-----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, L9nFLwuHlctsyxM6X/0ttvKjkLyD28qBKgfFh2vhZz0J81i3eQQ6HJtJ/IOedHTh 1ushJCDKqWboQ4ut2SabOA== 0000891618-96-003118.txt : 19961220 0000891618-96-003118.hdr.sgml : 19961220 ACCESSION NUMBER: 0000891618-96-003118 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19960927 FILED AS OF DATE: 19961219 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VARIAN ASSOCIATES INC /DE/ CENTRAL INDEX KEY: 0000203527 STANDARD INDUSTRIAL CLASSIFICATION: SPECIAL INDUSTRY MACHINERY, NEC [3559] 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: 96683069 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 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 27, 1996 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 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, 1996 was $1,498,011,000. Indicate the number of shares outstanding of each of the issuer's classes of common stock as of December 1, 1996: 30,703,000 shares of $1 par value common stock. An index of exhibits filed with this Form 10-K is located on pages 15 through 16. 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 27, 1996 (the "Annual Report")............................. I, II, IV Certain sections, identified by caption, of the Proxy Statement for the Registrant's 1997 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 "Varian", 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 health care, industrial production, scientific and industrial research, and environmental monitoring. The Company's principal business segments are health care systems, 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 27, 1996, the Company employed approximately 6,700 people worldwide. The Company sells its products throughout the world and has 28 field sales offices in the U.S. and 54 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, but there is no competitor which competes across all of the Company's segments. There were no material changes in the kinds of products produced or in the methods of distribution since the beginning of the fiscal year. The Company anticipates adequate availability of raw materials. The Company's sales to customers outside of the U.S. for 1996 were $918 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 headings "Foreign Currency Translation" and "Forward Exchange Contracts", on pages 26 and 30, respectively, 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, sells, and services 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 manufactures tubes for four primary medical X-ray imaging applications: CT scanner; diagnostic radiographic/fluoroscopic; special procedures; and mammography. Backlog for the Health Care Systems business amounted to $341 million and $293 million in fiscal 1996 and 1995, 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 chromatographs, gas chromatograph/mass spectrometers, NMR spectrometers, ultraviolet visible 2 3 Item 1. (continued) 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 found in 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 segments 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 also manufactures vacuum products and accessories for industrial and scientific applications. Its vacuum products and helium leak detectors are utilized in such applications as semiconductor and automotive manufacturing, high-energy physics, surface analysis, space research, and petrochemical refining. The Instruments business includes a facility which fabricates circuit boards and sub-assemblies for customers inside and outside the Company. Backlog for the Instruments business amounted to $110 million and $111 million in fiscal 1996 and 1995, respectively. The Company's Semiconductor Equipment business manufactures, sells, and services processing systems which are essential to making integrated circuits. Primary products are ion implantation and sputter coating systems used in wafer fabrication facilities. Backlog for this business amounted to $203 million and $248 million in fiscal 1996 and 1995, respectively. Additional information regarding the Company's lines of business and international operations are incorporated herein by reference from the information provided under the headings "Industry Segments" and "Geographic Segments" on pages 36-37 of the Annual Report. The Company employs 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 any particular patent as essential to its operations. The Company grants licenses to reliable manufacturers on various terms and enters into 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 heading "Research and Development" on page 28 of the Annual Report. The Company's operations are subject to various federal, state, and/or local laws regulating the discharge of materials to the environment or otherwise relating to the protection of the environment. The Company is also involved in various stages of environmental investigation and/or remediation under the direction of or in consultation with federal, state, and/or local agencies at certain current or former Company facilities (see the information provided under the headings "Management's Discussion and Analysis" and "Contingencies" on pages 17-21 and 33-35, respectively, of the Annual Report, which information is incorporated herein by reference). The Company has established what it believes to be adequate reserves for these matters. Based on information currently available, management believes that the Company's compliance with laws which have been adopted regulating the discharge of materials to the environment or relating to the protection of the environment is otherwise not reasonably likely to have a material adverse effect on the capital expenditures, earnings or competitive position of the Company. Also, estimated capital expenditures for environmental control facilities are not expected to be material in fiscal 1997, nor are they expected to be material in fiscal 1998. 3 4 Item 1. (continued) 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 16, 1996.
Name Age Position Term J. Tracy O'Rourke 61 Chairman of the Board and Chief Executive 1990-Present (Director) Officer Richard A. Aurelio 52 Executive Vice President 1992-Present President, Semiconductor Equipment 1991-1992 Allen J. Lauer 59 Executive Vice President 1990-Present Richard M. Levy 58 Executive Vice President 1990-Present Timothy E. Guertin 47 Corporate Vice President 1992-Present President, Oncology Systems 1990-Present Robert A. Lemos 55 Vice President, Finance and Chief Financial 1986-Present Officer Treasurer 1995-Present Joseph B. Phair 49 Secretary 1991-Present Vice President and General Counsel 1990-Present Wayne P. Somrak 51 Vice President 1991-Present Controller 1995-Present, 1985-1994 Treasurer 1995
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 740,502 square feet. The following is a summary of the Company's properties at September 27, 1996:
Land (Acres) Buildings (000's Sq. Ft.) ------------ ------------------------- Owned Leased Owned Leased ----- ------ ----- ------ United States 100 55 1,606 424 International 27 - 350 298 --- -- ----- --- 127 55 1,956 722 === == ===== ===
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 493 42 535 178 713 Instruments 393 195 588 354 942 Semiconductor Equipment 391 52 443 160 603 Other Operations 56 - 56 - 56 ----- --- ----- --- ----- Total Operations 1,333 289 1,622 692 2,314 ===== === ===== === Other 364 --- Total 2,678 =====
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, Venezuela, 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 heading "Contingencies" on pages 33-35 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 heading "Common Stock Prices (Unaudited)" on page 38 of the Annual Report, and the information provided under the heading "Long-Term Debt" on pages 29-30 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 6,265 holders of record of the Company's common stock on December 1, 1996. 6 7 ITEM 6. SELECTED FINANCIAL DATA
FISCAL YEARS - -------------------------------------------------------------------------------------------------------- (DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS) 1996 1995 1994 1993 1992 - -------------------------------------------------------------------------------------------------------- SUMMARY OF OPERATIONS Sales....................................... $1,599.4 1,575.7 1,313.4 1,061.9 1,025.2 -------- ------- ------- ------- ------- Earnings from Continuing Operations before taxes............................... $ 189.2 165.3 109.1 60.1 59.3 Taxes on earnings....................... $ 67.1 59.5 41.5 22.8 22.6 -------- ------- ------- -------- ------ Earnings from Continuing Operations......... $ 122.1 105.8 67.6 37.3 36.7 Earnings from Discontinued Operations, Net of Taxes........................... $ -- 33.5 11.8 8.5 1.9 -------- ------- -------- ------- ------ NET EARNINGS................................ $ 122.1 139.3 79.4 45.8 38.6 ======== ======= ======== ======= ====== EARNINGS PER SHARE - FULLY DILUTED Earnings Continuing Operations......... $ 3.81 3.01 1.90 1.03 0.97 Earnings Discontinued Operations....... $ -- 0.95 0.32 0.23 0.05 -------- ------- -------- ------- ------ NET EARNINGS PER SHARE...................... $ 3.81 3.96 2.22 1.26 1.02 ======== ======= ======== ======= ====== DIVIDENDS DECLARED PER SHARE............... $ 0.310 0.270 0.230 0.195 0.175 ======== ======= ======== ======= ====== FINANCIAL POSITION AT YEAR END Total assets............................... $1,018.9 1,003.8 962.4 878.7 878.7 Long-term debt (excluding current portion).............. $ 60.3 60.3 60.4 60.5 49.7
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 heading "Management's Discussion and Analysis" on pages 17-21 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 39 of the Annual Report and the Consolidated Financial Statements, Notes to the Consolidated Financial Statements, and Supplementary Data on pages 22-38 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 heading "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 heading "Section 16(a) Beneficial Ownership Reporting Compliance" 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 heading "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 heading "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 headings "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 22 through 37 and page 39 of the Annual Report: Consolidated Financial Statements: Consolidated Statements of Earnings for fiscal years 1996, 1995, and 1994 Consolidated Balance Sheets at fiscal year-end 1996 and 1995 Consolidated Statements of Stockholders' Equity for fiscal years 1996, 1995, and 1994 Consolidated Statements of Cash Flows for fiscal years 1996, 1995, and 1994 Notes to the Consolidated Financial Statements Report of Independent Accountants (2) Financial Statement Schedule The following financial statement schedule of the Registrant and its subsidiaries for fiscal years 1996, 1995, and 1994, and the related Report 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 Schedule 13 II Valuation and Qualifying Accounts 14 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. 9 10 Item 14. (continued) (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). 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). 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 Item 14. (continued) 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). 11 Computation of earnings per share. 13 Registrant's 1996 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 27, 1996 (EDGAR filing only). (b) Reports on Form 8-K: A report on Form 8-K was filed on August 27, 1996, regarding the Registrant's Preferred Stock Purchase Rights which expired and became unexercisable on August 25, 1996. 11 12 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 3, 1996 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 3, 1996 ---------------------- Officer (Principal Executive Officer) J. Tracy O'Rourke /s/ Robert A. Lemos Vice President, Finance, Chief Financial December 3, 1996 ------------------- Officer and Treasurer (Principal Financial Robert A. Lemos Officer) /s/ Wayne P. Somrak Vice President and Controller (Principal December 3, 1996 ------------------- Accounting Officer) Wayne P. Somrak Ruth M. Davis * Director Robert W. Dutton * Director Samuel Hellman * Director Terry R. Lautenbach * Director Angus A. MacNaughton * Director David W. Martin, Jr. * Director John G. McDonald * Director Wayne R. Moon * Director Gordon E. Moore * Director David E. Mundell * Director Donald O. Pederson * Director Burton Richter * Director Elizabeth E. Tallett * Director Richard W. Vieser * Director
* By /s/ Robert A. Lemos December 3, 1996 --------------------- Robert A. Lemos, Attorney-in-Fact ** - -------- ** By authority of powers of attorney filed herewith. 12 13 Report of Independent Accountants on Financial Statement Schedule To the Board of Directors and Stockholders of Varian Associates, Inc. Our report on the consolidated financial statements has been incorporated by reference in this form 10-K from page 39 of the 1996 Annual Report to Stockholders of Varian Associates, Inc. and subsidiary companies. In connection with our audits of such financial statements, we have also audited the related Financial Statement Schedule listed in the index on page 9 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, presents 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 16, 1996 13 14 SCHEDULE II VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES VALUATION AND QUALIFYING ACCOUNTS (1) for the fiscal years ended 1996, 1995, and 1994 (Dollars in Thousands)
BALANCE AT CHARGED TO BEGINNING COSTS AND DESCRIPTION OF PERIOD EXPENSES - ------------------------------------------------------------ ALLOWANCE FOR DOUBTFUL NOTES & ACCOUNTS RECEIVABLE: Fiscal Year Ended 1996 $ 2,316 $ 876 ======= ======= Fiscal Year Ended 1995 $ 2,422 $ 330 ======= ======= Fiscal Year Ended 1994 $ 2,219 $ 762 ======= ======= ESTIMATED LIABILITY FOR PRODUCT WARRANTY: Fiscal Year Ended 1996 $48,076 $52,680 ======= ======= Fiscal Year Ended 1995 $41,682 $61,954 ======= ======= Fiscal Year Ended 1994 $35,615 $49,354 ======= =======
DEDUCTIONS BALANCE AT -------------------------- END OF DESCRIPTION AMOUNT PERIOD - -------------------------------------------- Write-offs & Adjustments $ 883 $ 2,309 ======= ======= Write-offs & Adjustments $ 436 $ 2,316 ======= ======= Write-offs & Adjustments $ 559 $ 2,422 ======= ======= Actual Warranty Expenditures $51,505 $49,251 ======= ======= Actual Warranty Expenditures $55,560 $48,076 ======= ======= Actual Warranty Expenditures $43,287 $41,682 ======= =======
(1) As to column omitted the answer is "none". -14- 15 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). 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) 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). 15 16 INDEX OF EXHIBITS 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). 11 Computation of earnings per share. 13 Registrant's 1996 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 27, 1996 (EDGAR filing only). 16 EX-3.A 2 RESTATED CERTIFICATION OF INCORPORATION OF VARIAN 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 1 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. 2 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. 3 4 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 4 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) 1996 1995 1994 - ------------------------------------------------- ---- ---- ---- Actual weighted average shares outstanding for the period 31,024 33,648 34,391 Dilutive employee stock options 1,051 1,554 1,285 ---------- ---------- ---------- Weighted average shares outstanding for the period 32,075 35,202 35,676 ========== ========== ========== (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) - ------------------------------------------------- Earnings from continuing operations $ 122.1 $ 105.8 $ 67.6 Earnings from discontinued operations -- 33.5 11.8 ---------- ---------- ---------- Earnings applicable to fully diluted earnings per share $ 122.1 $ 139.3 $ 79.4 ========== ========== ========== Earnings per share based on SEC interpretive release No. 34-9083: Earnings from continuing operations $ 3.81 $ 3.01 $ 1.90 Earnings from discontinued operations -- 0.95 0.32 ---------- ---------- ---------- Earnings per share - Fully Diluted(1) $ 3.81 $ 3.96 $ 2.22 ========== ========== ==========
(1) There is no significant difference between fully diluted earnings per share and primary earnings per share. EX-13 4 1996 ANNUAL REPORT 1 EXHIBIT 13 VARIAN ASSOCIATES, INC. FY 1996 ANNUAL REPORT TO STOCKHOLDERS 2 Exhibit 13 MANAGEMENT'S DISCUSSION AND ANALYSIS RESULTS OF OPERATIONS In fiscal 1996, the Company earned $122.1 million, up 15% from the $105.8 million earned from continuing operations in 1995. Earnings per share of $3.81 rose 27% above the prior year's $3.01 from continuing operations. Fiscal 1996 orders totaled $1.625 billion, 2% above 1995's $1.597 billion. Sales for the year were $1.599 billion, 2% ahead of the year-ago's $1.576 billion. However, after adjustments for the effects of an equipment distribution agreement with Tokyo Electron Ltd. (TEL) which is no longer in effect, sales were up 8% from the previous year. Order backlog was $619 million compared to $651 million at the close of 1995. International sales accounted for 57% of total sales in 1996 compared to 51% in the prior year. In the fourth quarter of 1996, the Company earned $29.2 million versus the year-ago's $32.6 million earned from continuing operations. Earnings per share declined to $0.92 from $0.94 from continuing operations in the year-ago period. Fourth-quarter orders of $408 million were down 5% from 1995's $431 million, but 17% above the level of the prior quarter. Sales for 1996's fourth quarter rose to $413 million, up 2% from $407 million in the final quarter of fiscal 1995. While signs of a slowdown in demand in the semiconductor equipment industry first became evident around mid-year, the pace of new orders for the Company's equipment fell off sharply in the fourth quarter. Nonetheless, Varian's Semiconductor Equipment business not only remained profitable but improved its operating margins in the face of the deteriorating market conditions. The Company's Instruments business continued to improve its performance and made a solid contribution to the year's record results. Varian's Health Care operations were negatively impacted in the U.S. by the effects of ongoing industry cost containment efforts; however, orders for that business rebounded sharply in the fourth quarter. The Company's Health Care Systems orders rose to a record $534 million, up 5% from the prior year's level. The gain was driven by strong fourth-quarter demand, as quarterly bookings for this business surpassed the $200 million mark for the first time to end the period at $203 million. While both the oncology systems and X-ray tube product lines contributed to the growth, increased orders for cancer therapy equipment were the primary driver as bookings for these products rose 137% over the third quarter. Fourth-quarter oncology orders were strong in the U.S. market which had lagged growth abroad throughout the year. Domestic orders for the Company's cancer therapy products accounted for 68% of fourth-quarter oncology volume. Fourth-quarter orders for medical linear accelerators declined from 1995's fourth quarter. Health Care Systems sales for the year declined 4% to $464 million. Sales for the X-ray tube product line rose from 1995 levels for both the fourth quarter and the year; however, those gains were offset by lower shipments of oncology products. Fourth-quarter operating margins for Health Care Systems improved over the third quarter but fell substantially short of the prior year due to the lower volume and continued investments in offshore infrastructure and new product development programs. Backlog grew 17% from the year-ago level to a record $341 million. Orders for Varian's Semiconductor Equipment business declined 5% from the prior year to $628 million. Fourth-quarter bookings were 49% below 1995 due to the previously noted worldwide downturn in the industry. The drop in demand was evident in lower orders for both the thin film and ion implantation product lines in the year's final quarter. However, bookings for ion implantation products improved slightly for the year overall. Fourth-quarter Semiconductor Equipment sales were flat, with both product lines shipping at approximately the same level as in 1995. Sales for the year declined 1% from the prior year, but rose 15% after adjusting for the terminated TEL distribution agreement. 17 3 MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED) Operating profits for this business improved over the prior year from $99 million in 1995 to $135 million in 1996. Backlog of $203 million declined 26% from the previous quarter and 18% from the prior year level due to the softening industry demand conditions. Instruments business orders rose to $493 million, up 11% from the previous year. While fourth-quarter bookings for nuclear magnetic resonance instrument products were below the prior year's record level, the decline was more than offset by strong orders for the Company's vacuum and analytical product lines. Sales for this business rose 9% for the fourth quarter and 11% for the year, with improved shipments in nearly all product areas. Backlog ended the year at essentially the same level as year-end 1995. Instruments business operating profit improved significantly for both the fourth quarter and the year. While all product lines contributed to the better margins, the improvement was particularly evident in the analytical area. For the Company overall, spending on research and development rose, increasing $19.2 million to $110.1 million, or 7% of revenue, compared with 6% of revenue in 1995 and 1994. Net interest expense in 1996 declined to $0.8 million compared to $1.6 million and $2.0 million in 1995 and 1994, respectively. The continuing operations effective tax rate for 1996 was 35.5%, compared to 36% for 1995 and 38% for 1994. (See Notes to the Consolidated Financial Statements.) In March 1995, the FASB issued SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, which will become effective for the Company's fiscal year 1997. Its adoption will not have a material effect on the financial statements of the Company. In October 1995, the FASB issued SFAS 123, Accounting for Stock-Based Compensation. The Company is required to adopt SFAS 123 in fiscal 1997 and, upon adoption, will elect to continue to measure compensation cost for its employee stock compensation plans using the intrinsic value based method of accounting prescribed in APB 25. Accordingly, its adoption will not have a material effect on the financial statements of the Company. In October 1996, the AICPA issued SOP 96-1, Environmental Remediation Liabilities. SOP 96-1 is effective for fiscal 1998. The Company will be studying the implications of the statement, but the impact of its implementation on the financial statements of the Company has not yet been determined. See Summary of Significant Accounting Policies in Notes to the Consolidated Financial Statements. FINANCIAL CONDITION The Company's financial condition remained strong during 1996. Operating activities provided cash of $77.4 million compared to $117.4 million in 1995. Investing activities in 1996 used $73.4 million, mainly for the purchase of $67.7 million in property and equipment and the purchase of a business for $4.4 million. Investing activities in 1995 provided $125.6 million inclusive of $191.3 million in proceeds from the sale of the Electron Devices business which was offset by the purchase of property, plant, and equipment of $65.4 million and the purchase of businesses of $12.7 million. Financing activities in 1996 used $46.5 million, with $39.5 million used to buy back shares of the Company's stock, including shares purchased to offset the issuance of stock to employees, and $9.3 million used for payment of dividends. Financing activities in 1995 used $196.9 million, with $184.9 million to buy back shares of the Company's stock, including shares purchased to offset the issuance of stock to employees, and $8.8 million used for payment of dividends. 18 4 MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED) Total debt as a percent of total capital decreased to 12.1% from 13.6% a year ago. Cash and cash equivalents of $82.7 million exceeded short- and long-term debt of $64.6 million at fiscal year-end 1996. The ratio of current assets to current liabilities was 1.65 and 1.51 at fiscal year-end 1996 and 1995, respectively. Quarterly dividends were increased from $0.07 to $0.08 per share in the second quarter of fiscal 1996. The Company has $50 million available in unused committed lines of credit. OUTLOOK The fiscal 1996 highs for orders, sales, and profits were achieved when the market environment for a number of the Company's operations was obviously deteriorating as the year came to an end. Although continuation of the Company's aggressive new product development and productivity programs will contribute to the fiscal 1997 performance, it does not expect to surpass 1996's record results in 1997. The Health Care Systems segment's extraordinary momentum of the fourth quarter is not expected to be the norm in 1997, and soft demand in the semiconductor industry will likely produce lower orders and sales for that segment in the quarters immediately ahead. However, barring some unforeseen shift in the world economic picture, fiscal 1997 should still be a strong year for Varian. 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. This includes 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 nine sites where 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 $5.2 million in 1996 compared with $2.3 million in 1995. 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 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. These estimates are 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. The Company's estimates of the present value of future exposure for environmental related investigation and remediation expenditures, including operating and maintenance costs, ranged from approximately $32.2 million to $52.5 million as of September 27, 1996, and from approximately $35.7 million to $56.0 million as of September 29, 1995. The time frame over which the Company expects to incur such costs varies with each site, ranging up to 29 years as of September 27, 1996. Management believes that no amount in the foregoing range of estimated future costs is more probable of being incurred than any other amount in that range. 19 5 MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED) At September 27, 1996, the Company's reserve for environmental liabilities, based upon future environmental related costs estimated as of that date, was calculated as follows:
(Dollars in millions) - ---------------------------------------------------------------------------------- Recurring Total Costs Non-Recurring Anticipated Year Costs Future Costs - ---------------------------------------------------------------------------------- 1997 $ 1.6 $ 1.6 $3.2 1998 1.7 2.8 4.5 1999 2.0 0.6 2.6 2000 2.1 0.3 2.4 2001 2.1 0.2 2.3 Thereafter 52.4 4.9 57.3 ------------------------------------------- Total costs $61.9 $10.4 $72.3 Less imputed interest (at 7%) (40.1) ----- Reserve amount $32.2 =====
The amounts set forth in the foregoing table are only estimates of anticipated future environmental related costs, and the amounts actually spent in the years indicated may be greater or less than such estimates. The Company believes that its reserves are adequate, but as the scope of its obligations becomes more clearly defined, this reserve may be modified and related charges against earnings may be made. Although any ultimate liability arising from environmental related matters 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 an occurrence is considered remote. Based on information currently available and its best assessment of the ultimate amount and timing of environmental related events, Varian's management believes that the costs of these matters are not reasonably likely to have a material adverse effect on the financial condition of the Company. Varian evaluates its liability for environmental related investigation and remediation in light of the liability and financial wherewithal of potentially responsible parties and insurance companies where 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 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 settlements with certain defendant insurance carriers), the Company recorded an $18.0 million receivable in Other Current Assets at September 29, 1995, all but $0.2 million of which was received during fiscal 1996. Although the Company intends to aggressively pursue additional insurance recoveries from remaining defendants in that lawsuit, 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. Except for historical information, this discussion contains forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from those 20 6 MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED) projected. Such risks and uncertainties include: product demand and market acceptance risks; the effect of general economic conditions and foreign currency fluctuations; the impact of competitive products and pricing; new product development and commercialization; the impact of slower growth in worldwide semiconductor demand; the effect of the continuing shift in growth from domestic to international health care customers, and the impact of managed-care initiatives in the United States; the continued improvement of the various instruments markets the Company serves; the ability to increase operating margins on higher sales; and other risks detailed from time to time in the Company's filings with the U.S. Securities and Exchange Commission. 21 7 Exhibit 13 CONSOLIDATED STATEMENTS OF EARNINGS Varian Associates, Inc. and Subsidiary Companies
Fiscal Years - ------------------------------------------------------------------------------------------------------------ (Dollars in thousands except per share amounts) 1996 1995 1994 ============================================================================================================ SALES $1,599,361 $1,575,742 $1,313,447 ---------- ---------- ---------- OPERATING COSTS AND EXPENSES Cost of sales 995,668 1,024,539 853,955 Research and development 110,140 90,964 73,706 Marketing 200,333 187,148 168,975 General and administrative 103,128 106,170 105,726 ---------- ---------- ---------- Total operating costs and expenses 1,409,269 1,408,821 1,202,362 ---------- ---------- ---------- OPERATING EARNINGS 190,092 166,921 111,085 Interest expense (6,375) (6,936) (6,345) Interest income 5,526 5,315 4,353 EARNINGS FROM CONTINUING OPERATIONS ---------- ---------- ---------- BEFORE TAXES 189,243 165,300 109,093 Taxes on earnings 67,180 59,510 41,456 ---------- ---------- ---------- EARNINGS FROM CONTINUING OPERATIONS $ 122,063 $ 105,790 $ 67,637 EARNINGS FROM DISCONTINUED OPERATIONS NET OF TAXES - 33,496 11,721 ---------- ---------- ---------- NET EARNINGS $ 122,063 $ 139,286 $ 79,358 ========== ========== ========== EARNINGS PER SHARE - FULLY DILUTED Continuing operations $ 3.81 $ 3.01 $ 1.90 Discontinued operations - 0.95 0.32 ---------- ---------- ---------- NET EARNINGS PER SHARE $ 3.81 $ 3.96 $ 2.22 ========== ========== ==========
See accompanying Notes to the Consolidated Financial Statements. -22- 8 Exhibit 13 CONSOLIDATED BALANCE SHEETS Varian Associates, Inc. and Subsidiary Companies
Fiscal Year-End ------------------------------ (Dollars in thousands except par values) 1996 1995 - ----------------------------------------------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents $ 82,675 $ 122,728 Accounts receivable 380,330 346,330 Inventories 189,882 171,702 Other current assets 91,010 116,958 ---------- ---------- Total Current Assets 743,897 757,718 ---------- ---------- Property, Plant, and Equipment 473,852 431,303 Accumulated depreciation and amortization (261,766) (239,422) ---------- ---------- Net Property, Plant, and Equipment 212,086 191,881 ---------- ---------- Other Assets 62,938 54,183 ---------- ---------- TOTAL ASSETS $1,018,921 $1,003,782 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Notes payable $ 4,362 $ 1,755 Accounts payable - trade 75,745 82,851 Accrued expenses 264,565 316,419 Product warranty 49,251 48,076 Advance payments from customers 56,071 51,600 ---------- ---------- Total Current Liabilities 449,994 500,701 Long-Term Accrued Expenses 29,007 29,026 Long-Term Debt 60,258 60,329 Deferred Taxes 11,753 18,797 ---------- ---------- Total Liabilities 551,012 608,853 ---------- ---------- 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 30,646,000 shares (1996), 31,052,000 shares (1995) 30,646 31,052 Retained earnings 437,263 363,877 ---------- ---------- Total Stockholders' Equity 467,909 394,929 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,018,921 $1,003,782 ========== ==========
See accompanying Notes to the Consolidated Financial Statements. -23- 9 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, 1993 $17,342 $ - $396,719 $ - $ 414,061 Net earnings for the year - - 79,358 - 79,358 Issuance of stock under omnibus stock, stock option, 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, stock option, 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 Net earnings for the year - - 122,063 - 122,063 Issuance of stock under omnibus stock, stock option, and employee stock purchase plans (including tax benefit of $10,084) 1,213 38,623 - - 39,836 Purchase of common stock - - - (79,296) (79,296) Retirement of treasury stock (1,619) (38,623) (39,054) 79,296 - Dividends declared ($0.31 per share) - - (9,623) - (9,623) ------- -------- -------- --------- --------- BALANCES, FISCAL YEAR-END, 1996 $30,646 $ - $437,263 $ - $ 467,909 ======= ======== ======== ========= =========
See accompanying Notes to the Consolidated Financial Statements. -24- 10 Exhibit 13 CONSOLIDATED STATEMENTS OF CASH FLOWS Varian Associates, Inc. and Subsidiary Companies
Fiscal Years ---------------------------------- (Dollars in thousands) 1996 1995 1994 - ----------------------------------------------------------------------------------------------------------------- OPERATING ACTIVITIES Net Cash Provided by Operating Activities $ 77,353 $ 117,390 $120,251 INVESTING ACTIVITIES Proceeds from sale of property, plant, and equipment 4,781 4,394 18,320 Proceeds from sale of Electron Devices - 191,347 - Purchase of property, plant, and equipment (67,736) (65,404) (62,584) Purchase of businesses, net of cash acquired (4,396) (12,686) 133 Other (5,999) 7,985 (7,252) -------- --------- -------- Net Cash Provided (Used) by Investing Activities (73,350) 125,636 (51,383) -------- --------- -------- FINANCING ACTIVITIES Net borrowings (payments) on short-term obligations 2,607 (3,061) (12,042) Principal payments on long-term debt (71) (70) (6,071) Proceeds from common stock issued to employees 39,836 42,504 27,592 Purchase of common stock (79,296) (227,372) (63,669) Dividends paid (9,341) (8,819) (7,590) Other (282) (123) 392 -------- --------- -------- Net Cash Used by Financing Activities (46,547) (196,941) (61,388) -------- --------- -------- EFFECTS OF EXCHANGE RATE CHANGES ON CASH 2,491 (2,229) (1,915) -------- --------- -------- Net Increase (Decrease) in Cash and Cash Equivalents (40,053) 43,856 5,565 Cash and Cash Equivalents at Beginning of Year 122,728 78,872 73,307 -------- --------- -------- Cash and Cash Equivalents at End of Year $ 82,675 $ 122,728 $ 78,872 ======== ========= ======== DETAIL OF NET CASH PROVIDED BY OPERATING ACTIVITIES Net Earnings $122,063 139,286 $ 79,358 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation 42,918 49,997 48,029 Gain on sale of Electron Devices - (40,965) - Deferred taxes 1,113 (27,083) (8,283) Amortization of intangibles 3,155 5,634 4,484 Changes in assets and liabilities: Accounts receivable (38,677) (37,595) (40,765) Inventories (17,415) (33,009) (17,374) Other current assets 17,847 (19,362) 550 Accounts payable - trade (6,516) 10,711 18,226 Accrued expenses (50,742) 42,639 37,929 Product warranty 1,137 10,678 5,871 Advance payments from customers 5,411 (6,159) (3,503) Long-term accrued expenses (19) 29,026 - Other (2,922) (6,408) (4,271) -------- --------- -------- Net Cash Provided by Operating Activities $ 77,353 $ 117,390 $120,251 ======== ========= ========
See accompanying Notes to the Consolidated Financial Statements. -25- 11 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. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Foreign Currency Translation For non-U.S. operations, the U.S. dollar is the functional currency. Monetary assets and liabilities of foreign subsidiaries are translated into U.S. dollars at current exchange rates. Nonmonetary assets such as inventories and property, plant and equipment are translated at historical rates. Income and expense items are translated at effective rates of exchange prevailing during each year, except that inventories and depreciation charged to operations are translated at historical rates. The aggregate exchange loss included in general and administrative expenses for 1996, 1995, and 1994 was $1.1 million, $0.8 million, and $0.1 million, respectively. 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. The carrying amounts of cash and cash equivalents approximate estimated fair value because of the short maturities of those financial instruments. Accounts Receivable Accounts receivable are stated net of allowances for doubtful accounts of $2.3 million at the end of fiscal years 1996 and 1995. 26 12 Notes to the Consolidated Financial Statements (continued) Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of trade accounts receivable. Concentrations of credit risk with respect to trade accounts receivable are limited due to the large number of customers comprising the Company's customer base and their dispersion across many different industries and geographies. 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 used, inventories would have been higher than reported by $46.8 million in fiscal 1996, $45.6 million in fiscal 1995, and $49.0 million in fiscal 1994. The main components of inventories are as follows:
(Dollars in Millions) 1996 1995 - ---------------------------------------------------------------------------------- Raw materials and parts $ 112.3 $ 98.4 Work in process 53.7 52.6 Finished goods 23.9 20.7 ------------- -------------- Total Inventories $ 189.9 $ 171.7 ============= ==============
The Company's inventories include high technology parts and components that may be specialized in nature or subject to rapid technological obsolescence. While the Company has programs to minimize the required inventories on hand and considers technological obsolescence in estimating the required allowance to reduce recorded amounts to market values, such estimates could change in the future. 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. When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are removed from the accounts. Gains or losses resulting from retirements or disposals are included in earnings from continuing operations. The main components of property, plant, and equipment are as follows:
(Dollars in Millions) 1996 1995 - --------------------------------------------------------------------------------------------- Land and land leaseholds $ 11.3 $ 10.1 Buildings 160.4 145.3 Machinery and equipment 291.7 259.9 Construction in progress 10.5 16.0 -------------- -------------- Total Property, Plant, and Equipment $ 473.9 $ 431.3 ============== ==============
27 13 Notes to the Consolidated Financial Statements (continued) 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 The Company's provision for income taxes comprises its estimated tax liability currently payable and the change in its deferred income taxes. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. 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 recognition of related revenue. Total expenditures on research and development for fiscal 1996, 1995, and 1994, were $116.5 million, $94.7 million, and $74.8 million, respectively, of which $6.4 million, $3.7 million, and $1.1 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 1996, 1995, and 1994, was 32,075, 35,202, and 35,676 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 the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of In March 1995, the FASB issued SFAS 121, Accounting for the 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. The Company is required to adopt SFAS 123 in fiscal 1997 and, upon adoption, will elect to continue to measure compensation cost for its employee stock compensation plans using the intrinsic value based method of accounting prescribed in APB 25. Accordingly, its adoption will not have a material effect on the financial statements of the Company. 28 14 Notes to the Consolidated Financial Statements (continued) Accounting for Environmental Remediation Liabilities In October 1996, the AICPA issued SOP 96-1, Environmental Remediation Liabilities. SOP 96-1 is effective for fiscal 1998. The Company will be studying the implications of the statement, but the impact of its implementation on the financial statements of the Company has not yet been determined. Reclassification Certain amounts in prior years have been reclassified to conform with the 1996 presentation. These reclassifications did not change previously reported total assets, liabilities, stockholders' equity or earnings from continuing operations. ACCRUED EXPENSES
(Dollars in Millions) 1996 1995 - -------------------------------------------------------------------------------- Taxes, including taxes on earnings $ 35.3 $ 79.7 Payroll and employee benefits 108.8 104.4 Environmental 3.2 6.7 Estimated loss contingencies 34.0 36.8 Deferred income 23.7 22.5 Other 59.6 66.3 ------ ------ Total Accrued Expenses $264.6 $316.4 ====== ======
SHORT-TERM DEBT Short-term notes payable and the current portion of long-term debt amounted to $4.4 million and $1.8 million at the end of fiscal years 1996 and 1995, respectively. The weighted average interest rates on short-term borrowings were 3.7% and 3.4% at the end of fiscal years 1996 and 1995, respectively. Total debt is subject to limitations included in long-term debt agreements. At fiscal year-end 1996, 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. LONG-TERM DEBT
(Dollars in Millions) 1996 1995 - ------------------------------------------------------------------------------------------------- Unsecured term loan, 7.29% due in semiannual installments of $6.0 payable 1998-2002 $60.0 $60.0 Other debt 0.4 0.4 ----- ----- Long-term borrowings 60.4 60.4 Less current portion 0.1 0.1 ----- ----- Long-term Debt $60.3 $60.3 ===== =====
29 15 Notes to the Consolidated Financial Statements (continued) The unsecured term loans contain covenants that limit future borrowings and require the Company to maintain certain levels of working capital and operating results. For fiscal year 1996, the Company was in compliance with all restrictive covenants of the loan agreements, including a restriction on payment of cash dividends. At September 27, 1996, approximately $120.8 million of retained earnings were unrestricted for payment of cash dividends. The annual maturities of long-term debt (in millions) for fiscal years 1997 through 2001, are as follows: $0.1, $12.1, $12.1, $12.1, and $12.1. Interest paid (in millions) on short and long-term debt was $6.4, $6.9, and $6.4, in fiscal 1996, 1995, and 1994, respectively. Based on rates currently available to the Company for debt with similar terms and remaining maturities, the carrying amounts of long-term debt and notes payable approximate estimated fair value. FORWARD EXCHANGE CONTRACTS 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 1996, the Company had forward exchange contracts with maturities of twelve months or less to sell foreign currencies totaling $71.5 million ($15.7 million of Canadian dollars, $12.9 million of Japanese yen, $11.2 million of French francs, $9.6 million of Australian dollars, $8.6 million of British pounds, $6.3 million of Italian lira, $1.9 million of German marks, $1.1 million of Swedish krona, $1.1 million of Belgian francs, $1.6 million of Dutch guilders, and $1.5 million of Spanish pesetas) and to buy foreign currencies totaling $6.8 million ($5.2 million of British pounds, $1.3 million of Swiss francs, and $0.3 million of Japanese yen). The face values of these foreign exchange contracts approximate estimated fair value. OMNIBUS STOCK AND EMPLOYEE STOCK PURCHASE PLANS (SHARES IN THOUSANDS) Prior to fiscal 1991, the Company had in place the 1982 Non-Qualified Stock Option Plan under which options are still exercisable. 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. Options granted are generally exercisable in cumulative installments of one-third each year, commencing one year following date of grant, 30 16 Notes to the Consolidated Financial Statements (continued) and expire if not exercised within seven or ten years from 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. Option activity under the Plans is presented below.
1996 1995 1994 ------------------------- ------------------------- ------------------------- (Dollars in Millions) Shares Dollars Shares Dollars Shares Dollars - ----------------------------- -------- -------- -------- -------- -------- -------- Beginning of year 3,809 $ 88.0 3,999 $ 74.2 3,785 $ 60.6 Granted 1,159 56.3 1,111 40.3 1,161 29.5 Terminated or expired (62) (2.5) (116) (3.3) (63) (1.4) Exercised (1,029) (22.5) (1,185) (23.2) (884) (14.5) ------ -------- ------ -------- ----- -------- End of Year 3,877 $ 119.3 3,809 $ 88.0 3,999 $ 74.2 ====== ======== ====== ======== ===== ======== Shares exercisable 1,869 2,030 1,692 Available shares remaining 456 703 634
Options were outstanding at prices ranging from $10.60 to $61.31 per share at fiscal year-end 1996. Options were exercised at prices ranging from $10.60 to $48.94 for fiscal 1996, $10.60 to $39.13 for fiscal 1995, and $10.60 to $24.25 for fiscal 1994. During fiscal years 1996, 1995, and 1994, 69, 63, and 64 shares, respectively, were awarded under restricted stock grants at no cost to the employees. The restricted stock grants vest generally over a three year period. Compensation expense from restricted stock was approximately $2.6 million, $2.0 million, and $1.2 million, in fiscal years 1996, 1995, and 1994, 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 1996, 1995, and 1994, 111 shares, 205 shares, and 266 shares were issued under the ESPP for $4.7 million, $7.0 million, and $7.0 million, respectively. At fiscal year-end 1996, the Company had a balance of 3,014 shares reserved for ESPP. 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 $23.6 million, $21.1 million, and $18.5 million, for fiscal 1996, 1995, and 1994, respectively. 31 17 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. Taxes on earnings from continuing operations are as follows:
(Dollars in millions) 1996 1995 1994 - -------------------------------------------------------------------------------- Current U.S. federal $42.3 $60.6 $27.4 Non-U.S 13.8 14.8 15.6 State and local 9.9 11.2 6.7 ----- ----- ----- Total current 66.0 86.6 49.7 ----- ----- ----- Deferred U.S. federal 0.6 (26.6) (8.8) Non-U.S 0.6 (0.5) 0.5 ----- ----- ----- Total deferred 1.2 (27.1) (8.3) ----- ----- ----- Taxes on Earnings $67.2 $59.5 $41.4 ===== ===== =====
Significant items making up deferred tax assets and liabilities are as follows:
(Dollars in millions) 1996 1995 - -------------------------------------------------------------------------------- Assets: Product warranty $16.2 $15.6 Deferred compensation 10.1 10.7 Special provisions 23.1 24.9 Inventory adjustments 20.7 16.1 Deferred income 5.9 5.4 State income tax 1.7 3.9 Other 4.5 3.7 ----- ----- 82.2 80.3 Liabilities: Accelerated depreciation 13.6 13.3 Unconsolidated affiliates 8.0 5.7 Other 0.3 (0.2) ----- ----- 21.9 18.8 Net Deferred Tax Asset $60.3 $61.5 ===== =====
The classification of the net deferred tax asset on the Balance Sheet is as follows:
(Dollars in millions) 1996 1995 - -------------------------------------------------------------------------------- Net current deferred tax asset (included in other current assets) $72.1 $80.3 Net long-term deferred tax liability (11.8) (18.8) ----- ----- Net Deferred Tax Asset $60.3 $61.5 ===== =====
32 18 Notes to the Consolidated Financial Statements (continued) The effective tax rate on continuing operations differs from the U.S. federal statutory tax rate as a result of the following:
1996 1995 1994 ------ ------ ------ Federal statutory income tax rate 35.0 % 35.0 % 35.0 % State and local taxes, net of federal tax benefit 3.4 4.4 4.0 Foreign taxes, net 0.4 (1.2) (0.9) Foreign Sales Corporation (2.8) (2.4) (1.9) Other (0.5) 0.2 1.8 ------ ------ ------ Effective Tax Rate 35.5 % 36.0 % 38.0 % ====== ====== ======
Income taxes paid are as follows:
(Dollars in millions) 1996 1995 1994 - -------------------------------------------------------------------------------- Federal income taxes paid, net $63.6 $35.1 $25.2 State income taxes paid, net 9.8 11.7 6.2 Foreign income taxes paid, net 21.2 24.0 11.8 ----- ----- ----- Total Paid $94.6 $70.8 $43.2 ===== ===== =====
LEASE COMMITMENTS At fiscal year-end 1996, the Company was committed to minimum rentals under noncancellable operating leases for fiscal years 1997 through 2001 and thereafter, as follows, in millions: $9.1, $6.4, $4.9, $3.6, $2.5, and $2.9. Rental expense for fiscal years 1996, 1995, and 1994, in millions, was $18.4, $18.6, and $18.7, 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. 33 19 Notes to the Consolidated Financial Statements (continued) 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 nine sites where 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 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. Nevertheless, the Company continues to estimate the amounts of these future costs in periodically establishing reserves. These estimates are 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. The Company's estimates of the present value of future exposure for environmental related investigation and remediation expenditures, including operating and maintenance costs, ranged from approximately $32.2 million to $52.5 million as of September 27, 1996, and from approximately $35.7 million to $56.0 million as of September 29, 1995. The time frame over which the Company expects to incur such costs varies with each site, ranging up to 29 years as of September 27, 1996. Management believes that no amount in the foregoing range of estimated future costs is more probable of being incurred than any other amount in that range. At September 27, 1996, the Company's reserve for environmental liabilities, based upon future environmental related costs estimated by the Company as of that date, was calculated as follows:
(Dollars in millions) - ----------------------------------------------------------------------------------- Total Recurring Non-Recurring Anticipated Year Costs Costs Future costs - ----------------------------------------------------------------------------------- 1997 $ 1.6 $ 1.6 $ 3.2 1998 1.7 2.8 4.5 1999 2.0 0.6 2.6 2000 2.1 0.3 2.4 2001 2.1 0.2 2.3 Thereafter 52.4 4.9 57.3 ----- ----- ----- Total costs $61.9 $10.4 $72.3 Less imputed interest (at 7%) (40.1) ----- Reserve amount $32.2 =====
The amounts set forth in the foregoing table are only estimates of anticipated future environmental related costs, and the amounts actually spent in the years indicated may be greater or less than such estimates. The 34 20 Notes to the Consolidated Financial Statements (continued) Company believes that its reserves are adequate, but as the scope of its obligations becomes more clearly defined, this reserve may be modified and related charges against earnings may be made. 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). Although any ultimate liability arising from environmental related matters 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 an occurrence is considered remote. Based on information currently available and its best assessment of the ultimate amount and timing of environmental related events, Varian's management believes that the costs of these matters are not reasonably likely to have a material adverse effect on the financial condition of the Company. Varian evaluates its liability for environmental related investigation and remediation in light of the liability and financial wherewithal of potentially responsible parties and insurance companies where 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 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 settlements with certain defendant insurance carriers), the Company recorded an $18.0 million receivable in Other Current Assets at September 29, 1995, all but $0.2 million of which was received during fiscal 1996. Although the Company intends to aggressively pursue additional insurance recoveries from remaining defendants in that lawsuit, 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. 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 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 - -------------------------------------------------------------------------------- Sales $205.1 $239.0 Earnings Before Taxes 13.2 18.9 Taxes on Earnings 5.0 7.2 ------ ------ Net Earnings from Discontinued Operations Before Gain on Sale $ 8.2 $ 11.7 ====== ======
35 21 Notes to the Consolidated Financial Statements (continued) SUBSEQUENT EVENT During October 1996, the Company obtained additional long term financing of $25.0 million with an interest rate of 7.21%. Semiannual principal repayments of $2.4 million begin in the year 2002. The unsecured note contains covenants that limit future borrowings and require the Company to maintain certain levels of working capital and operating results. 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. Sales to customers located in Korea were $177.9 million in fiscal 1996 and $183.8 million in fiscal 1995. For 1994 no single country outside the United States accounted for more than 10% of total sales. For fiscal 1996, 1995 and 1994, 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 $496 million in fiscal 1996, $420 million in fiscal 1995, and $286 million in fiscal 1994. Sales under prime contracts from the U.S. Government were approximately $15 million in fiscal 1996, $22 million in fiscal 1995, and $28 million in fiscal 1994. 36 22 Exhibit 13 INDUSTRY SEGMENTS
Pretax Identifiable Sales Earnings Assets ---------------------------------------------------------------------------------------------- (Dollars in millions) 1996 1995 1994 1996 1995 1994 1996 - ----------------------------------------------------------------------------------------------------------------------------- Health Care Systems $ 464 $ 482 $ 426 $ 68 $ 90 $ 86 $ 282 Instruments 481 432 408 33 18 36 248 Semiconductor Equipment 650 659 477 135 99 36 262 Eliminations & Other 4 3 2 (12) (11) (9) 10 ------ ------ ------ ----- ----- ----- ------ Total Industry Segments 1,599 1,576 1,313 224 196 149 802 General Corporate -- -- -- (34) (29) (38) 217 Interest, Net -- -- -- (1) (2) (2) -- ------ ------ ------ ----- ----- ----- ------ Continuing Operations $1,599 $1,576 $1,313 $ 189 $ 165 $ 109 $1,019 ====== ====== ====== ===== ===== ===== ======
Identifiable Capital Assets Expenditures Depreciation ------------------------------------------------------------------------------------ (Dollars in millions) 1995 1994 1996 1995 1994 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------- Health Care Systems $ 254 $201 $13 $16 $11 12 11 $ 9 Instruments 235 226 19 21 21 13 12 11 Semiconductor Equipment 227 196 24 15 6 11 9 9 Eliminations & Other 9 8 1 -- 1 1 1 1 Total Industry Segments 725 631 57 52 39 37 33 30 General Corporate 279 191 12 10 9 6 6 5 Interest, Net -- -- -- -- -- -- -- -- ------ ---- --- --- --- --- --- --- Continuing Operations $1,004 $822 $69 $62 $48 $43 $39 $35 ====== ==== === === === === === ===
GEOGRAPHIC SEGMENTS
Sales to Intergeographic Unaffiliated Sales to Customers Affiliates -------------------------------------------------------------------------------- (Dollars in millions) 1996 1995 1994 1996 1995 1994 - ---------------------------------------------------------------------------------------------------------------- United States $1,152 $1,175 $ 920 $ 256 $ 217 $ 253 International 444 398 392 61 54 56 Eliminations & Other 3 3 1 (317) (271) (309) ------ ------ ------ ----- ----- ----- Total Geographic Segments 1,599 1,576 1,313 -- -- -- General Corporate -- -- -- -- -- -- Interest, Net -- -- -- -- -- -- ------ ------ ------ ----- ----- ----- Continuing Operations $1,599 $1,576 $1,313 $ -- $ -- $ -- ====== ====== ====== ===== ===== =====
Total Pretax Sales Earnings ----------------------------------------------------------------------------------- (Dollars in millions) 1996 1995 1994 1996 1995 1994 - ------------------------------------------------------------------------------------------------------------------- United States $ 1,408 $ 1,392 $ 1,173 $ 200 $ 165 $ 112 International 505 452 448 36 42 46 Eliminations & Other (314) (268) (308) (12) (11) (9) ------- ------- ------- ----- ----- ----- Total Geographic Segments 1,599 1,576 1,313 224 196 149 General Corporate -- -- -- (34) (29) (38) Interest, Net -- -- -- (1) (2) (2) ------- ------- ------- ----- ----- ----- Continuing Operations $ 1,599 $ 1,576 $ 1,313 $ 189 $ 165 $ 109 ======= ======= ======= ===== ===== =====
Identifiable Assets -------------------------------- (Dollars in millions) 1996 1995 1994 - ---------------------------------------------------------------- United States $ 514 $ 496 $429 International 278 220 193 Eliminations & Other 10 9 9 ------ ------ ---- Total Geographic Segments 802 725 631 General Corporate 217 279 191 Interest, Net -- -- -- ------ ------ ---- Continuing Operations $1,019 $1,004 $822 ====== ====== ====
Total sales is based on the location of the operation furnishing goods and services. International sales based on final destination of products sold are $918 million, $797 million, and $659 million, in 1996, 1995, and 1994, respectively. Certain Foreign Sales Corporation (FSC) expenses for 1995 and 1994 have been reclassified in pretax earnings from International to United States to properly offset the related revenues. -37- 23 Exhibit 13 QUARTERLY FINANCIAL DATA (UNAUDITED)
1996 ----------------------------------------------------- (Dollars in millions except First Second Third Fourth Total per share amounts) Quarter Quarter Quarter Quarter Year - ------------------------------------------------------------------------------------------------------------ Sales $351.2 417.7 417.0 413.5 1,599.4 ------ ----- ----- ----- ------- Gross Profit $133.1 154.2 157.1 159.3 603.7 ------ ----- ----- ----- ------- Net Earnings Continuing Operations $ 25.5 33.1 34.3 29.2 122.1 Discontinued Operations - - - - - ------ ----- ----- ----- ------- Net Earnings $ 25.5 33.1 34.3 29.2 122.1 ====== ===== ==== ==== ======= Net Earnings Per Share - Fully Diluted Continuing Operations $ 0.79 1.03 1.07 0.92 3.81 Discontinued Operations - - - - - ------ ----- ---- ---- ------- Net Earnings Per Share - Fully Diluted $ 0.79 1.03 1.07 0.92 3.81 ====== ===== ==== ==== =======
1995 -------------------------------------------------- (Dollars in millions except First Second Third Fourth Total per share amounts) Quarter Quarter Quarter Quarter Year - --------------------------------------------------------------------------------------------------------- Sales $346.1 428.7 394.2 406.7 1,575.7 ------ ----- ----- ----- ------- Gross Profit $115.3 143.2 137.8 154.9 551.2 ------ ----- ----- ----- ------- Net Earnings Continuing Operations $ 17.8 26.5 28.9 32.6 105.8 Discontinued Operations 3.0 3.1 2.9 24.5 33.5 ------ ----- ----- ----- ------- Net Earnings $ 20.8 29.6 31.8 57.1 139.3 ====== ===== ==== ==== ======= Net Earnings Per Share - Fully Diluted Continuing Operations 0.51 0.75 0.82 0.94 3.01 Discontinued Operations 0.08 0.10 0.08 0.71 0.95 ------ ----- ----- ----- ------- Net Earnings Per Share - Fully Diluted 0.59 0.85 0.90 1.65 3.96 ====== ===== ==== ==== =======
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)
1996 -------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter - --------------------------------------------------------------------------------------------------- Common Stock High $53 7/8 52 5/8 62 7/8 52 3/8 Low $42 1/2 43 1/4 49 1/4 40 1/2 Dividends Declared Per Share $ .07 .08 .08 .08
1995 -------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter - --------------------------------------------------------------------------------------------------- Common Stock High $37 1/4 44 56 57 3/8 Low $30 7/8 34 1/2 42 1/4 50 5/8 Dividends Declared Per Share $ .06 .07 .07 .07
-38- 24 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 27, 1996 and September 29, 1995, and the related consolidated statements of earnings, stockholders' equity, and cash flows for each of the three fiscal years in the period ended September 27, 1996. 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 27, 1996 and September 29, 1995, and the consolidated results of their operations and their cash flows for each of the three fiscal years in the period ended September 27, 1996 in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. ____________________________________________ COOPERS & LYBRAND L.L.P. San Jose, California October 16, 1996 39 EX-21 5 SUBSIDIARIES OF THE REGISTRANT 1 Exhibit 21 VARIAN ASSOCIATES, INC. SUBSIDIARIES OF THE REGISTRANT FISCAL 1996
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% Varian Biosynergy, Inc. Delaware 100% Varian Technologies, Inc. Delaware 100% Varian Japan, Ltd. Delaware 100% Varian Pacific, Inc. Delaware 100% Varian Instruments of Puerto Rico, Inc. Delaware 100% Varian Ltd. 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% Nippon Oncology Systems, Ltd. Japan 49%
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 INDEPENDANT 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 reports dated October 16, 1996, on our audits of the consolidated financial statements and financial statement schedule of Varian Associates, Inc. as of September 27, 1996 and September 29, 1995 and for each of the three fiscal years in the period ended September 27, 1996, which reports are included or incorporated by reference in this Form 10-K. /s/ Coopers & Lybrand L.L.P. ----------------------------- Coopers & Lybrand L.L.P. San Jose, California December 17, 1996 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 27, 1996 ("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 ______________ , 1996. /s/ Ruth M. Davis /s/ Robert W. Dutton - ----------------------------- ---------------------------- Ruth M. Davis Robert W. Dutton /s/ Samuel Hellman /s/ Terry R. Lautenbach - ----------------------------- ---------------------------- Samuel Hellman Terry R. Lautenbach /s/ Angus A. MacNaughton /s/ David W. Martin - ----------------------------- ---------------------------- Angus A. MacNaughton David W. Martin, Jr. /s/ John G. McDonald /s/ Wayne R. Moon - ----------------------------- ---------------------------- John G. McDonald Wayne R. Moon /s/ Gordon E. Moore /s/ David E. Mundell - ----------------------------- ---------------------------- Gordon E. Moore David E. Mundell /s/ Donald O Pederson /s/ Burton Richter - ----------------------------- ---------------------------- Donald O. Pederson Burton Richter /s/ Elizabeth E. Tallett /s/ Richard W. Vieser - ----------------------------- ---------------------------- Elizabeth E. Tallett 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 1996 Annual Report to Stockholders. 1,000 U.S. DOLLARS YEAR SEP-27-1996 SEP-30-1996 SEP-27-1996 1 82,675 0 382,639 2,309 189,882 743,897 473,852 261,766 1,018,921 449,994 0 0 0 30,646 437,263 1,018,921 1,599,361 1,599,361 995,668 1,409,269 0 0 6,375 189,243 67,180 122,063 0 0 0 122,063 .00 3.81
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