11-K 1 d11k.txt FORM 11-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________ FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year September 30, 2000 OR [_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____. Commission file number 1-7598 VARIAN MEDICAL SYSTEMS, INC. RETIREMENT PLAN (Full title of the plan) Varian Medical Systems, Inc. (Name of issuer of the securities held pursuant to the plan) 3100 Hansen Way Palo Alto, California 94304-1129 (Address of principal executive offices) VARIAN MEDICAL SYSTEMS INC. RETIREMENT PLAN INDEX
Varian Medical Systems, Inc. Retirement Plan - Pension Element:................................................. 1 Report of Independent Accountants............................................................................ 2 Financial Statements......................................................................................... 3 Statements of Net Assets Available for Benefits........................................................... 3 Statements of Changes in Net Assets Available for Benefits................................................ 4 Notes to Financial Statements............................................................................. 5 Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element:.......................................... 12 Report of Independent Accountants............................................................................ 13 Financial Statements......................................................................................... 14 Statements of Net Assets Available for Benefits........................................................... 14 Statements of Changes in Net Assets Available for Benefits................................................ 15 Notes to Financial Statements............................................................................. 16 Supplemental Schedule Furnished Pursuant to Requirements of the Employee Retirement Income Security Act of 1974:........................................................................................... 23 Schedule H, Item 4i: Schedule of Assets Held for Investment Purposes as of September 30, 2000............................................................................................................ 23
Varian Medical Systems, Inc. Retirement Plan - Pension Element Financial Statements September 30, 2000 and 1999 1 Report of Independent Accountants To the Participants and Retirement Committee of Varian Medical Systems, Inc. Retirement Plan - Pension Element: In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of Varian Medical Systems, Inc. Retirement Plan - Pension Element (the "Pension Element") at September 30, 2000 and 1999, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Pension Element's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP San Jose, California April 13, 2001 2 Varian Medical Systems, Inc. Retirement Plan - Pension Element Statements of Net Assets Available For Benefits -------------------------------------------------------------------------------- September 30, 2000 1999 (in thousands) Interest in the Varian Associates, Inc. Retirement and Profit Sharing Program Trust (Note 5) $ 300,345 $ 280,264 ----------- ------------ Net assets available for benefits $ 300,345 $ 280,264 =========== =========== The accompanying notes are an integral part of these financial statements. 3 Varian Medical Systems, Inc. Retirement Plan - Pension Element Statements of Changes In Net Assets Available For Benefits -------------------------------------------------------------------------------- For the Year Ended September 30, 2000 1999 (in thousands) Interest in Varian Associates, Inc. Retirement and Profit Sharing Program Trust investment income $ 54,151 $ 62,120 ----------- ---------- Contributions: Participant 318 492 Employer 4,760 6,875 ----------- ---------- Total contributions 5,078 7,367 ----------- ---------- Total additions 59,229 69,487 ----------- ---------- Deductions from net assets attributed to: Benefits paid to participants 36,679 52,164 Administrative expenses 27 23 ----------- ---------- Total deductions 36,706 52,187 ----------- ---------- Increase in net assets prior to transfers to other plans 22,523 17,300 Transfers to other plans (Note 1) (2,442) (72,228) ----------- ---------- Increase (decrease) in net assets 20,081 (54,928) Net assets available for benefits: Beginning of year 280,264 335,192 ----------- ---------- End of year $ 300,345 $ 280,264 =========== ========== The accompanying notes are an integral part of these financial statements. 4 Varian Medical Systems, Inc. Retirement Plan - Pension Element Notes to Financial Statements -------------------------------------------------------------------------------- 1. Description of the Program The following brief description of the Varian Medical Systems, Inc. Retirement Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan document for more complete information. In November 1998, the Board of Directors of Varian Associates, Inc. approved a plan to reorganize into three publicly traded independent companies by spinning off two of its businesses to stockholders in a tax free distribution. On April 2, 1999, the distribution was consummated by spinning off the instruments business, which renamed itself Varian, Inc., and the semiconductor equipment business, which renamed itself Varian Semiconductor Equipment Associates, Inc. Varian Associates, Inc. renamed itself Varian Medical Systems, Inc. (the "Company"). The Plan remained with the Company. The employees of the other two companies had the following options with respect to their Plan balances: (i) transfer their entire Plan balance, including any loans, to the new company retirement plan; (ii) choose a distribution of their entire Plan balance and directly rollover the amount to an IRA or another employer's tax-qualified plan; (iii) choose a distribution of their entire Plan balance, or (iv) leave their account balance in the Plan. Transfers out of the Plan have been shown on the statement of changes in net assets available for benefits as transfers to other plans. The Plan was established to provide benefits to those employees of the Company who elect to participate. The Plan consists of two distinct defined contribution plan elements, the Varian Medical Systems, Inc. Retirement Plan -Pension Element (the "Pension Element") and the Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element (the "Profit Sharing Element"). The contributions to the Pension Element Plan come from participant after-tax contributions, Company matching contributions and matching Employee Incentive Plan ("EIP") contributions. The contributions to the Profit Sharing Element come from participant before-tax contributions, EIP bonus allocations, retirement profit-sharing contributions and rollover contributions. Employees of the Company may elect to have their EIP bonus allocation paid out in cash or deposited directly to their Plan accounts in 10% increments, subject to statutory annual limitations. Employees are eligible to join the Plan immediately after they are hired by the Company. Participants in the Plan may make a minimum contribution of 0% of their base pay (as defined) up to a maximum of 15% of their base pay, subject to statutory annual limitations. All participant contributions may be made on either a before-tax or after-tax basis and are subject to statutory annual limitations and Plan rules. Effective October 2, 1999, new Plan participants must complete one year of service before making any after-tax contributions to the Plan. Upon completion of one year of service with the Company, participants are entitled to receive Company contributions. The Company's matching contribution is 100% of participants' before or after tax deposits, up to a maximum of 6% of participants' eligible base pay. Contributions for Company EIP matching contributions are 6% of participants' EIP allocations. The Company may make a discretionary retirement profit-sharing contribution to the Profit Sharing Element for participants who have completed one year of service and were employed on the last day of the fiscal year or died during the fiscal year. Participants' portions of the Company's retirement profit- sharing contributions are based on the percentages of their eligible base salary to the total eligible base pay for all participants during the Profit Sharing Element year. No discretionary Company retirement profit-sharing contributions were made in fiscal year 2000 and 1999. 5 Varian Medical Systems, Inc. Retirement Plan - Pension Element Notes to Financial Statements (Continued) -------------------------------------------------------------------------------- Each participant's account is credited with the participant's contribution and allocations of (a) the Company's contribution and (b) Plan earnings, and charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Participants are always fully vested in their contributions and Company contributions. Contributions made to the Plan are allocated among eight investment funds offered by the Plan in 1% increments upon the participant's direction. Participants may transfer account balances and the investment of their future contributions among these funds. Loans Loans are available to participants who are either active employees or on a leave of absence. Participants are eligible to request a loan from the Plan ranging from $1,000 to the lesser of 50% of the participant's Plan assets or $50,000. Loan balances are also subject to certain other limitations as provided by the Plan. Participants are scheduled to repay loans in a series of bi-weekly payments consisting of loan principal and interest over a maximum of five years. Outstanding loans bear an interest at a fixed rate of prime plus 1% at the date requested. Upon employment termination, the entire loan balance becomes immediately due and payable. The interest rates on loans outstanding at September 30, 2000 and September 30, 1999 range from 8.75% to 10.5% and 5.0% to 10.0%, respectively. Payment of benefits Upon termination of service on account of death, disability or retirement, a participant or beneficiary may elect to receive either a lump sum amount equal to the value of their account or annual installments over a period of years. Withdrawals are subject to restrictions as to amount, frequency, and intended use of the proceeds. The normal form of payment is cash. Hardship distributions Participants are allowed to withdraw funds from the Profit Sharing Element in case of hardship. Withdrawals may be made no more than once a month and must be at least $500 (or such lesser amount as is available for withdrawal). Administration The Plan is administered by Fidelity Institutional Retirement Services Company. The Pension Element's investments, as well as the investments of the Profit Sharing Element, are maintained in the Varian Associates, Inc. Retirement and Profit Sharing Program Trust ("Master Trust"), a trust established pursuant to a trust agreement between the Company and Fidelity Management Trust Company ("Fidelity"). Program expenses Certain general and administrative expenses for the Plan are paid by the trustee out of the Master Trust pursuant to the terms of the trust agreement. 6 Varian Medical Systems, Inc. Retirement Plan - Pension Element Notes to Financial Statements (Continued) -------------------------------------------------------------------------------- Plan termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. 2. Summary of Significant Accounting Policies Basis of accounting The financial statements of the Pension Element are prepared utilizing the accrual basis of accounting. Investments Investments of the Master Trust in the Retirement Money Market Portfolio and Mutual Funds are valued at fair value as determined by quoted market prices. Investments of the Master Trust in the Interest Income Fund are stated at net asset value, as determined by the investment manager, based on the fair value of the underlying securities. The carrying amounts of the investments approximate fair value. Purchases and sales of securities held in the Master Trust are recorded on a trade-date basis. Participant loans are valued at cost which approximate fair value. The Master Trust presents in its investment income the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on these investments. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the administrator and trustee to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements. Such estimates include those regarding fair value. Actual results may differ from those estimates. Payment of benefits Benefits are recorded when paid. 3. Income Taxes The Plan obtained its current determination letter in August 1996, in which the Internal Revenue Service stated that the Plan design is in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been subsequently amended; however, the Company believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code and that the trust, which forms a part of the Plan, is exempt from tax. Therefore, no provision for income taxes has been included in the Plan's financial statements. 7 Varian Medical Systems, Inc. Retirement Plan - Pension Element Notes to Financial Statements (Continued) -------------------------------------------------------------------------------- 4. Reconciliation of Financial Statements to Form 5500 The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
September 30, 2000 1999 Net assets available for benefits per the financial statements $ 300,345 $ 280,264 Amounts allocated to withdrawing participants (323) - ---------- ---------- Net assets available for benefits per the Form 5500 $ 300,022 $ 280,264 ========== ==========
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
Year Ended September 30, 2000 1999 Benefits paid to participants per the financial statements $ 36,679 $ 52,164 Add: Amounts allocated to withdrawing participants 323 - ---------- ---------- Benefits paid to participants per the Form 5500 $ 37,002 $ 52,164 ========== ==========
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to September 30 but not yet paid as of that date. 8 Varian Medical Systems, Inc. Retirement Plan-Pension Element Notes to Financial Statement (Continued) -------------------------------------------------------------------------------- 5. Investment in the Varian Associates, Inc. Retirement and Profit Sharing Program Trust The Pension Element's investments are in the Master Trust which was established for the investment of assets of the Pension Element and the Profit Sharing Element. Each participating element has a specific interest in the Master Trust. Investment income and administrative expenses relating to the Master Trust are allocated to the individual elements based upon participant balances. A summary of the net assets of the Master Trust and significant Master Trust investments at September 30, 2000 and 1999 is as follows: STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS SEPTEMBER 30, 2000 AND 1999 (in thousands)
-------------------------------------------------------------------- 2000 1999 -------------------------------------------------------------------- Pension Profit Sharing Pension Profit Sharing Element Element Total Element Element Total ----------------------------------------------------------------------------------------------------- Assets Master Trust investments: Mutual funds $ 274,336 $ 328,178 $ 602,514 $ 262,695 $ 302,055 $ 564,750 Money market funds 25,220 26,085 51,305 17,433 17,474 34,907 Participant loans 184 2,715 2,899 21 1,099 1,120 --------- --------- --------- --------- --------- --------- Total Master Trust investments 299,740 356,978 656,718 280,149 320,628 600,777 --------- --------- --------- --------- --------- --------- Receivables: Company contributions 628 - 628 121 - 121 Participant contributions 9 626 635 15 213 228 --------- --------- --------- --------- --------- --------- Total receivables 637 626 1,263 136 213 349 --------- --------- --------- --------- --------- --------- Total assets 300,377 357,604 657,981 280,285 320,841 601,126 --------- --------- --------- --------- --------- --------- Liabilities Accrued expenses (32) (38) (70) (21) (24) (45) --------- --------- --------- --------- --------- --------- Total liabilities (32) (38) (70) (21) (24) (45) --------- --------- --------- --------- --------- --------- Net assets available for benefits $ 300,345 $ 357,566 $ 657,911 $ 280,264 $ 320,817 $ 601,081 --------- --------- --------- --------- --------- --------- Element's participating interest 46% 54% 100% 47% 53% 100% -----------------------------------------------------------------------------------------------------
9 Varian Medical Systems, Inc. Retirement Plan-Pension Element Notes to Financial Statement (Continued) -------------------------------------------------------------------------------- Investment income for the Master Trust is as follows (in thousands):
-------------------------------------------------------------------------------------------------------------- For the Year Ended September 30, 2000 For the Year Ended September 30, 1999 ------------------------------------------------------------------------------ Pension Profit Sharing Pension Profit Sharing Element Element Total Element Element Total -------------------------------------------------------------------------------------------------------------- Net appreciation in fair value of investments (mutual funds) $ 40,328 $ 52,375 $ 92,703 $ 47,943 $ 66,935 $ 114,878 Interest 13,823 18,068 31,891 14,177 18,437 32,614 -------- -------- --------- -------- --------- --------- Total $ 54,151 $ 70,443 $ 124,594 $ 62,120 $ 85,372 $ 147,492 ======== ======== ========= ======== ========= ========= --------------------------------------------------------------------------------------------------------------
Master Trust investments in excess of 5% of net assets were as follows (in thousands): September 30, 2000 1999 Fidelity Growth Company Fund $ 220,568 $ 127,041 Fidelity Growth and Income Portfolio 110,522 130,267 Fidelity Balanced Fund 44,051 48,137 Fidelity Retirement Money Market Portfolio 51,305 34,907 Spartan U.S. Equity Index Portfolio 111,705 125,098 Interest Income Fund 107,350 128,759 10 Varian Medical Systems, Inc. Retirement Plan - Pension Element Notes to Financial Statements (Continued) -------------------------------------------------------------------------------- 6. Related Party Transactions Certain Master Trust investments are shares of mutual funds managed by an affiliate of Fidelity, and therefore these transactions qualify as party-in-interest. Any purchases and sales of these funds are open market transactions at fair market value. Consequently, such transactions are permitted under the provisions of the Plan and are exempt from the prohibition of party-in-interest transactions under ERISA. Administrative fees paid by the Plan to Fidelity for the years ended September 30, 2000 and 1999 were $16,000 and $22,000, respectively. 7. Subsequent Event On October 2, 2000, the Plan was amended to allow participants to invest in common stock of the Company as an investment option. 11 Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element Financial Statements September 30, 2000 and 1999 12 Report of Independent Accountants To the Participants and Retirement Committee of Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element: In our opinion, the accompanying statements of net assets available for benefits and the related statements of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element (the "Profit Sharing Element") at September 30, 2000 and 1999, and the changes in net assets available for benefits for the years then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Profit Sharing Element's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP San Jose, California April 13, 2001 13 Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element Statements of Net Assets Available for Benefits -------------------------------------------------------------------------------- September 30, 2000 1999 (in thousands) Interest in the Varian Associates, Inc. Retirement and Profit Sharing Program Trust (Note 5) $ 357,566 320,817 ------------ ---------- Net assets available for benefits $ 357,566 320,817 ============ ========== The accompanying notes are an integral part of these financial statements. 14 Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element Statements of Changes in Net Assets Available for Benefits -------------------------------------------------------------------------------- For the Year Ended September 30, 2000 1999 (in thousands) Interest in Varian Associates, Inc. Retirement and Profit Sharing Program Trust investment income $ 70,443 $ 85,372 ----------- --------- Contributions: Participant 7,488 11,496 Employer 889 848 ----------- --------- Total contributions 8,377 12,344 ----------- --------- Total additions 78,820 97,716 ----------- --------- Deductions from net assets attributed to: Benefits paid to participants 37,773 62,786 Administrative expenses 171 235 ----------- --------- Total deductions 37,944 63,021 ----------- --------- Increase in net assets prior to transfers to other plans 40,876 34,695 Transfer to other plans (Note 1) (4,127) (118,078) ----------- --------- Increase (decrease) in net assets 36,749 (83,383) Net assets available for benefits: Beginning of year 320,817 404,200 ----------- --------- End of year $ 357,566 $320,817 =========== ========= 15 Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element Notes to Financial Statements -------------------------------------------------------------------------------- 1. Description of the Program The following brief description of the Varian Medical Systems, Inc. Retirement Plan (the "Plan") is provided for general information purposes only. Participants should refer to the Plan document for more complete information. In November 1998, the Board of Directors of Varian Associates, Inc. approved a plan to reorganize into three publicly traded independent companies by spinning off two of its businesses to stockholders in a tax free distribution. On April 2, 1999, the distribution was consummated by spinning off the instruments business, which renamed itself Varian, Inc., and the semiconductor equipment business, which renamed itself Varian Semiconductor Equipment Associates, Inc. Varian Associates, Inc. renamed itself Varian Medical Systems, Inc. (the "Company"). The Plan remained with the Company. The employees of the other two companies had the following options with respect to their Plan balances: (i) transfer their entire Plan balance, including any loans, to the new company retirement plan; (ii) choose a distribution of their entire Plan balance and directly rollover the amount to an IRA or another employer's tax-qualified plan; (iii) choose a distribution of their entire Plan balance, or (iv) leave their account balance in the Plan. Transfers out of the Plan have been shown on the statements of changes in net assets available for benefits as transfers to other plans. The Plan was established to provide benefits to those employees of the Company who elect to participate. The Plan consists of two distinct defined contribution plan elements, the Varian Medical Systems, Inc. Retirement Plan - Pension Element (the "Pension Element") and the Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element (the "Profit Sharing Element"). The contributions to the Pension Element come from participant after-tax contributions, Company matching contributions and matching Employee Incentive Plan ("EIP") contributions. The contributions to the Profit Sharing Element come from participant before-tax contributions, EIP bonus allocations, retirement profit-sharing contributions and rollover contributions. Employees of the Company may elect to have their EIP bonus allocation paid out in cash or deposited directly to their Plan accounts in 10% increments, subject to statutory annual limitations. Employees are eligible to join the Plan immediately after they are hired by the Company. Participants in the Plan may make a minimum contribution of 0% of their base pay (as defined) up to a maximum of 15% of their base pay, subject to statutory annual limitations. All participant contributions may be made on either a before-tax or after-tax basis and are subject to statutory annual limitations and Plan rules. Effective October 2, 1999, new Plan participants must complete one year of service before making any after-tax contributions to the Plan. Upon completion of one year of service with the Company, participants are entitled to receive Company contributions. The Company's matching contribution is 100% of participants' before or after-tax deposits, up to a maximum of 6% of participants' eligible base pay. The Company may make a discretionary retirement profit-sharing contribution to the Profit Sharing Element for participants who have completed one year of service and were employed on the last day of the fiscal year or died during the fiscal year. Participants' portions of the Company's retirement profit sharing contribution are based on the percentages of their eligible base salary to the total eligible base pay for all employees during the Profit Sharing Element year. No discretionary Company retirement profit-sharing contributions were made in fiscal year 2000 and 1999. 16 Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element Notes to Financial Statements (Continued) -------------------------------------------------------------------------------- Each participant's account is credited with the participant's contribution and allocations of (a) the Company's contribution and (b) Plan earnings, and charged with an allocation of administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Participants are always fully vested in their contributions and Company contributions. Contributions made to the Plan are allocated among eight investment funds offered by the Plan in 1% increments upon the participant's direction. Participants may transfer account balances and the investment of their future contributions among these funds. Loans Loans are available to participants who are either active employees or on a leave of absence. Participants are eligible to request a loan from the Plan ranging from $1,000 to the lesser of 50% of the participant's Plan assets or $50,000. Loan balances are also subject to certain other limitations as provided by the Plan. Participants are scheduled to repay loans in a series of bi-weekly payments consisting of loan principal and interest. Outstanding loans bear an interest at a fixed rate of prime plus 1% at the date requested. Upon employment termination, the entire loan balance becomes immediately due and payable. The interest rates on loans outstanding at September 30, 2000 and September 30, 1999 ranges from 8.75% to 10.5% and 5.0% to 10.0%, respectively. Payment of benefits Upon termination of service on account of death, disability or retirement, a participant or beneficiary may elect to receive either a lump sum amount equal to the value of their account or annual installments over a period of years. Withdrawals are subject to restrictions as to amount, frequency, and intended use of the proceeds. The normal form of payment is cash. Hardship distributions Participants are allowed to withdraw funds from the Profit Sharing Element in case of hardship. Withdrawals may be made no more than once a month and must be at least $500 (or such lesser amount as is available for withdrawal). Administration The Plan is administered by Fidelity Institutional Retirement Services Company. The Profit Sharing Element's investments, as well as the investments of the Pension Element, are maintained in the Varian Associates, Inc. Retirement and Profit Sharing Program Trust ("Master Trust"), a trust established pursuant to a trust agreement between the Company and Fidelity Management Trust Company ("Fidelity"). Program expenses Certain general and administrative expenses for the Plan are paid for by the trustee out of the Master Trust pursuant to the terms of the trust agreement. 17 Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element Notes to Financial Statements (Continued) -------------------------------------------------------------------------------- Plan termination Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. 2. Summary of Significant Accounting Policies Basis of accounting The financial statements of the Profit Sharing Element are prepared utilizing the accrual basis of accounting. Investments Investments of the Master Trust in the Retirement Money Market Fund and Mutual Funds are valued at fair value as determined by quoted market prices. Investments of the Master Trust in the Interest Income Fund are stated at net asset value, as determined by the investment manager, based on the fair value of the underlying securities. The carrying amounts of the investments approximate fair value. Purchases and sales of securities held in the Master Trust are recorded on a trade-date basis. Participant loans are valued at cost which approximates fair value. The Master Trust presents in its investment income the net appreciation (depreciation) in the fair value of its investments, which consists of the realized gains or losses and the unrealized appreciation (depreciation) on these investments. Use of estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the administrator and trustee to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements. Such estimates include those regarding fair value. Actual results may differ from those estimates. Payment of benefits Benefits are recorded when paid. 3. Income Taxes The Plan obtained its current determination letter in August 1996, in which the Internal Revenue Service stated that the Plan design is in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been subsequently amended; however, the Company believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code and that the trust, which forms a part of the Plan, is exempt from tax. Therefore, no provision for income taxes has been included in the Plan's financial statements. 18 Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element Notes to Financial Statements (Continued) -------------------------------------------------------------------------------- 4. Reconciliation of Financial Statements to Form 5500 The following is a reconciliation of net assets available for benefits per the financial statements to the Form 5500:
September 30, 2000 1999 Net assets available for benefits per the financial statements $ 357,566 $ 320,817 Amounts allocated to withdrawing participants (447) - ---------- --------- Net assets available for benefits per the Form 5500 $ 357,119 $ 320,817 ========== =========
The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:
Year Ended September 30, 2000 1999 Benefits paid to participants per the financial statements $ 37,773 $ 62,786 Add: Amounts allocated to withdrawing participants at September 30, 2000 447 - ---------- --------- Benefits paid to participants per the Form 5500 $ 38,220 $ 62,786 ========== =========
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to September 30 but not yet paid as of that date. 19 Varian Medical Systems, Inc., Retirement Plan - Profit Sharing Element Notes to Financial Statements (Continued) -------------------------------------------------------------------------------- 5. Investment in the Varian Associates, Inc. Retirement and Profit Sharing Program Trust The Profit Sharing Element's investments are in the Master Trust which was established for the investment of assets of the Profit Sharing Element and the Pension Element. Each participating element has a specific interest in the Master Trust. Investment income and administrative expenses relating to the Master Trust are allocated to the individual elements based upon participant balances. A summary of the net assets of the Master Trust and significant Master Trust investments at September 30, 2000 and 1999 is as follows: STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS September 30, 2000 and 1999 (in thousands)
------------------------------------------------------------------ 2000 1999 ------------------------------------------------------------------------------------------------------ Pension Profit Sharing Pension Profit Sharing Element Element Total Element Element Total ----------------------------------------------------------------------------------------------------- Assets Master Trust investments: Mutual funds $ 274,336 $ 328,178 $ 602,514 $ 262,695 $ 302,055 $ 564,750 Money market funds 25,220 26,085 51,305 17,433 17,474 34,907 Participant loans 184 2,715 2,899 21 1,099 1,120 --------- ----------- --------- --------- ----------- --------- Total Master Trust investments 299,740 356,978 656,718 280,149 320,628 600,777 --------- ----------- --------- --------- ----------- --------- Receivables: Company contributions 628 - 628 121 - 121 Participant contributions 9 626 635 15 213 228 --------- ----------- --------- --------- ----------- --------- Total receivables 637 626 1,263 136 213 349 --------- ----------- --------- --------- ----------- --------- Total assets 300,377 357,604 657,981 280,285 320,841 601,126 --------- ----------- --------- --------- ----------- --------- Liabilities Accrued expenses (32) (38) (70) (21) (24) (45) --------- ----------- --------- --------- ----------- --------- Total liabilities (32) (38) (70) (21) (24) (45) --------- ----------- --------- --------- ----------- --------- Net assets available for benefits $ 300,345 $ 357,566 $ 657,911 $ 280,264 $ 320,817 $ 601,081 --------- ----------- --------- --------- ----------- --------- Element's participating interest 46% 54% 100% 47% 53% 100% -------------------------------------------------------------------------------------------------------
20 Varian Medical Systems, Inc., Retirement Plan - Profit Sharing Element Notes to Financial Statements (Continued) ---------------------------------------------------------------------------- Investment income for the Master Trust is as follows (in thousands):
---------------------------------------------------------------------------- For the Year Ended September 30, 2000 For the Year Ended September 30, 1999 ----------------------------------------------------------------------------------------------------------------- Pension Profit Sharing Pension Profit Sharing Element Element Total Element Element Total ----------------------------------------------------------------------------------------------------------------- Net appreciation in fair value of investments (mutual funds) $ 40,328 $ 52,375 $ 92,703 $ 47,943 $ 66,935 $ 114,878 Interest 13,823 18,068 31,891 14,177 18,437 32,614 -------- -------- --------- -------- --------- ---------- Total $ 54,151 $ 70,443 $ 124,594 $ 62,120 $ 85,372 $ 147,492 -------- -------- --------- -------- --------- ----------
Master Trust investments in excess of 5% of net assets were as follows (in thousands): September 30, 2000 1999 Fidelity Growth Company Fund $ 220,568 $ 127,041 Fidelity Growth and Income Portfolio 110,522 130,267 Fidelity Balanced Fund 44,051 48,137 Fidelity Retirement Money Market Portfolio 51,305 34,907 Spartan U.S. Equity Index Portfolio 111,705 125,098 Interest Income Fund 107,350 128,759 21 Varian Medical Systems, Inc. Retirement Plan - Profit Sharing Element Notes to Financial Statements (Continued) -------------------------------------------------------------------------------- 6. Related Party Transactions Certain Master Trust investments are shares of mutual funds managed by an affiliate of Fidelity, and therefore these transactions qualify as party-in-interest. Any purchases and sales of these funds are open market transactions at fair market value. Consequently, such transactions are permitted under the provisions of the Plan and are exempt from the prohibition of party-in-interest transactions under ERISA. Administrative fees paid by the Plan to Fidelity for the years ended September 30, 2000 and 1999 were $157,000 and $234,000, respectively. 7. Subsequent Event On October 2, 2000, the Plan was amended to allow participants to invest in common stock of the Company as an investment option. 22 Supplemental Schedule Schedule of Assets Held for Investments - Attachment to 1999 Form 5500 For Plan Year beginning 10/01/1999 to 09/30/2000 Plan Name: Varian Assoc., Inc Retirement and Profit Sharing Program Trust Plan No. 003 Plan Sponsor: Varian Medical Systems, Inc. Employer Identification Number: 942359345
------------------------------------------------------------------------------------------------------------------------------- (c) Description of investment including maturity date, rate (a) (b) Identity of issue, borrower, lessor or similar party of interest, collateral, par, or maturity value ------------------------------------------------------------------------------------------------------------------------------- * Interest Income Fund Mutual Fund ------------------------------------------------------------------------------------------------------------------------------- * Fidelity Puritan Mutual Fund ------------------------------------------------------------------------------------------------------------------------------- * Fidelity Growth Co. Mutual Fund ------------------------------------------------------------------------------------------------------------------------------- * Fidelity Growth & Income Mutual Fund ------------------------------------------------------------------------------------------------------------------------------- * Fidelity Balanced Mutual Fund ------------------------------------------------------------------------------------------------------------------------------- * Fidelity Worldwide Mutual Fund ------------------------------------------------------------------------------------------------------------------------------- * Fidelity Retirement MMkt Mutual Fund ------------------------------------------------------------------------------------------------------------------------------- * Spartan US Eq Index Mutual Fund ------------------------------------------------------------------------------------------------------------------------------- * Participant Loans Maturity dates of up to 5 years; interest rates range from 8.75% to 10.5%; collateralized by participants' account balances. ------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------ (a) (d) Cost** (e) Current Value ------------------------------------------------ * $107,349,824 ------------------------------------------------ * $ 2,968,051 ------------------------------------------------ * $220,568,004 ------------------------------------------------ * $110,522,289 ------------------------------------------------ * $ 44,050,621 ------------------------------------------------ * $ 5,350,249 ------------------------------------------------ * $ 51,304,766 ------------------------------------------------ * $111,705,196 ------------------------------------------------ * $ 2,899,000 ------------------------------------------------ ------------------------------------------------ $656,718,000 ------------------------------------------------
* = Party-in-interest ** = All investments are participant-directed; therefore, disclosure of cost is not required. 23 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the trustee (or other persons who administer the employee benefit plan) has duly caused this annual report to be signed by the undersigned, thereunto duly authorized. VARIAN MEDICAL SYSTEMS INC. RETIREMENT PLAN By: Varian Medical Systems, Inc. By: /s/ Joseph B. Phair ----------------------------------------------- Joseph B. Phair Vice President, Administration, General Counsel and Secretary Date: June 20, 2001 EXHIBIT INDEX Number Description ------ ----------- 23.1 Consent of Independent Accountants. 23.2 Consent of Independent Accountants.