holders of shares of Series A Preferred Stock shall be entitled to receive, when, as 22 6 Exhibit 3-a (continued) and if declared by the Board of Directors out of funds legally available for the purpose, (i) cash dividends in an amount per share (rounded to the nearest cent) equal to 100 times the aggregate per share amount of all cash dividends declared or paid on the Common Stock, $1.00 par value per share, of the Company ("the Common Stock") and (ii) a preferential cash dividend (the "Preferential Dividends"), if any, on the first day of January, April, July and October of each year (each a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Preferred Stock, in an amount equal to $10 per share of Series A Preferred Stock less the per share amount of all cash dividends declared on the Series A Preferred Stock pursuant to clause (i) of this sentence since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Preferred Stock. In the event the Company shall, at any time after the issuance of any share or fraction of a share of Series A Preferred Stock, make any distribution on the shares of Common Stock of the Company, whether by way of a dividend or a reclassification of stock, a recapitalization, reorganization or partial liquidation of the Company or otherwise, which is payable in cash or any debt security, debt instrument, real or personal property or any other property (other than cash dividends subject to the immediately preceding sentence, a distribution of shares of Common Stock or other capital stock of the Company or a distribution of rights or warrants to acquire any such share, including any debt security convertible into or exchangeable for any such share, at a price less than the Fair Market Value of such share), then and in each such event the Company shall simultaneously pay on each then outstanding share of Series A Preferred Stock of the Company a distribution, in like kind, of 100 times such distribution paid on a share of Common Stock (subject to the provisions for adjustment hereinafter set forth). The dividends and distributions on the Series A Preferred Stock to which holders thereof are entitled pursuant to clause (i) of the first sentence of this paragraph and pursuant to the second sentence of this paragraph are hereinafter referred to as "Participating Dividends" and the multiple of such cash and non-cash dividends on the Common Stock applicable to the determination of the Participating Dividends, which shall be 100 initially but shall be adjusted from time to time as hereinafter provided, is hereinafter referred to as the "Dividend Multiple". In the event the Company shall at any time after September 3, 1986 declare or pay any dividend or make any distribution on Common Stock payable in shares of Common Stock, or effect a subdivision or split or a combination, consolidation or reverse split of the outstanding shares of Common Stock into a greater or lesser number of shares of Common Stock, then in each such case the Dividend Multiple thereafter applicable to the determination of the amount of Participating Dividends which holders of shares of Series A Preferred Stock shall be entitled to receive shall be the Dividend Multiple applicable immediately prior to such event multiplied by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 23 7 Exhibit 3-a (continued) (B) The Company shall declare each Participating Dividend at the same time it declares any cash or non-cash dividend or distribution on the Common Stock in respect of which a Participating Dividend is required to be paid. No cash or non-cash dividend or distribution on the Common Stock in respect of which a Participating Dividend is required to be paid shall be paid or set aside for payment on the Common Stock unless a Participating Dividend in respect of such dividend or distribution on the Common Stock shall be simultaneously paid, or set aside for payment, on the Series A Preferred Stock. (C) Preferential Dividends shall begin to accrue on outstanding shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issuance of any shares of Series A Preferred Stock. Accrued but unpaid Preferential Dividends shall cumulate but shall not bear interest. Preferential Dividends paid on the shares of Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. Section 3. Voting Rights. The holders of shares of Series A Preferred Stock shall have the following voting rights: (A) Subject to the provisions for adjustment hereinafter set forth, each share of Series A Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Company. The number of votes which a holder of Series A Preferred Stock is entitled to cast, as the same may be adjusted from time to time as hereinafter provided, is hereinafter referred to as the "Vote Multiple". In the event the Company shall at any time after September 3, 1986 declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or split or a combination, consolidation or reverse split of the outstanding shares of Common Stock into a greater or lesser number of shares of Common Stock, then in each such case the Vote Multiple thereafter applicable to the determination of the number of votes per share to which holders of shares of Series A Preferred Stock shall be entitled after such event shall be the Vote Multiple immediately prior to such event multiplied by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein, in the Restated Certificate of Incorporation or by law, the holders of shares of Series A Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Company. (C) In the event that the Preferential Dividends accrued on the Series A Preferred Stock for four or more quarterly dividend periods, whether consecutive or not, shall not have been declared and paid or set apart for payment, the holders of record of Preferred Stock of the Company of all series (including the Series A Preferred Stock), other than any series in respect of which such right is expressly 24 8 Exhibit 3-a (continued) withheld by the Restated Certificate of Incorporation or the authorizing resolutions included in the Certificate of Designations therefor, shall have the right, at the next meeting of stockholders called for the election of directors, to elect two members to the Board of Directors, which directors shall be in addition to the number required by the By-laws prior to such event, to serve until the next Annual Meeting and until their successors are elected and qualified or their earlier resignation, removal or incapacity or until such earlier time as all accrued and unpaid Preferential Dividends upon the outstanding shares of Series A Preferred Stock shall have been paid (or set aside for payment) in full. The holders of shares of Series A Preferred Stock shall continue to have the right to elect directors as provided by the immediately preceding sentence until all accrued and unpaid Preferential Dividends upon the outstanding shares of Series A Preferred Stock shall have been paid (or set aside for payment) in full. Such directors may be removed and replaced by such stockholders, and vacancies in such directorships may be filled only by such stockholders (or by the remaining director elected by such stockholders, if there be one) in the manner permitted by law; provided, however, that any such action by stockholders shall be taken at a meeting of stockholders and shall not be taken by written consent thereto. (D) Except as otherwise required by the Restated Certificate of Incorporation or by law or set forth herein, holders of Series A Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for the taking of any corporate action. Section 4. Certain Restrictions. (A) Whenever Preferential Dividends or Participating Dividends are in arrears or the Company shall be in default of payment thereof, thereafter and until all accrued and unpaid Preferential Dividends and Participating Dividends, whether or not declared, on shares of Series A Preferred Stock outstanding shall have been paid or set aside for payment in full, and in addition to any and all other rights which any holder of shares of Series A Preferred Stock may have in such circumstances, the Company shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity as to dividends with the Series A Preferred Stock, unless dividends are paid ratably on the Series A Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled if the full dividends accrued thereon were to be paid; 25 9 Exhibit 3-a (continued) (iii) except as permitted by subparagraph (iv) of this paragraph 4(A), redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Stock, provided that the Company may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Company ranking junior (both as to dividends and upon liquidation, dissolution or winding up) to the Series A Preferred Stock; or (iv) purchase or otherwise acquire for consideration any shares of Series A Preferred Stock, or any shares of stock ranking on a parity with the Series A Preferred Stock (either as to dividends or upon liquidation, dissolution or winding up), except in accordance with a purchase offer made to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Company shall not permit any Subsidiary (as hereinafter defined) of the Company to purchase or otherwise acquire for consideration any shares of stock of the Company unless the Company could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. A "Subsidiary" of the Company shall mean any corporation or other entity of which securities or other ownership interests having ordinary voting power suffi cient to elect a majority of the board of directors or other persons performing similar functions are beneficially owned, directly or indirectly, by the Company or by any corporation or other entity that is otherwise controlled by the Company. (C) The Company shall not issue any shares of Series A Preferred Stock except upon exercise of Rights issued pursuant to that certain Rights Agreement dated as of August 5, 1986 between the Company and The First National Bank of Boston, a copy of which is on file with the Secretary of the Company at its principal executive office and shall be made available to stockholders of record without charge upon written request therefor addressed to said Secretary. Notwithstanding the foregoing sentence, nothing contained in the provisions hereof shall prohibit or restrict the Company from issuing for any purpose any series of Preferred Stock with rights and privileges similar to, different from, or greater than, those of the Series A Preferred Stock. Section 5. Reacquired Shares. Any shares of Series A Preferred Stock purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares upon their retirement and cancellation shall become authorized but unissued shares of Preferred Stock, without designation as to series, and such shares may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors. 26 10 Exhibit 3-a (continued) Section 6. Liquidation, Dissolution or Winding Up. Upon any voluntary or involuntary liquidation, dissolution or winding up of the Company, no distribution shall be made (i) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Stock unless the holders of shares of Series A Preferred Stock shall have received, subject to adjustment as hereinafter provided, (A) $125 per share plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, or (B) if greater than the amount specified in clause (i)(A) of this sentence, an amount equal to 100 times the aggregate amount to be distributed per share to holders of Common Stock, as the same may be adjusted as hereinafter provided, and (ii) to the holders of stock ranking on a parity upon liquidation, dissolution or winding up with the Series A Preferred Stock, unless simultaneously therewith distributions are made ratably on the Series A Preferred Stock and all other shares of such parity stock in proportion to the total amounts to which the holders of shares of Series A Preferred Stock are entitled under clause (i)(A) of this sentence and to which the holders of such parity shares are entitled, in each case upon such liquidation, dissolution or winding up. The amount to which holders of Series A Preferred Stock may be entitled upon liquidation, dissolution or winding up of the Company pursuant to clause (i)(B) of the foregoing sentence is hereinafter referred to as the "Participating Liquidation Amount" and the multiple of the amount to be distributed to holders of shares of Common Stock upon the liquidation, dissolution or winding up of the Company applicable pursuant to said clause to the determination of the Participating Liquidation Amount, as said multiple may be adjusted from time to time as hereinafter provided, is hereinafter referred to as the "Liquidation Multiple". In the event the Company shall at any time after September 3, 1986 declare or pay any dividend on Common Stock payable in shares of Common Stock, or effect a subdivision or split or a combination, consolidation or reverse split of the outstanding shares of Common Stock into a greater or lesser number of shares of Common Stock, then in each such case the Liquidation Multiple thereafter applicable to the determination of the Participating Liquidation Amount to which holders of Series A Preferred Stock shall be entitled after such event shall be the Liquidation Multiple applicable immediately prior to such event multiplied by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Certain Reclassifications and Other Events. (A) In the event that holders of shares of Common Stock of the Company receive after September 3, 1986 in respect of their shares of Common Stock any share of capital stock of the Company (other than any share of Common Stock of the Company), whether by way of reclassification, recapitalization, reorganization, dividend or other distribution or otherwise (a "Transaction"), then and in each such event the dividend rights, voting rights and rights upon the liquida tion, dissolution or winding up of the Company of the shares of Series A Preferred Stock shall be adjusted so that after such event the holders of Series A Preferred Stock shall be entitled, in respect of each share of Series A Preferred 27 11 Exhibit 3-a (continued) Stock held, in addition to such rights in respect thereof to which such holder was entitled immediately prior to such adjustment, to (i) such additional dividends as equal the Dividend Multiple in effect immediately prior to such Transaction multiplied by the additional dividends which the holder of a share of Common Stock shall be entitled to receive by virtue of the receipt in the Transaction of such capital stock, (ii) such additional voting rights as equal the Vote Multiple in effect immediately prior to such Transaction multiplied by the additional voting rights which the holder of a share of Common Stock shall be entitled to receive by virtue of the receipt in the Transaction of such capital stock and (iii) such additional distributions upon liquidation, dissolution or winding up of the Company as equal the Liquidation Multiple in effect immediately prior to such Transaction multiplied by the additional amount which the holder of a share of Common Stock shall be entitled to receive upon liquidation, dissolution or winding up of the Company by virtue of the receipt in the Transaction of such capital stock, as the case may be, all as provided by the terms of such capital stock. (B) In the event that holders of shares of Common Stock of the Company receive after September 3, 1986 in respect of their shares of Common Stock any right or warrant to purchase Common Stock (including as such a right, for all purposes of this paragraph, any security convertible into or exchangeable for Common Stock) at a purchase price per share less than the Fair Market Value (as hereinafter defined) of a share of Common Stock on the date of issuance of such right or warrant, then and in each such event the dividend rights, voting rights and rights upon the liquidation, dissolution or winding up of the Company of the shares of Series A Preferred Stock shall each be adjusted so that after such event the Dividend Multiple, the Vote Multiple and the Liquidation Multiple shall each be the product of the Dividend Multiple, the Vote Multiple and the Liquidation Multiple, as the case may be, in effect immediately prior to such event multiplied by a fraction the numerator of which shall be the number of shares of Common Stock outstanding immediately before such issuance of rights or warrants plus the maximum number of shares of Common Stock which could be acquired upon exercise in full of all such rights or warrants and the denominator of which shall be the number of shares of Common Stock outstanding immediately before such issuance of rights or warrants plus the number of shares of Common Stock which could be purchased, at the Fair Market Value of the Common Stock at the time of such issuance, by the maximum aggregate consideration payable upon exercise in full of all such rights or warrants. (C) In the event that holders of shares of Common Stock of the Company receive after September 3, 1986 in respect of their shares of Common Stock any right or warrant to purchase capital stock of the Company (other than shares of Common Stock), including as such a right, for all purposes of this paragraph, any security convertible into or exchangeable for capital stock of the Company (other than Common Stock), at a purchase price per share less than the Fair Market Value of such shares of capital stock on the date of issuance of such right or warrant, then and in each such event the dividend rights, voting rights and rights upon liquidation, dissolution or winding up of the Company of the shares of Series A Preferred Stock shall each be adjusted so that after such event each holder 28 12 Exhibit 3-a (continued) of a share of Series A Preferred Stock shall be entitled, in respect of each share of Series A Preferred Stock held, in addition to such rights in respect thereof to which such holder was entitled immediately prior to such event, to receive (i) such additional dividends as equal the Dividend Multiple in effect immediately prior to such event multiplied, first, by the additional dividends to which the holder of a share of Common Stock shall be entitled upon exercise of such right or warrant by virtue of the capital stock which could be acquired upon such exercise and multiplied again by the Discount Fraction (as hereinafter defined) and (ii) such additional voting rights as equal the Vote Multiple in effect immediately prior to such event multiplied, first, by the additional voting rights to which the holder of a share of Common Stock shall be entitled upon exercise of such right or warrant by virtue of the capital stock which could be acquired upon such exercise and multiplied again by the Discount Fraction and (iii) such additional distributions upon liquidation, dissolution or winding up of the Company as equal the Liquidation Multiple in effect immediately prior to such event multiplied, first, by the additional amount which the holder of a share of Common Stock shall be entitled to receive upon liquidation, dissolution or winding up of the Company upon exercise of such right or warrant by virtue of the capital stock which could be acquired upon such exercise and multiplied again by the Discount Fraction. For purposes of this paragraph, the "Discount Fraction" shall be a fraction the numerator of which shall be the difference between the Fair Market Value of a share of the capital stock subject to a right or warrant distributed to holders of shares of Common Stock of the Company as contemplated by this paragraph immediately after the distribution thereof and the purchase price per share for such share of capital stock pursuant to such right or warrant and the denominator of which shall be the Fair Market Value of a share of such capital stock immediately after the distribution of such right or warrant. (D) For purposes of this Section 7, the "Fair Market Value" of a share of capital stock of the Company (including a share of Common Stock) on any date shall be deemed to be the average of the daily closing price per share thereof over the 30 consecutive Trading Days (as such term is hereinafter defined) immediately prior to such date; provided, however, that, in the event that such Fair Market Value of any such share of capital stock is determined during a period which includes any date that is within 30 Trading Days after (i) the ex-dividend date for a dividend or distribution on stock payable in shares of such stock or securities convertible into shares of such stock, or (ii) the effective date of any subdivision, split, combination, consolidation, reverse stock split or reclassification of such stock, then, and in each such case, the Fair Market Value shall be appropriately adjusted by the Board of Directors of the Company to take into account ex-dividend or post-effective date trading. The closing price for any day shall be the last sale price, regular way, or, in case, no such sale takes place on such day, the average of the closing bid and asked prices, regular way (in either case, as reported in the applicable transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange), or, if the shares are not listed or admitted to trading on the New York Stock Exchange, as reported in the applicable transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares are listed or admitted to trading or, 29 13 Exhibit 3-a (continued) if the shares are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other system then in use, or if on any such date the shares are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the shares selected by the Board of Directors of the Company. The term "Trading Day" shall mean a day on which the principal national securities exchange on which the shares are listed or admitted to trading is open for the transaction of business or, if the shares are not listed or admitted to trading on any national securities exchange, on which the New York Stock Exchange or such other national securities exchange as may be selected by the Board of Directors of the Company is open. If the shares are not publicly held or not so listed or traded on any day within the period of 30 Trading Days applicable to the determination of Fair Market Value thereof as aforesaid, "Fair Market Value" shall mean the fair market value thereof per share as determined in good faith by the Board of Directors of the Company. In either case referred to in the foregoing sentence, the determination of Fair Market Value shall be described in a statement filed with the Secretary of the Company. Section 8. Consolidation, Merger. etc. In case the Company shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each outstanding share of Series A Preferred Stock shall at the same time be similarly exchanged for or changed into the aggregate amount of stock, securities, cash and/or other property (payable in like kind), as the case may be, for which or into which each share of Common Stock is changed or exchanged multiplied by the highest of the Vote Multiple, the Dividend Multiple or the Liquidation Multiple in effect immediately prior to such event. Section 9. Effective Time of Adjustments. (A) Adjustments to the Series A Preferred Stock required by the provisions hereof shall be effective as of the time at which the event requiring such adjustments occurs. (B) The Company shall give prompt written notice to each holder of a share of Series A Preferred Stock of the effect of any adjustment to the voting rights, dividend rights or rights upon liquidation, dissolution or winding up of the Company of such shares required by the provisions hereof. Notwithstanding the foregoing sentence, the failure of the Company to give such notice shall not affect the validity of or the force or effect of or the requirement for such adjustment. Section 10. No Redemption. The shares of Series A Preferred Stock shall not be redeemable at the option of the Company or any holder thereof. Notwithstanding the foregoing sentence of this Section, the Company may acquire 30 14 Exhibit 3-a (continued) shares of Series A Preferred Stock in any other manner permitted by law, the provisions hereof and the Restated Certificate of Incorporation of the Company. Section 11. Ranking. Unless otherwise provided in the Restated Certificate of Incorporation of the Company or a Certificate of Designations relating to a subsequent series of preferred stock of the Company, the Series A Preferred Stock shall rank junior to all other series of the Company's Preferred Stock as to the payment of dividends and the distribution of assets on liquidation, dissolution or winding up and senior to the Common Stock. Section 12. Amendment. The provisions hereof and the Restated Certificate of Incorporation of the Company shall not be amended in any manner which would adversely affect the rights, privileges or powers of the Series A Pre ferred Stock without, in addition to any other vote of stockholders required by law, the affirmative vote of the holders to two-thirds or more of the outstanding shares of Series A Preferred Stock, voting together as a single class. IN WITNESS WHEREOF, the undersigned officer of the corporation has hereunto set his hand this 3rd day of November, 1995. VARIAN ASSOCIATES, INC. By: /s/ Joseph B. Phair ------------------------------ Joseph B. Phair Vice President, General Counsel and Secretary 31 EX-11 3 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES COMPUTATION OF EARNINGS PER SHARE IN ACCORDANCE WITH INTERPRETIVE RELEASE NO. 34-9083
(SHARES IN THOUSANDS) 1995 1994 1993 - ------------------------------------------------------------- ------- ------- ------- Actual weighted average shares outstanding for the period (1) 33,648 34,391 35,372 Dilutive employee stock options (1) 1,554 1,285 920 ------- ------- ------- Weighted average shares outstanding for the period (1) 35,202 35,676 36,292 ======= ======= ======= (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) - ------------------------------------------------------------- Earnings from continuing operations $ 105.8 $ 67.6 $ 37.3 Earnings from discontinued operations 33.5 11.8 8.5 ------- ------- ------- Earnings applicable to fully diluted earnings per share $ 139.3 $ 79.4 $ 45.8 ======= ======= ======= Earnings per share based on SEC interpretive release No. 34-9083: Earnings from continuing operations $ 3.01 $ 1.90 $ 1.03 Earnings from discontinued operations 0.95 0.32 0.23 ------- ------- ------- Earnings per share - Fully Diluted (1) (2) $ 3.96 $ 2.22 $ 1.26 ======= ======= =======
(1) Prior periods restated for two-for-one stock split effected in the form of a stock dividend in March 1994. (2) There is no significant difference between fully diluted earnings per share and primary earnings per share. EX-13 4 1995 ANNUAL REPORT TO STOCKHOLDERS 1 EXHIBIT 13 VARIAN ASSOCIATES, INC. FY 1995 ANNUAL REPORT TO STOCKHOLDERS 2 Exhibit 13 MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS In fiscal 1995, the Company earned $105.8 million from continuing operations, up 56% from the $67.6 million earned in 1994. Earnings per share from continuing operations rose to $3.01, a 58% increase from the prior year's $1.90. Orders for the year grew 9% to $1.597 billion from 1994's $1.471 billion. Sales of $1.576 billion were up by 20% from the year-ago's $1.313 billion. However, after adjustments for the effect of an equipment distribution agreement with Tokyo Electron, Ltd. (TEL), which ended in 1994, the increase in orders was 24% while sales rose 26%. Order backlog stood at $651 million at the close of the year. Net earnings from discontinued operations for the year totaled $33.5 million ($0.95/share), comprising of a $25.3 million ($0.72/share) gain on the sale of its Electron Devices business, and $8.2 million ($0.23/share) from discontinued operations. Each of Varian's three core businesses contributed to the improved volume due largely to the continued strong performances by the Company's Semiconductor Equipment and Health Care Systems businesses. For the second year in a row, the Company's largest business, Semiconductor Equipment, posted higher results over the prior year. Orders and sales rose to $658 million and $659 million respectively. After adjustments for ending the previously noted distribution arrangement with Tokyo Electron, Ltd., orders were up 56% and sales grew 65% over the year-ago levels. The Company took full advantage of increased demand for new chipmaking equipment, as orders for its Thin Film Systems unit were up 76% over 1994, and bookings for its Ion Implantation lines rose 48%. The higher demand was principally driven by interest in the Company's newly introduced or improved sputtering systems as well as its new VIISion high current ion implanter and its E220 and E500 medium current systems. Operating profit for the Semiconductor Equipment business rose to $99 million from the prior year's $36 million. Backlog grew to $248 million, which was an increase of 65% for Varian-made products after adjusting for the 1994 TEL distribution arrangement. Varian's Health Care Systems business closed the year with fourth-quarter orders exceeding the $150 million mark for the first time. Annual orders and sales rose for both of its major business lines, oncology systems and X-ray tube products, with most of the momentum coming in the X-ray sector. Health Care Systems' operating profit improved over the prior year from $86 million in 1994 to $90 million in 1995. Backlog also rose from the 1994 level to $293 million. Stronger demand for Oncology Systems' products outside the U.S. and higher orders for related software and ancillary products offset continued domestic pricing pressures and flat demand. Orders and sales for Varian's Instruments business rose from 1994 levels. The growth is attributed to higher demand for the Company's vacuum equipment, products from its Tempe Electronics Center, and newly introduced nuclear magnetic resonance instruments, while tempered by slow or stagnant demand for its analytical lines (particularly in Europe). Backlog increased from the year-ago level, with all product areas except the analytical sector contributing to the gain. Operating profits for this business were substantially below the prior year, due primarily to the weak analytical volume and related restructuring activities. Research and development expense increased $17.3 million to $91.0 million, representing 5.8% of revenue, comparable with 1994 and 1993. Net interest expense in 1995 declined to $1.6 million compared to $2.0 million and $4.5 million in 1994 and 1993 respectively. The continuing operations effective tax rate for 1995 was 36%, and 38% in each of the preceding two years. See Notes to the Consolidated Financial Statements. The Financial Accounting Standards Board (FASB) and the American Institute of Certified Public Accountants (AICPA) have issued statements which the Company has not yet adopted. These statements are Statement of Financial Accounting Standards No. 121, (SFAS 121), Accounting for the Impairment of Long- Lived Assets and for Long-Lived Assets To Be Disposed Of; Statement of Financial Accounting Standards No. 123, (SFAS 123), Accounting for Stock Based Compensation; and American Institute of Certified Public Accountants Statement of Position No. 94-6, (SOP 94-6), Disclosure of Certain Significant Risks and Uncertainties. The adoption of these statements will not have a material effect on the financial statements of the Company. See Summary of Significant Accounting Policies in Notes to the Consolidated Financial Statements. 17 3 Management's Discussion and Analysis (continued) FINANCIAL CONDITION The Company's financial condition remained strong during 1995. Operating activities provided cash of $117.4 million compared to $120.3 million in 1994. Investing activities provided $125.6 million inclusive of $191.3 million proceeds from the sale of the Electron Devices business, offset by the purchase of property, plant, and equipment of $65.4 million and the purchase of businesses of $12.7 million. Financing activities used $184.9 million to buy back shares of the Company's stock, and to offset the issuance of stock to employees. Total debt as a percent of total capital increased to 13.6% from 12.7% a year ago. Cash and cash equivalents increased to $122.7 million from $78.9 a year ago, exceeding all short- and long-term debt of $62.1 million. The ratio of current assets to current liabilities was 1.51 and 1.55 at fiscal year-end 1995 and 1994, respectively. Quarterly dividends were increased from $.06 to $.07 per share in the second quarter of fiscal 1995. The Company has available $50 million in unused committed lines of credit. OUTLOOK Despite the favorable financial results described above, future revenue and profitability remain difficult to predict. Although the semiconductor industry's extraordinary growth rate of the past two years may moderate to some degree in 1996, the Company anticipates continued gains in sales and earnings in its Semiconductor Equipment business. The debate over health care costs and related pressures for cost containment in U.S. health care appear likely to continue for the foreseeable future. The Health Care Systems business however is continuing to emphasize development of increasingly efficient and effective products, and expects continued strong sales in international markets and of software and ancillary products. In addition, the Company continues to face various general risks associated with its business operations, including uncertain general worldwide economic conditions and new product acceptance. Such conditions could affect the Company's future performance. 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, such as discharges to soil, water, and air, and the generation, handling, storage, transportation, and disposal of waste and hazardous substances. These laws have the effect of increasing costs and potential liabilities associated with the conduct of such operations. The Company has also been named by the U.S. Environmental Protection Agency or third parties as a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, at eight sites to which the Company is alleged to have shipped manufacturing waste for recycling or disposal. 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 and former Company facilities (including facilities disposed of in connection with the Company's sale of its Electron Devices business during 1995). Expenditures for environmental investigation and remediation amounted to $2.3 million in 1995 compared with $3.5 million in 1994. Uncertainty as to (a) the extent to which the Company caused, if at all, the conditions being investigated, (b) the extent of environmental contamination and risks, (c) the applicability of changing and complex environmental laws, (d) the number and financial viability of other potentially responsible parties, (e) the stage of the investigation and/or remediation, (f) the unpredictability of investigation and/or remediation costs (including as to when they will be incurred), (g) applicable clean-up standards, (h) the remediation (if any) that will ultimately be required, and (i) available technology make it difficult to assess the likelihood and scope of further investigation or remediation activities, or to estimate the future costs of such activities if undertaken. Nevertheless, the Company continues to estimate the amounts of these future costs in periodically establishing reserves, based partly on progress made in determining the magnitude of such costs, experience gained from sites on which remediation is ongoing or has been completed, and the timing and extent of remedial actions required by the applicable governmental authorities. As of September 29, 1995, the Company estimated that the present value of the Company's future exposure for environmental related investigation and remediation expenditures, including operating and maintenance costs, ranged from approximately $35.7 million to $56.0 million. The time frame over which the Company expects to incur such costs varies with each site, ranging up to 30 years. Management believes that no amount in the foregoing range of estimated future costs is more probable of being incurred than any other amount in such range. 18 4 Management's Discussion and Analysis (continued) At September 29, 1995, the Company's reserve for environmental liabilities, based upon future environmental related costs estimated by the Company as of such date, was calculated as follows: (Dollars in millions)
Recurring Non- Total Costs recurring Costs Anticipated Year Future costs - ------------------------------------------------------------------------------------------- 1996 $ 2.2 $ 4.5 $ 6.7 1997 2.2 1.9 4.1 1998 2.2 1.7 3.9 1999 2.1 0.0 2.1 2000 2.2 0.0 2.2 Thereafter 52.9 5.6 58.5 ------------------------------------------------ Total Costs $63.8 $13.7 $ 77.5 Less imputed interest (at 7%) (41.8) ------ Reserve amount $ 35.7 ======
The amounts set forth in the foregoing table are only estimates of anticipated future environmental related costs. The amounts actually spent by the Company in the years indicated may be greater or less than such estimates. As a result of information developed and analyzed by the Company during 1995 as part of continuing investigations and in connection with the pending environmental insurance coverage litigation referred to below, as well as the Company's sale of its Electron Devices business in 1995, the Company increased its reserve for environmental related costs at the end of 1995 to $35.7 million compared to $3.6 million at the end of 1994. The reserve recorded at the end of 1995 included $5.0 million for environmental related costs attributable to discontinued operations (i.e., the Electron Devices business). The Company believes that its reserve is adequate. As the scope of the Company's obligations becomes more clearly defined, this reserve may be modified and related charges against the Company's earnings may be made. Although any ultimate liability arising from an environmental related matter described herein could result in significant expenditures that, if aggregated and assumed to occur within a single fiscal year, would be material to the Company's financial condition, the likelihood of such occurrence is considered remote. Based on information currently available to management and its best assessment of the ultimate amount and timing of environmental related events, management believes that the costs of these environmental related matters are not reasonably likely to have a material adverse effect on the financial condition of the Company. The Company evaluates its liability for environmental related investigation and remediation in light of the liability and financial wherewithal of potentially responsible parties and insurance companies with respect to which the Company believes that it has rights to contribution, indemnity and/or reimbursement. Claims for recovery of environmental investigation and remediation costs already incurred and to be incurred in the future have been asserted against various insurance companies and other third parties. In 1992, the Company filed a lawsuit against 36 insurance companies with respect to most of the above-referenced sites. Due to recent developments with respect to this litigation (including the California Supreme Court decision in Montrose Chemical Corporation of California v. Admiral Insurance Company rendered in July 1995 and recent settlements with certain defendant insurance carriers), the Company received certain settlements during 1995 and recorded an $18.0 million receivable in Other Current Assets at September 29, 1995. The Company expects to recover at least this amount from the defendants in such litigation (net of attorneys' fees). Except for this amount, due to the uncertainty as to ultimate recoveries from third parties, the Company has neither recorded any asset nor reduced any liability in anticipation of recovery with respect to claims made against third parties. The Company believes that it has a strong case against the defendant insurance carriers in its pending environmental insurance coverage litigation. The Company intends to aggressively pursue additional insurance recoveries from such defendants. 19 5 Exhibit 13 CONSOLIDATED STATEMENTS OF EARNINGS Varian Associates, Inc. and Subsidiary Companies
Fiscal Years - --------------------------------------------------------------------------------------------------- (Dollars in thousands except per share amounts) 1995 1994 1993 =================================================================================================== SALES $1,575,742 $1,313,447 $1,061,881 ---------- ---------- ---------- OPERATING COSTS AND EXPENSES Cost of sales 1,024,539 853,955 679,516 Research and development 90,964 73,706 66,365 Marketing 187,148 168,975 155,667 General and administrative 106,170 105,726 95,751 ---------- ---------- ---------- Total operating costs and expenses 1,408,821 1,202,362 997,299 ---------- ---------- ---------- OPERATING EARNINGS 166,921 111,085 64,582 Interest expense (6,936) (6,345) (6,555) Interest income 5,315 4,353 2,064 EARNINGS FROM CONTINUING OPERATIONS BEFORE TAXES ---------- ---------- ---------- 165,300 109,093 60,091 Taxes on earnings 59,510 41,456 22,832 ---------- ---------- ---------- EARNINGS FROM CONTINUING OPERATIONS $ 105,790 $ 67,637 $ 37,259 DISCONTINUED OPERATIONS - NET OF TAXES: Earnings from operations 8,159 11,721 8,544 Gain from disposal 25,337 -- -- ---------- ---------- ---------- TOTAL FROM DISCONTINUED OPERATIONS 33,496 11,721 8,544 ========== ========== ========== NET EARNINGS $ 139,286 $ 79,358 $ 45,803 ========== ========== ========== EARNINGS PER SHARE - FULLY DILUTED CONTINUING OPERATIONS $ 3.01 $ 1.90 $ 1.03 DISCONTINUED OPERATIONS: Earnings from operations 0.23 0.32 0.23 Gain from disposal 0.72 -- -- ---------- ---------- ---------- TOTAL FROM DISCONTINUED OPERATIONS 0.95 0.32 0.23 ---------- ---------- ---------- NET EARNINGS PER SHARE $ 3.96 $ 2.22 $ 1.26 ========== ========== ==========
See accompanying Notes to the Consolidated Financial Statements. -20- 6 Exhibit 13 CONSOLIDATED BALANCE SHEETS Varian Associates, Inc. and Subsidiary Companies
Fiscal Year-End -------------------------- (Dollars in thousands except par values) 1995 1994 - ------------------------------------------------------------------------------------------ ASSETS Current Assets Cash and cash equivalents $ 122,728 $ 78,872 Accounts receivable 346,330 338,448 Inventories 171,702 179,176 Other current assets 116,958 72,243 ---------- ---------- Total Current Assets 757,718 668,739 ---------- ---------- Property, Plant, and Equipment 431,303 574,402 Accumulated depreciation and amortization (239,422) (339,082) ---------- ---------- Net Property, Plant, and Equipment 191,881 235,320 ---------- ---------- Other Assets 54,183 58,364 ---------- ---------- TOTAL ASSETS $1,003,782 $ 962,423 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Notes payable $ 1,755 $ 4,816 Accounts payable - trade 82,851 78,094 Accrued expenses 316,419 248,751 Product warranty 48,076 41,682 Advance payments from customers 51,600 58,440 ---------- ---------- Total Current Liabilities 500,701 431,783 Long-Term Accrued Expenses 29,026 -- Long-Term Debt 60,329 60,399 Deferred Taxes 18,797 20,788 ---------- ---------- Total Liabilities 608,853 512,970 ---------- ---------- Stockholders' Equity Preferred stock Authorized 1,000,000 shares, par value $1, issued none -- -- Common stock Authorized 99,000,000 shares, par value $1, issued and outstanding 31,052,000 shares (1995), 33,979,000 shares (1994) 31,052 33,979 Retained earnings 363,877 415,474 ---------- ---------- Total Stockholders' Equity 394,929 449,453 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,003,782 $ 962,423 ========== ==========
See accompanying Notes to the Consolidated Financial Statements. -21- 7 Exhibit 13 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Varian Associates, Inc. and Subsidiary Companies
Capital in Treasury (Dollars in thousands except Common Excess of Retained Stock per share amounts) Stock Par Value Earnings at Cost Total - ----------------------------------------------------------------------------------------------------------- BALANCES, FISCAL YEAR-END, 1992 $18,160 $ 39,103 $362,993 $ -- $ 420,256 Net earnings for the year -- -- 45,803 -- 45,803 Issuance of stock under omnibus stock and employee stock purchase plans (including tax benefit of $3,845) 775 26,292 -- -- 27,067 Purchase of common stock -- -- -- (72,228) (72,228) Retirement of treasury stock (1,593) (65,395) (5,240) 72,228 -- Dividends declared ($0.195 per share) -- -- (6,837) -- (6,837) ------- -------- -------- --------- --------- BALANCES, FISCAL YEAR-END, 1993 17,342 -- 396,719 -- 414,061 Net earnings for the year -- -- 79,358 -- 79,358 Issuance of stock under omnibus stock and employee stock purchase plans (including tax benefit of $4,821) 839 26,753 -- -- 27,592 Purchase of common stock -- -- -- (63,669) (63,669) Retirement of treasury stock (1,423) (26,753) (35,493) 63,669 -- Dividends declared ($0.23 per share) -- -- (7,889) -- (7,889) Two-for-one stock split 17,221 -- (17,221) -- -- ------- -------- -------- --------- --------- BALANCES, FISCAL YEAR-END, 1994 33,979 -- 415,474 -- 449,453 Net earnings for the year -- -- 139,286 -- 139,286 Issuance of stock under omnibus stock and employee stock purchase plans (including tax benefit of $10,548) 1,445 41,059 -- -- 42,504 Purchase of common stock -- -- -- (227,372) (227,372) Retirement of treasury stock (4,372) (41,059) (181,941) 227,372 -- Dividends declared ($0.27 per share) -- -- (8,942) -- (8,942) BALANCES, FISCAL YEAR-END, 1995 $31,052 $ -- $363,877 $ -- $ 394,929 ======= ======== ======== ========= =========
See accompanying Notes to the Consolidated Financial Statements. -22- 8 Exhibit 13 CONSOLIDATED STATEMENTS OF CASH FLOWS Varian Associates, Inc. and Subsidiary Companies
Fiscal Years -------------------------------------- (Dollars in thousands) 1995 1994 1993 - --------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net Cash Provided by Operating Activities $ 117,390 $120,251 $ 89,815 INVESTING ACTIVITIES Proceeds from sale of property, plant, and equipment 4,394 18,320 5,228 Proceeds from sale of Electron Devices 191,347 -- -- Purchase of property, plant, and equipment (65,404) (62,584) (45,102) Purchase of businesses, net of cash acquired (12,686) 133 (11,879) Other 7,985 (7,252) (6,099) --------- -------- -------- Net Cash Provided/(Used) by Investing Activities 125,636 (51,383) (57,852) --------- -------- -------- FINANCING ACTIVITIES Net borrowings (payments) on short-term obligations (3,061) (12,042) 12,549 Proceeds from long-term borrowings -- -- 60,000 Principal payments on long-term debt (70) (6,071) (49,238) Proceeds from common stock issued to employees 42,504 27,592 27,067 Purchase of common stock (227,372) (63,669) (72,228) Dividends paid (8,819) (7,590) (6,761) Other (123) 392 512 --------- -------- -------- Net Cash Used by Financing Activities (196,941) (61,388) (28,099) --------- -------- -------- EFFECTS OF EXCHANGE RATE CHANGES ON CASH (2,229) (1,915) 2,700 --------- -------- -------- Net Increase in Cash and Cash Equivalents 43,856 5,565 6,564 Cash and Cash Equivalents at Beginning of Year 78,872 73,307 66,743 --------- -------- -------- Cash and Cash Equivalents at End of Year $ 122,728 $ 78,872 $ 73,307 ========= ======== ======== DETAIL OF NET CASH PROVIDED BY OPERATING ACTIVITIES Net Earnings $ 139,286 79,358 $ 45,803 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation 49,997 48,029 45,266 Gain on sale of Electron Devices (40,965) -- -- Deferred taxes (27,083) (8,283) 2,900 Amortization of intangibles 5,634 4,484 4,429 Changes in assets and liabilities: Accounts receivable (37,595) (40,765) (26,214) Inventories (33,009) (17,374) 16,003 Other current assets (19,362) 550 (1,646) Accounts payable - trade 10,711 18,226 1,972 Accrued expenses 42,639 37,929 (5,955) Product warranty 10,678 5,871 2,056 Advance payments from customers (6,159) (3,503) 1,629 Long-term accrued expenses 29,026 -- -- Other (6,408) (4,271) 3,572 --------- -------- -------- Net Cash Provided by Operating Activities $ 117,390 $120,251 $ 89,815 ========= ======== ========
See accompanying Notes to the Consolidated Financial Statements. -23- 9 Exhibit 13 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Fiscal Year The Company's fiscal years reported are the 52- or 53-week periods which ended on the Friday nearest September 30. Principles of Consolidation The consolidated financial statements include those of the Company and its subsidiaries. Significant intercompany balances, transactions, and stock holdings have been eliminated in consolidation. Investments in less-than-majority-owned affiliated companies are stated at equity in the net assets of these companies. Foreign Currency Translation Assets and liabilities of subsidiaries outside of the United States representing cash and amounts receivable or payable are translated into U.S. dollars at the exchange rates in effect at year end. Other accounts including inventories and property, plant and equipment are translated at historical exchange rates. Revenue and expense items are translated at effective rates of exchange prevailing during each year, except that inventories are charged to cost of sales and depreciation is expensed at historical exchange rates. The aggregate exchange gain (loss) included in general and administrative expenses for 1995, 1994, and 1993 was $(0.8) million, $(0.1) million, and $(8.3) million, respectively. The Company enters into forward exchange contracts to mitigate the effects of operational (sales orders and purchase commitments) and balance sheet exposures to fluctuations in foreign currency exchange rates. When the Company's foreign exchange contracts hedge operational exposure, the effects of movements in currency exchange rates on these instruments are recognized in income when the related revenues and expenses are recognized. When foreign exchange contracts hedge balance sheet exposure, such effects are recognized in income when the exchange rate changes. Because the impact of movements in currency exchange rates on foreign exchange contracts generally offsets the related impact on the underlying items being hedged, these instruments do not subject the Company to risk that would otherwise result from changes in currency exchange rates. At fiscal year-end 1995, the Company had forward exchange contracts with maturities of twelve months or less to sell foreign currencies totaling $45.4 million ($15.9 million of French francs, $11.8 million of British pounds, $7.7 million of Italian lira, $7.6 million of Japanese yen, $1.5 million of Canadian dollars and $0.9 million of Swiss francs) and to buy foreign currencies totaling $20.7 million ( $6.0 million of Swiss francs, $5.8 million of British pounds, $4.2 million of Australian dollars, $2.8 million of Japanese yen, $1.1 million of Swedish krona and $0.8 million of Deutsche marks). Revenue Recognition Sales and related cost of sales are recognized primarily upon shipment of products. Sales and related cost of sales under long-term contracts to commercial customers and the U.S. Government are recognized primarily as units are delivered. Statements of Cash Flows The Company considers currency on hand, demand deposits, and all highly liquid investments with an original maturity of three months or less to be cash and cash equivalents. Accounts Receivable Accounts receivable are stated net of allowances for doubtful accounts of $2.3 million at the end of fiscal year 1995 and $2.4 million at the end of fiscal year 1994. Inventories Inventories are valued at the lower of cost or market (realizable value) using last-in, first-out (LIFO) cost for the U.S. inventories of the Health Care Systems (except X-ray Tube Products) Instruments, and Semiconductor Equipment segments. All other inventories are valued principally at average cost. If the first-in, first-out (FIFO) method had been 24 10 Notes to the Consolidated Financial Statements (continued) used, inventories would have been higher than reported by $45.6 million in fiscal 1995, $49.0 million in fiscal 1994, and $50.8 million in fiscal 1993. The main components of inventories are as follows:
(Dollars in Millions) 1995 1994 - -------------------------------------------------------------- Raw materials and parts $ 98.4 $104.2 Work in process 52.6 60.3 Finished goods 20.7 14.7 ------ ------ Total Inventories $171.7 $179.2 ====== ======
Property, Plant, and Equipment Property, plant, and equipment are stated at cost. Major improvements are capitalized, while maintenance and repairs are expensed currently . Plant and equipment are depreciated over their estimated useful lives using the straight-line method for financial reporting purposes and accelerated methods for tax purposes. Leasehold improvements are amortized using the straight-line method over their estimated useful lives, or the remaining term of the lease, whichever is less. The main components of property, plant, and equipment are as follows:
(Dollars in Millions) 1995 1994 - -------------------------------------------------------------- Land and land leaseholds $ 10.1 $ 10.8 Buildings 145.3 201.4 Machinery and equipment 259.9 347.2 Construction in progress 16.0 15.0 ------ ------ Total Property, Plant, and Equipment $431.3 $574.4 ====== ======
Environmental Liabilities Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated. Generally, the timing of these accruals coincides with completion of a feasibility study or the Company's commitment to a formal plan of action. Taxes on Earnings Effective the beginning of fiscal year 1994, the Company adopted Statement of Financial Accounting Standards No.109 (SFAS 109), Accounting for Income Taxes. The Company elected to adopt this new standard by restating the prior three years. Retained earnings for all years restated was decreased by $7.8 million as a result of adoption, and the income tax provision did not change for any of the three years restated. Adopting SFAS 109 has not caused a significant change in the Company's provision for income taxes. The adoption has not caused a change in the Company's reconciliation of the effective tax rate with the federal statutory rate or a change in the significant components of the income tax expense. Postemployment Benefits During 1994, the Company adopted SFAS 112, Employers' Accounting for Postemployment Benefits. Its adoption did not have a material effect on the financial statements of the Company. Postretirement Benefits Other Than Pensions The Company adopted SFAS 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, during 1994. Its adoption did not have a material effect on the financial statements of the Company. Research and Development Company-sponsored research and development costs related to both present and future products are expensed currently. Costs related to research and development contracts are included in inventory and charged to cost of sales upon 25 11 Notes to the Consolidated Financial Statements (continued) recognition of related revenue. Total expenditures on research and development for fiscal 1995, 1994, and 1993, were $94.7 million, $74.8 million, and $67.0, million, respectively, of which $3.7 million, $1.1 million, and $0.6 million, respectively, were funded by customers. Computation of Earnings Per Share (Shares in thousands) Earnings-per-share computations are based on the weighted average common shares outstanding and common share equivalents (dilutive stock options). The average number of common shares and common share equivalents used in the computation of earnings per share in 1995, 1994, and 1993, was 35,202, 35,676, and 36,292 shares, respectively. There is no significant difference between fully diluted earnings per share and primary earnings per share. Stock Split On February 17, 1994, the Board of Directors declared a two-for-one stock split in the form of a stock dividend, issued on March 17, 1994, to stockholders of record on March 3, 1994. All share and per share information has been restated to reflect the stock split on a retroactive basis. Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of In March 1995, the FASB issued SFAS 121, Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of. It is effective for the Company's fiscal year 1997. Its adoption will not have a material effect on the financial statements of the Company. Accounting for Stock Based Compensation In October 1995, the FASB issued SFAS 123, Accounting for Stock Based Compensation. It is effective for the Company's fiscal year 1997. Its adoption will not have a material effect on the financial statements of the Company. Disclosure of Certain Significant Risks and Uncertainties In December 1994, The AICPA issued SOP 94-6, Disclosure of Certain Significant Risks and Uncertainties. It is effective for the Company's fiscal year 1996. Its adoption will not have a material effect on the financial statements of the Company.
ACCRUED EXPENSES (Dollars in Millions) 1995 1994 - -------------------------------------------------------------- Taxes, including taxes on earnings $ 79.7 $ 52.5 Payroll and employee benefits 104.4 90.8 Environmental 6.7 3.9 Estimated loss contingencies 36.8 14.0 Deferred income 22.5 23.1 Other 66.3 64.5 ------ ------ Total Accrued Expenses $316.4 $248.8 ====== ======
SHORT-TERM DEBT Short-term notes payable and the current portion of long-term debt amounted to $1.8 million and $4.8 million at the end of fiscal years 1995 and 1994, respectively. The weighted average interest rates on short-term borrowings were 9.7% and 6.1% at the end of fiscal years 1995 and 1994, respectively. Total debt is subject to limitations included in long-term debt agreements. At fiscal year-end 1995, the Company had total unused committed lines of credit amounting to $50 million. LONG-TERM ACCRUED EXPENSES Long-term accrued expenses are comprised of accruals for environmental costs not expected to be expended within the next year. The current portion is recorded within Accrued Expenses. 26 12 Notes to the Consolidated Financial Statements (continued)
LONG-TERM DEBT (Dollars in Millions) 1995 1994 - ------------------------------------------------------------------------------------- Unsecured term loan, 7.29% due in semiannual installments of $6.0 payable 1998-2002 $60.0 $60.0 Other debt 0.4 0.5 ----- ----- Long-term borrowings 60.4 60.5 Less current portion 0.1 0.1 ----- ----- Long-term Debt $60.3 $60.4 ===== =====
The unsecured term loans contain covenants which limit future borrowings and require the Company to maintain certain levels of working capital and operating results. At fiscal year-end 1995, the Company was in compliance with all restrictive covenants of the loan agreements, including a restriction on payment of cash dividends. At September 29, 1995, approximately $106.5 million of retained earnings were unrestricted for payment of cash dividends. The annual maturities of long-term debt (in millions) for fiscal years 1996 through 2000, are as follows: $0.1, $ 0.1, $12.1, $12.1, and $12.1. Interest paid (in millions) on short and long-term debt was $6.9, $6.4, and $6.4, in fiscal 1995, 1994, and 1993, respectively. OMNIBUS STOCK AND EMPLOYEE STOCK PURCHASE PLANS (SHARES IN THOUSANDS) During fiscal 1991, the Company adopted the Omnibus Stock Plan (the Plan) under which shares of common stock can be issued to officers, directors, and key employees. The maximum number of shares of common stock available for awards under the Plan during each fiscal year (including incentive stock options) is 5% of the total outstanding shares of the Company on the last business day of the preceding fiscal year. The maximum number of shares of the common stock available for incentive stock option grants under the Plan is 6,000. The exercise price for incentive and nonqualified stock options granted under the Plan may not be less than 100% of the fair market value at the date of the grant. Options granted will be exercisable at such times and be subject to such restrictions and conditions as determined by the Organization and Compensation Committee of the Company's Board of Directors, but no option shall be exercisable later than ten years from the date of grant. Restricted stock grants may be awarded at prices ranging from 0% to 50% of the fair market value of the stock and may be subject to restrictions on transferability and continued employment as determined by the Organization and Compensation Committee. Options granted are generally exercisable in cumulative installments of one-third each year, commencing one year following date of grant, and expire if not exercised within seven or ten years from date of grant. Option activity under the Plans is presented below.
1995 1994 1993 ------------------ ------------------ ----------------- (Dollars in Millions) Shares Dollars Shares Dollars Shares Dollars - -------------------- ------- ------- ------- ------- ------- ------- Beginning of year 3,999 $ 74.2 $3,785 60.6 3,871 $ 55.5 Granted 1,111 40.3 1,161 29.5 1,153 22.6 Terminated or expired (116) (3.3) (63) (1.4) (82) (1.4) Exercised (1,185) (23.2) (884) (14.5) (1,158) (16.0) ------ ------ ------ ------ ------ ------ End of Year 3,809 $ 88.0 3,999 $ 74.2 3,784 $ 60.7 ====== ====== ====== ====== ====== ====== Shares exercisable 2,030 1,692 1,476 Available shares remaining 703 634 735 ====== ====== ======
27 13 Notes to the Consolidated Financial Statements (continued) Options were outstanding at prices ranging from $10.60 to $54.69 per share at fiscal year-end 1995. Options were exercised at prices ranging from $10.60 to $39.13 for fiscal 1995, $10.60 to $24.25 for fiscal 1994, and $10.60 to $23.72 for fiscal 1993. During fiscal years 1995, 1994, and 1993, 63, 64, and 15, shares, respectively, were awarded under restricted stock grants at no cost to the employees. The restricted stock grants vest over a three year period. Compensation expense from restricted stock was approximately $2.0, million, $1.2 million, and $0.9 million, in fiscal years 1995, 1994, and 1993, respectively. The Employee Stock Purchase Plan (ESPP) covers substantially all employees in the United States and Canada. The participants' purchase price is the lower of 85% of the closing market price on the first trading day of the fiscal quarter or the first trading day of the next fiscal quarter. The discount is treated as equivalent to the cost of issuing stock for financial reporting purposes. During fiscal 1995, 1994, and 1993, 205 shares, 266 shares, and 382 shares were issued under the ESPP for $7.0 million, $7.0 million, and $6.3 million, respectively. At fiscal year-end 1995, the Company had a balance of 3,125 shares reserved for ESPP. PREFERRED STOCK PURCHASE RIGHTS (SHARES IN THOUSANDS) At fiscal year-end, there were issued and outstanding 31,052 preferred stock purchase rights (one right for each outstanding common share). Each right entitles the holder to buy one two-hundredth of a share of the Company's Series A Junior Participating Preferred Stock for $62.50. Of the 1,000 shares of authorized preferred stock, 280 shares have been designated as Series A Junior Participating Preferred Stock, to be issued upon exercise of the rights. Upon issuance, these preferred shares will have certain voting, dividend, and liquidation preferences over the common stock, as described in the Rights Agreement of August 25, 1986, as amended. The rights are exercisable ten days after a person or group has acquired 15% or more of the Company's voting stock, or the tenth day (or such later date as may be determined by the Board of Directors) after the date of the commencement of announcement of a person's or group's intention to commence a tender or exchange offer whose consummation will result in the ownership of 30% or more of stock. If a person or group becomes the beneficial owner of 15% or more of the voting stock, each right would entitle the holder, other than the acquiring person or group, to buy shares of the Company's Series A Junior Participating Preferred Stock, having a market value of $125, for the exercise price of $62.50. If the Company were to be merged into another entity, or merged with another entity, and the common stock were changed into other securities or assets, each right would entitle the holder to purchase for the exercise price of $62.50 common stock of the acquiring company equal to a market value of twice the exercise price, or $125. The rights expire on August 25, 1996, but may be redeemed by the Board of Directors of the Company for $.025 per right at any time before they become exercisable. RETIREMENT PLANS The Company has defined contribution retirement plans covering substantially all of its United States' and Canadian employees. The Company's major obligation is to contribute an amount based on a percentage of each participant's base pay. The Company also contributes 5% of its consolidated earnings from continuing operations before taxes, as adjusted for discretionary items, as retirement plan profit sharing. Participants are entitled, upon termination or retirement, to their portion of the retirement fund assets, which are held by a third-party trustee. In addition, a number of the Company's foreign subsidiaries have defined benefit retirement plans for regular full-time employees. Total pension expense for all plans amounted to $25.4 million, $23.1 million, and $18.4 million, for fiscal 1995, 1994, and 1993, respectively. 28 14 Notes to the Consolidated Financial Statements (continued) TAXES ON EARNINGS U.S. federal income tax returns for the years through 1992 have been settled with the Internal Revenue Service. It is believed that adequate provision has been made for all open years and unresolved issues. The detail of taxes on earnings from continuing operations is as follows:
(Dollars in millions) 1995 1994 1993 - -------------------------------------------------------------------------------- Current U.S. federal $ 60.6 $27.4 $ 6.1 Non-U.S. 14.8 15.6 12.2 State and local 11.2 6.7 1.6 ------ ----- ----- Total current 86.6 49.7 19.9 ------ ----- ----- Deferred U.S. federal (26.6) (8.8) 2.4 Non-U.S. (0.5) 0.5 0.5 ------ ----- ----- Total deferred (27.1) (8.3) 2.9 ------ ----- ----- Taxes on Earnings $ 59.5 $41.4 $22.8 ====== ===== =====
Significant items making up deferred tax liabilities, reported separately as long-term liabilities, and deferred tax assets, included in other current assets, are as follows:
(Dollars in millions) 1995 1994 - ----------------------------------------------------------------- Assets: Product Warranty $15,546 $13,427 Deferred Compensation 10,713 11,435 Special Provisions 24,928 6,595 Inventory Adjustments 16,123 17,741 Deferred Income 5,442 3,550 Insurance Reserves 1,075 1,183 State Income Tax 3,893 1,974 Other 2,611 (665) ------- ------- 80,331 55,240 Liabilities: Accelerated Depreciation 13,272 20,522 Unconsolidated Affiliates 5,715 143 Other (191) 123 ------- ------- 18,796 20,788 Net $61,535 $34,452 ======= =======
29 15 Notes to the Consolidated Financial Statements (continued) The effective tax rate on continuing operations differs from the applicable statutory federal tax rate as a result of the following differences:
1995 1994 1993 ---- ---- ---- Statutory federal income tax rate 35.0% 35.0% 34.8% State and local taxes, net of federal tax benefit 4.4 4.0 1.7 Foreign taxes, net (1.2) (0.9) 3.5 Foreign Sales Corporation (2.4) (1.9) (4.1) Other 0.2 1.8 2.1 ---- ---- ---- Effective Tax Rate 36.0% 38.0% 38.0% ==== ==== ====
Income taxes paid are as follows:
(Dollars in millions) 1995 1994 1993 - -------------------------------------------------------------------------------- Federal income taxes paid, net $35.1 $25.2 $ 4.5 State income taxes paid, net 11.7 6.2 1.7 Foreign income taxes paid, net 24.0 11.8 14.9 ----- ----- ----- Total Paid $70.8 $43.2 $21.1 ===== ===== =====
LEASE COMMITMENTS At fiscal year-end 1995, the Company was committed to minimum rentals under noncancellable operating leases for fiscal years 1996 through 2000 and thereafter, as follows, in millions: $7.8, $5.3, $4.1, $3.0, $1.9, and $4.0. Rental expense for fiscal years 1995, 1994 and 1993, in millions, was $18.6, $18.7, and $20.8, respectively. CONTINGENCIES In February 1990, a purported class action was brought by Panache Broadcasting of Pennsylvania, Inc. on behalf of all purchasers of electron tubes in the U.S. against the Company and a joint-venture partner, alleging that the activities of their joint venture in the power-grid tube industry violated antitrust laws. The complaint seeks injunctive relief and unspecified damages, which may be trebled under the antitrust laws. In February 1993, the U.S. District Court in Chicago granted in part and denied in part the Company's motion to dismiss the complaint. Panache Broadcasting filed an amended complaint in March 1993. In October 1995, the Court affirmed a federal Magistrate's recommendation to grant in part and deny in part the Company's motion to dismiss the amended complaint. Also in October 1995, the Magistrate recommended denial of plaintiff's request to certify the purported class and recommended certification of a different and narrower class than that defined by plaintiff. The Company is appealing that proposed class certification to the District Court, and believes that it has meritorious defenses to the Panache lawsuit. In addition to the above-referenced matter, the Company is currently a defendant in a number of legal actions and could incur an uninsured liability in one or more of them. In the opinion of management, the outcome of the above litigation will not have a material adverse effect on the financial condition of the Company. The Company has also been named by the U.S. Environmental Protection Agency or third parties as a potentially responsible party under the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, at eight sites to which Varian is alleged to have shipped manufacturing waste for recycling or disposal. 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. Uncertainty as to (a) the extent to which the Company caused, if at all, the conditions being investigated, (b) the extent of environmental contamination and risks, (c) the applicability of changing and complex environmental laws, (d) the number and financial viability of other potentially responsible parties, (e) the stage of the investigation and/or remediation, (f) the unpredictability of investigation and/or remediation costs (including as to when they will be incurred), (g) applicable clean-up standards,(h) the remediation (if any) that will ultimately be required, and (i) available technology make it difficult to assess the likelihood and scope of further investigation or remediation activities or to estimate the future costs of such activities if undertaken. 30 16 Notes to the Consolidated Financial Statements (continued) Nevertheless, the Company continues to estimate the amounts of these future costs in periodically establishing reserves, based partly on progress made in determining the magnitude of such costs, experience gained from sites on which remediation is ongoing or has been completed, and the timing and extent of remedial actions required by the applicable governmental authorities. As of September 29, 1995, the Company estimated that the present value of the Company's future exposure for environmental related investigation and remediation expenditures, including operating and maintenance costs, ranged from approximately $35.7 million to $56.0 million. The time frame over which the Company expects to incur such costs varies with each site, ranging up to 30 years. Management believes that no amount in the foregoing range of estimated future costs is more probable of being incurred than any other amount in such range. At September 29, 1995, the Company's reserve for environmental liabilities, based upon future environmental related costs estimated by the Company as of such date, was calculated as follows: (Dollars in millions)
Recurring Non- Total Costs recurring Costs Anticipated Year Future costs - ------------------------------------------------------------------------------------- 1996 $ 2.2 $ 4.5 $ 6.7 1997 2.2 1.9 4.1 1998 2.2 1.7 3.9 1999 2.1 0.0 2.1 2000 2.2 0.0 2.2 Thereafter 52.9 5.6 58.5 ------------------------------------------ Total costs $63.8 $13.7 $ 77.5 Less imputed interest (at 7%) (41.8) ------ Reserve amount $ 35.7 ======
The amounts set forth in the foregoing table are only estimates of anticipated future environmental related costs. The amounts actually spent by the Company in the years indicated may be greater or less than such estimates. As a result of information developed and analyzed by the Company during 1995 as part of continuing investigations and in connection with the pending environmental insurance coverage litigation referred to below as well as the Company's sale of its Electron Devices business in 1995, the Company increased its reserve for environmental related costs at the end of 1995 to $35.7 million compared to $3.6 million at the end of 1994. The reserve recorded at the end of 1995 included $5.0 million for environmental related costs attributable to discontinued operations (i.e., the Electron Devices business). The Company believes that its reserve is adequate. As the scope of the Company's obligations becomes more clearly defined, such reserve may be modified and related charges against the Company's earnings may be made. Although any ultimate liability arising from an environmental related matter described herein could result in significant expenditures that, if aggregated and assumed to occur within a single fiscal year, would be material to the Company's financial condition, the likelihood of such occurrence is considered remote. Based on information currently available to management and its best assessment of the ultimate amount and timing of environmental related events, management believes that the costs of these environmental related matters are not reasonably likely to have a material adverse effect on the financial condition of the Company. The Company evaluates its liability for environmental related investigation and remediation in light of the liability and financial wherewithal of potentially responsible parties and insurance companies with respect to which the Company believes that it has rights to contribution, indemnity and/or reimbursement. Claims for recovery of environmental investigation and remediation costs already incurred and to be incurred in the future have been asserted against various insurance companies and other third parties. In 1992, the Company filed a lawsuit against 36 insurance companies with respect to most of the above-referenced sites. Due to recent developments 31 17 Notes to the Consolidated Financial Statements (continued) with respect to this litigation (including the California Supreme Court decision in Montrose Chemical Corporation of California v. Admiral Insurance Company rendered in July 1995 and recent settlements with certain defendant insurance carriers), the Company received certain settlements during 1995 and recorded an $18.0 million receivable in Other Current Assets at September 29, 1995. The Company expects to recover at least this amount from the defendants in such litigation (net of attorneys' fees). Except for this amount, due to the uncertainty as to ultimate recoveries from third parties, the Company has neither recorded any asset nor reduced any liability in anticipation of recovery with respect to claims made against third parties. The Company believes that it has a strong case against the defendant insurance carriers in its pending environmental insurance coverage litigation. The Company intends to aggressively pursue additional insurance recoveries from such defendants. DISCONTINUED OPERATION On August 11, 1995 the Company completed the sale of the Electron Devices business segment (not including the Tempe Electronics Center). The Tempe facility was retained as part of the Instruments business segment. The transaction was accounted for as a discontinued operation. The Company received $191.3 million net proceeds in cash. Amounts in the Consolidated Statements of Earnings for 1994 and 1993 have been reclassified to conform to the 1995 discontinued operations presentation. The gain on the sale was $25.3 million (net of income taxes of $15.6 million). Summary operating results of discontinued operations, excluding the above gain, are as follows.
(Dollars in millions) 1995 1994 1993 - -------------------------------------------------------------------------------- Sales $205.1 $239.0 $249.1 Earnings Before Taxes 13.2 18.9 13.7 Taxes on Earnings 5.0 7.2 5.2 ------ ------ ------ Net Earnings from Discontinued Operations Before Gain on Sale $ 8.2 $ 11.7 $ 8.5 ====== ====== ======
INDUSTRY SEGMENTS The Company's operations are grouped into three business segments: Health Care Systems, Instruments, and Semiconductor Equipment. Indirect and common costs have been allocated through the use of estimates. Accordingly, the following information is provided for purposes of achieving an understanding of operations, but may not be indicative of the financial results of the reported segments were they independent organizations. In addition, comparisons of the Company's operations to similar operations of other companies may not be meaningful. The Health Care Systems business includes linear accelerators used for cancer therapy, industrial testing, and inspection, as well as cancer treatment planning systems and data management systems for medical facilities. It also designs and manufactures a broad range of X-ray generating tubes for the medical diagnostic imaging market worldwide. The Instruments business consists of analytical instruments widely used in the fields of chemistry, environmental monitoring, biology, life sciences, and metallurgy. It also manufactures high vacuum pumps, instrumentation, gauges, components, and printed circuit boards. The Semiconductor Equipment business includes systems used for semiconductor wafer fabrication. Included in Eliminations and Other are certain insignificant support operations. The Company operates various manufacturing and marketing operations outside the United States. For fiscal 1995, sales to customers located in Korea were $183.8 million. For fiscal 1994 and 1993, no single country outside the United States accounted for more than 10% of total assets. Sales between geographic areas are accounted for at cost plus prevailing markups arrived at through negotiations between independent profit centers. Related profits are eliminated in consolidation. Included in the total of United States sales are export sales of $420 million in fiscal 1995, $286 million in fiscal 1994, and $187 million in fiscal 1993. Sales under prime contracts from the U.S. Government were approximately $22 million in fiscal 1995, $28 million in fiscal 1994, and $14 million in fiscal 1993. 32 18 EXHIBIT 13 INDUSTRY SEGMENTS
PRETAX IDENTIFIABLE CAPITAL SALES EARNINGS (LOSS) ASSETS EXPENDITURES DEPRECIATION --------------------------------------------------------------------------------------------------- (DOLLARS IN MILLIONS) 1995 1994 1993 1995 1994 1993 1995 1994 1993 1995 1994 1993 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------ Health Care Systems $ 482 $ 426 $ 387 $ 90 $ 86 $ 75 $ 254 $201 $187 $ 16 $ 11 $ 8 $ 11 $ 9 $ 8 Instruments 432 408 381 18 36 37 235 226 198 21 21 13 12 11 11 Semiconductor Equipment 659 477 291 99 36 1 227 196 148 15 6 5 9 9 9 Eliminations & Other 3 2 3 (11) (9) (7) 9 8 9 - 1 1 1 1 1 ------ ------ ------ ---- ---- ---- ------ ---- ---- ---- ---- ---- ---- ---- ---- Total Industry Segments 1,576 1,313 1,062 196 149 106 725 631 542 52 39 27 33 30 29 General Corporate - - - (29) (38) (42) 279 191 182 10 9 8 6 5 4 Interest, Net - - - (2) (2) (4) - - - - - - - - - ------ ------ ------ ---- ---- ---- ------ ---- ---- ---- ---- ---- ---- ---- ---- Continuing Operations $1,576 $1,313 $1,062 $165 $109 $ 60 $1,004 $822 $724 $ 62 $ 48 $ 35 $ 39 $ 35 $ 33 ====== ====== ====== ==== ==== ==== ====== ==== ==== ==== ==== ==== ==== ==== ====
GEOGRAPHIC SEGMENTS
SALES TO INTERGEOGRAPHIC UNAFFILIATED SALES TO TOTAL PRETAX CUSTOMERS AFFILIATES SALES EARNINGS (LOSS) --------------------------------------------------------------------------------------------- (DOLLARS IN MILLIONS) 1995 1994 1993 1995 1994 1993 1995 1994 1993 1995 1994 1993 - ----------------------------------------------------------------------------------------------------------------------- United States $1,175 $ 920 $ 738 $ 217 $ 253 $ 185 $1,392 $1,173 $ 923 $182 $124 $ 94 International 398 392 323 54 56 52 452 448 375 25 34 19 Eliminations & Other 3 1 1 (271) (309) (237) (268) (308) (236) (11) (9) (7) ------ ------ ------ ----- ----- ----- ------ ------ ------ ---- ---- ---- Total Geographic Segments 1,576 1,313 1,062 - - - 1,576 1,313 1,062 196 149 106 General Corporate - - - - - - - - - (29) (38) (42) Interest, Net - - - - - - - - - (2) (2) (4) ------ ------ ------ ----- ----- ----- ------ ------ ------ ---- ---- ---- Continuing Operations $1,576 $1,313 $1,062 $ - $ - $ - $1,576 $1,313 $1,062 $165 $109 $ 60 ====== ====== ====== ===== ===== ===== ====== ====== ====== ==== ==== ====
IDENTIFIABLE ASSETS -------------------- (DOLLARS IN MILLIONS) 1995 1994 1993 - ---------------------------------------------- United States $ 496 $429 $375 International 220 193 158 Eliminations & Other 9 9 9 ------ ---- ---- Total Geographic Segments 725 631 542 General Corporate 279 191 182 Interest, Net - - ------ ---- ---- Continuing Operations $1,004 $822 $724 ====== ==== ====
Total sales is based on the location of the operation furnishing goods and services. International sales based on final destination of products sold are $797 million, $659 million, and $482 million, in 1995, 1994, and 1993, respectively. -33- 19 QUARTERLY FINANCIAL DATA (UNAUDITED) EXHIBIT 13
1995 1994 ------------------------------------------------ ------------------------------------------------ (Dollars in millions except First Second Third Fourth Total First Second Third Fourth Total per share amounts) Quarter Quarter Quarter Quarter Year Quarter Quarter Quarter Quarter Year - ------------------------------------------------------------------------------ ------------------------------------------------ Sales $346.1 428.7 394.2 406.7 1,575.7 $267.6 334.2 332.4 379.2 1,313.4 ------ ----- ----- ----- ------- ------ ----- ----- ----- ------- Gross Profit $115.3 143.2 137.8 154.9 551.2 $ 90.1 115.9 114.2 139.3 459.5 ------ ----- ----- ----- ------- ------ ----- ----- ----- ------- Net Earnings Continuing Operations 17.8 26.5 28.9 32.6 105.8 8.8 16.8 18.8 23.2 67.6 Discontinued Operations 3.0 3.1 2.9 24.5 33.5 2.9 1.5 3.6 3.8 11.8 Net Earnings $ 20.8 29.6 31.8 57.1 139.3 $ 11.7 18.3 22.4 27.0 79.4 ====== ===== ===== ===== ======= ====== ===== ===== ===== ======= Net Earnings Per Share - Fully Diluted Continuing Operations 0.51 0.75 0.82 0.94 3.01 0.25 0.47 0.53 0.66 1.90 Discontinued Operations 0.08 0.10 0.08 0.71 0.95 0.08 0.04 0.10 0.10 0.32 ------ ----- ----- ----- ------- ------ ----- ----- ----- ------- Net Earnings Per Share - Fully Diluted $ 0.59 0.85 0.90 1.65 3.96 $ 0.33 0.51 0.63 0.76 2.22 ====== ===== ===== ===== ======= ====== ===== ===== ===== =======
The four quarters for net earnings per share may not add for the year because of the different number of shares outstanding during the year. COMMON STOCK PRICES (UNAUDITED)
1995 1994 ---------------------------------------------- ---------------------------------------------- First Second Third Fourth First Second Third Fourth Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter - --------------------------------------------------------------------------- ---------------------------------------------- Common Stock High $ 37 1/4 44 56 57 3/8 $ 30 39 39 1/4 38 7/8 Low $ 30 7/8 34 1/2 42 1/4 50 5/8 $ 23 3/8 28 1/4 30 3/4 33 1/2 Dividends Declared Per Share $.06 .07 .07 .07 $.05 .06 .06 .06
-34- 20 EXHIBIT 13 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Varian Associates, Inc. We have audited the accompanying consolidated balance sheets of Varian Associates, Inc. and subsidiary companies as of September 29, 1995 and September 30, 1994, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three fiscal years in the period ended September 29, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Varian Associates, Inc. and subsidiary companies as of September 29, 1995 and September 30, 1994, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended September 29, 1995 in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. - ---------------------------------- COOPERS & LYBRAND L.L.P. San Jose, California October 18, 1995 35 EX-21 5 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21 VARIAN ASSOCIATES, INC. SUBSIDIARIES OF THE REGISTRANT FISCAL 1995
ORGANIZED UNDER PERCENTAGE OF VOTING LAWS OF SECURITIES OWNED --------------- -------------------- VARIAN ASSOCIATES, INC. (REGISTRANT): Varian Sample Preparation Products, Inc. California 100% Varian Associates Limited California 100% Varian Inter-American Corp. California 100% Varian Investment Corporation California 100% Varian Realty Inc. California 100% Varian Asia, Ltd. Delaware 100% Varian China, Ltd. Delaware 100% Vaian Ireland, Ltd. Delaware 100% Varian Japan, Ltd. Delaware 100% Varian Pacific, Inc. Delaware 100% Varian Instruments of Puerto Rico, Inc. Delaware 100% Varian Ltd. Delaware 100% Varian Semiconductor Equipment Cp. Inc. Delaware 100% Mansfield Insurance Company Vermont 100% Varian Australia Pty., Ltd. Australia 100% Varian Holdings (Australia) Pty. Limited Australia 100% Varian Gesellschaft m.b.H Austria 100% Varian Belgium, N.V. Belgium 100% Varian Industria E Comercia Limitada Brazil 100% Intralab Instrumentacao Analytica Ltda. Brazil 100% Varian Canada, Inc. Canada 100% Varian AS Denmark 100% Varian S.A. France 100% Varian Medical France France 100% Varian - Dosetek OY Finland 100% Varian GmbH Germany 100% Varian S.p.A. Italy 100% Varian Technologies Korea, Ltd. Korea 100% Varian, S.A. Mexico 100% Varian AB Sweden 100% Varian International AG Switzerland 100% Varian Nederland B.V. The Netherlands 100% Varian FSC B.V. The Netherlands 100% Varian - TEM Limited England 100% Varian Technologies, C.A. Venezuela 100% Varian Iberica, S.L. Spain 70% Varian Korea, Ltd. Korea 61% TEL-Varian, Ltd. Japan 50%
All of the above subsidiaries are included in the Company's consolidated financial statements. The names of certain consolidated subsidiaries have been omitted because, considered in the aggregate as a single subsidiary, they would not consitute a significant subsidiary. EX-23 6 CONSENT OF INDEPENDENT ACCOUNTANTS 1 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of Varian Associates, Inc. on Forms S-8 (Nos. 33-46000, 33-33661, 33-33660, 2-95139, and 33-1425) and Forms S-8 and S-3, (No. 33-40460), of our report dated October 18, 1995, on our audits of the consolidated financial statements and financial statement schedules of Varian Associates, Inc. as of September 29, 1995 and September 30, 1994 and for each of the three fiscal years in the period ended September 29, 1995, which report is incorporated in this Form 10-K by reference to the Company's 1995 Annual Report to Stockholders. /s/ Coopers & Lybrand L.L.P. ----------------------------------- Coopers & Lybrand L.L.P. San Jose, California December 21, 1995 EX-24 7 POWER OF ATTORNEY 1 Exhibit 24 POWER OF ATTORNEY The undersigned directors of Varian Associates, Inc., a Delaware corporation ("Company"), hereby constitute and appoint Robert A. Lemos and Joseph B. Phair, and each of them with full power to act without the other, the undersigned's true and lawful attorney-in-fact, with full power of substitution and resubstitution, for the undersigned and in the undersigned's name, place and stead in the undersigned's capacity as a director of the Company, to execute in the name and on behalf of the undersigned of the Company's Annual Report on Form 10-K for the fiscal year ended September 29, 1995 ("Report"), under the Securities and Exchange Act of 1934, as amended, and to file such Report, with exhibits thereto and other documents in connection therewith and any and all amendments thereto, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done and to take any other action of any type whatsoever in connection with the foregoing which, in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required of, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion. This Power of Attorney may be executed in any number of counterparts, all of which together shall constitute one and the same Power of Attorney. IN WITNESS WHEREOF, I have hereunto set my hand this day of , 1995. /s/ Ruth M. Davis /s/Samuel Hellman - ----------------------------- ------------------------------ Ruth M. Davis Samuel Hellman /s/ Terry R. Lautenbach - ----------------------------- ------------------------------ Terry R. Lautenbach Angus A. MacNaughton /s/ David W. Martin, Jr. /s/ John G. McDonald - ----------------------------- ------------------------------ David W. Martin, Jr. John G. McDonald /s/ William F. Miller /s/ Wayne R. Moon - ----------------------------- ------------------------------ William F. Miller Wayne R. Moon /s/ Gordon E. Moore /s/ David E. Mundell - ----------------------------- ------------------------------ Gordon E. Moore David E. Mundell /s/ Donald O. Pederson - ----------------------------- ------------------------------ Donald O. Pederson Philip J. Quigley /s/ Burton Richter /s/ Richard W. Vieser - ----------------------------- ------------------------------ Burton Richter Richard W. Vieser EX-27 8 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM VARIAN ASSOCIATES INC., AND SUBSIDIARY COMPANIES, CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF EARNINGS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, ALL CONTAINED WITHIN EXHIBIT 13, REGISTRANT'S 1995 ANNUAL REPORT TO STOCKHOLDERS. 1,000 YEAR SEP-29-1995 OCT-01-1994 SEP-29-1995 122,728 0 348,646 2,316 171,702 757,718 431,303 239,422 1,003,782 500,701 0 31,052 0 0 363,877 1,003,782 1,575,742 1,575,742 1,024,539 1,408,821 0 0 6,936 165,300 59,510 105,790 33,496 0 0 139,286 0 3.96
EX-27.1 9 RESTATED FDS FOR THE YEAR ENDED SEPTEMBER 30, 1994
5 1,000 YEAR SEP-30-1994 OCT-02-1993 SEP-30-1994 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,313,447 1,313,417 853,955 1,202,362 0 0 0 109,093 41,456 67,637 11,721 0 0 0 0 0
EX-27.2 10 RESTATED FOR THE QUARTER ENDED DECEMBER 30, 1994
5 1,000 3-MOS SEP-29-1995 OCT-01-1994 DEC-30-1994 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 346,142 346,142 230,902 316,919 0 0 0 28,293 10,470 17,823 2,927 0 0 0 0 0
EX-27.3 11 RESTATED FDS FOR THE QUARTER ENDED MARCH 31, 1995
5 1,000 6-MOS SEP-29-1995 OCT-01-1994 MAR-31-1995 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 774,779 774,779 516,355 703,013 0 0 0 70,256 25,998 44,258 6,184 0 0 0 0 0
EX-27.4 12 RESTATED FDS FOR THE QUARTER ENDED JUNE 30, 1995
5 1,000 9-MOS SEP-29-1995 OCT-01-1994 JUN-30-1995 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,169,048 1,169,048 772,785 1,050,619 0 0 2,259 116,170 42,985 73,185 9,000 0 0 0 0 0
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