<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
Telephone No., including area code:
(415) 493-4000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B)OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- -----------------------
Common Stock, New York Stock Exchange
$1 par value Pacific Stock Exchange
Preferred Stock New York Stock Exchange
Purchase Rights Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G)OF THE ACT:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. YES X NO
--- ---
An index of exhibits filed with this Form 10-Q is located on page 14.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of April 28, 1995: 33,917,000 shares of $1 par value common
stock.
<PAGE> 2
PART 1. FINANCIAL INFORMATION
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF EARNINGS
UNAUDITED
<TABLE>
<CAPTION>
SECOND QUARTER ENDED SIX MONTHS ENDED
- -------------------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS MARCH 31, APRIL 1, MARCH 31, APRIL 1,
EXCEPT PER SHARE AMOUNTS) 1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $ 490,369 $ 394,534 $ 891,496 $ 718,284
---------- ---------- ---------- ----------
OPERATING COSTS AND EXPENSES
Cost of sales 329,640 264,762 600,684 484,407
Research and development 24,469 21,480 46,049 39,905
Marketing 52,336 46,126 99,430 87,833
General and administrative 36,212 31,523 63,751 55,620
---------- ---------- ---------- ----------
Total operating costs and expenses 442,657 363,891 809,914 667,765
---------- ---------- ---------- ----------
OPERATING EARNINGS 47,712 30,643 81,582 50,519
Interest expense, net 580 1,065 1,510 2,127
---------- ---------- ---------- ----------
EARNINGS BEFORE TAXES 47,132 29,578 80,072 48,392
Taxes on Earnings 17,440 11,240 29,630 18,390
---------- ---------- ---------- ----------
NET EARNINGS $ 29,692 $ 18,338 $ 50,442 $ 30,002
========== ========== ========== ==========
Average Shares Outstanding Including
Common Stock Equivalents 35,100 35,697 35,182 35,742
========== ========== ========== ==========
EARNINGS PER SHARE - FULLY DILUTED $ 0.85 $ 0.51 $ 1.43 $ 0.84
========== ========== ========== ==========
- --------------------------------------------------------------------------------------------------------------------------------
Dividends Declared Per Share $ 0.07 $ 0.06 $ 0.13 $ 0.11
Order Backlog $ 810,000 $ 753,500
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements.
-2-
<PAGE> 3
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
MARCH 31, SEPTEMBER 30,
(DOLLARS IN THOUSANDS EXCEPT PAR VALUES) 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 77,156 $ 78,872
Accounts receivable 384,368 338,448
Inventories
Raw materials and parts 135,822 104,212
Work in process 63,650 60,296
Finished goods 26,722 14,668
---------- ----------
Total Inventories 226,194 179,176
Other current assets 76,771 72,243
---------- ----------
TOTAL CURRENT ASSETS 764,489 668,739
Property, Plant, and Equipment 593,849 574,402
Accumulated depreciation and amortization (354,759) (339,082)
---------- ----------
NET PROPERTY, PLANT, AND EQUIPMENT 239,090 235,320
Other Assets 61,418 58,364
---------- ----------
TOTAL ASSETS $1,064,997 $ 962,423
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 38,491 $ 4,816
Accounts payable - trade 86,361 78,094
Accrued expenses 271,639 248,751
Product warranty 46,100 41,682
Advance payments from customers 61,801 58,440
---------- ----------
TOTAL CURRENT LIABILITIES 504,392 431,783
Long-Term Debt 60,329 60,399
Deferred taxes 20,759 20,788
---------- ----------
TOTAL LIABILIITIES 585,480 512,970
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock
Authorized 1,000,000 shares, par value $1, issued none -- --
Common stock
Authorized 99,000,000 shares, par value $1, issued and outstanding
33,907,000 shares at March 31, 1995 and 33,979,000 shares at
September 30, 1994 33,907 33,979
Retained earnings 445,610 415,474
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 479,517 449,453
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,064,997 $ 962,423
========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements.
-3-
<PAGE> 4
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
SIX MONTHS ENDED
- ----------------------------------------------------------------------------------------------------
MARCH 31, APRIL 1,
(DOLLARS IN THOUSANDS) 1995 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Cash Provided by Operating Activities $ 26,555 $ 14,046
INVESTING ACTIVITIES
Purchase of property, plant, and equipment (27,587) (25,563)
Purchase of businesses, net of cash acquired (12,754) 250
Other, net 2,593 2,873
----------- ------------
Net Cash Used by Investing Activities (37,748) (22,440)
FINANCING ACTIVITIES
Net borrowings on short-term obligations 33,675 26,418
Proceeds from common stock issued to employees 14,471 16,124
Purchase of common stock (30,452) (39,079)
Other, net (4,467) (3,843)
----------- ------------
Net Cash Provided / (Used) by Financing Activities 13,227 (380)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH (3,750) 503
----------- ------------
Net Decrease in Cash and Cash Equivalents (1,716) (8,271)
Cash and Cash Equivalents at Beginning of Period 78,872 73,307
----------- ------------
Cash and Cash Equivalents at End of Period $ 77,156 $ 65,036
=========== ============
</TABLE>
See accompanying notes to the consolidated financial statements.
-4-
<PAGE> 5
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Unaudited
(Dollars in Millions)
NOTE 1: The consolidated financial statements include the accounts of
Varian Associates, Inc. and its subsidiaries and have been
prepared by the Company, pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to
such rules and regulations. It is suggested that these
financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's
latest Form 10-K annual report. In the opinion of management,
the consolidated financial statements include all normal
recurring adjustments necessary to present fairly the
information required to be set forth therein. The results of
operations for the second quarter and semi-annual periods ended
March 31, 1995, and April 1, 1994, are not necessarily
indicative of the results to be expected for a full year or
for any other periods.
NOTE 2: Inventories are valued at the lower of cost or market
(realizable value) using the last-in, first-out (LIFO) cost for
the U.S. inventories of the Health Care Systems (except for
X-ray Tube Products), Instruments, and Semiconductor Equipment
segments. All other inventories are valued principally at
average cost. Approximately half of total gross inventories are
valued using the LIFO method. If the first-in, first-out (FIFO)
method had been used for those operations valuing inventories on
a LIFO basis, inventories would have been higher than reported
by $50.2 at March 31, 1995, $49.0 at September 30, 1994, $50.8
at April 1, 1994, and $50.8 at October 1, 1993.
NOTE 3: 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 revenue and expenses are
recognized. When foreign exchange contracts
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 (Continued)
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 March 31, 1995, the Company had forward
exchange contracts with maturities of twelve months or less to
sell foreign currencies totaling $88.2 million ($1.2 million of
Belgian francs, $14.9 million of British pounds, $2.6 million of
Canadian dollars, $23.2 million of Deutsche marks, $16.4
million of French francs, $1.0 million of Italian lira, $24.3
million of Japanese yen, $1.9 million of Swedish krona and $2.7
million of Swiss francs,) and to buy foreign currencies
totaling $28.6 million ($0.9 million of Australian dollars, $7.5
million of British pounds, $2.1 million of Swiss francs and
$18.1 million of Japanese yen).
NOTE 4: 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 the
Company's motion to dismiss the complaint with leave to amend.
Panache Broadcasting filed an amended complaint in March 1993.
A Federal magistrate has recommended that the court grant in
part and deny in part the Company's motion to dismiss that
complaint. No determination has been made regarding the
plaintiff's request to certify the purported class. The Company
believes that it has meritorious defenses to the Panache
lawsuit.
In addition to the above-referenced matter, the Company is
currently a defendant in a number of legal actions and could
incur an uninsured liability in one or more of them. In the
opinion of management, the outcome of the above litigation will
not have a material adverse effect on the financial condition of
the Company.
The Company has also been named by the U.S. Environmental
Protection Agency or third parties as a potentially responsible
party under the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, at six sites
to which Varian is alleged to have shipped manufacturing waste
for disposal. The Company is also involved in various stages of
environmental investigation and/or remediation under the
direction of, or in consultation with, local and/or state
agencies at certain current or former Company facilities.
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 4 (Continued)
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) which 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. In addition,
the Company believes that it has rights to contribution and/or
reimbursement from financially viable, potentially responsible
parties and/or insurance companies, and has filed a lawsuit
against 36 insurance companies with respect to most of the
above-referenced sites. The Company has established reserves
for these environmental matters, which reserves management
believes are adequate. Based on information currently
available, management believes that the costs of these matters
are otherwise not reasonably likely to have a material adverse
effect on the financial condition of the Company.
NOTE 5: On October 20, 1994, the Company announced that it will seek a
buyer for the Electron Devices operations. The sale will not
go forward unless the selling price recognizes the increased
profitability and improving value attained in the business in
recent years.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
On April 20, Varian reported continued strong orders and record sales
and profits for the second quarter and first half of fiscal 1995. Earnings per
share also rose over last year's comparable periods, reaching $0.85 for the
quarter, a 67% increase over the prior year's $0.51 and $1.43 per share for the
first half, moving 70% ahead of 1994's $0.84. Net earnings for the second
quarter were a record $29.6 million, exceeding the year-ago's $18.3 million by
62%. This was the sixth consecutive quarter in which orders exceeded the $400
million level, climbing to $439 million versus last year's $413 million. Sales
of $490 million were up 24% over the $395 million of 1994's second period,
establishing a new high for any quarter. Backlog rose to $810 million from
$754 million at the close of last year's first half, but was lower than in the
prior quarter due largely to termination of an equipment distribution agreement
with Tokyo Electron Ltd. For the first six months of 1995, orders were a
record $932 million versus the prior year's $853 million. Sales climbed to
$891 million over 1994's $718 million. Earnings for the first half also set a
record for the period at $50.4 million, up 68% from last year's $30 million.
All four of the Company's major businesses contributed to the record revenues,
with the greatest momentum coming from Semiconductor Equipment operations.
Health Care Systems orders rose 9% from the year-ago's first half, as
this business posted its eighth straight quarter of over $100 million in new
bookings. First-half sales were up 20%, and operating margins improved. The
X-ray Tube Products side of this business enjoyed a particularly strong quarter
as it successfully entered new market niches and increased its penetration of
the market overall. The Oncology Systems side of the business continued to
expand its presence in key international markets offering excellent growth
potential. Good acceptance of new products, such as the Varis software
management system, which enhances the quality of care for cancer patients while
helping to reduce medical facility operating costs, also contributed to the
higher results.
Orders and sales for Varian's Instruments business were up 3% and 5%,
respectively, over last year's first half. Second quarter sales were a record
$101 million for the period and included particularly strong shipments in the
vacuum products and nuclear magnetic resonance (NMR) instruments sectors.
Operating margins declined moderately, due in part to costs incurred for a
reorganization of Instruments' marketing activities to take better advantage of
increased operating efficiencies. Backlog declined 9% from the previous quarter
reflecting a lag in orders for high-end NMR systems which tend to follow a
somewhat sporadic pattern.
First-half orders for Varian's Semiconductor Equipment business grew
16% over the year-ago period, prior to adjustments for Varian's resale activity
for Tokyo Electron Ltd. (TEL) which was phased out at the end of fiscal 1994.
Sales grew 52% and backlog rose 38% over 1994 levels. Operating margins for
this business continued to show significant improvement over the year-ago
periods, and have now reached the double-digit level. The reported orders tend
to obscure the current strong demand for Varian-made products because the 1994
total included substantial bookings for TEL products then being distributed by
Varian. When adjusted to remove the TEL volume, orders increased by 53% over
the year-ago's first half. Worldwide demand for Varian's chip-making systems
in the first half included especially strong bookings from the Pacific
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Rim nations. Order rates were good for both ion implantation and sputtering
products, especially some of the company's leading-edge systems for advanced
chip processing.
Varian's Electron Devices business orders rose slightly to $145
million from $143 million in the prior year's first half, while sales were up
9% reaching $142 million versus $130 million during this same period. Backlog
also improved 3% over the year ago period. Operating margins for this business
improved in the second quarter, and for the year-to-date as well.
FINANCIAL CONDITION
The Company's financial condition remained strong during the first six
months of fiscal 1995. Operating activities provided cash of $26.6 million in
the first-half of fiscal 1995 compared to $14.1 million in the same period last
year. Investing activities in the first half of fiscal 1995 used $37.7
million, $12.8 million for the purchase of businesses, and the remainder used
mainly for the purchase of property, plant and equipment. Investing activities
in the same period last year used $22.4 million, mainly for the purchase of
property, plant and equipment. Financing activities provided $13.2 million
during the first-half of 1995 and used $0.4 million during the same period last
year. Total debt as a percentage of total capital increased to 17.1% at the end
of the second quarter of fiscal 1995 as compared with 12.7% at fiscal year
end. The ratio of current assets to current liabilities decreased to 1.52 to
1 at March 31, 1995, from 1.55 to 1 at fiscal year end, 1994. The Company has
available $50 million in unused committed lines of credit.
OUTLOOK
Despite the favorable financial results described above, future
revenue and profitability remain difficult to predict. The Company continues
to face various risks associated with its business operations including
uncertain general worldwide economic conditions, lingering worldwide
recessionary conditions, new product acceptance, and uncertainty regarding
possible legislation and private initiatives in the U.S. to control health care
costs. Such conditions could affect the Company's future performance.
As discussed in the annual report form 10-K for the fiscal year ended
September 30, 1994, the Company is involved in certain environmental matters.
The company has established reserves for these environmental matters, which
reserves management believes are adequate. Based on information currently
available, management continues to believe that the costs of these matters,
individually or in the aggregate, are otherwise not reasonably likely to have a
material adverse effect on the financial condition or results of operations of
the Company.
9
<PAGE> 10
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Varian Associates, Inc.:
We have reviewed the consolidated balance sheet of Varian Associates, Inc.
and subsidiary companies as of March 31, 1995, and the related consolidated
statements of earnings for the quarters and semi-annual periods ended
March 31, 1995 and April 1, 1994, and the condensed consolidated statements
of cash flows for the semi-annual periods ended March 31, 1995 and
April 1, 1994. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the aforementioned financial statements for them to be in conformity
with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
------------------------------
COOPERS & LYBRAND L.L.P.
San Jose, California
April 18, 1995
10
<PAGE> 11
PART II. OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on February 16, 1995, the
stockholders of the Company voted on the election of five directors to the
Company's Board of Directors for three-year terms. The voting on each such
nominee for director was as follows:
<TABLE>
<CAPTION>
Votes Votes Broker
Nominee For Withheld Abstentions Nonvotes (1)
------------------- ---------- -------- ----------- ------------
<S> <C> <C> <C> <C>
Samuel Hellman 29,505,948 74,091 0
Terry R. Lautenbach 29,501,893 74,091 0
Gordon E. Moore 29,514,136 74,091 0
David E. Mundell 29,540,055 74,091 0
Philip J. Quigley 29,527,172 74,091 0
</TABLE>
(1) Pursuant to the Rules of the New York Stock Exchange, this election of
directors constituted a routine matter, and therefore brokers were permitted to
vote without receipt of instructions from clients.
At the Annual Meeting of Stockholders, the stockholders also voted on a
proposal to approve amendments to the Omnibus Stock Plan and on a proposal to
approve the Management Incentive Plan. The voting on those proposals were as
follows:
<TABLE>
<CAPTION>
Votes Votes Broker
Proposal For Against Abstentions Nonvotes
------------------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Proposal to approve 24,923,882 1,008,893 539,747 3,119,410
amendments to the
Omnibus Stock Plan.
Proposal to approve the 24,393,421 1,543,217 535,883 3,119,410
Management Incentive
Plan.
</TABLE>
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 10.1 Registrant's Omnibus Stock Plan, as amended
and effective as of October 1, 1994.
Exhibit 10.4 Registrant's Management Incentive Plan, as
amended and effective as of October 1, 1994.
11
<PAGE> 12
PART II ITEM 6 (Continued)
Exhibit 11 Computation of Earnings Per Share.
Exhibit 15 Letter Regarding Unaudited Interim Financial
Information.
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
A report on Form 8-K was filed on October 20, 1994, regarding the
Registrant's announcement that it will seek a buyer for its
Electron Devices operations.
12
<PAGE> 13
SIGNATURE
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.
VARIAN ASSOCIATES, INC.
----------------------
Registrant
May 12, 1995
----------------------
Date
/s/ Allen K. Jones
----------------------
Allen K. Jones
Vice President and Controller
13
<PAGE> 14
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Page
------- ----
<S> <C> <C>
10.1 Registrant's Omnibus Stock Plan 15
10.4 Registrant's Management Incentive Plan 26
11 Computation of Earnings Per Share 30
15 Letter Regarding Unaudited Interim Financial Information 31
27 Financial Data Schedule 32
14
</TABLE>
<PAGE> 1
EXHIBIT 10.1
VARIAN ASSOCIATES, INC.
OMNIBUS STOCK PLAN
(as amended and effective as of October 1, 1994)
1. PURPOSE
The purpose of the Plan is to provide a vehicle under which a variety
of stock-based incentive and other awards may be granted to employees and
directors of the Company and its Subsidiaries to promote the Company's success.
2. DEFINITIONS
A. "Award" means any form of stock option, restricted stock, stock
appreciation right, long-term incentive award or other incentive award granted
under the Plan.
B. "Award Notice" means any written notice from the Company to a
Participant or agreement between the Company and a Participant that establishes
the terms applicable to an Award.
C. "Board of Directors" means the Board of Directors of the Company.
D. "Code" means the Internal Revenue Code of 1986, as amended.
E. "Committee" means the Organization and Compensation Committee of the
Board of Directors, or such other committee designated by the Board of
Directors, which is authorized to administer the Plan under Section 3 hereof.
The Committee shall be comprised solely of Directors who are both (i)
disinterested persons under Rule 16b-3, and (ii) outside directors under Section
162(m) of the Code.
F. "Common Stock" means common stock of the Company.
G. "Company" means Varian Associates, Inc.
H. "Director" means a member of the Board of Directors.
I. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
J. "Fair Market Value" means, as of a specified date, the mean of the
high and the low sales price of the Common Stock on the composite tape for the
New York Stock Exchange-listed securities, or if not traded on that date, then
on the date last traded. If for any reason the Company's stock ceases to be
listed on the New York Stock Exchange, the Committee shall establish the method
for determining the Fair Market Value of the Common Stock.
15
<PAGE> 2
Exhibit 10.1, Omnibus Stock Plan (Continued)
K. "Key Employee" means any employee of the Company or a Subsidiary
whose performance the Committee determines can have a significant effect on the
success of the Company.
L. "Participant" means any individual to whom an Award is granted under
the Plan.
M. "Plan" means this Plan, which shall be known as the Varian
Associates, Inc. Omnibus Stock Plan.
N. "Return on Equity" means the Company's annual earnings expressed as
a percentage of the Company's annual average shareholders equity, as reported in
the Company's Annual Report to Stockholders.
O. "Return on Net Assets" means annual operating earnings expressed as
a percentage of annual average net assets. Return on Net Assets for a multi-year
performance period means the average of Return on Net Assets calculated
separately for each fiscal year of such multi-year period.
P. "Rule 16b-3" means Rule 16b-3 issued under the Exchange Act, or any
successor rule.
Q. "Subsidiary" means a corporation or other business entity (i) of
which the Company directly or indirectly has an ownership interest of 50% or
more, or (ii) of which it has a right to elect or appoint 50% or more of the
board of directors or other governing body.
3. ADMINISTRATION
A. The Plan shall be administered by the Committee. The Committee shall
have the authority to:
(i) interpret and determine all questions of
policy and expediency pertaining to the Plan;
(ii) adopt such rules, regulations, agreements and
instruments as it deems necessary for its proper
administration;
(iii) select Key Employees to receive Awards;
(iv) determine the form and terms of Awards;
(v) determine the number of shares or other
consideration subject to Awards (within the limits
prescribed in the Plan);
<PAGE> 3
Exhibit 10.1, Omnibus Stock Plan (Continued)
(vi) determine whether Awards will be granted
singly, in combination, in tandem, in replacement of, or
as alternatives to, other grants under the Plan or any
other incentive or compensation plan of the Company, a
Subsidiary or an acquired business unit;
(vii) grant waivers of Plan or Award conditions
(other than Awards intended to qualify under Section
162(m) of the Code);
(viii) accelerate the vesting, exercise or payment
of Awards (but with respect to Awards intended to qualify
under Section 162(m) of the Code, only as permitted under
that Section);
(ix) correct any defect, supply any omission, or
reconcile any inconsistency in the Plan, any Award or any
Award Notice;
(x) establish and administer Awards in addition to
the types specifically enumerated in Section 2.A. which
the Committee determines are consistent with the Plan's
purpose; and
(xi) take any and all other actions it deems
necessary or advisable for the proper administration of
the Plan.
B. The Committee may adopt such Plan amendments, procedures,
regulations, subplans and the like as it deems are necessary to enable Key
Employees and Directors who are foreign nationals or employed outside the United
States to receive Awards.
C. The Committee may delegate its authority to grant and administer
Awards to a separate committee; however, only the Committee may grant and
administer Awards (i) with respect to persons who are subject to Section 16 of
the Exchange Act, and (ii) which are intended to qualify as performance-based
compensation under Section 162(m) of the Code.
4. ELIGIBILITY
A. Any Key Employee is eligible to become a Participant in the Plan.
B. Directors who are not employees of the Company or a Subsidiary shall
receive Awards in accordance with Section 7.
5. SHARES AVAILABLE
A. Subject to Section 15, the maximum number of shares of Common Stock
available for Award grants (including incentive stock options) during each
fiscal year shall be 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
Common Stock available for incentive stock option grants under the Plan is
6,000,000.
<PAGE> 4
Exhibit 10.1, Omnibus Stock Plan (Continued)
B. The shares of Common Stock available under the Plan may be
authorized and unissued shares or treasury shares.
6. TERM
The Plan as amended shall become effective as of October 1, 1994, and
shall continue in effect until terminated by the Board of Directors. However,
Awards (other than stock options) intended to qualify under Section 162(m) of
the Code shall be conditional upon approval of the amended and restated Plan by
the Company's stockholders not later than the 1995 annual meeting of
stockholders.
7. AWARDS TO NON-EMPLOYEE DIRECTORS
Directors who are not employees of the Company or a Subsidiary shall
receive Awards in accordance with the following terms:
A. On the first business day following adoption of this Plan by the
Board of Directors, and thereafter on the first business day of each fiscal
year, each such director shall receive (i) a fully vested grant of 200 shares of
Common Stock, subject to payment to the Company of the aggregate par value of
such shares in cash, and (ii) a non-qualified stock option for 2,000 shares.
B. Options to such directors shall be subject to the following terms:
(i) the exercise price shall be equal to 100% of the Fair Market Value of the
shares on the date of the grant, payable in accordance with all the alternatives
stated in Sections 8.B.(ii) and (iii); (ii) the term of the options shall be 10
years; (iii) the options shall be exercisable beginning 12 months after the date
of the grant; and (iv) the options shall be subject to Section 13.
8. STOCK OPTIONS
A. Awards may be granted in the form of stock options. Stock options
may be incentive stock options within the meaning of Section 422 of the Code or
non-qualified stock options (i.e., stock options which are not incentive stock
options). During any fiscal year of the Company, no Participant shall be granted
options for more than 1,000,000 shares.
B. Subject to Section 8.C. relating to incentive stock options, options
shall be in such form and contain such terms as the Committee deems appropriate.
While the terms of options need not be identical, each option shall be subject
to the following terms:
(i) The exercise price shall be the price set by
the Committee but may not be less than 100% of the Fair
Market Value of the shares on the date of the grant.
(ii) The price shall be paid in cash (including
check, bank draft, or money order), or at the discretion
of the Committee, all or part of the purchase price may be
paid by delivery of the optionee's full recourse
<PAGE> 5
Exhibit 10.1, Omnibus Stock Plan (Continued)
promissory note, delivery of Common Stock already owned by
the Participant for at least 6 months and valued at its
Fair Market Value, or any combination of the foregoing
methods of payment, provided no less than the par value of
the stock is paid in cash. In the case of incentive stock
options, the terms of payment shall be determined at the
time of grant.
(iii) Promissory notes given as payment of the
price, if permitted by the Committee, shall contain such
terms as set by the Committee which are not inconsistent
with the following: the unpaid principal shall bear
interest at a rate set from time to time by the Committee;
payments of principal and interest shall be made no less
frequently than annually; no part of the note shall be
payable later than 10 years from the date of purchase of
the shares; and the optionee shall give such security as
the Committee deems necessary to ensure full payment.
(iv) The term of an option may not be greater than
10 years from the date of the grant.
(v) Neither a person to whom an option is granted
nor his legal representative, heir, legatee or distributee
shall be deemed to be the holder of, or to have any of the
rights of a holder with respect to, any shares subject to
such option unless and until he has exercised his option.
C. The following special terms shall apply to grants of incentive stock
options:
(i) No incentive stock option shall be granted
after the 10th anniversary of the date the Plan is adopted
by the Board of Directors.
(ii) Subject to Section 8.C.(iii), the price under
each incentive stock option shall not be less than 100% of
the Fair Market Value of the shares on the date of the
grant.
(iii) No incentive stock option shall be granted
to any employee who directly or indirectly owns stock
possessing more than 10% of the total combined voting
power of all classes of stock of the Company, unless at
the time of such grant the option price is at least 110%
of the Fair Market Value of the stock subject to the
option and such option is not exercisable after the
expiration of 5 years from the date of the grant.
(iv) No incentive stock option shall be granted to
a person in his capacity as a Key Employee of a Subsidiary
if the Company has less than a 50% ownership interest in
such Subsidiary.
(v) The Fair Market Value (determined on the
date(s) of grant) of the shares subject to incentive stock
options which first become
<PAGE> 6
Exhibit 10.1, Omnibus Stock Plan (Continued)
exercisable during any calendar year shall not exceed
$100,000 for any employee.
(vi) Options shall contain such other terms as may
be necessary to qualify the options granted therein as
incentive stock options pursuant to Section 422 of the
Code, or any successor statute.
9. RESTRICTED STOCK
A. Awards may be granted in the form of restricted stock. During any
fiscal year of the Company, no Participant shall be granted more than 25,000
shares of restricted stock.
B. Grants of restricted stock shall be awarded in exchange for
consideration equal to an amount from 0 to 50% of the aggregate Fair Market
Value of such stock, as determined by the Committee. The price, if any, of such
restricted stock shall be paid in cash, or at the discretion of the Committee,
all or part of the purchase price may be paid by delivery of the Participant's
full recourse promissory note, delivery of Common Stock already owned by the
Participant for at least 6 months and valued at its Fair Market Value, or any
combination of the foregoing methods of payment, provided no less than the par
value of the stock is paid in cash, or the Participant has rendered no less than
3 months' prior service to the Company.
C. Restricted stock awards shall be subject to such restrictions as the
Committee may impose including, if the Committee shall so determine,
restrictions on transferability and restrictions relating to continued
employment. For purposes of qualifying restricted stock as performance-based
compensation under Section 162(m) of the Code, the Committee may in its
discretion determine that grants of restricted stock shall be conditioned on the
achievement of pre-established Company goals for Return on Equity. The target
goals for Return on Equity and the number of shares which may be awarded upon
achievement of such target goals, shall be set by the Committee on or before the
latest date permissible so as to qualify under Section 162(m) of the Code. In
granting restricted stock which is intended to qualify under Section 162(m) of
the Code, the Committee shall follow any procedures determined by it to be
necessary or appropriate to ensure such qualification. No restricted stock award
intended to qualify under Section 162(m) of the Code shall be paid unless and
until the Committee certifies in writing that the pre-established performance
goals have been satisfied.
D. The Committee, in its discretion, may reduce or eliminate a
Participant's restricted stock award at any time before it is granted, whether
or not calculated on the basis of pre-established performance goals or formulas.
E. The Committee shall have the discretion to grant to a Participant
receiving restricted shares all or any of the rights of a stockholder while such
shares continue to be subject to restrictions.
<PAGE> 7
Exhibit 10.1, Omnibus Stock Plan (Continued)
10. LONG-TERM INCENTIVE AWARDS
A. Awards may be granted in the form of long-term incentive awards,
which shall be made on the basis of Company and/or business unit performance
goals and formulas determined by the Committee in its sole discretion. In the
discretion of the Committee, long-term incentive awards may be paid in cash
and/or shares of Common Stock having an equivalent value (based on Fair Market
Value on the date that a cash payment otherwise would have been made to the
Participant).
B. During any fiscal year of the Company, no Participant shall receive
a long-term incentive award of more than (i) 200% of that Participant's annual
base salary at the end of the applicable performance period, or (ii) $5,000,000,
whichever of these amounts is lower. In applying this limit, any shares of
Common Stock paid in satisfaction of a long-term incentive award shall be valued
at Fair Market Value on the date that the cash payment otherwise would have been
made to the Participant. Total aggregate long-term incentive awards for any
performance period shall not exceed five percent of the Company's pre-tax
operating earnings (before incentive compensation) for the last fiscal year of
the performance period. If total aggregate long-term incentive awards calculated
for a performance period would exceed this aggregate limitation, all long-term
incentive awards for that performance period shall be pro-rated on an equal
basis among all Participants according to a formula established by the
Committee.
C. For purposes of qualifying long-term incentive awards as
performance-based compensation under Section 162(m) of the Code, the Committee
may in its discretion determine that such awards shall be conditioned on the
achievement of pre-established Company and/or business unit goals for Return on
Net Assets, provided that any such goals for purposes of an Award to the
Company's Chief Executive Officer shall be Company goals for Return on Net
Assets. The target goals for Return on Net Assets and the amounts which may be
awarded upon achievement of such target goals, shall be set by the Committee on
or before the latest date permissible so as to qualify under Section 162(m) of
the Code. In granting long-term incentive awards which are intended to qualify
under Section 162(m) of the Code, the Committee shall follow any procedures
determined by it to be necessary or appropriate to ensure such qualification. No
long-term incentive award intended to qualify under Section 162(m) of the Code
shall be paid unless and until the Committee certifies in writing that the
pre-established performance goals have been satisfied.
D. The Committee, in its discretion, may reduce or eliminate a
Participant's long-term incentive award at any time before it is paid, whether
or not calculated on the basis of pre-established performance goals or formulas.
11. STOCK APPRECIATION RIGHTS
A. Awards may be granted in the form of stock appreciation rights.
Stock appreciation rights may be awarded in tandem with a stock option, in
addition to a stock option, or may be
<PAGE> 8
Exhibit 10.1, Omnibus Stock Plan (Continued)
free-standing and unrelated to a stock option. During any fiscal year of the
Company, no Participant shall be granted stock appreciation rights for more than
1,000,000 shares.
B. A stock appreciation right entitles the Participant to receive from
the Company an amount equal to the positive difference between (i) the Fair
Market Value of Common Stock on the date of exercise of the stock appreciation
right and (ii) the grant price or some lesser amount as the Committee may
determine either at the time of grant or prior to the time of exercise.
C. With respect to persons subject to Section 16 of the Exchange Act, a
stock appreciation right may only be exercised during a period which (i) begins
on the third business day following a date when the Company's quarterly summary
statement of sales and earnings is released to the public and (ii) ends on the
12th business day following such date. This Section 11.C. shall not apply if the
exercise occurs automatically on the date when a related stock option expires.
D. Settlement of stock appreciation rights may be in cash, in shares of
Common Stock, or a combination thereof, as determined by the Committee.
12. DEFERRAL OF AWARDS
At the discretion of the Committee, payment of an Award, dividend
equivalent, or any portion thereof may be deferred until a time established by
the Committee. Deferrals shall be made in accordance with guidelines established
by the Committee to ensure that such deferrals comply with applicable
requirements of the Code and its regulations. Deferrals shall be initiated by
the delivery of a written, irrevocable election by the Participant to the
Committee or its nominee. Such election shall be made prior to the date
specified by the Committee. The Committee may also (A) credit interest on cash
payments that are deferred and set the rates of such interest and (B) credit
dividends or dividend equivalents on deferred payments denominated in the form
of shares.
13. EXERCISE OF STOCK OPTIONS UPON TERMINATION OF EMPLOYMENT OR SERVICES
A. Options granted under Section 7 shall be exercisable upon the
Participant's termination of service within the following periods only. Subject
to Section 21, stock options to other Participants may permit the exercise of
options upon the Participant's termination of employment within the following
periods, or such shorter periods as determined by the Committee at the time of
grant:
(i) if on account of death, within 18 months of
such event by the person or persons to whom the
Participant's rights pass by will or the laws of descent
or distribution.
(ii) if on account of disability (as defined in
Section 22(e)(3) of the Code or any successor statute),
non-qualified stock options may be
<PAGE> 9
Exhibit 10.1, Omnibus Stock Plan (Continued)
exercised within 18 months of such termination and
incentive stock options within 12 months.
(iii) if on account of retirement (as defined from
time to time by Company policy), non-qualified stock
options may be exercised within 36 months of such
termination and incentive stock options within 3 months.
(iv) if on account of resignation, options may be
exercised within 1 month of such termination.
(v) if for cause (as defined from time to time by
Company policy), no unexercised option shall be
exercisable to any extent after termination.
(vi) if for any reason other than death,
disability, retirement, resignation, or cause, options may
be exercised within 3 months of such termination.
B. An unexercised option shall be exercisable only to the extent that
such option was exercisable on the date the Participant's employment or service
terminated. However, terms relating to the exercisability of options may be
amended by the Committee before or after such termination, except in respect to
options granted under Section 7.
C. In no case may an unexercised option be exercised to any extent by
anyone after expiration of its term.
14. NONASSIGNABILITY
The rights of a Participant under the Plan shall not be assignable by
such Participant, by operation of law or otherwise, except by will or the laws
of descent and distribution. During the lifetime of the person to whom a stock
option or similar right (including a stock appreciation right) is granted, he or
she alone may exercise it. No Participant may create a lien on any funds,
securities, rights or other property to which he or she may have an interest
under the Plan, or which is held by the Company for the account of the
Participant under the Plan.
15. ADJUSTMENT OF SHARES AVAILABLE
The Committee shall make appropriate and equitable adjustments in the
shares available for future Awards, the numerical limitations set forth in
Sections 8.A., 9.A. and 11.A., future Awards under Section 7.A., and the number
of shares covered by unexercised, unvested or unpaid Awards upon the subdivision
of the outstanding shares of Common Stock; the declaration of a dividend payable
in Common Stock; the declaration of a dividend payable in a form other than
Common Stock in an amount that has a material effect on the price of the shares
of Common Stock; the combination or consolidation of the outstanding shares of
Common Stock
<PAGE> 10
Exhibit 10.1, Omnibus Stock Plan (Continued)
(by reclassification or otherwise) into a lesser number of shares of Common
Stock; a recapitalization; or a similar event.
16. PAYMENT OF WITHHOLDING TAXES
As a condition to receiving or exercising an Award, as the case may be,
the Participant shall pay to the Company or the employer Subsidiary the amount
of all applicable federal, state, local and foreign taxes required by law to be
paid or withheld relating to receipt or exercise of the Award. The Company shall
deduct such withholding taxes from any Award paid in cash.
17. AMENDMENTS
The Board of Directors may amend the Plan at any time and from time to
time, provided however that the Board shall not amend the terms of the Plan more
frequently than permitted under Rule 16b-3 in regard to provisions that affect
persons receiving Awards under Section 7. Rights and obligations under any Award
granted before amendment of the Plan shall not be materially altered or impaired
adversely by such amendment, except with consent of the person to whom the Award
was granted.
18. REGULATORY APPROVALS AND LISTINGS
Notwithstanding any other provision in the Plan, the Company shall have
no obligation to issue or deliver certificates of Common Stock under the Plan
prior to (A) obtaining approval from any governmental agency which the Company
determines is necessary or advisable, (B) admission of such shares to listing on
the stock exchange on which the Common Stock may be listed and (C) completion of
any registration or other qualification of such shares under any state or
federal law or ruling of any governmental body which the Company determines to
be necessary or advisable.
19. NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS
Participation in the Plan shall not give any Key Employee any right to
remain in the employ of the Company or any Subsidiary. Further, the adoption of
this Plan shall not be deemed to give any Key Employee or other individual the
right to be selected as a Participant or to be granted an Award.
20. NO RIGHT, TITLE, OR INTEREST IN COMPANY ASSETS
No Participant shall have any rights as a stockholder of the Company
until he acquires an unconditional right under an Award to have shares of Common
Stock issued to him. To the extent any person acquires a right to receive
payments from the Company under this Plan, such rights shall be no greater than
the rights of an unsecured creditor of the Company.
<PAGE> 11
Exhibit 10.1, Omnibus Stock Plan (Continued)
21. SPECIAL PROVISION PERTAINING TO PERSONS SUBJECT TO SECTION 16
Notwithstanding any other term of this Plan, the following shall apply
to persons subject to Section 16 of the Exchange Act, except in the case of
death or disability:
A. No restricted stock or other equity security (within the meaning
used in Rule 16b-3 of the Exchange Act or any successor rule) offered pursuant
to this Plan may be transferred for at least 6 months after acquisition; and
B. No stock option, stock appreciation right or other derivative
security (within the meaning used in Rule 16b-3 of the Exchange Act or any
successor rule) issued pursuant to the Plan may be exercisable for at least 6
months after the date of issue.
22. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of Delaware.
<PAGE> 1
EXHIBIT 10.4
VARIAN ASSOCIATES, INC.
MANAGEMENT INCENTIVE PLAN
(as amended and effective as of October 1, 1994)
1. PURPOSES
The purposes of the Varian Associates, Inc. Management Incentive Plan
are to motivate the Company's key employees to improve stockholder value by
linking a portion of their cash compensation to the Company's financial
performance, reward key employees for improving the Company's financial
performance, and help attract and retain key employees.
2. DEFINITIONS
A. "Award" means any cash incentive payment made under the Plan.
B. "Code" means the Internal Revenue Code of 1986, as amended.
C. "Committee" means the Organization and Compensation Committee of
Varian Associates, Inc.'s Board of Directors, or such other committee designated
by that Board of Directors, which is authorized to administer the Plan under
Section 3 hereof. The Committee shall be comprised solely of directors who are
outside directors under Section 162(m) of the Code.
D. "Company" means Varian Associates, Inc. and any corporation or other
business entity of which Varian Associates, Inc. (i) directly or indirectly has
an ownership interest of 50% or more, or (ii) has a right to elect or appoint
50% or more of the board of directors or other governing body.
E. "Key Employee" means any employee of the Company whose performance
the Committee determines can have a significant effect on the success of the
Company.
F. "Participant" means any individual to whom an Award is granted under
the Plan.
G. "Plan" means this Plan, which shall be known as the Varian
Associates, Inc. Management Incentive Plan.
H. "Return on Sales" means annual operating earnings expressed as a
percentage of annual sales.
26
<PAGE> 2
Exhibit 10.4, Management Incentive Plan (Continued)
3. ADMINISTRATION
A. The Plan shall be administered by the Committee. The Committee shall
have the authority to:
(i) interpret and determine all questions of
policy and expediency pertaining to the Plan;
(ii) adopt such rules, regulations, agreements and
instruments as it deems necessary for its proper
administration;
(iii) select Key Employees to receive Awards;
(iv) determine the terms of Awards;
(v) determine amounts subject to Awards (within
the limits prescribed in the Plan);
(vi) determine whether Awards will be granted in
replacement of or as alternatives to any other incentive
or compensation plan of the Company or an acquired
business unit;
(vii) grant waivers of Plan or Award conditions
(other than Awards intended to qualify under Section
162(m) of the Code);
(viii) accelerate the payment of Awards (but with
respect to Awards intended to qualify under Section 162(m)
of the Code, only as permitted under that Section);
(ix) correct any defect, supply any omission, or
reconcile any inconsistency in the Plan, any Award or any
Award notice;
(x) take any and all other actions it deems
necessary or advisable for the proper administration of
the Plan;
(xi) adopt such Plan procedures, regulations,
subplans and the like as it deems are necessary to enable
Key Employees to receive Awards; and
(xii) amend the Plan at any time and from time to
time, provided however that no amendment to the Plan
shall be effective unless approved by the Company's
stockholders, to the extent such stockholder approval is
required under Section 162(m) of the Code with respect to
Awards which are intended to qualify under that Section.
<PAGE> 3
Exhibit 10.4, Management Incentive Plan (Continued)
B. The Committee may delegate its authority to grant and administer Awards to a
separate committee; however, only the Committee may grant and administer Awards
which are intended to qualify as performance-based compensation under Section
162(m) of the Code.
4. ELIGIBILITY
Any Key Employee is eligible to become a Participant in the Plan.
5. AWARDS
A. Awards may be made on the basis of Company and/or business unit
performance goals and formulas determined by the Committee in its sole
discretion. During any fiscal year of the Company, no Participant shall receive
an Award of more than (i) 200% of that Participant's annual base salary at the
end of the applicable performance period, or (ii) $5,000,000, whichever of these
amounts is lower. Total aggregate Awards for any fiscal year shall not exceed
eight percent of the Company's pre-tax operating earnings (before incentive
compensation) for that fiscal year. If total aggregate Awards calculated for a
fiscal year would exceed this aggregate limitation, all Awards for that fiscal
year shall be pro-rated on an equal basis among all Participants according to a
formula established by the Committee.
B. For purposes of qualifying Awards as performance-based compensation
under Section 162(m) of the Code, the Committee may in its discretion determine
that such Awards shall be conditioned on the achievement of pre-established
Company and/or business unit goals for Return on Sales, provided that any such
goals for purposes of an Award to the Company's Chief Executive Officer shall be
Company goals for Return on Sales. The target goals for Return on Sales and the
amounts which may be awarded upon achievement of such target goals shall be set
by the Committee on or before the latest date permissible so as to qualify under
Section 162(m) of the Code. In granting Awards which are intended to qualify
under Section 162(m) of the Code, the Committee shall follow any procedures
determined by it to be necessary or appropriate to ensure such qualification. No
Award intended to qualify under Section 162(m) of the Code shall be paid unless
and until the Committee certifies in writing that the pre-established
performance goals have been satisfied.
C. The Committee, in its discretion, may reduce or eliminate a
Participant's Award at any time before it is paid, whether or not calculated on
the basis of pre-established performance goals or formulas.
D. The Company shall withhold all applicable federal, state, local and
foreign taxes required by law to be paid or withheld relating to the receipt or
payment of any Award.
E. At the discretion of the Committee, payment of an Award or any
portion thereof may be deferred until a time established by the Committee.
Deferrals shall be made in accordance with guidelines established by the
Committee to ensure that such deferrals comply with applicable requirements of
the Code and its regulations. Deferrals shall be initiated by the
<PAGE> 4
Exhibit 10.4, Management Incentive Plan (Continued)
delivery of a written, irrevocable election by the Participant to the Committee
or its nominee. Such election shall be made prior to the date specified by the
Committee. The Committee may also credit interest on cash payments that are
deferred and set the rates of such interest.
6. GENERAL
A. The Plan shall become effective as of October 1, 1994, subject to
stockholder approval of the Plan at the 1995 annual meeting of the Company's
stockholders.
B. Any rights of a Participant under the Plan shall not be assignable
by such Participant, by operation of law or otherwise, except by will or the
laws of descent and distribution. No Participant may create a lien on any funds
or rights to which he or she may have an interest under the Plan, or which is
held by the Company for the account of the Participant under the Plan.
C. Participation in the Plan shall not give any Key Employee any right
to remain in the employ of the Company. Further, the adoption of this Plan shall
not be deemed to give any Key Employee or other individual the right to be
selected as a Participant or to be granted an Award.
D. To the extent any person acquires a right to receive payments from
the Company under this Plan, such rights shall be no greater than the rights of
an unsecured creditor of the Company.
E. The Plan shall be governed by and construed in accordance with the
laws of the State of California.
<PAGE> 1
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE IN ACCORDANCE
WITH INTERPRETIVE RELEASE NO. 34-9083
UNAUDITED
<TABLE>
<CAPTION>
SECOND QUARTER ENDED SIX MONTHS ENDED
MARCH 31, APRIL 1, MARCH 31, APRIL 1,
(SHARES IN THOUSANDS) 1995 1994 1995 1994
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actual weighted average shares outstanding for the period 33,782 34,486 33,838 34,522
Dilutive employee stock options 1,318 1,211 1,344 1,220
----------- ----------- ---------- ------------
Weighted average shares outstanding for the period 35,100 35,697 35,182 35,742
=========== =========== ========== ============
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Earnings applicable to fully diluted earnings per share $ 29,692 $ 18,338 $ 50,442 $ 30,002
=========== =========== ========== ============
Earnings per share based on SEC interpretive release
No. 34-9083:
Earnings per share - Fully Diluted (1) $ 0.85 $ 0.51 $ 1.43 $ 0.84
=========== =========== ========== ============
</TABLE>
(1) There is no significant difference between fully diluted earnings per share
and primary earnings per share.
-30-
<PAGE> 1
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Varian Associates, Inc.
Registrations on Forms S-8 and S-3
We are aware that our report dated April 18, 1995 on our review of the interim
financial information of Varian Associates, Inc. for the three-month and
six-month periods ended March 31, 1995, included in this Form 10-Q is
incorporated by reference in the Company's registration statements on Forms
S-8, Registration Statement Numbers 33-46000, 33-33661, 33-33660, and 2-95139
and Forms S-8 and S-3, Registration Statement Number 33-40460. Pursuant to
Rule 436(c) under the Securities Act of 1933 this report should not be
considered a part of the registration statements prepared or certified by us
within the meaning of Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
-----------------------------
Coopers & Lybrand L.L.P.
San Jose, California
May 12, 1995
31
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-29-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 77156
<SECURITIES> 0
<RECEIVABLES> 386819
<ALLOWANCES> 2451
<INVENTORY> 226194
<CURRENT-ASSETS> 764489
<PP&E> 593849
<DEPRECIATION> 354759
<TOTAL-ASSETS> 1064997
<CURRENT-LIABILITIES> 504392
<BONDS> 0
<COMMON> 33907
0
0
<OTHER-SE> 445610
<TOTAL-LIABILITY-AND-EQUITY> 1064997
<SALES> 891496
<TOTAL-REVENUES> 891496
<CGS> 600684
<TOTAL-COSTS> 809914
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1510
<INCOME-PRETAX> 80072
<INCOME-TAX> 29630
<INCOME-CONTINUING> 50442
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50442
<EPS-PRIMARY> 0
<EPS-DILUTED> 1.43
</TABLE>
