SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 18, 1996
(Date of Earliest
Event Reported)
VARLEN CORPORATION
(Exact Name of Registered as Specified in its Charter)
Delaware 0-5374 13-2651100
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File No.) Identification No.)
55 Shuman Boulevard, P. O. Box 3089, Naperville, Illinois 60566-7089
(Address of Principal Executive Office) (Zip Code)
(630) 420-0400
(Registrant's Telephone Number
Including Area Code)
<PAGE>
Amendment No. 1
Varlen Corporation (the "Registrant") hereby amends the following
items, financial statements, exhibits or other portions of its
Current Report on Form 8-K dated July 18, 1996 as follows:
Item 7(a): Financial statements of businesses acquired
Brenco, Incorporated's ("Brenco") audited consolidated balance
sheets for the year ending December 31, 1995 and 1994,
respectively, audited consolidated statements of shareholders'
equity, income and cash flows for the year ending December 31,
1995, 1994 and 1993, respectively, and related notes and audit
opinion (incorporated herein by reference to Brenco's December
31, 1995 form 10-K dated March 22, 1996).
Brenco's unaudited consolidated balance sheet for the period
ending June 30, 1996 and unaudited consolidated statements of
income and cash flows for the six month periods ending June 30,
1996 and June 30, 1995 (incorporated herein by reference to
Brenco's June 30, 1996 10-Q dated August 14, 1996).
Item 7(b): Pro-forma financial information
Pro-forma income statements for the year period ended January 31,
1996 and six month period ended August 3, 1996.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Varlen Corporation
(Registrant)
October 1, 1996 By: /s/ Richard A. Nunemaker
Richard A. Nunemaker
Vice President, Finance and
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
<PAGE>
Item 7 (b): Pro-forma Financial Information
The following unaudited pro-forma condensed consolidated
statements of earnings for the six month period ended August 3,
1996 and the year ended January 31, 1996 reflect the acquisition
by Varlen of 100% of the outstanding capital stock of Brenco upon
the culmination of a two-step merger completed on August 23,
1996. On July 18, 1996, Varlen, through a wholly-owned
subsidiary, completed the purchase of approximately 91.5% of
Brenco's common shares through a tender offer which expired on
that date. Due to the tender offer and shares previously owned
by a subsidiary of Varlen, Varlen then owned 96% of the
outstanding common shares of Brenco until the completion of the
merger on August 23, 1996.
The unaudited pro-forma condensed consolidated statements of
earnings combine the results of operations of Varlen for the six
month period ended August 3, 1996 with the results of operations
of Brenco for the six month period ended June 30, 1996 and the
operations of Varlen for the year ended January 31, 1996 with the
results of operations of Brenco for the year ended December 31,
1995.
The acquisition of Brenco was accounted for under the purchase
method of accounting, and accordingly, the accompanying unaudited
pro-forma condensed consolidated statements of earnings reflect
the effects of a preliminary allocation of the Registrant's
purchase cost.
As provided for in Article 11 of Regulation S-X, no pro-forma
balance sheet has been provided since Varlen's condensed
consolidated balance sheet for the period ended August 3, 1996 as
filed with the Securities and Exchange Commission on September
16, 1996 reflects the acquisition of Brenco.
<PAGE>
VARLEN CORPORATION AND SUBSIDIARIES
Pro-Forma Condensed Consolidated Statements of Earnings
Unaudited)
(In Thousands, Except Per Share Amounts)
Varlen
Corporation Brenco, Inc.
Six Month Six Month
Period Ended Period Ended Pro-Forma
August 3, June 30, Adjustments
1996 1996 (Note A) As Adjusted
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net sales 183,000 66,102 (5,225) 243,877
Cost of sales 136,724 50,458 (3,345) 183,837
Gross profit 46,276 15,644 (1,880) 60,040
Selling, general and
administrative expenses 28,347 7,632 (248) 35,731
Gain on sale of business 3,730 --- --- 3,730
Interest expense/(income),
net 2,479 (99) 5,250 7,630
Earnings before income
taxes 19,180 8,111 (6,882) 20,409
Income taxes 8,458 3,061 (2,154) 9,365
Net earnings 10,722 5,050 (4,728) 11,044
Earnings per share:
Primary 1.77 1.82
Fully diluted 1.33 1.36
Weighted average number of
shares outstanding-primary 6,054 6,054
Weighted average number of
shares outstanding-fully
diluted 9,109 9,109
</TABLE>
<PAGE>
VARLEN CORPORATION AND SUBSIDIARIES
NOTE TO THE PRO-FORMA CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
Note A
The pro-forma adjustments assume the acquisition of Brenco
occurred on February 1, 1996.
The adjustment to sales reflects the removal of the sales of a
Brenco subsidiary that is currently held for sale.
The adjustment to cost of sales reflects additional depreciation
caused by the write-up of buildings by $5.3 million depreciated
over twenty years and the write-up of equipment by $17.0 million
depreciated over eight years, with two-thirds of the building
depreciation and five-sixths of the equipment depreciation
applied to cost of sales, offset by a portion of the depreciation
expense capitalized to inventory and the removal of $4.2 million
in cost of sales of the Brenco subsidiary currently held for
sale.
The adjustment to selling, general and administrative expenses
reflects goodwill from the purchase of Brenco of $84.5 million
amortized over 40 years and $.2 million of depreciation expense
from the write-up of the building and equipment, offset by $.7
million in expenses relating to the Brenco subsidiary held for
sale, $.6 million for the removal of Brenco's cost of being a
public company, acquisition related expenses and restricted stock
plan expenses and $.2 million in other eliminated expenses.
The adjustment to interest expense reflects the average net
acquisition debt of $136.9 million at an average interest rate of
6.88% and lost interest income due to the acquisition.
The adjustment to income taxes reflect the tax effects of the
adjustments noted above, net of non-deductible goodwill
amortization, at the statutory federal and state income tax rate
in effect during the period.
<PAGE>
VARLEN CORPORATION AND SUBSIDIARIES
Pro-Forma Condensed Consolidated Statements of Earnings
(Unaudited)
(In Thousands, Except Per Share Amounts)
Varlen
Corporation Brenco, Inc.
Year Ended Year Ended Pro-Forma
January 31, December 31, Adjustments
1996 1995 (Note A) As Adjusted
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Net sales 386,987 127,139 (8,977) 505,149
Cost of sales 290,052 95,040 (5,328) 379,764
Gross profit 96,935 32,099 (3,649) 125,385
Selling, general and
administrative
expenses 57,762 15,019 172 72,953
Interest expense/
(income), net 4,467 171 10,065 14,703
Earnings before income
taxes 34,706 16,909 (13,886) 37,729
Income taxes 15,097 6,249 (4,430) 16,916
Net earnings 19,609 10,660 (9,456) 20,813
Earnings per share:
Primary 3.19 3.39
Fully diluted 2.43 2.56
Weighted average number
of shares outstanding
- - primary 6,141 6,141
Weighted average number
of shares outstanding
- fully diluted 9,199 9,199
</TABLE>
<PAGE>
VARLEN CORPORATION AND SUBSIDIARIES
NOTE TO THE PRO-FORMA CONDENSED CONSOLIDATED
STATEMENTS OF EARNINGS
Note A
The pro-forma adjustments assume the acquisition of Brenco
occurred on February 1, 1995.
The adjustment to sales reflects the removal of the sales of a
Brenco subsidiary that is currently held for sale.
The adjustment to cost of sales reflects additional depreciation
caused by the write-up of buildings by $5.3 million depreciated
over twenty years and the write-up of equipment by $17.0 million
depreciated over eight years, with two-thirds of the building
depreciation and five-sixths of the equipment depreciation
applied to cost of sales, offset by a portion of the depreciation
expense capitalized to inventory and the removal of $6.9 million
in cost of sales of the Brenco subsidiary currently held for
sale.
The adjustment to selling, general and administrative expenses
reflects goodwill from the purchase of Brenco of $84.5 million
amortized over 40 years and $.4 million of depreciation expense
from the write-up of the building and equipment, offset by $1.5
million in expenses relating to the Brenco subsidiary held for
sale, $.4 million for the removal of Brenco's cost of being a
public company and restricted stock plan expenses and $.5 million
in other eliminated expenses.
The adjustment to interest expense reflects the average net
acquisition debt of $136.9 million at an average interest rate of
6.88% and lost interest income due to the acquisition.
The adjustment to income taxes reflect the tax effects of the
adjustments noted above, net of non-deductible goodwill
amortization, at the statutory federal and state income tax rate
in effect during the period.
