<PAGE>
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 23, 1995
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(E)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934)
VARIAN ASSOCIATES, INC.
(NAME OF ISSUER AND PERSON FILING STATEMENT)
----------------
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
----------------
922204102
(CUSIP NUMBER OF CLASS OF SECURITIES)
----------------
JOSEPH B. PHAIR
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
VARIAN ASSOCIATES, INC.
3050 HANSEN WAY
PALO ALTO, CALIFORNIA 94304-1000
(415) 493-4000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF THE PERSON FILING STATEMENT)
COPY TO:
RICHARD V. SMITH
ORRICK, HERRINGTON & SUTCLIFFE
THE OLD FEDERAL RESERVE BANK BUILDING
400 SANSOME STREET
SAN FRANCISCO, CALIFORNIA 94111
(415) 392-1122
AUGUST 23, 1995
(DATE TENDER OFFER FIRST PUBLISHED,
SENT OR GIVEN TO SECURITY HOLDERS)
CALCULATION OF FILING FEE
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Transaction Valuation* Amount of Filing Fee
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$174,000,000 $34,800
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(*) Determined pursuant to Rule O-11(b)(1). Assumes the purchase of 3,000,000
shares at $58.00 per share.
[_] Check box if any part of the fee is offset as provided by Rule O-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: Not applicable.
Form or Registration No.: Not applicable.
Filing Party: Not applicable.
Date Filed: Not applicable.
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
(a) The name of the issuer is Varian Associates, Inc., a Delaware
corporation (the "Company"), that has its principal executive offices at 3050
Hansen Way, Palo Alto, California 94304-1000. The information set forth on
page 1 and in "Certain Information Concerning the Company" in Section 10 of
the Offer to Purchase (as defined below) is incorporated herein by reference.
(b) This Schedule relates to the offer by the Company to purchase up to
3,000,000 outstanding shares of Common Stock, par value $1.00 per share (the
"Shares") (including the associated preferred stock purchase rights issued
pursuant to the Rights Agreement, dated as of August 25, 1986, as amended,
between the Company and The First National Bank of Boston, as the Rights
Agent), at a price not greater than $58 nor less than $51 per share, net to
the seller in cash, all upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated August 23, 1995 (the "Offer to Purchase"), and
related Letter of Transmittal, copies of which are attached hereto as Exhibits
(a)(1) and (a)(2), respectively. The information set forth on pages 1, 3 and
4, and under "Number of Shares; Proration" in Section 1, of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in "Price Range of Shares; Dividends" in
Section 8 of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS.
(a) The information set forth under "Source and Amount of Funds" in Section
11 of the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a) to (j) The information set forth under "Purpose of the Offer; Certain
Effects of the Offer" in Section 9 and "Certain Information Concerning the
Company" in Section 10 of the Offer to Purchase is incorporated herein by
reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth under "Transactions and Agreements Concerning the
Shares" in Section 12 of the Offer to Purchase is incorporated herein by
reference.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth under "Transactions and Agreements Concerning the
Shares" in Section 12 of the Offer to Purchase is incorporated herein by
reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth under "Fees and Expenses" in Section 15 of the
Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) and (b) The information set forth under "Certain Information Concerning
the Company" in Section 10 of the Offer to Purchase is incorporated herein by
reference.
<PAGE>
ITEM 8. ADDITIONAL INFORMATION.
(a) to (e) None or not applicable.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a)(1) Form of Offer to Purchase, dated August 23, 1995.
(a)(2) Form of Letter of Transmittal, dated August 23, 1995, together with
Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(3) Form of Letter to Stockholders from J. Tracy O'Rourke, Chairman of
the Board and Chief Executive Officer of the Registrant, dated
August 23, 1995.
(a)(4) Form of Notice of Guaranteed Delivery.
(a)(5) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees, dated August 23, 1995.
(a)(6) Form of Letter to Clients, dated August 23, 1995.
(a)(7) Form of Summary Advertisement, dated August 23, 1995.
(a)(8) Form of Press Release, dated August 23, 1995.
(b) Not applicable.
(c) None.
(d) None.
(e) Not applicable.
(f) None.
(g)(1) Pages 21 to 37 of the Registrant's Annual Report to Stockholders
for the Year Ended September 30, 1994.
(g)(2) The Registrant's Third Quarter Report 1995.
</TABLE>
2
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Varian Associates, Inc.
By /s/ Robert A. Lemos
-------------------------------------
Robert A. Lemos
Vice President, Finance and Chief
Financial Officer
Dated: August 23, 1995
3
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
(a)(1) Form of Offer to Purchase, dated August 23, 1995.
(a)(2) Form of Letter of Transmittal, dated August 23, 1995, together
with Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(3) Form of Letter to Stockholders from J. Tracy O'Rourke, Chairman
of the Board and Chief Executive Officer of the Registrant,
dated August 23, 1995.
(a)(4) Form of Notice of Guaranteed Delivery.
(a)(5) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees, dated August 23, 1995.
(a)(6) Form of Letter to Clients, dated August 23, 1995.
(a)(7) Form of Summary Advertisement, dated August 23, 1995.
(a)(8) Form of Press Release, dated August 23, 1995.
(g)(1) Pages 21 to 37 of the Registrant's Annual Report to Stockholders
for the Year Ended September 30, 1994.
(g)(2) The Registrant's Third Quarter Report 1995.
</TABLE>
<PAGE>
EXHIBIT a.1
Varian Associates, Inc.
Offer to Purchase for Cash
Up to 3,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
At a Purchase Price Not Greater Than $58
Nor Less Than $51 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 20, 1995,
UNLESS THE OFFER IS EXTENDED.
--------------
Varian Associates, Inc., a Delaware corporation (the "Company"), invites its
stockholders to tender shares of its Common Stock, par value $1.00 per share
(the "Shares") (including the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of August 25,
1986, as amended, between the Company and The First National Bank of Boston,
as the Rights Agent), at prices not greater than $58 nor less than $51 per
Share, net to the seller in cash, specified by such stockholders, upon the
terms and subject to the conditions set forth herein and in the related Letter
of Transmittal (which together constitute the "Offer"). Unless the context
otherwise requires, all references to Shares shall include the associated
Rights. The Company will determine a single per Share price (not greater than
$58 nor less than $51 per Share) that it will pay for the Shares validly
tendered pursuant to the Offer and not withdrawn (the "Purchase Price"),
taking into account the number of Shares so tendered and the prices specified
by the tendering stockholders. The Company will select the Purchase Price that
will enable it to purchase 3,000,000 Shares (or such lesser number of Shares
as are validly tendered at prices not greater than $58 nor less than $51 per
Share) pursuant to the Offer. The Company will purchase all Shares validly
tendered at prices at or below the Purchase Price and not withdrawn, upon the
terms and subject to the conditions of the Offer, including the provisions
thereof relating to proration and conditional tenders described herein. Shares
tendered at prices in excess of the Purchase Price and Shares not purchased
because of proration and conditional tenders will be returned. Stockholders
must complete the section of the Letter of Transmittal relating to the price
at which they are tendering Shares in order to validly tender Shares.
--------------
Shares tendered and purchased by the Company will not receive or otherwise
be entitled to the regular quarterly cash dividend of $.07 per Share to be
paid by the Company on October 20, 1995 to holders of record on October 2,
1995, unless the Offer is extended beyond, or Shares are accepted for payment
after, October 2, 1995 for any reason whatsoever. Shares which are tendered
but not purchased as a result of proration or otherwise will remain entitled
to receipt of the dividend to be paid on October 20, 1995. See Section 8.
--------------
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 7.
--------------
IMPORTANT
Any stockholder desiring to tender all or any portion of his or her shares
should either (1) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver it and any other required documents to the Depositary, and either
deliver the certificates for Shares to the Depositary along with the Letter of
Transmittal or deliver such Shares pursuant to the procedure for book-entry
transfer set forth in Section 3 hereof or (2) request his or her broker,
dealer, commercial bank, trust company or nominee to effect the transaction
for him or her. A stockholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or nominee must contact such
broker, dealer, commercial bank, trust company or nominee if he or she desires
to tender such Shares. Any stockholder who desires to tender Shares and whose
certificates for such Shares are not immediately available, or who cannot
comply in a timely manner with the procedure for book-entry transfer, should
tender such Shares by following the procedures for guaranteed delivery set
forth in Section 3 hereof.
--------------
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER MUST
MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER ANDAT WHAT PRICE. THE COMPANY HAS BEEN
ADVISED THAT NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER
SHARES PURSUANT TO THE OFFER.
--------------
The Shares are listed and principally traded on the New York Stock Exchange
(the "NYSE"). On August 22, 1995, the last trading day prior to the
commencement of the Offer, the last reported sale price of the Shares on the
NYSE Composite Tape was $52 7/8 per Share. Stockholders are urged to obtain
current market quotations for the Shares.
Questions or requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or other tender offer materials may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase.
--------------
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
Incorporated
August 23, 1995
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF THE
COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER SHARES PURSUANT TO THE OFFER.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION AND SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION
------- PAGE
<C> <S> <C>
1. Number of Shares; Proration............................... 4
2. Tenders by Holders of Fewer Than 100 Shares............... 5
3. Procedure for Tendering Shares............................ 6
4. Withdrawal Rights......................................... 8
Acceptance for Payment of Shares and Payment of Purchase
5. Price..................................................... 8
6. Conditional Tender of Shares.............................. 9
7. Certain Conditions of the Offer........................... 10
8. Price Range of Shares; Dividends.......................... 11
9. Purpose of the Offer; Certain Effects of the Offer........ 12
10. Certain Information Concerning the Company................ 14
11. Source and Amount of Funds................................ 17
12. Transactions and Agreements Concerning the Shares......... 17
13. Certain Federal Income Tax Consequences................... 17
14. Extension of Tender Period; Termination; Amendments....... 21
15. Fees and Expenses......................................... 22
16. Miscellaneous............................................. 22
Certain Transactions Involving Shares..................... Schedule A
The Company's Current Report on Form 8-K (other than the
exhibits thereto)......................................... Annex I
The Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995 (other than the exhibits
thereto).................................................. Annex II
</TABLE>
2
<PAGE>
To the Holders of Common Stock of
Varian Associates, Inc.:
Varian Associates, Inc., a Delaware corporation (the "Company"), invites its
stockholders to tender shares of its Common Stock, par value $1.00 per share
(the "Shares") (including the associated preferred stock purchase rights (the
"Rights") issued pursuant to the Rights Agreement, dated as of August 25, 1986,
as amended, between the Company and The First National Bank of Boston, as the
Rights Agent), at prices not greater than $58 nor less than $51 per Share, net
to the seller in cash, specified by such stockholders, upon the terms and
subject to the conditions set forth herein and in the related Letter of
Transmittal (which together constitute the "Offer"). Unless the context
otherwise requires, all references to Shares shall include the associated
Rights.
The Company will determine a single per Share price (not greater than $58 nor
less than $51 per Share) that it will pay for the Shares validly tendered
pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into
account the number of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the Purchase Price that will enable it to
purchase 3,000,000 Shares (or such lesser number of Shares as is validly
tendered at prices not greater than $58 nor less than $51 per Share) pursuant
to the Offer. The Company will purchase all Shares validly tendered at prices
at or below the Purchase Price and not withdrawn on or prior to the Expiration
Date (as defined in Section 1), upon the terms and subject to the conditions of
the Offer, including the provisions relating to proration and conditional
tenders described below. The Purchase Price will be paid in cash, net to the
seller, with respect to all Shares purchased. Shares tendered at prices in
excess of the Purchase Price and Shares not purchased because of proration or
conditional tenders will be returned.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 7.
Tendering stockholders will not be obligated to pay brokerage commissions,
solicitation fees or, subject to the Instructions to the Letter of Transmittal,
stock transfer taxes on the purchase of Shares by the Company. The Company will
pay all charges and expenses of Morgan Stanley & Co. Incorporated (the "Dealer
Manager"), The First National Bank of Boston (the "Depositary") and Georgeson &
Company Inc. (the "Information Agent") incurred in connection with the Offer.
See Section 15. HOWEVER, ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO
COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 THAT IS INCLUDED IN THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO A REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING
OF 31% OF THE GROSS PROCEEDS PAYABLE TO SUCH STOCKHOLDER OR OTHER PAYEE
PURSUANT TO THE OFFER. SEE SECTIONS 3 AND 13.
Stockholders who are participants in the Dividend Reinvestment and Cash Stock
Purchase Plan (the "Reinvestment Plan") available to owners of Shares through
The First National Bank of Boston, which administers the Reinvestment Plan, may
instruct The First National Bank of Boston to tender part or all of the Shares
held in their accounts under the Reinvestment Plan. See Section 3.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER
MUST MAKE HIS OR HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO,
HOW MANY SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED THAT
NO DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE
OFFER.
As of August 22, 1995, the Company had issued and outstanding 33,887,015
Shares and had reserved for issuance upon exercise of outstanding stock options
3,996,106 Shares. The 3,000,000 Shares that the Company is offering to purchase
represent approximately 8.85% of the Shares then outstanding, or approximately
7.92% on a fully diluted basis (assuming the exercise of all outstanding stock
options).
3
<PAGE>
A tender of Shares pursuant to the Offer will include a tender of the
associated Rights. No separate consideration will be paid for such Rights. See
Section 8.
The Shares are listed and principally traded on the New York Stock Exchange
("NYSE"). The Shares are also listed and traded on the Pacific Stock Exchange
("PSE"). The Shares trade under the symbol "VAR." See Section 8. STOCKHOLDERS
ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
Except where otherwise stated, Share information and per Share data contained
herein have been restated to reflect a two-for-one stock split in the form of a
100% stock dividend effected on March 17, 1994.
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions described herein and in the
Letter of Transmittal, the Company will purchase up to 3,000,0000 Shares that
are validly tendered on or prior to the Expiration Date (and not properly
withdrawn in accordance with Section 4) at a price (determined in the manner
set forth below) not greater than $58 nor less than $51 per Share. The later of
12:00 midnight, New York City time, on Wednesday, September 20, 1995, or the
latest time and date to which the Offer is extended, is referred to herein as
the "Expiration Date." If the Offer is oversubscribed as described below, only
Shares tendered at or below the Purchase Price on or prior to the Expiration
Date will be eligible for proration.
The Company will determine the Purchase Price taking into account the number
of Shares so tendered and the prices specified by tendering stockholders. The
Company will select the Purchase Price that will enable it to purchase
3,000,000 Shares (or such lesser number of Shares as is validly tendered and
not withdrawn at prices not greater than $58 nor less than $51 per Share)
pursuant to the Offer. The Company reserves the right to purchase more than
3,000,000 Shares pursuant to the Offer, but does not currently plan to do so.
The Offer is not conditioned on any minimum number of Shares being tendered.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder who wishes to tender Shares must specify the price (not greater
than $58 nor less than $51 per Share) at which such stockholder is willing to
have the Company purchase such Shares. As promptly as practicable following the
Expiration Date, the Company will determine the Purchase Price (not greater
than $58 nor less than $51 per Share) that it will pay for Shares validly
tendered pursuant to the Offer, taking into account the number of Shares so
tendered and the prices specified by tendering stockholders. All Shares not
purchased pursuant to the Offer, including Shares tendered at prices greater
than the Purchase Price and Shares not purchased because of proration or
conditional tenders, will be returned to the tendering stockholders at the
Company's expense as promptly as practicable following the Expiration Date.
Upon the terms and subject to the conditions of the Offer, if 3,000,000 or
fewer Shares have been validly tendered at or below the Purchase Price and not
withdrawn on or prior to the Expiration Date, the Company will purchase all
such Shares (including fractional Shares). Upon the terms and subject to the
conditions of the Offer, if more than 3,000,000 Shares have been validly
tendered at or below the Purchase Price and not withdrawn on or prior to the
Expiration Date, the Company will purchase Shares in the following order of
priority:
(a) all Shares validly tendered at or below the Purchase Price and not
withdrawn on or prior to the Expiration Date by any stockholder (an "Odd
Lot Owner") who owned beneficially an aggregate of fewer than 100 Shares
(including any Shares held in the Reinvestment Plan) as of the close of
business on August 22, 1995 and who validly tenders all of such Shares
(partial and conditional tenders will not qualify for this preference) and
completes the box captioned "Odd Lots" on the Letter of Transmittal and, if
applicable, the Notice of Guaranteed Delivery; and
(b) after purchase of all of the foregoing Shares, subject to the
conditional tender provisions described in Section 6, all other Shares
validly tendered at or below the Purchase Price and not withdrawn on or
prior to the Expiration Date on a pro rata basis, if necessary (with
appropriate adjustments to avoid purchases of fractional Shares, other than
Shares held in the Reinvestment Plan).
4
<PAGE>
If proration of tendered Shares is required, because of the difficulty in
determining the number of Shares validly tendered (including Shares tendered by
the guaranteed delivery procedure described in Section 3) and as a result of
the "odd lot" procedure described in Section 2 and conditional tender procedure
described in Section 6, the Company does not expect that it would be able to
announce the final proration factor or to commence payment for any Shares
purchased pursuant to the Offer until approximately seven NYSE trading days
after the Expiration Date. Proration for each stockholder tendering Shares
other than Odd Lot Owners will be based on the ratio of the number of Shares
tendered by such stockholder to the total number of Shares tendered by all
stockholders other than Odd Lot Owners at or below the Purchase Price. This
ratio will be applied to stockholders tendering Shares other than Odd Lot
Owners to determine the number of Shares that will be purchased from each
stockholder pursuant to the Offer. Preliminary results of proration will be
announced by press release as promptly as practicable after the Expiration
Date. Holders of Shares may obtain such preliminary information from the Dealer
Manager or the Information Agent and may also be able to obtain such
information from their brokers.
THE COMPANY EXPRESSLY RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO PURCHASE
ADDITIONAL SHARES PURSUANT TO THE OFFER. If (i) the Company increases or
decreases the price to be paid for Shares, increases the number of Shares being
sought and such increase in the number of Shares being sought exceeds 2% of the
outstanding Shares or decreases the number of Shares being sought and (ii) the
Offer is scheduled to expire at any time earlier than the expiration of a
period ending on the tenth business day from, and including, the date that
notice of such increase or decrease is first published, sent or given in the
manner described in Section 14, the Offer will be extended until the expiration
of ten business days from the date of publication of such notice.
The Company also expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary.
See Section 14. There can be no assurance, however, that the Company will
exercise its right to extend the Offer.
For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, New York City time.
Copies of this Offer to Purchase and the Letter of Transmittal are being
mailed to record holders of Shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES.
All Shares validly tendered at or below the Purchase Price and not withdrawn
on or prior to the Expiration Date by or on behalf of persons who each owned
beneficially an aggregate of fewer than 100 Shares (including Shares held in
the Reinvestment Plan and fractional Shares) as of the close of business on
August 22, 1995, will be accepted before proration, if any, of the purchase of
other tendered Shares. See Section 1. Partial or conditional tenders will not
qualify for this preference, and it is not available to beneficial holders of
100 or more Shares, even if such holders have separate stock certificates for
fewer than 100 Shares. By accepting the Offer, a stockholder owning
beneficially fewer than 100 Shares will avoid the payment of brokerage
commissions and the applicable odd lot discount payable in a sale of such
Shares in a transaction effected on a securities exchange.
As of August 22, 1995, there were approximately 6,223 holders of record of
Shares. Approximately 48.0% these holders of record held individually fewer
than 100 Shares and held in the aggregate approximately 95,367 Shares. Because
of the large number of Shares held in the names of brokers and
5
<PAGE>
nominees, the Company is unable to estimate the number of beneficial owners of
fewer than 100 Shares or the aggregate number of Shares they own. Any
stockholder wishing to tender all of his Shares pursuant to this Section should
complete the box captioned "Odd Lots" on the Letter of Transmittal and, if
applicable, on the Notice of Guaranteed Delivery.
3. PROCEDURE FOR TENDERING SHARES.
To tender Shares validly pursuant to the Offer, either (a) a properly
completed and duly executed Letter of Transmittal or facsimile thereof,
together with any required signature guarantees and any other documents
required by the Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
either (i) certificates for the Shares to be tendered must be received by the
Depositary at one of such addresses or (ii) such Shares must be delivered
pursuant to the procedures for book-entry transfer described below (and a
confirmation of such delivery received by the Depositary), in each case on or
prior to the Expiration Date, or (b) the tendering holder of Shares must comply
with the guaranteed delivery procedure described below.
IN ACCORDANCE WITH INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, IN ORDER TO
TENDER SHARES PURSUANT TO THE OFFER, A STOCKHOLDER MUST INDICATE IN THE SECTION
CAPTIONED "PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" ON
THE LETTER OF TRANSMITTAL THE PRICE (IN MULTIPLES OF $0.125) AT WHICH SUCH
SHARES ARE BEING TENDERED. Stockholders wishing to tender Shares at more than
one price must complete separate Letters of Transmittal for each price at which
such Shares are being tendered. The same Shares cannot be tendered at more than
one price. FOR A TENDER OF SHARES TO BE VALID, A PRICE BOX, BUT ONLY ONE PRICE
BOX, ON EACH LETTER OF TRANSMITTAL MUST BE CHECKED.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company, Midwest Securities Trust Company and Philadelphia
Depository Trust Company (collectively referred to as the "Book-Entry Transfer
Facilities") for purposes of the Offer within two business days after the date
of this Offer to Purchase, and any financial institution that is a participant
in the system of any Book-Entry Transfer Facility may make delivery of Shares
by causing such Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the procedures of such Book-Entry
Transfer Facility. Although delivery of Shares may be effected through book-
entry transfer, a properly completed and duly executed Letter of Transmittal or
facsimile thereof, together with any required signature guarantees and any
other required documents, must, in any case, be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase on
or prior to the Expiration Date, or the tendering holder of Shares must comply
with the guaranteed delivery procedure described below. Delivery of the Letter
of Transmittal and any other required documents to a Book-Entry Transfer
Facility does not constitute delivery to the Depositary.
Except as otherwise provided below, all signatures on a Letter of Transmittal
must be guaranteed by a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
by a commercial bank or trust company having an office or correspondent in the
United States which is a participant in an approved Signature Guarantee
Medallion Program (each of the foregoing being referred to as an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed if
(a) the Letter of Transmittal is signed by the registered holder of the Shares
tendered therewith and such holder has not completed the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on
the Letter of Transmittal or (b) such Shares are tendered for the account of an
Eligible Institution. See Instructions 1 and 6 of the Letter of Transmittal.
If a stockholder desires to tender Shares pursuant to the Offer and cannot
deliver certificates for such Shares and all other required documents to the
Depositary on or prior to the Expiration Date or the procedure for book-entry
transfer cannot be complied with in a timely manner, such Shares may
nevertheless be tendered if all of the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
6
<PAGE>
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Company (with any required
signature guarantees) is received by the Depositary as provided below on or
prior to the Expiration Date; and
(iii) the certificates for such Shares (or a confirmation of a book-entry
transfer of such Shares into the Depositary's account at one of the Book-
Entry Transfer Facilities), together with a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other
documents required by the Letter of Transmittal, are received by the
Depositary no later than 5:00 p.m., New York City time, on the third NYSE
trading day after the date of execution of the Notice of Guaranteed
Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution in the form set forth in such Notice.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY.
TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE PURSUANT TO THE OFFER, EACH STOCKHOLDER MUST NOTIFY THE
DEPOSITARY OF SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING THE SUBSTITUTE FORM
W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN STOCKHOLDERS (AS DEFINED IN
SECTION 13) MAY BE REQUIRED TO SUBMIT A PROPERLY COMPLETED FORM W-8, CERTIFYING
NON-UNITED STATES STATUS, IN ORDER TO AVOID BACKUP WITHHOLDING. IN ADDITION,
FOREIGN STOCKHOLDERS MAY BE SUBJECT TO 30% (OR LOWER TREATY RATE) WITHHOLDING
ON GROSS PAYMENTS RECEIVED PURSUANT TO THE OFFER (AS DISCUSSED IN SECTION 13).
For a discussion of certain federal income tax consequences to tendering
stockholders, see Section 13. EACH STOCKHOLDER IS URGED TO CONSULT WITH HIS OR
HER OWN TAX ADVISOR.
It is a violation of Rule 14e-4 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), for a person to tender Shares for his
or her own account unless the person so tendering (i) has a net long position
equal to or greater than the amount of (x) Shares tendered or (y) other
securities immediately convertible into, exercisable, or exchangeable for the
amount of Shares tendered and will acquire such Shares for tender by
conversion, exercise or exchange of such other securities and (ii) will cause
such Shares to be delivered in accordance with the terms of the Offer. Rule
14e-4 provides a similar restriction applicable to the tender or guarantee of a
tender on behalf of another person. The tender of Shares pursuant to any one of
the procedures described above will constitute the tendering stockholder's
representation and warranty that (i) such stockholder has a net long position
in the Shares being tendered within the meaning of Rule 14e-4 promulgated under
the Exchange Act, and (ii) the tender of such Shares complies with Rule 14e-4.
The Company's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the tendering stockholder and the
Company upon the terms and subject to the conditions of the Offer.
All questions as to the Purchase Price, the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment of
any tender of Shares will be determined by the Company, in its sole discretion,
and its determination shall be final and binding. The Company reserves the
absolute right to reject any or all tenders of Shares that it determines are
not in proper form or the acceptance for payment of or payment for Shares that
may, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the absolute right to waive any defect or irregularity in any tender
of Shares. None of the Company, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give notice of
any defect or irregularity in tenders, nor shall any of them incur any
liability for failure to give any such notice.
A stockholder participating in the Reinvestment Plan who wishes to have The
First National Bank of Boston, which administers the Reinvestment Plan, tender
Shares held in such participants' accounts in the
7
<PAGE>
Reinvestment Plan should so indicate by completing the box captioned "Dividend
Reinvestment and Cash Stock Purchase Plan Shares" in the Letter of Transmittal.
Participants in the Reinvestment Plan are urged to read Section 13 of the
Letter of Transmittal carefully. Any Reinvestment Plan Shares tendered but not
purchased will be returned to the participant's Reinvestment Plan account.
If a participant tenders all of his or her Reinvestment Plan Shares and all
such Shares are purchased by the Company pursuant to the Offer, such tender
will be deemed to be authorization and written notice to The First National
Bank of Boston of termination of such stockholder's participation in the
Reinvestment Plan.
4. WITHDRAWAL RIGHTS.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after October 19, 1995 unless theretofore accepted
for payment as provided in this Offer to Purchase. If the Company extends the
period of time during which the Offer is open, is delayed in accepting for
payment or paying for Shares or is unable to accept for payment or pay for
Shares pursuant to the Offer for any reason, then, without prejudice to the
Company's rights under the Offer, the Depositary may, on behalf of the Company,
retain all Shares tendered, and such Shares may not be withdrawn except as
otherwise provided in this Section 4, subject to Rule 13e-4(f)(5) under the
Exchange Act, which provides that the issuer making the tender offer shall
either pay the consideration offered, or return the tendered securities
promptly after the termination or withdrawal of the tender offer.
To be effective, a written or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover of this Offer to Purchase and must specify the name of the
person who tendered the Shares to be withdrawn and the number of Shares to be
withdrawn. If the Shares to be withdrawn have been delivered to the Depositary,
a signed notice of withdrawal with signatures guaranteed by an Eligible
Institution (except in the case of Shares tendered by an Eligible Institution)
must be submitted prior to the release of such Shares. In addition, such notice
must specify, in the case of Shares tendered by delivery of certificates, the
name of the registered holder (if different from that of the tendering
stockholder) and the serial numbers shown on the particular certificates
evidencing the Shares to be withdrawn or, in the case of Shares tendered by
book-entry transfer, the name and number of the account at one of the Book-
Entry Transfer Facilities to be credited with the withdrawn Shares. Withdrawals
may not be rescinded, and Shares withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 3 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Company, in its sole discretion,
which determination shall be final and binding. None of the Company, the Dealer
Manager, the Depositary, the Information Agent or any other person will be
under any duty to give notification of any defect or irregularity in any notice
of withdrawal or incur any liability for failure to give any such notification.
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer and as promptly as
practicable after the Expiration Date, the Company will determine the Purchase
Price, taking into account the number of Shares tendered and the prices
specified by tendering stockholders, announce the Purchase Price, and will
(subject to the proration and conditional tender provisions of the Offer)
accept for payment and pay for Shares validly tendered at or below the Purchase
Price. Thereafter, payment for all Shares validly tendered on or prior to the
Expiration Date and accepted for payment pursuant to the Offer will be made by
the Depositary by check as promptly as practicable. In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of certificates for Shares (or of a
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities), a properly completed and
duly executed Letter of Transmittal or facsimile thereof, and any other
required documents.
8
<PAGE>
For purposes of the Offer, the Company will be deemed to have accepted for
payment (and thereby purchased) Shares that are validly tendered and not
withdrawn as, if and when it gives oral or written notice to the Depositary of
its acceptance for payment of such Shares. The Company will pay for Shares that
it has purchased pursuant to the Offer by depositing the Purchase Price
therefor with the Depositary. The Depositary will act as agent for tendering
stockholders for the purpose of receiving payment from the Company and
transmitting payment to tendering stockholders. Under no circumstances will
interest be paid on amounts to be paid to tendering stockholders, regardless of
any delay in making such payment.
Certificates for all Shares not purchased will be returned (or, in the case
of Shares tendered by book-entry transfer, such Shares will be credited to an
account maintained with a Book-Entry Transfer Facility) as promptly as
practicable without expense to the tendering stockholder.
Payment for Shares may be delayed in the event of difficulty in determining
the number of Shares properly tendered or if proration is required. See
Section 1. In addition, if certain events occur, the Company may not be
obligated to purchase Shares pursuant to the Offer. See Section 7.
The Company will pay or cause to be paid any stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the Purchase Price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder, or if tendered Shares are registered
in the name of any person other than the person signing the Letter of
Transmittal, the amount of any stock transfer taxes (whether imposed on the
registered holder, such other person or otherwise) payable on account of the
transfer to such person will be deducted from the Purchase Price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted. See Instruction 7 to the Letter of Transmittal.
6. CONDITIONAL TENDER OF SHARES.
Under certain circumstances and subject to the exceptions set forth in
Section 1, the Company may prorate the number of Shares purchased pursuant to
the Offer. As discussed in Section 13, the number of Shares to be purchased
from a particular stockholder might affect the tax treatment of such purchase
to such stockholder and such stockholder's decision whether to tender. EACH
STOCKHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR. Accordingly, a
stockholder may tender Shares subject to the condition that a specified minimum
number of such holder's Shares tendered pursuant to a Letter of Transmittal or
Notice of Guaranteed Delivery must be purchased if any such Shares so tendered
are purchased, and any stockholder desiring to make such a conditional tender
must so indicate in the box captioned "Conditional Tender" in such Letter of
Transmittal or, if applicable, the Notice of Guaranteed Delivery.
Any tendering stockholders wishing to make a conditional tender must
calculate and appropriately indicate such minimum number of Shares. If the
effect of accepting tenders on a pro rata basis would be to reduce the number
of Shares to be purchased from any stockholder (tendered pursuant to a Letter
of Transmittal or Notice of Guaranteed Delivery) below the minimum number so
specified, such tender will automatically be regarded as withdrawn (except as
provided in the next paragraph) and all Shares tendered by such stockholder
pursuant to such Letter of Transmittal or Notice of Guaranteed Delivery will be
returned as promptly as practicable thereafter.
If conditional tenders would otherwise be so regarded as withdrawn and would
cause the total number of Shares to be purchased to fall below 3,000,000, then,
to the extent feasible, the Company will select enough of such conditional
tenders that would otherwise have been so withdrawn to permit the Company to
purchase 3,000,000 Shares. In selecting among such conditional tenders, the
Company will select by lot and will limit its purchase in each case to the
designated minimum number of Shares to be purchased.
9
<PAGE>
7. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company will not be
required to accept for payment or pay for any Shares tendered, and may
terminate or amend and may postpone (subject to the requirements of the
Exchange Act for prompt payment for or return of Shares) the acceptance for
payment of Shares tendered, if at any time after August 22, 1995 and at or
before acceptance for payment of any Shares any of the following shall have
occurred:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency or authority or tribunal or any other person, domestic or foreign,
or before any court, authority, agency or tribunal that (i) challenges the
acquisition of Shares pursuant to the Offer or otherwise in any manner
relates to or affects the Offer or (ii) in the sole judgment of the
Company, could materially and adversely affect the business, condition
(financial or other), income, operations or prospects of the Company and
its subsidiaries, taken as a whole, or otherwise materially impair in any
way the contemplated future conduct of the business of the Company or any
of its subsidiaries or materially impair the Offer's contemplated benefits
to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or the Company or
any of its subsidiaries, by any legislative body, court, authority, agency
or tribunal which, in the Company's sole judgment, would or might directly
or indirectly (i) make the acceptance for payment of, or payment for, some
or all of the Shares illegal or otherwise restrict or prohibit consummation
of the Offer, (ii) delay or restrict the ability of the Company, or render
the Company unable, to accept for payment or pay for some or all of the
Shares, (iii) materially impair the contemplated benefits of the Offer to
the Company or (iv) materially affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any if
its subsidiaries;
(c) it shall have been publicly disclosed or the Company shall have
learned that (i) any person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) has acquired or proposes to acquire
beneficial ownership of more than 5% of the outstanding Shares whether
through the acquisition of stock, the formation of a group, the grant of
any option or right, or otherwise (other than as disclosed in a Schedule
13D or 13G on file with the Securities and Exchange Commission (the
"Commission") on August 22, 1995) or (ii) any such person or group that on
or prior to August 22, 1995 had filed such a Schedule with the Commission
thereafter shall have acquired or shall propose to acquire whether through
the acquisition of stock, the formation of a group, the grant of any option
or right, or otherwise, beneficial ownership of additional Shares
representing 2% or more of the outstanding Shares;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market, (ii) any significant decline in the
market price of the Shares, (iii) any change in the general political,
market, economic or financial condition in the United States or abroad that
could have a material adverse effect on the Company's business, condition
(financial or other), income, operations, prospects or ability to obtain
financing generally or the trading in the Shares, (iv) the declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or any limitation on, or any event which, in the Company's
sole judgment, might affect, the extension of credit by lending
institutions in the United States, (v) the commencement of a war, armed
hostilities or other international or national calamity directly or
indirectly involving the United States or (vi) in the case of any of the
foregoing existing at the time of the commencement of the Offer, in the
Company's sole judgment, a material acceleration or worsening thereof;
(e) a tender or exchange offer with respect to some or all of the Shares
(other than the Offer), or a merger, acquisition or other business
combination proposal for the Company, shall have been proposed, announced
or made by another person;
10
<PAGE>
(f) there shall have occurred any event or events that have resulted, or
may in the sole judgment of the Company result, in an actual or threatened
change in the business, condition (financial or other), income, operations,
stock ownership or prospects of the Company and its subsidiaries, taken as
a whole; or
(g) there shall have occurred any decline in the Dow Jones Industrial
Average (4620.41 at the close of business on August 22, 1995) or the
Standard & Poor's Composite 500 Stock Index (559.52 at the close of
business on August 22, 1995) by an amount in excess of 10% measured from
the close of business on August 22, 1995;
and, in the sole judgment of the Company, such event or events make it
undesirable or inadvisable to proceed with the Offer or with such acceptance
for payment or payment.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action
or inaction by the Company) giving rise to any such condition, and any such
condition may be waived by the Company, in whole or in part, at any time and
from time to time in its sole discretion. The failure by the Company at any
time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right and each such right shall be deemed an ongoing right which may
be asserted at any time and from time to time. Any determination by the Company
concerning the events described above will be final and binding on all parties.
8. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and principally traded on the NYSE. The Shares are also
listed and traded on the PSE. The following table sets forth the high and low
closing sales prices of the Shares on the NYSE Composite Tape and the cash
dividends per Share for the Company's fiscal quarters indicated.
<TABLE>
<CAPTION>
CASH DIVIDENDS
HIGH* LOW* PER SHARE*
----- ---- --------------
<S> <C> <C> <C>
Fiscal 1993: 1st Quarter.......................... $22 3/16 $16 7/8 $0.045
2nd Quarter.......................... 23 13/16 19 3/8 0.05
3rd Quarter.......................... 26 1/8 22 0.05
4th Quarter.......................... 26 3/16 24 1/8 0.05
Fiscal 1994: 1st Quarter.......................... 30 23 7/16 0.05
2nd Quarter.......................... 39 28 1/4 0.06
3rd Quarter.......................... 37 1/2 31 0.06
4th Quarter.......................... 38 5/8 34 1/8 0.06
Fiscal 1995: 1st Quarter.......................... 37 31 1/8 0.06
2nd Quarter.......................... 43 3/4 34 5/8 0.07
3rd Quarter.......................... 56 42 5/8 0.07
4th Quarter (to August 22, 1995)..... 57 1/4 51 1/2 --
</TABLE>
--------
* Information provided has been restated to reflect a two-for-one stock split
in the form of a 100% stock dividend effected on March 17, 1994.
On August 22, 1995, the last full NYSE trading day prior to the commencement
of the Offer, the last reported sale price of the Shares on the NYSE Composite
Tape was $52 7/8 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
Shares tendered and purchased by the Company will not receive or otherwise be
entitled to the regular quarterly cash dividend of $.07 per Share to be paid by
the Company on October 20, 1995 to holders of record on October 2, 1995, unless
the Offer is extended beyond, or Shares are accepted for payment after, October
2, 1995 for any reason whatsoever. Shares which are tendered but not purchased
as a result of proration or otherwise will remain entitled to receipt of the
dividend to be paid on October 20, 1995. See Section 8.
11
<PAGE>
Under a rights plan, every outstanding Share and every Share issuable by the
Company (until certain events occur) includes a Right. Pursuant to a Rights
Agreement, dated as of August 25, 1986, as amended (the "Rights Agreement"),
between the Company and The First National Bank of Boston, as the Rights Agent,
each Right entitles the registered holder to purchase from the Company a unit
consisting of one two-hundredth of a share (a "Unit") of Series A Junior
Participating Preferred Stock, par value $1.00 per share ("Preferred Stock"),
at a purchase price of $62.50 per Unit, subject to adjustment.
The Rights are not exercisable until the Distribution Date (as defined below)
and will expire at the close of business on August 25, 1996, unless earlier
redeemed by the Company. Prior to a Distribution Date, the Rights will be
evidenced by the Shares and cannot be traded separately from such Shares. The
Rights will separate from the Shares and a Distribution Date (the "Distribution
Date") will occur upon the earlier of (a) 10 days following a public
announcement that a person or group of affiliated or associated persons, other
than certain exempt persons and other persons as set forth in the Rights
Agreement, has acquired, or obtained the right to acquire, beneficial ownership
of 15% or more of the outstanding Shares (including any other outstanding
voting stock of the Company) (an "Acquiring Person"), or (b) 10 days (subject
to adjustment by the Board of Directors of the Company) following the
commencement of, or first public announcement of the intent to commence, a
tender offer or exchange offer that could result, if successful, in a person or
group, other than certain exempt persons as set forth in the Rights Agreement,
beneficially owning 30% or more of such outstanding Shares and such other
voting stock. The Rights will not become separately exercisable or separately
tradeable as a result of the Offer.
In the event that any person becomes an Acquiring Person (the "Trigger
Event"), unless pursuant to a transaction approved by a majority of certain
directors of the Company ("Continuing Directors") as set forth in the Rights
Agreement, each holder of a Right will have the right to receive, upon exercise
of such Right, the greater of (a) the number of shares of Preferred Stock (or,
in certain circumstances, cash, property or other securities of the Company)
for which such Right was exercisable immediately prior to such event, or (b)
such number of shares of Preferred Stock (or, in certain circumstances, cash,
property or other securities of the Company), based on the fair market value of
such stock as calculated pursuant to the terms of the Rights Agreement on the
date of such event, having a value equal to two times the exercise price of the
Right. Notwithstanding any of the foregoing, following the occurrence of a
Trigger Event, all Rights that are, or were, at the time of the Trigger Event
beneficially owned by any Acquiring Person will be null and void.
Unless approved by a majority of the Continuing Directors, in the event that,
at any time following the Distribution Date, (a) the Company is acquired in a
merger or other business combination transaction in which the Company is not
the surviving corporation, (b) a person consolidates or merges with or into the
Company, the Company is the surviving corporation and all or part of the
Company's outstanding shares are changed into or exchanged for stock or
securities of any other person or cash or other property or (c) 50% or more of
the assets or earning power of the Company and its subsidiaries, taken as a
whole, is sold or transferred, each holder of a Right shall thereafter have the
right to receive, upon exercise of such Right, common stock of the acquiring
company having a value equal to two times the exercise price of the Right.
The foregoing description of the Rights is qualified in its entirety by
reference to the Rights Agreement, a copy of which has been included as an
exhibit to the Company's Registration Statement on Form 8-A dated August 29,
1986, and a copy of the amendment thereto to which has been included as an
exhibit to the Company's Form 8 dated July 7, 1989, in each case filed with the
Commission. Such reports and exhibits may be obtained from the Commission in
the manner provided in Section 16.
9. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
The Company believes that the purchase of its Shares at this time represents
an attractive investment opportunity that will benefit the Company and its
stockholders. The Offer will afford to stockholders who are considering the
sale of all or a portion of their Shares the opportunity to determine the price
at which they are willing to sell their Shares and, in the event the Company
accepts such Shares for purchase, to dispose
12
<PAGE>
of Shares without the usual transaction costs associated with a market sale.
The Offer will also allow qualifying stockholders owning beneficially fewer
than 100 Shares to avoid the payment of brokerage commissions and the
applicable odd lot discount payable on a sale of Shares in a transaction
effected on a securities exchange. Correspondingly, the costs to the Company
for servicing the accounts of odd lot holders will be reduced. See Section 2.
Stockholders who determine not to accept the Offer will obtain a
proportionate increase in their ownership interest in the Company. After
consummation of the Offer, increases or decreases in net income will likely be
reflected in greater increases or decreases in earnings per Share than is
presently the case because of the smaller number of Shares outstanding
thereafter.
If fewer than 3,000,000 Shares are purchased pursuant to the Offer, the
Company may repurchase the remainder of such Shares on the open market, in
privately negotiated transactions or otherwise. The Company is currently
authorized to repurchase up to approximately 1,804,500 Shares (not including
Shares to be repurchased pursuant to the Offer) pursuant to the Company's stock
repurchase program, and the Company intends to resume repurchases under such
program after the expiration of the Offer. See Section 12. In the future, the
Company also may determine to purchase additional Shares on the open market, in
privately negotiated transactions, through one or more tender offers or
otherwise. Any such purchases may be on the same terms or on terms which are
more or less favorable to stockholders than the terms of the Offer. However,
Rule 13e-4 under the Exchange Act prohibits the Company and its affiliates from
purchasing any Shares, other than pursuant to the Offer, until at least ten
business days after the Expiration Date. Any future purchases of Shares by the
Company would depend on many factors, including the market price of the Shares,
the Company's business and financial position, and general economic and market
conditions.
Shares that the Company acquires pursuant to the Offer will become authorized
but unissued Shares and will be available for issuance by the Company without
further stockholder action (except as may be required by applicable law or the
rules of the securities exchanges on which the Shares are listed). Such Shares
could be issued without stockholder approval for, among other things,
acquisitions, the raising of additional capital for use in the Company's
business, stock dividends or in connection with employee stock, stock option
and other plans, or a combination thereof. The Company has no current plans for
the Shares it may acquire pursuant to the Offer or any other authorized but
unissued Shares.
As of August 22, 1995, the Company had issued and outstanding 33,887,015
Shares and had reserved for issuance upon exercise of outstanding stock options
3,996,106 Shares. The 3,000,000 Shares that the Company is offering to purchase
represent approximately 8.85% of the Shares then outstanding. As of August 22,
1995, all directors and executive officers of the Company as a group owned
beneficially an aggregate of 1,372,043.07 Shares (including an aggregate of
1,103,692 Shares that may be acquired pursuant to the exercise of outstanding
stock options exercisable within 60 days of the date hereof). The Company has
been advised that no director or executive officer intends to tender Shares
pursuant to the Offer. If the Company purchases 3,000,000 Shares pursuant to
the Offer and no director or executive officer of the Company tenders Shares,
the percentage of outstanding Shares owned beneficially by all of the Company's
directors and executive officers as a group would increase to approximately
3.93% of the Shares then outstanding (including for this purpose, Shares that
may be acquired by such directors and executive officers pursuant to the
exercise of outstanding stock options exercisable within 60 days of the date
hereof).
Except as disclosed in this Offer to Purchase, the Company has no plans or
proposals which relate to or would result in: (a) the acquisition by any person
of additional securities of the Company or the disposition of securities of the
Company; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (d) any change in the present Board of
Directors or management of the Company; (e) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Company; (f)
any other material change in the Company's corporate structure or business; (g)
any change in the Company's Restated Certificate of Incorporation or By-Laws or
any actions
13
<PAGE>
which may impede the acquisition of control of the Company by any person; (h) a
class of equity security of the Company being delisted from a national
securities exchange; (i) a class of equity security of the Company becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or (j) the suspension of the Company's obligation to file reports
pursuant to Section 15(d) of the Exchange Act.
The Company does not believe that the Offer will result in delisting of the
Shares on the NYSE or termination of registration of the Shares under the
Exchange Act.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. EACH STOCKHOLDER
MUST MAKE HIS OR HER OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND AT WHAT PRICE. THE COMPANY HAS BEEN ADVISED THAT NO
DIRECTOR OR EXECUTIVE OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER.
10.CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company together with its subsidiaries is a technology enterprise which
was founded in 1948. It is engaged in the research, development, manufacture
and marketing of products and services for the fields of health care,
industrial production, scientific and industrial research and environmental
monitoring. The Company's principal products are health care systems,
analytical instruments and semiconductor production equipment.
The Company's principal executive offices are located at 3050 Hansen Way,
Palo Alto, California 94304-1000 and its telephone number is (415) 493-4000.
Recent Developments
On August 11, 1995, the Company completed the sale of its Electron Devices
business ("EDB"). A brief summary of that transaction is contained in the
Company's Current Report on Form 8-K (the "Form 8-K"), which Form 8-K (other
than the exhibits thereto) is attached to this Offer to Purchase as Annex I and
is incorporated herein by this reference.
William F. Miller is expected to retire from the Board of Directors of the
Company at the end of his term and upon election of a new director at the
Annual Meeting of Stockholders in February 1996.
Allen K. Jones, Vice President and Controller, is expected to leave the
Company in October 1995 under an arrangement which will provide him with
certain separation benefits. Wayne P. Somrak, currently Vice President, and
Treasurer, is expected to thereafter assume Mr. Jones' position. Robert A.
Lemos, Vice President, Finance, and Chief Financial Officer, is expected to
then assume the additional position of Treasurer.
Summary Consolidated Historical Financial Information
The following selected financial data for the nine months ended June 30, 1995
and July 1, 1994 (unaudited) are derived from the unaudited consolidated
financial statements of Varian Associates, Inc. and subsidiaries set forth in
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995
(the "1995 Third Quarter 10-Q"), except for the reclassification of EDB, which
was sold on August 11, 1995, as discontinued operations. In the opinion of
management, all adjustments considered necessary for a fair statement of the
results for the periods, which consisted only of normal recurring accruals,
have been made. Results for the nine months are not necessarily indicative of
the results for the entire year for most of the Company's businesses. The
following selected financial data for each of the years ended September 30,
1994 and October 1, 1993 were derived from the audited consolidated financial
statements of Varian Associates, Inc. and subsidiaries incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended
September 30, 1994 (the "1994 10-K"), except for the reclassification of EDB,
which was sold on August 11, 1995, as discontinued operations. The data should
be read in conjunction with, and is qualified in its entirety by reference to,
such audited consolidated financial statements and their related notes. The
1995 Third Quarter 10-Q (other than the exhibits thereto) is attached to this
Offer to Purchase as Annex II. The 1995 Third Quarter 10-Q and the Form 8-K, in
each case complete with exhibits, and the 1994 10-K may be obtained from the
Commission in the manner provided in Section 16.
14
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT RATIOS, PER SHARE AMOUNTS AND SHARES OUTSTANDING)
<TABLE>
<CAPTION>
NINE
MONTHS ENDED YEAR ENDED
----------------- ------------------------
JUNE 30, JULY 1, SEPTEMBER 30, OCTOBER 1,
1995 1994 1994 1993
-------- ------- ------------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales............................... $1,169.0 $934.2 $1,313.4 $1,061.9
Earnings before taxes............... 116.2 71.6 109.1 60.1
Earnings from continuing operations. 73.2 44.4 67.6 37.3
Earnings from discontinued opera-
tions.............................. 9.0 8.0 11.8 8.5
-------- ------ -------- --------
Net earnings........................ $ 82.2 $ 52.4 $ 79.4 $ 45.8
======== ====== ======== ========
Earnings per share --
Earnings from continuing
operations....................... $ 2.06 $ 1.24 $ 1.90 $ 1.03
Earnings from discontinued
operations....................... 0.26 0.23 0.32 0.23
-------- ------ -------- --------
Net earnings...................... $ 2.32 $ 1.47 $ 2.22 $ 1.26
======== ====== ======== ========
Average shares outstanding including
common stock
equivalents (in thousands)......... 35,480 35,703 35,676 36,292
Ratio of earnings from continuing
operations
to fixed charges................... 17.84x 13.79x 14.30x 6.27x
<CAPTION>
AT AT
----------------- ------------------------
JUNE 30, JULY 1, SEPTEMBER 30, OCTOBER 1,
1995 1994 1994 1993
-------- ------- ------------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital..................... $ 277.4 $235.7 $ 237.0 $ 208.5
Total assets........................ 1,069.1 937.5 962.4 878.7
Total assets, less goodwill......... 1,051.2 922.9 947.9 862.7
Total debt.......................... 93.3 99.3 65.2 83.3
Stockholders' equity................ 495.7 433.6 449.5 414.1
Stockholders' equity per share out-
standing........................... $ 14.65 $12.64 $ 13.23 $ 11.94
</TABLE>
NOTES TO SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(1) The ratios of earnings from continuing operations to fixed charges
were computed by dividing earnings from continuing operations before fixed
charges and income taxes by the fixed charges. Earnings consist of income
from continuing operations, to which has been added fixed charges and
income taxes. Fixed charges consist of interest and debt expense and one-
third of rent expense, which approximates the interest factor.
(2) Share information and per share data have been restated to reflect a
two-for-one stock split in the form of a 100% stock dividend effected on
March 17, 1994.
Summary Unaudited Consolidated Pro Forma Financial Information
The following summary unaudited consolidated pro forma financial information
gives effect to the purchase of Shares pursuant to the Offer, based on certain
assumptions described in the Notes to Summary Unaudited Consolidated Pro Forma
Financial Information. The Consolidated Statements of Earnings gives effect to
the purchase of Shares pursuant to the Offer as if it had occurred on October
2, 1993 and October 1, 1994. Additionally, the consolidated statements of
earnings have been restated to report the operations of EDB, which was sold on
August 11, 1995, as discontinued operations. The summary unaudited consolidated
pro forma financial information should be read in conjunction with the summary
consolidated historical financial information and does not purport to be
indicative of the results that would actually have been obtained had the
purchase of the Shares pursuant to the Offer been completed at the dates
indicated or that may be obtained in the future.
15
<PAGE>
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT RATIOS, PER SHARE AMOUNTS AND SHARES OUTSTANDING)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
JUNE 30, 1995 SEPTEMBER 30, 1994
----------------------------- -----------------------------
PRO FORMA PRO FORMA
------------------ ------------------
ASSUMED ASSUMED ASSUMED ASSUMED
$51 PER $58 PER $51 PER $58 PER
SHARE SHARE SHARE SHARE
UNAUDITED PURCHASE PURCHASE PURCHASE PURCHASE
HISTORICAL PRICE PRICE HISTORICAL PRICE PRICE
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales................... $1,169.0 $1,169.0 $1,169.0 $1,313.4 $1,313.4 $1,313.4
Earnings before taxes... 116.2 116.2 116.2 109.1 109.1 109.1
Earnings from continuing
operations............. 73.2 73.2 73.2 67.6 67.6 67.6
Earnings from discontin-
ued operations......... 9.0 9.0 9.0 11.8 11.8 11.8
-------- -------- -------- -------- -------- --------
Net earnings............ $ 82.2 $ 82.2 $ 82.2 $ 79.4 $ 79.4 $ 79.4
======== ======== ======== ======== ======== ========
Earnings per share --
Earnings from
continuing
operations........... $ 2.06 $ 2.25 $ 2.25 $ 1.90 $ 2.07 $ 2.07
Earnings from
discontinued
operations........... 0.26 0.28 0.28 0.32 0.36 0.36
-------- -------- -------- -------- -------- --------
Net earnings.......... $ 2.32 $ 2.53 $ 2.53 $ 2.22 $ 2.43 $ 2.43
======== ======== ======== ======== ======== ========
Average shares outstand-
ing including
common stock equiva-
lents
(in thousands)......... 35,480 32,480 32,480 35,676 32,676 32,676
Ratio of earnings from
continuing
operations to fixed
charges................ 17.84x 17.84x 17.84x 14.30x 14.30x 14.30x
<CAPTION>
AT JUNE 30, 1995 AT SEPTEMBER 30, 1994
----------------------------- -----------------------------
PRO FORMA PRO FORMA
------------------ ------------------
ASSUMED ASSUMED ASSUMED ASSUMED
$51 PER $58 PER $51 PER $58 PER
SHARE SHARE SHARE SHARE
UNAUDITED PURCHASE PURCHASE PURCHASE PURCHASE
HISTORICAL PRICE PRICE HISTORICAL PRICE PRICE
---------- -------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 277.4 $ 123.7 $ 102.7 $ 237.0 $ 83.3 $ 62.3
Total assets............ 1,069.1 915.4 894.4 962.4 808.7 787.7
Total assets, less good-
will................... 1,051.2 897.5 876.5 947.9 794.2 773.2
Total debt.............. 93.3 93.3 93.3 65.2 65.2 65.2
Stockholders' equity.... 495.7 342.0 321.0 449.5 295.8 274.8
Stockholders' equity per
share
outstanding............ $ 14.65 $ 11.09 $ 10.41 $ 13.23 $ 9.55 $ 8.87
</TABLE>
NOTES TO SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
The following assumptions regarding the Offer were made in determining the
pro forma financial information:
(1) The information assumes that excess cash proceeds from the sale of
EDB, which closed on August 11, 1995, were used to fund the purchase of
Shares pursuant to the Offer.
(2) The information assumes 3,000,000 Shares are purchased and retired at
$51 per Share and at $58 per Share, with the purchase being financed with
cash proceeds from the sale of EDB, which sale was assumed to have occurred
at the beginning of the periods presented, and cash on hand. There can be
no assurance that the Company will purchase 3,000,000 Shares or the price
at which Shares will be purchased.
16
<PAGE>
(3) Expenses directly related to the Offer are assumed to be $0.7 million
and are charged against additional paid-in capital.
(4) The ratios of earnings from continuing operations to fixed charges
were computed by dividing earnings from continuing operations before fixed
charges and income taxes by the fixed charges. Earning consist of income
from continuing operations, to which has been added fixed charges and
income taxes. Fixed charges consist of interest and debt expense and one
third of rent expense, which approximates the interest factor.
(5) Share information and per share data have been restated to reflect a
two-for-one stock split in the form of a 100% stock dividend effected on
March 17, 1994.
11. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases 3,000,000 Shares pursuant to the Offer at
a price of $58 per Share, the total amount required by the Company to purchase
such Shares will be $174 million, exclusive of fees and other expenses. The
Company expects to fund the purchase of such Shares from the net proceeds from
the sale of EDB and cash on hand. See Section 10.
12. TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.
The Company currently maintains a program for the repurchase of Shares, such
purchases to be effected on the open market, in privately negotiated
transactions or otherwise. On November 19, 1993, 2,000,000 Shares (calculated
on a pre-stock split basis) were authorized for repurchase pursuant to such
program. Due to a two-for-one split in the form of a 100% stock dividend
effected in March 1994, the November 1993 authorization was replaced by the
authorization in February 1994 to repurchase up to 4,000,000 Shares pursuant to
the program. Between November 22, 1993 and June 30, 1995, the Company purchased
a total of 2,898,700 Shares. The daily average price of Shares so purchased
ranged from a high of $55.04 to a low of $25.69 per Share, and the average
price paid per Share was approximately $36.87. The Company has not acquired any
Shares under the repurchase program since June 30, 1995. Under the present
Board authorization, the Company may repurchase up to approximately 1,804,500
Shares (not including Shares to be repurchased pursuant to the Offer) pursuant
to the Company's repurchase program.
On June 30, 1995, quarterly purchases of 95 Shares, 88 Shares, 145 Shares and
190 Shares were made at a price of approximately $36.76 per Share through the
Company's 1985 Employee Stock Purchase Plan on behalf of Richard A. Aurelio,
Executive Vice President, Allen K. Jones, Vice President and Controller, Robert
A. Lemos, Vice President, Finance and Chief Financial Officer, and Richard M.
Levy, Executive Vice President, respectively. On July 7, 1995, less than one
Share was purchased at a price of $55.675 per Share for the Reinvestment Plan
account of Ruth M. Davis, a director of the Company.
Except as set forth above and on Schedule A hereto, based upon the Company's
records and upon information provided to the Company by its directors and
executive officers, neither the Company nor, to the Company's knowledge, any of
its associates, subsidiaries, directors, executive officers or any associate of
any such director or executive officer, or any director or executive officer of
its subsidiaries, has engaged in any transactions involving the Shares during
the 40 business days preceding the date hereof. Neither the Company nor, to the
Company's knowledge, any of its directors or executive officers is a party to
any contract, arrangement, understanding or relationship relating directly or
indirectly to the Offer with any other person with respect to the Shares.
13. CERTAIN FEDERAL INCOME TAX CONSEQUENCES.
In General. The following summary describes certain United States federal
income tax consequences relating to the Offer. The summary is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and existing final,
temporary and proposed Treasury Regulations, Revenue Rulings and judicial
decisions, all of which are subject to prospective and retroactive changes. The
summary deals only with Shares held as capital assets within the meaning of
Section 1221 of the Code and does not address tax consequences that may be
relevant to investors in special tax situations, such as certain financial
institutions, tax-exempt organizations, life insurance companies, dealers in
securities or currencies, or stockholders holding the Shares
17
<PAGE>
as part of a conversion transaction, as part of a hedge or hedging transaction,
or as a position in a straddle for tax purposes. The Company will not seek a
ruling from the Internal Revenue Service (the "IRS") with regard to the United
States federal income tax treatment of the Offer and, therefore, there can be
no assurance that the IRS will agree with the conclusions set forth below.
Accordingly, each stockholder should consult its own tax advisor with regard to
the Offer and the application of United States federal income tax laws, as well
as the laws of any state, local or foreign taxing jurisdiction, to its
particular situation.
Characterization of the Sale. A sale of Shares by a stockholder of the
Company pursuant to the Offer will be a taxable transaction for United States
federal income tax purposes and may also be a taxable transaction under
applicable state, local and foreign tax laws. The United States federal income
tax consequences to a stockholder may vary depending upon the stockholder's
particular facts and circumstances. Under Section 302 of the Code, a sale of
Shares by a stockholder to the Company pursuant to the Offer will be treated as
a "sale or exchange" of such Shares for United States federal income tax
purposes (rather than as a distribution by the Company with respect to the
Shares held by the tendering stockholder) if the receipt of cash upon such sale
(i) is "substantially disproportionate" with respect to the stockholder, (ii)
results in a "complete redemption" of the Shares owned by the stockholder, or
(iii) is "not essentially equivalent to a dividend" with respect to the
stockholder (each as described below).
If any of the above three tests is satisfied, and the sale of the Shares is
therefore treated as a "sale or exchange" of such Shares for United States
federal income tax purposes, the tendering stockholder will recognize gain or
loss equal to the difference between the amount of cash received by the
stockholder pursuant to the Offer and the stockholder's tax basis in the Shares
sold pursuant to the Offer. Any such gain or loss will be capital gain or loss,
and will be long term capital gain or loss if the Shares have been held for
more than one year.
If none of the above three tests is satisfied, the tendering stockholder
would be treated as having received a dividend includible in gross income in an
amount equal to the entire amount of cash received by the stockholder pursuant
to the Offer (without reduction for the tax basis of the Shares sold pursuant
to the Offer), no loss would be recognized, and the tendering stockholder's
basis in the Shares sold pursuant to the Offer would be added to such
stockholder's basis in its remaining Shares, if any.
In determining whether any of the three tests under Section 302 of the Code
is satisfied, stockholders must take into account not only the Shares which are
actually owned by the stockholder, but also Shares which are constructively
owned by the stockholder within the meaning of Section 318 of the Code. Under
Section 318 of the Code, a stockholder may constructively own Shares actually
owned, and in some cases constructively owned, by certain related individuals
or entities and Shares which the stockholder has the right to acquire by
exercise of an option or by conversion. Contemporaneous dispositions or
acquisitions of Shares by a stockholder or related individuals or entities may
be deemed to be part of a single integrated transaction which will be taken
into account in determining whether any of the three tests under Section 302 of
the Code has been satisfied. Each stockholder should be aware that because
proration may occur in the Offer, even if all the Shares actually and
constructively owned by a stockholder are tendered pursuant to the Offer, fewer
than all of such Shares may be purchased by the Company. Thus, proration may
affect whether a sale by a stockholder pursuant to the Offer will meet any of
the three tests under Section 302 of the Code. See Section 6 for information
regarding each stockholder's option to make a conditional tender of a minimum
number of Shares. A stockholder should consult its own tax advisor regarding
whether to make a conditional tender of a minimum number of Shares, and the
appropriate calculation thereof.
Section 302 Tests. The receipt of cash by a stockholder will be
"substantially disproportionate" if the percentage of the outstanding Shares
actually and constructively owned by the stockholder immediately following the
sale of Shares pursuant to the Offer (treating as not outstanding all Shares
purchased pursuant to the Offer) is less than 80% of the percentage of the
outstanding Shares actually and constructively owned by such stockholder
immediately before the sale of Shares pursuant to the Offer (treating as
outstanding all Shares purchased pursuant to the Offer). Stockholders should
consult their tax advisors with respect to the application of the
"substantially disproportionate" test to their particular situation.
18
<PAGE>
The receipt of cash by a stockholder will be a "complete redemption" of all
the Shares owned by the stockholder if either (i) all of the Shares actually
and constructively owned by the stockholder are sold pursuant to the Offer, or
(ii) all of the Shares actually owned by the stockholder are sold pursuant to
the Offer and, with respect to Shares constructively owned by the stockholder
which are not sold pursuant to the Offer, the stockholder is eligible to waive
(and effectively waives) constructive ownership of all such Shares under
procedures described in Section 302(c) of the Code.
Even if the receipt of cash by a stockholder fails to satisfy the
"substantially disproportionate" test or the "complete redemption" test, a
stockholder may nevertheless satisfy the "not essentially equivalent to a
dividend" test, if the stockholder's sale of Shares pursuant to the Offer
results in a "meaningful reduction" in the stockholder's interest in the
Company. Whether the receipt of cash by a stockholder will be "not essentially
equivalent to a dividend" will depend upon the individual stockholder's facts
and circumstances. The IRS has indicated in published rulings that even a small
reduction in the proportionate interest of a small minority stockholder in a
publicly held corporation who exercises no control over corporate affairs may
constitute such a "meaningful reduction." The IRS held in Rev. Rul. 76-385,
1976-2 C.B. 92, that a reduction in the percentage ownership interest of a
stockholder in a publicly held corporation from .0001118% to .0001081% (a
reduction to 96.7% of the stockholder's prior percentage ownership interest)
would constitute a "meaningful reduction." Under this ruling, it is likely that
a small minority stockholder who exercises no control over the Company, and all
of whose actual and constructively owned Shares are tendered at or below the
Purchase Price, would satisfy the "not essentially equivalent to a dividend"
test notwithstanding proration in the Offer. Stockholders expecting to rely on
the "not essentially equivalent to a dividend" test should consult their own
tax advisors as to its application in their particular situation.
Corporate Stockholder Dividend Treatment. Under current law, if a sale of
Shares by a corporate stockholder is treated as a dividend, the corporate
stockholder may be entitled to claim a deduction equal to 70% of the dividend
under Section 243 of the Code, subject to applicable limitations. However,
identical bills (H.R. 1551, S.750) have been introduced by the chairmen and
ranking minority members of the House Ways and Means Committee and the Senate
Finance Committee that would have the effect of prohibiting corporate
stockholders from treating non-pro rata redemptions as dividends. Rather,
corporate stockholders generally would be required to treat such redemptions as
sales or exchanges, and no dividends-received deduction would be available.
However, losses would not be permitted. The legislation is proposed to be
effective for redemptions after May 3, 1995. Corporate stockholders are urged
to consult with their tax advisors concerning the likelihood that proposals
such as these will be enacted with retroactive effect to May 3, 1995, and
therefore that the dividends-received deduction would be unavailable to amounts
received by corporate stockholders pursuant to the Offer.
There also are provisions of current law that are likely to affect the
availability of the dividends-received deduction for corporate stockholders.
Corporate stockholders should consider the effect of Section 246(c) of the
Code, which disallows the 70% dividends-received deduction with respect to
stock that is held for 45 days or less. For this purpose, the length of time a
taxpayer is deemed to have held stock may be reduced by periods during which
the taxpayer's risk of loss with respect to the stock is diminished by reason
of the existence of certain options or other transactions. Moreover, under
Section 246A of the Code, if a corporate stockholder has incurred indebtedness
directly attributable to an investment in Shares, the 70% dividends-received
deduction may be reduced by a percentage generally computed based on the amount
of such indebtedness and the total adjusted tax basis in the Shares. In
addition, it is expected that any amount received by a corporate stockholder
pursuant to the Offer that is treated as a dividend would constitute an
"extraordinary dividend" under Section 1059 of the Code. For this purpose, all
dividends received by a stockholder within, and having their ex-dividend date
within, an 85-day period (expanded to a 365-day period in the case of dividends
received in such period that in the aggregate exceed 20% of the stockholder's
adjusted tax basis in the Shares) are aggregated and also treated as
extraordinary dividends. Accordingly, a corporate stockholder would be required
under Section 1059(a) of the Code to reduce its basis (but not below zero) in
its Shares by the non-taxed portion of the dividend (i.e., the portion of the
dividend for which a deduction is allowed), and if such portion exceeds the
stockholder's tax basis for its Shares, to treat the excess as gain from the
sale of such Shares in the year in which a sale or disposition of such Shares
occurs (which, in certain
19
<PAGE>
circumstances, may be the year in which Shares are sold pursuant to the Offer).
Corporate stockholders should consult their own tax advisors as to the
application of Section 1059 of the Code to the Offer, as well as the effect of
pending legislation discussed above.
Additional Tax Considerations. The distinction between long-term capital
gains and ordinary income is relevant because certain individuals are subject
to taxation at a reduced rate on the excess of net long-term capital gains over
net short-term capital losses. In addition, legislation currently under active
consideration would provide for reduced taxation of net long-term capital
gains. See Legislative Proposals below. Stockholders are urged to consult their
own tax advisors regarding any possible impact on their obligation to make
estimated tax payments as a result of the recognition of any capital gain (or
the receipt of any ordinary income) caused by the sale of any Shares to the
Company pursuant to the Offer.
Foreign Stockholders. The Company will withhold United States federal income
tax at a rate of 30% from gross proceeds paid pursuant to the Offer to a
foreign stockholder or his agent, unless the Company determines that a reduced
rate of withholding is applicable pursuant to a tax treaty or that an exemption
from withholding is applicable because such gross proceeds are effectively
connected with the conduct of a trade or business by the foreign stockholder
within the United States. For this purpose, a foreign stockholder is any
stockholder that is not (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States, or (iii) any estate or trust the income of which is
subject to United States federal income taxation regardless of its source.
Without definite knowledge to the contrary, the Company will determine whether
a stockholder is a foreign stockholder by reference to the stockholder's
address. A foreign stockholder may be eligible to file for a refund of such tax
or a portion of such tax if such stockholder (i) meets the "complete
redemption," "substantially disproportionate" or "not essentially equivalent to
a dividend" tests described above, (ii) is entitled to a reduced rate of
withholding pursuant to a treaty and the Company withheld at a higher rate, or
(iii) is otherwise able to establish that no tax or a reduced amount of tax was
due. In order to claim an exemption from withholding on the ground that gross
proceeds paid pursuant to the Offer are effectively connected with the conduct
of a trade or business by a foreign stockholder within the United States or
that the foreign stockholder is entitled to the benefits of a tax treaty, the
foreign stockholder must deliver to the Depositary (or other person who is
otherwise required to withhold United States tax) a properly executed statement
claiming such exemption or benefits. Such statements may be obtained from the
Depositary. Foreign stockholders are urged to consult their own tax advisors
regarding the application of United States federal income tax withholding,
including eligibility for a withholding tax reduction or exemption and the
refund procedures.
Backup Withholding. See Section 3 with respect to the application of the
United States federal income tax backup withholding.
Legislative Proposals. In April 1995 the House of Representatives passed H.R.
1215, a major tax reduction bill that constitutes part of the "Contract With
America" announced by Republican members of the House of Representatives. The
House bill includes a reduction in the tax on net long-term capital gains for
both individuals and corporations, as well as indexing of the basis of capital
assets for inflation. Under the bill, non-corporate taxpayers would be
permitted a deduction for 50% of net capital gains (i.e., the excess of net
long-term capital gains over net short-term capital losses). In addition, the
deduction for net long-term capital losses could not exceed 50% of the excess
of net long-term capital losses over net short-term capital gains. Under the
House bill, these changes generally would be effective for transactions
occurring in 1995. The Congress also has passed a budget resolution for fiscal
1996 providing for approximately $245 billion in tax cuts over seven years
financed from anticipated savings from balancing the federal budget over a
similar period. The form that those tax cuts would take has not yet been
decided. In addition, there currently is significant interest in the Congress
in making major changes in the income tax laws, including "flat tax",
consumption tax, and value-added tax proposals, some of which would replace the
current income tax.
The impact of pending and future budget and tax legislation on the United
States federal tax system, including possible effects on taxation of the Offer,
is uncertain. Stockholders are advised to consult their own tax advisors as to
these matters.
20
<PAGE>
Corporate stockholders should also consider the effect of pending legislative
proposals that, if enacted in their current form, would deny the dividends-
received deduction to corporate stockholders that participate in the Offer,
discussed above under the heading Corporate Stockholder Dividend Treatment.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY
AND MAY NOT APPLY TO SHARES ACQUIRED IN CONNECTION WITH THE EXERCISE OF STOCK
OPTIONS OR PURSUANT TO OTHER COMPENSATION ARRANGEMENTS WITH THE COMPANY. THE
TAX CONSEQUENCES OF A SALE PURSUANT TO THE OFFER MAY VARY DEPENDING UPON, AMONG
OTHER THINGS, THE PARTICULAR CIRCUMSTANCES OF THE TENDERING STOCKHOLDER. NO
INFORMATION IS PROVIDED HEREIN AS TO THE STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES OF THE TRANSACTION CONTEMPLATED BY THE OFFER. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR FEDERAL,
STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF SALES MADE BY THEM PURSUANT TO THE
OFFER, THE EFFECT OF THE STOCK OWNERSHIP ATTRIBUTION RULES MENTIONED ABOVE AND
THE EFFECT OF TAX LEGISLATIVE PROPOSALS.
14. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS.
The Company expressly reserves the right, in its sole discretion and at any
time or from time to time, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary.
There can be no assurance, however, that the Company will exercise its right to
extend the Offer. During any such extension, all Shares previously tendered
will remain subject to the Offer, except to the extent that such Shares may be
withdrawn as set forth in Section 4. The Company also expressly reserves the
right, in its sole discretion, (i) to terminate the Offer and not accept for
payment any Shares not theretofore accepted for payment or, subject to Rule 13-
4(f)(5) under the Exchange Act, which requires the Company either to pay the
consideration offered or to return the Shares tendered promptly after the
termination or withdrawal of the Offer, to postpone payment for Shares upon the
occurrence of any of the conditions specified in Section 7 hereof by giving
oral or written notice of such termination to the Depositary and making a
public announcement thereof and (ii) at any time or from time to time amend the
Offer in any respect. Amendments to the Offer may be effected by public
announcement. Without limiting the manner in which the Company may choose to
make public announcement of any termination or amendment, the Company shall
have no obligation (except as otherwise required by applicable law) to publish,
advertise or otherwise communicate any such public announcement, other than by
making a release to the Dow Jones News Service, except in the case of an
announcement of an extension of the Offer, in which case the Company shall have
no obligation to publish, advertise or otherwise communicate such announcement
other than by issuing a notice of such extension by press release or other
public announcement, which notice shall be issued no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Material changes to information previously provided to holders
of the Shares in this Offer or in documents furnished subsequent thereto will
be disseminated to holders of Shares in compliance with Rule 13e-4(e)(2)
promulgated by the Commission under the Exchange Act.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in price,
change in dealer's soliciting fee or change in percentage of securities sought)
will depend on the facts and circumstances, including the relative materiality
of such terms or information. In a published release, the Commission has stated
that in its view, an offer should remain open for a minimum of five business
days from the date that notice of such a material change is first published,
sent or given. The Offer will continue or be extended for at least ten business
days from the time the Company publishes, sends or gives to holders of Shares a
notice that it will (a) increase or decrease the price it will pay for Shares
or the amount of the Dealer Manager's soliciting fee or (b) increase (except
for an increase not exceeding 2% of the outstanding Shares) or decrease the
number of Shares it seeks.
21
<PAGE>
15. FEES AND EXPENSES.
Morgan Stanley & Co. Incorporated will act as Dealer Manager for the Company
in connection with the Offer. The Company has agreed to pay the Dealer Manager,
upon acceptance for payment of Shares pursuant to the Offer, a fee of 0.15% of
the Purchase Price of the aggregate number of Shares purchased by the Company
pursuant to the Offer. The Dealer Manager will also be reimbursed by the
Company for its reasonable out-of-pocket expenses and will be indemnified
against certain liabilities and expenses, including liabilities under the
federal securities laws, in connection with the Offer.
The Dealer Manager has rendered, is currently rendering and is expected to
continue to render various investment banking and other advisory services to
the Company. It has received, and will continue to receive, customary
compensation from the Company for such services.
The Company has retained The First National Bank of Boston as Depositary and
Georgeson & Company Inc. as Information Agent in connection with the Offer. The
Information Agent may contact stockholders by mail, telephone, telex, telegraph
and personal interviews, and may request brokers, dealers and other nominee
stockholders to forward materials relating to the Offer to beneficial owners.
The Depositary and the Information Agent will receive reasonable and customary
compensation for their services and will also be reimbursed for certain out-of-
pocket expenses. The Company has agreed to indemnify the Depositary and the
Information Agent against certain liabilities, including certain liabilities
under the federal securities laws, in connection with the Offer. Neither the
Information Agent nor the Depositary has been retained to make solicitations or
recommendations in connection with the Offer.
The Company will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other than
the fee of the Dealer Manager). The Company will, upon request, reimburse
brokers, dealers, commercial banks and trust companies for reasonable and
customary handling and mailing expenses incurred by them in forwarding
materials relating to the Offer to their customers.
16. MISCELLANEOUS.
The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Commission relating to its business, financial condition
and other matters. Certain information as of particular dates concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is filed with the Commission. The
Company has also filed an Issuer Tender Offer Statement on Schedule 13E-4 with
the Commission, which includes certain additional information relating to the
Offer. Such reports, as well as such other material, may be inspected and
copies may be obtained at the Commission's public reference facilities at 450
Fifth Street, N.W., Washington, D.C., and should also be available for
inspection and copying at the regional offices of the Commission located at 7
World Trade Center, 13th Floor, New York, New York 10048, and Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material may be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's Public Reference Section at
450 Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy statements
and other information also should be available for inspection at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York and the
Pacific Stock Exchange, 301 Pine Street, San Francisco, California. The
Company's Schedule 13E-4 may not be available at the Commission's regional
offices.
The Offer is being made to all holders of Shares. The Company is not aware of
any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company
will make a good faith effort to comply with such statute. If, after such good
faith effort, the Company cannot comply with such statute, the Offer will not
be made to, nor will tenders be accepted from or on behalf of, holders of
Shares in such state. In those jurisdictions whose securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Company by the Dealer Manager
or one or more registered brokers or dealers licensed under the laws of such
jurisdictions.
VARIAN ASSOCIATES, INC.
August 23, 1995
22
<PAGE>
SCHEDULE A
CERTAIN TRANSACTIONS INVOLVING SHARES
The Company has made the following purchases of Shares during the 40
business-day period preceding the commencement of the Offer on the dates, in
the amounts and at the prices indicated below pursuant to its stock repurchase
program. All such purchases were effected on the NYSE.
<TABLE>
<CAPTION>
AVERAGE
PRICE
DATE NO. OF SHARES PER SHARE
---- ------------- ---------
<S> <C> <C>
6/27/95 20,600 $53.3647
6/28/95 20,600 53.7846
6/29/95 37,300 53.6750
6/30/95 23,400 55.0499
</TABLE>
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates for Shares should be sent or delivered by each
stockholder of the Company or his or her broker, dealer, bank or trust company
to the Depositary at one of its addresses set forth below.
The Depositary:
THE FIRST NATIONAL BANK OF BOSTON
By Mail: By Facsimile By Overnight Courier:
Transmission:
P.O. Box 1889 Shareholder Services Division
Mail Stop 45-01-19 (617) 575-2233 150 Royall Street, Mail Stop
Boston, Massachusetts 45-01-19
02105 Canton, Massachusetts 02021
By Hand: Confirm by By Hand:
Telephone:
100 Federal Street, Floor BancBoston Trust Company of
1-B (617) 575-2700 New York
Boston, Massachusetts 55 Broadway, 3rd Floor
Attn: Receipt and Delivery New York, New York
Window
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at the respective telephone numbers and addresses
listed below. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal or other tender offer materials may be directed to the
Information Agent or the Dealer Manager, and such copies will be furnished
promptly at the Company's expense. Stockholders may also contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
The Information Agent:
[LOGO OF GEORGESON & COMPANY INC. APPEARS HERE]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect:
(212) 440-9800
ALL OTHERS CALL TOLL FREE:
1-800-223-2064
The Dealer Manager:
MORGAN STANLEY & CO.
Incorporated
1251 Avenue of the Americas
New York, New York 10020
(415) 576-2247 (call collect)
<PAGE>
ANNEX I
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): AUGUST 11, 1995
VARIAN ASSOCIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-7598 94-2359345
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
3050 HANSEN WAY
PALO ALTO, CALIFORNIA 94304-1000
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(415) 493-4000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 9, 1995, CPII Acquisition Corp., a Delaware corporation ("Buyer")
(formerly, Communications & Power Industries Holding Corporation), entered
into a Stock Sale Agreement (the "Stock Sale Agreement") with Varian
Associates, Inc., a Delaware corporation ("Registrant"), pursuant to which
Buyer agreed to purchase substantially all of Registrant's Electron Devices
business (the "Business"). The Business, one of Registrant's four core
businesses, develops, manufactures and distributes microwave tubes, power grid
tubes, microwave amplifiers, modulators and various other power supply
equipment. Buyer was formed at the direction of Leonard Green & Partners, L.P.
on behalf of its equity investment fund, Green Equity Investors II, L.P.
In order to facilitate the sale of the Business to Buyer, pursuant to the
Stock Sale Agreement, Registrant formed a new wholly owned subsidiary,
Communications & Power Industries, Inc., a Delaware corporation ("CPI"), on
June 12, 1995. On August 10, 1995, pursuant to the Stock Sale Agreement,
Registrant contributed substantially all of the U.S.-based assets of the
Business to CPI in exchange for all the authorized stock of CPI.
On August 11, 1995 (the "Closing Date"), the sale of the Business was
completed. Buyer acquired on the Closing Date all of the outstanding stock of
CPI from Registrant. Also on the Closing Date, various affiliates of CPI
acquired from affiliates of Registrant substantially all of the assets of the
Business located in foreign jurisdictions. In addition, Registrant and Buyer
entered into amendments to the Stock Sale Agreement (together with the Stock
Sale Agreement, the "Amended Agreement"), copies of which are attached hereto
as Exhibits 2.1 and 2.2 and incorporated herein by reference. Pursuant to the
Amended Agreement, among other things, Communications & Power Industries
Holding Corporation, a Delaware corporation owning all of the outstanding
stock of Buyer ("Holding"), became a party to the Amended Agreement.
In accordance with the Amended Agreement, Buyer and its affiliates paid to
Registrant and its affiliates on the Closing Date $196,200,000 (the "Purchase
Price") in cash in consideration of the sale of the stock of CPI and the
foreign-based assets of the Business. Holding, Buyer and their affiliates also
assumed as of the Closing Date certain specified liabilities of Registrant and
its affiliates related to the Business, including certain liabilities with
respect to product warranties and personal injuries associated with products
of the Business. Except as specifically provided in the Amended Agreement,
Registrant and its affiliates generally retained all liabilities of the
Business arising from the operations, activities and transactions of the
Business up through the Closing Date, including various environmental related
liabilities.
The Amended Agreement provides that the Purchase Price is subject to
adjustment for changes, among other things, in the book value of the Business
since March 31, 1995. Such an adjustment to the Purchase Price will be
determined after completion of a closing balance sheet of the Business as at
the Closing Date which will be audited by Buyer's auditors. Such closing
balance sheet must be delivered by Buyer to Registrant within 60 days of the
Closing Date (or such longer period of time as may be reasonably required). As
with any other dispute among the parties with respect to the Amended
Agreement, any unresolved dispute concerning a possible adjustment to the
Purchase Price will be subject to binding arbitration.
In the Amended Agreement, Registrant made various representations and
warranties as to itself and the Business and has agreed to indemnify Buyer for
any breaches thereof. Claims for breaches of such representations and
warranties must be brought before December 31, 1996. Registrant's maximum
indemnification obligation for such losses is an amount equal to 10% of the
Purchase Price ($19,620,000), which is subject to adjustment as discussed
above.
Except with respect to certain environmental matters, all other
indemnification obligations of Registrant under the Amended Agreement
generally have no time or dollar limitations. Such indemnification provisions
cover, among other matters, breaches of agreements and covenants of Registrant
contained in the Amended Agreement and certain other agreements, various
liabilities retained by Registrant and its affiliates with respect to the
operation of the Business through the Closing Date and liabilities arising
from certain environmental claims and matters.
2
<PAGE>
On the Closing Date, Registrant entered into various agreements with Buyer
pursuant to the Amended Agreement, including (a) a noncompetition agreement
prohibiting Registrant and its affiliates from competing with the Business for
a period of ten years; (b) subleases of certain properties both to and from
Buyer; (c) agreements relating to the purchase and sale of products; (d) an
agreement whereby Registrant will provide certain transitional services to
Buyer; and (e) agreements whereby Registrant granted to Buyer various licenses
relating to certain intellectual property of Registrant which Buyer will use
in the Business. Registrant also guaranteed certain promissory notes executed
by various management investors in favor of Holding.
On August 23, 1995, Registrant commenced an offer (the "Offer") to purchase
from its stockholders up to 3,000,000 shares of its common stock ("Shares").
Registrant will determine a single per Share price (not greater than $58 nor
less than $51 per Share) that it will pay for the Shares validly tendered
pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into
account the number of Shares so tendered and the prices specified by tendering
stockholders. Registrant will select the Purchase Price that will enable it to
purchase 3,000,000 Shares (or such lesser number of Shares as are validly
tendered at prices not greater than $58 nor less than $51 per Share) pursuant
to the Offer. Registrant will purchase all Shares validly tendered at prices
at or below the Purchase Price and not withdrawn on or prior to the expiration
date of the Offer, upon the terms and subject to the conditions of the Offer.
The Purchase Price will be paid in cash, net to the seller, with respect to
all Shares purchased. The Offer will expire on September 20, 1995 unless
extended. Registrant will use the proceeds from the sale of the Business and
cash on hand to purchase Shares in the Offer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
<TABLE>
<S> <C>
Pro Forma Condensed Consolidated Balance Sheet as at June 30,
1995.......................................................... Page F-1
Pro Forma Condensed Consolidated Statements of Earnings:
Year Ended September 30, 1994................................. Page F-2
Nine Months Ended June 30, 1995............................... Page F-3
</TABLE>
The Pro Forma Condensed Consolidated Balance Sheet of Registrant as at
June 30, 1995 reflects the financial position of Registrant after giving
effect to the disposition of the assets and assumption of the liabilities
discussed in Item 2 and assumes the disposition took place on June 30, 1995.
The Pro Forma Condensed Consolidated Statements of Earnings for the fiscal
year ended September 30, 1994 and the nine months ended June 30, 1995 assume
that the disposition occurred on October 2, 1993, and are based on the
operations of Registrant for the year ended September 30, 1994 and the nine
months ended June 30, 1995. Such pro forma financial statements also reflect
the purchase of 3,000,000 Shares pursuant to the Offer referred to in Item 2
at a purchase price of $56 per Share (the last reported sale price of the
Shares on the New York Stock Exchange on June 30, 1995).
The unaudited pro forma condensed consolidated financial statements have
been prepared by Registrant based upon assumptions deemed proper by it. The
unaudited pro forma condensed consolidated financial statements presented
herein are shown for illustrative purposes only and are not necessarily
indicative of the future financial position or future results of operations of
Registrant, or of the financial position or results of operations of
Registrant that would have actually occurred had the transaction been in
effect as of the date or for the periods presented. In addition, it should be
noted that Registrant's financial statements will reflect the disposition only
from August 11, 1995, the Closing Date.
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the historical financial statements and related
notes of Registrant.
3
<PAGE>
(c) Exhibits.
<TABLE>
<CAPTION>
NO. DESCRIPTION
--- -----------
<C> <S>
2.1 First Amendment to Stock Sale Agreement, dated as of August 11, 1995, by
and among Registrant, Holding and Buyer. (Registrant hereby agrees to
furnish supplementally to the Securities and Exchange Commission upon
request a copy of any omitted schedule, all of which are listed in
Sections 14 to 17 of the First Amendment to Stock Sale Agreement.)
2.2 Second Amendment to Stock Sale Agreement, dated as of August 11, 1995,
by and among Registrant, Holding and Buyer.
</TABLE>
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VARIAN ASSOCIATES, INC.
Date: August 23, 1995 By: /s/ Robert A. Lemos
----------------------------------
Robert A. Lemos
Vice President,
Finance
and Chief Financial Officer
5
<PAGE>
PRO FORMA FINANCIAL INFORMATION
VARIAN ASSOCIATES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
-------------------
HISTORICAL EDB (A) OTHER PRO FORMA
---------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents....... $ 90,120 $ 9,437 $ 37,637(b) $ 118,320
Accounts receivable............. 378,462 40,258 338,204
Inventories..................... 225,932 44,305 181,627
Other current assets............ 75,199 11,998 10,719(c) 73,920
---------- --------- -------- ---------
TOTAL CURRENT ASSETS........... 769,713 105,998 48,356 712,071
Property, Plant, and Equipment... 602,524 185,708 416,816
Accumulated depreciation and
amortization.................... (364,334) (129,113) (235,221)
---------- --------- ---------
Net Property, Plant and
Equipment..................... 238,190 56,595 181,595
Other Assets.................... 61,181 2,289 58,892
---------- --------- -------- ---------
TOTAL ASSETS................... $1,069,084 $ 164,882 $ 48,356 $ 952,558
========== ========= ======== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes Payable................... $ 32,968 $ -- $ $ 32,968
Accounts Payable--Trade......... 83,493 6,599 3,286(d) 80,180
Accrued expenses................ 266,175 22,260 48,345(d) 292,260
Product warranty................ 48,349 4,491 43,858
Advance payments from customers. 61,264 3,764 57,500
---------- --------- -------- ---------
TOTAL CURRENT LIABILITIES...... 492,249 37,114 51,631 506,766
Long-Term Debt................... 60,329 -- 60,329
Deferred Taxes................... 20,773 4,961 14,961(d) 30,773
---------- --------- -------- ---------
TOTAL LIABILITIES............... 573,351 42,075 66,592 597,868
TOTAL STOCKHOLDERS' EQUITY....... 495,733 122,807 (18,236) 354,690
---------- --------- -------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY........... $1,069,084 $ 164,882 $ 48,356 $ 952,558
========== ========= ======== =========
</TABLE>
--------
(a) To eliminate the assets and liabilities included in the balance sheet of
the Company's Electron Devices business ("EDB") as of June 30, 1995.
(b) To reflect the $196.2 million net proceeds from the sale of EDB, the
$168.0 million purchase of 3,000,000 shares of the Company's common stock
pursuant to the Company's tender offer at a purchase price of $56.00 per
share (the last reported sale price of the Company's common stock on the
New York Stock Exchange on June 30, 1995), and the retention of $9.4
million of cash held by EDB.
(c) To reflect deferred tax asset retained by the Company.
(d) To reflect transaction costs, liabilities retained by the Company, and
income tax liabilities related to the transaction.
F-1
<PAGE>
PRO FORMA FINANCIAL INFORMATION
VARIAN ASSOCIATES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE YEAR ENDED
SEPTEMBER 30, 1994
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
----------------
HISTORICAL EDB (A) OTHER PRO FORMA
---------- -------- ------- ----------
<S> <C> <C> <C> <C>
SALES............................... $1,552,477 $246,890 $ $1,305,587
---------- -------- ------- ----------
OPERATING COSTS AND EXPENSES
Cost of sales...................... 1,031,956 186,996 844,960
Research and development........... 81,326 7,619 73,707
Marketing.......................... 187,332 19,476 167,856
General and administrative......... 121,873 17,380 3,485(b) 107,978
---------- -------- ------- ----------
Total operating costs and expenses. 1,422,487 231,471 3,485 1,194,501
---------- -------- ------- ----------
OPERATING EARNINGS.................. 129,990 15,419 (3,485) 111,086
Interest expense, net.............. 1,992 1,992
---------- -------- ------- ----------
EARNINGS BEFORE TAXES............... 127,998 15,419 (3,485) 109,094
Taxes on Earnings.................. 48,640 5,859 (1,324)(b) 41,457
---------- -------- ------- ----------
NET EARNINGS........................ $ 79,358 $ 9,560 $(2,161) $ 67,637
========== ======== ======= ==========
Average Shares Outstanding Including
Common Stock Equivalents........... 35,676 (3000)(c) 32,676
EARNINGS PER SHARE--FULLY DILUTED... $2.22 $2.07
</TABLE>
--------
(a) To eliminate the profit and loss of EDB for the entire period.
(b) To reflect costs that would not have been eliminated due to the sale of
EDB.
(c) To reflect the purchase of shares of the Company's common stock pursuant
to its tender offer as if the transaction had been completed at the
beginning of the period.
F-2
<PAGE>
PRO FORMA FINANCIAL INFORMATION
VARIAN ASSOCIATES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS
ENDED JUNE 30, 1995
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
----------------
HISTORICAL EDB (A) OTHER PRO FORMA
---------- -------- ------- ----------
<S> <C> <C> <C> <C>
SALES............................... $1,350,403 $192,304 $ $1,158,099
---------- -------- ------- ----------
OPERATING COSTS AND EXPENSES
Cost of sales...................... 903,926 142,959 760,967
Research and development........... 72,470 6,366 66,104
Marketing.......................... 153,950 14,834 139,116
General and administrative......... 87,344 16,500 2,640(b) 73,484
---------- -------- ------- ----------
Total operating costs and expenses. 1,217,690 180,659 2,640 1,039,671
---------- -------- ------- ----------
OPERATING EARNINGS.................. 132,713 11,645 (2,640) 118,428
Interest expense, net.............. 2,258 2,258
---------- -------- ------- ----------
EARNINGS BEFORE TAXES............... 130,455 11,645 (2,640) 116,170
Taxes on Earnings.................. 48,270 4,309 (977)(b) 42,984
---------- -------- ------- ----------
NET EARNINGS........................ $ 82,185 $ 7,336 $(1,663) $ 73,186
========== ======== ======= ==========
Average Shares Outstanding Including
Common Stock Equivalents........... 35,480 (3,000)(c) 32,480
EARNINGS PER SHARE--FULLY DILUTED... $2.32 $2.25
</TABLE>
--------
(a) To eliminate the profit and loss of EDB for the entire period.
(b) To reflect costs that would not have been eliminated due to the sale of
EDB.
(c) To reflect the purchase of shares of the Company's common stock pursuant
to its tender offer as if the transaction had been completed at the
beginning of the period.
F-3
<PAGE>
ANNEX II
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 June 30, 1995
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
VARIAN ASSOCIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-7598 94-2359345
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION OR FILE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
3050 HANSEN WAY
PALO ALTO, CALIFORNIA 94304-1000
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(415) 493-4000
(TELEPHONE NUMBER, INCLUDING AREA CODE)
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 that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Number of shares of Common Stock, par value $1 per share, outstanding as of
the close of business on July 28, 1995: 33,859,000 shares.
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF EARNINGS
UNAUDITED
<TABLE>
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
---------------------- -------------------------
JUNE 30, JULY 1, JUNE 30, JULY 1,
1995 1994 1995 1994
---------------------- ------------ ------------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
SALES......................... $ 458,907 $ 393,054 $ 1,350,403 $ 1,111,338
---------- ---------- ------------ ------------
OPERATING COSTS AND EXPENSES
Cost of sales............... 303,242 262,599 903,926 747,006
Research and development.... 26,421 19,513 72,470 59,418
Marketing................... 54,520 48,225 153,950 136,058
General and administrative.. 23,593 27,530 87,344 83,150
---------- ---------- ------------ ------------
Total operating costs and
expenses................... 407,776 357,867 1,217,690 1,025,632
---------- ---------- ------------ ------------
OPERATING EARNINGS............ 51,131 35,187 132,713 85,706
Interest expense, net....... 748 (991) 2,258 1,136
---------- ---------- ------------ ------------
EARNINGS BEFORE TAXES......... 50,383 36,178 130,455 84,570
Taxes on Earnings........... 18,640 13,750 48,270 32,140
---------- ---------- ------------ ------------
NET EARNINGS.................. $ 31,743 $ 22,428 $ 82,185 $ 52,430
========== ========== ============ ============
Average Shares Outstanding
Including Common Stock
Equivalents.................. 35,431 35,528 35,480 35,703
========== ========== ============ ============
EARNINGS PER SHARE--FULLY
DILUTED...................... $ 0.90 $ 0.63 $ 2.32 $ 1.47
========== ========== ============ ============
Dividends Declared Per Share.. $ 0.07 $ 0.06 $ 0.20 $ 0.17
Order Backlog................. $ 764,000 $ 803,500
</TABLE>
See accompanying notes to the consolidated financial statements.
2
<PAGE>
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1995 1994
---------- -------------
(DOLLARS IN THOUSANDS
EXCEPT PAR VALUES)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents........................... $ 90,120 $ 78,872
Accounts receivable................................. 378,462 338,448
Inventories
Raw materials and parts............................ 131,578 104,212
Work in process.................................... 65,763 60,296
Finished goods..................................... 28,591 14,668
---------- ---------
Total Inventories.................................. 225,932 179,176
Other current assets................................ 75,199 72,243
---------- ---------
Total Current Assets............................... 769,713 668,739
Property, Plant, and Equipment....................... 602,524 574,402
Accumulated depreciation and amortization............ (364,334) (339,082)
---------- ---------
Net Property, Plant, and Equipment................. 238,190 235,320
Other Assets......................................... 61,181 58,364
---------- ---------
Total Assets....................................... $1,069,084 $ 962,423
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Notes payable...................................... $ 32,968 $ 4,816
Accounts payable--trade............................ 83,493 78,094
Accrued expenses................................... 266,175 248,751
Product warranty................................... 48,349 41,682
Advance payments from customers.................... 61,264 58,440
---------- ---------
Total Current Liabilities........................ 492,249 431,783
Long-Term Debt....................................... 60,329 60,399
Deferred Taxes....................................... 20,773 20,788
---------- ---------
Total Liabilities................................ 573,351 512,970
---------- ---------
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 33,833,000 shares at June 30, 1995
and 33,979,000 shares at September 30, 1994....... 33,833 33,979
Retained earnings.................................. 461,900 415,474
---------- ---------
Total Stockholders' Equity....................... 495,733 449,453
---------- ---------
Total Liabilities and Stockholders' Equity....... $1,069,084 $ 962,423
========== =========
</TABLE>
See accompanying notes to the consolidated financial statements.
3
<PAGE>
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
NINE MONTHS ENDED
------------------------
JUNE 30, JULY 1,
1995 1994
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OPERATING ACTIVITIES
Net Cash Provided by Operating Activities........... $ 68,659 $ 56,801
INVESTING ACTIVITIES
Purchase of property, plant, and equipment............ (40,551) (41,001)
Purchase of businesses, net of cash acquired.......... (12,705) 250
Other, net............................................ 6,313 5,064
----------- -----------
Net Cash Used by Investing Activities............... (46,943) (35,687)
FINANCING ACTIVITIES
Net borrowings on short-term obligations.............. 28,152 15,996
Proceeds from common stock issued to employees........ 22,582 18,984
Purchase of common stock.............................. (51,719) (46,029)
Other, net............................................ (6,838) (5,902)
----------- -----------
Net Cash Used by Financing Activities............... (7,823) (16,951)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH.............. (2,645) (664)
----------- -----------
Net Increase in Cash and Cash Equivalents........... 11,248 3,499
Cash and Cash Equivalents at Beginning of Period.... 78,872 73,307
----------- -----------
Cash and Cash Equivalents at End of Period.......... $ 90,120 $ 76,806
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
NOTES TO THE 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 third quarter and nine months ended June 30,
1995, and July 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 June 30, 1995, $49.0 at September
30, 1994, $51.4 at July 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 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 June 30, 1995, the Company had forward exchange
contracts with maturities of twelve months or less to sell foreign currencies
totaling $69.1 million ($0.5 million of Finnish marks, $11.6 million of
British pounds, $1.5 million of Canadian dollars, $16.3 million of Deutsche
marks, $15.7 million of French francs, $6.3 million of Italian lira, $14.1
million of Japanese yen, $2.2 million of Swedish krona and $0.9 million of
Swiss francs,) and to buy foreign currencies totaling $15.0 million ( $10.8
million of British pounds and $4.2 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.
5
<PAGE>
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
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. 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 June 12, 1995, the Company announced an agreement with Leonard
Green & Partners, L.P., (LGP) under which the Company will sell its Electron
Devices business to a company formed at the direction of LGP for approximately
$200 million in cash, plus the assumption of certain liabilities. The
transaction is subject to certain customary conditions and the arrangement of
financing, and is expected to close in August 1995.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On July 20, Varian reported the highest third-quarter earnings in the
Company's history. Net profits rose to $31.8 million, 42% above last year's
$22.4 million. Earnings per share were $0.90 compared to $0.63 in the third
quarter of 1994. Orders were $417 million versus $441 million in the year-ago
period. For the quarter, order receipts rose 16% from the prior year when
adjusted for the effect of a distribution agreement with Tokyo Electron Ltd.
(TEL) which ended at the close of fiscal 1994. Third quarter sales climbed to
$459 million, growing 17% over the $393 million of a year ago. Backlog of $764
million was down 5% from $804 million in the 1994 quarter. For the first nine
months of fiscal 1995, orders were $1.35 billion versus 1994's $1.29 billion,
an increase of 19% on a TEL-adjusted basis. Sales for the period reached $1.35
billion compared to last year's $1.11 billion. Earnings for the nine months
were $82.2 million ($2.32/share) up 57% over the prior year's $52.4 million
($1.47/share). The higher results were due largely to continued strong
performances by the Company's Semiconductor Equipment and Health Care Systems
businesses.
Orders for Varian's Health Care Systems business rose 6% year-to-date. Sales
for the nine months were up 15%, and operating margins improved. Backlog
declined 5% from 1994's level. The X-ray Tube Products side of this business
continued to experience strong demand for its high-end products, with
particularly good interest from the Japanese market.
Orders for the Company's Instruments business grew 3% during the nine-months
on improved market conditions in the U.S. and the Far East, driven by strong
demand for vacuum products. Sales were slightly higher for the year to date,
reaching $276 million, a 3% increase over the year-ago period. Backlog
declined 4% from the previous quarter. Instrument markets worldwide continue
to be extremely competitive. Operating margins for this business declined from
the year-ago period.
Nine-month orders for Varian's Semiconductor Equipment business rose 54%
over the year-ago period, after the previously noted adjustment for the
dissolved Tokyo Electron Ltd. distribution agreement. Sales grew 49% over the
1994 level. Backlog rose 53% over the prior year on a TEL-adjusted basis.
Operating margins continue in the double-digit range, reaching twice the level
of those achieved in the first nine months of the prior year. The strong year-
to-date demand for the Company's chip-making equipment was worldwide, with
particularly heavy orders from Korea and other Pacific Rim nations. Interest
in Varian's ion implantation products was especially strong, particularly for
leading edge, medium-current systems and the new VIIsion high-current system.
Varian's Electron Devices business posted higher orders and sales, up 4% and
9%, respectively, over the year-ago period while backlog rose 2%. Operating
margins for this business improved modestly during the quarter.
FINANCIAL CONDITION
The Company's financial condition remained strong during the first nine
months of fiscal 1995. Operating activities provided cash of $68.7 million in
the first nine months of fiscal 1995 compared to $56.8 million in the same
period last year. Investing activities used $46.9 million in the first nine
months of fiscal 1995, $12.7 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 $35.7 million, mainly
for the purchase of property, plant and equipment. Financing activities used
$7.8 million and $17.0 million during the first nine months of 1995 and 1994,
respectively. Total debt as a percentage of total capital increased to 15.8%
at the end of the third quarter of fiscal 1995 as compared with 12.7% at
fiscal year end. The ratio of current assets to current liabilities increased
slightly to 1.56 to 1 at June 30, 1995, from 1.55 to 1 at fiscal year end,
1994. The Company has available $50 million in unused committed lines of
credit.
7
<PAGE>
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.
On June 12, 1995, the Company announced an agreement with Leonard Green &
Partners, L.P., (LGP) under which the Company will sell its Electron Devices
business to a company formed at the direction of LGP for approximately $200
million in cash, plus the assumption of certain liabilities. The transaction
is subject to certain customary conditions and the arrangement of financing,
and is expected to close in August 1995. The Company anticipates that most of
the proceeds from the sale will be used to repurchase outstanding shares of
stock.
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.
8
<PAGE>
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 June 30, 1995, and the related consolidated
statements of earnings for the quarters and nine months ended June 30, 1995
and July 1, 1994, and the condensed consolidated statements of cash flows for
the nine months ended June 30, 1995 and July 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
July 19, 1995
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
<TABLE>
<C> <S>
Exhibit 10.5 Registrant's Supplemental Retirement Plan, as amended and
effective as of July 1, 1994.
Exhibit 11 Computation of Earnings Per Share.
Exhibit 15 Letter Regarding Unaudited Interim Financial Information.
Exhibit 27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
A report on Form 8-K was filed on June 13, 1995, regarding the
Registrant's agreement with Leonard Green & Partners, L.P., (LGP) under
which the Company agreed to sell its Electron Devices business to a company
formed at the direction of LGP.
10
<PAGE>
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.
/s/ Allen K. Jones
_____________________________________
Allen K. Jones
Vice President and Controller
(Chief Accounting Officer)
August 8, 1995
11
<PAGE>
EXHIBIT a.2
LETTER OF TRANSMITTAL
To Accompany Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Varian Associates, Inc.
Tendered Pursuant to the Offer to Purchase
Dated August 23, 1995
--------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 20, 1995,
UNLESS THE OFFER IS EXTENDED.
--------------------------------------------------------------------------------
To: THE FIRST NATIONAL BANK OF BOSTON, Depositary
By Mail: By Facsimile By Overnight Courier:
Transmission:
P.O. Box 1889 Shareholder Services Division
Mail Stop 45-01-19 (617) 575-2233 150 Royall Street, Mail Stop
Boston, Massachusetts 45-01-19
02105
By Hand: Confirm by Canton, Massachusetts 02021
Telephone: By Hand:
100 Federal Street, Floor (617) 575-2700 BancBoston Trust Company of
1-B New York
Boston, Massachusetts 55 Broadway, 3rd Floor
Attn: Receipt and Delivery New York, New York
Window
--------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
--------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF
REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL LIST IF NECESSARY)
--------------------------------------------------------------------------------
CERTIFICATE TOTAL NUMBER NUMBER OF
NUMBER(S)* OF SHARES SHARES
REPRESENTED TENDERED**
BY
CERTIFICATE(S)*
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
TOTAL SHARES:
--------------------------------------------------------------------------------
*Need not be completed by stockholders tendering by book-entry transfer.
**Unless otherwise indicated, it will be assumed that all Shares
represented by any certificate delivered to the Depository are being
tendered. See Instruction 4.
--------------------------------------------------------------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used if certificates are to be forwarded
herewith or if delivery of Shares (as defined below) is to be made by book-
entry transfer to the Depositary's account at The Depository Trust Company
("DTC"), Midwest Securities Trust Company ("MSTC") or Philadelphia Depository
Trust Company ("PDTC") (hereinafter collectively referred to as the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase (as defined below).
Stockholders who cannot deliver their Shares and all other documents required
hereby to the Depositary by the Expiration Date (as defined in the Offer to
Purchase) must tender their Shares pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2.
Delivery of documents to the Company or to a Book-Entry Transfer Facility does
not constitute a valid delivery.
<PAGE>
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution _______________________________________________
Check Applicable Box: [_] DTC [_] MSTC [_] PDTC
Account No. _________________________________________________________________
Transaction Code No. ________________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Tendering Stockholder(s) _________________________________________
Date of Execution of Notice of Guaranteed Delivery __________________________
Name of Institution that Guaranteed Delivery ________________________________
If delivery is by book-entry transfer:
Name of Tendering Institution _______________________________________________
Account No. at [_] DTC [_] MSTC [_] PDTC
Transaction Code No. ________________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED ON PAGE 6 BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Varian Associates, Inc., a Delaware
corporation (the "Company"), the above-described shares of its Common Stock,
par value $1.00 per share (the "Shares") (including the associated preferred
stock purchase rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of August 25, 1986, as amended, between the Company and The First
National Bank of Boston, as the Rights Agent), pursuant to the Company's offer
to purchase up to 3,000,000 Shares at a price per Share hereinafter set forth,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated August 23, 1995 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer"). Unless the context
otherwise requires, all references to Shares shall include the associated
Rights.
Subject to, and effective upon, acceptance for payment of and payment for the
Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to all the Shares that are being tendered
hereby (and any and all other Shares or other securities issued or issuable in
respect thereof on or after August 23, 1995 (collectively, "Distributions"))
and constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and all
Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (a) deliver
certificates for such Shares and all Distributions, or transfer ownership of
such Shares and all Distributions on the account books maintained by any of the
Book-Entry Transfer Facilities, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
the Company, (b) present such Shares and all Distributions for registration and
2
<PAGE>
transfer on the books of the Company and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares and all
Distributions, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions and that, when and to the extent the same are
accepted for payment by the Company, the Company will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances, conditional sales agreements or other obligations
relating to the sale or transfer thereof, and the same will not be subject to
any adverse claims. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby and all Distributions.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of the undersigned, and
any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
stated in the Offer, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer, including the undersigned's representation and
warranty that (i) the undersigned has a net long position in the Shares being
tendered within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (ii) the tender of such Shares complies
with Rule 14e-4. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Offer.
The undersigned understands that the Company will determine a single per
Share price (not greater than $58 nor less than $51 per Share) (the "Purchase
Price") that it will pay for Shares validly tendered and not withdrawn pursuant
to the Offer taking into account the number of Shares so tendered and the
prices specified by tendering stockholders. The undersigned understands that
the Company will select the Purchase Price that will enable it to purchase
3,000,000 Shares (or such lesser number of Shares as are validly tendered at
prices not greater than $58 nor less than $51 per Share) pursuant to the Offer.
The undersigned understands that tenders of Shares pursuant to any one of the
procedures described in Section 2 or 3 of the Offer to Purchase and in the
instructions hereto will constitute an agreement between the undersigned and
the Company upon the terms and subject to the conditions of the Offer. The
undersigned also understands that unless the Rights are redeemed or become
separately transferable in accordance with their terms, by tendering Shares the
undersigned will also be tendering the associated Rights and that no separate
consideration will be paid for such Rights.
Unless otherwise indicated under "Special Payment Instructions," please issue
the check for the purchase price of any Shares purchased, and/or return any
Shares not tendered or not purchased, in the name(s) of the undersigned (and,
in the case of Shares tendered by book-entry transfer, by credit to the account
at the Book-Entry Transfer Facility designated above). Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the
check for the purchase price of any Shares purchased and/or any certificates
for Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the undersigned at the address shown below the undersigned's
signature(s). In the event that both "Special Payment Instructions" and
"Special Delivery Instructions" are completed, please issue the check for the
purchase price of any Shares purchased and/or return any Shares not tendered or
not purchased in the name(s) of, and mail said check and/or any certificates
to, the person(s) so indicated. The undersigned recognizes that the Company has
no obligation, pursuant to the "Special Payment Instructions," to transfer any
Shares from the name of the registered holder(s) thereof if the Company does
not accept for payment any of the Shares so tendered.
3
<PAGE>
--------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
--------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED,
THERE IS NO VALID TENDER OF SHARES.
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[_] $51.000 [_] $52.000 [_] $53.000 [_] $54.000 [_] $55.000 [_] $56.000 [_] $57.000
[_] $51.125 [_] $52.125 [_] $53.125 [_] $54.125 [_] $55.125 [_] $56.125 [_] $57.125
[_] $51.250 [_] $52.250 [_] $53.250 [_] $54.250 [_] $55.250 [_] $56.250 [_] $57.250
[_] $51.375 [_] $52.375 [_] $53.375 [_] $54.375 [_] $55.375 [_] $56.375 [_] $57.375
[_] $51.500 [_] $52.500 [_] $53.500 [_] $54.500 [_] $55.500 [_] $56.500 [_] $57.500
[_] $51.625 [_] $52.625 [_] $53.625 [_] $54.625 [_] $55.625 [_] $56.625 [_] $57.625
[_] $51.750 [_] $52.750 [_] $53.750 [_] $54.750 [_] $55.750 [_] $56.750 [_] $57.750
[_] $51.875 [_] $52.875 [_] $53.875 [_] $54.875 [_] $55.875 [_] $56.875 [_] $57.875
[_] $58.000
</TABLE>
--------------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 9)
This section is to be completed ONLY if Shares are being tendered by or on
behalf of a person owning beneficially an aggregate of fewer than 100 Shares
as of the close of business on August 22, 1995.
The undersigned either (check one box):
[_] was the beneficial owner of an aggregate of fewer than 100 Shares
(including Shares held in the Reinvestment Plan (as such term is defined
in the Offer to Purchase)) as of the close of business on August 22,
1995, all of which are being tendered, or
[_] is a broker, dealer, commercial bank, trust company or other nominee that
(i) is tendering, for the beneficial owners thereof, Shares with respect
to which it is the record owner, and (ii) believes, based upon
representations made to it by each such beneficial owner, that such
beneficial owner owned beneficially an aggregate of fewer than 100 Shares
(including Shares held in the Reinvestment Plan) as of the close of
business on August 22, 1995 and is tendering all of such Shares.
--------------------------------------------------------------------------------
4
<PAGE>
--------------------------------------------------------------------------------
DIVIDEND REINVESTMENT AND CASH STOCK PURCHASE PLAN SHARES
(SEE INSTRUCTION 13)
This section is to be completed ONLY if Shares held in the Reinvestment
Plan are to be tendered.
[_] By checking this box, the undersigned represents that the undersigned is
a participant in the Reinvestment Plan and hereby tenders the following
number of Shares held in the Reinvestment Plan account of the
undersigned:
________ Shares*
* The undersigned understands and agrees that all Shares held in the
Reinvestment Plan account(s) of the undersigned will be tendered if the
above box is checked and the space above is left blank.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 6, 7 AND 8) (SEE INSTRUCTIONS 6, 7 AND 8)
To be completed ONLY if the check To be completed ONLY if the check
for the purchase price of Shares for the purchase price of Shares
purchased and/or certificates for purchased and/or certificates for
Shares not tendered or not Shares not tendered or not
purchased are to be issued in the purchased are to be mailed to
name of someone other than the someone other than the undersigned
undersigned. or to the undersigned at an
address other than that shown
Issue [_] check and/or below the undersigned's
[_] certificate(s) to: signature(s).
Name Mail [_] check and/or
------------------------------ [_] certificates to:
------------------------------ Name
(Please Print) ------------------------------
Address ------------------------------
--------------------------- (Please Print)
--------------------------- Address
(Include Zip Code) ---------------------------
---------------------------
----------------------------------- (Include Zip Code)
(Taxpayer Identification or Social
Security No.)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
CONDITIONAL TENDER
A tendering stockholder may condition his or her tender of Shares upon the
purchase by the Company of a specified minimum number of the Shares tendered
hereby, all as described in the Offer to Purchase, particularly in Section 6
thereof. Unless at least such minimum number of Shares is purchased by the
Company pursuant to the terms of the Offer, none of the Shares tendered
hereby will be purchased. It is the tendering stockholder's responsibility
to calculate such minimum number of Shares, and each stockholder is urged to
consult his or her own tax advisor. Unless this box has been completed and a
minimum specified, the tender will be deemed unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
________ Shares
--------------------------------------------------------------------------------
5
<PAGE>
--------------------------------------------------------------------------------
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON PAGE 11 HEREOF)
-----------------------------------------------------------------------
Signature(s) of Owner(s)
-----------------------------------------------------------------------
Dated _______________, 1995
Name(s)
---------------------------------------------------------------------
-----------------------------------------------------------------------------
(Please Print)
-----------------------------------------------------------------------------
Capacity (full title)
-------------------------------------------------------
Address
---------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone No.
-------------------------------------------------
Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, please set forth full title and see
Instruction 6.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Name of Firm
----------------------------------------------------------------
Authorized Signature
--------------------------------------------------------
Dated _______________, 1995
--------------------------------------------------------------------------------
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is a
member of a registered national securities exchange or the National Association
of Securities Dealers, Inc., or by a commercial bank or trust company having an
office or correspondent in the United States which is a participant in an
approved Signature Guarantee Medallion Program (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed (a) if this
Letter of Transmittal is signed by the registered holder(s) of the Shares
(which term, for purposes of this document, shall include any participant in
one of the Book-Entry Transfer Facilities whose name appears on a security
position listing as the owner of Shares) tendered herewith and such holder(s)
have not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal or (b)
if such Shares are tendered for the account of an Eligible Institution. See
Instruction 6.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of Transmittal
is to be used either if certificates are to be forwarded herewith or if
delivery of Shares is to be made by book-entry transfer pursuant to the
procedures set forth in Section 3 of the Offer to Purchase. Certificates for
all physically delivered Shares, or a confirmation of a book-entry transfer
into the Depositary's account at one of the Book-Entry Transfer Facilities of
all Shares delivered electronically, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the front page of this Letter of Transmittal
on or prior to the Expiration Date (as defined in the Offer to Purchase).
Stockholders who cannot deliver their Shares and all other required documents
to the Depositary on or prior to the Expiration Date must tender their Shares
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by
or through an Eligible Institution, (b) a properly completed and duly executed
Notice of Guaranteed Delivery substantially in the form provided by the Company
(with any required signature guarantees) must be received by the Depositary on
or prior to the Expiration Date and (c) the certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-entry Transfer Facilities of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or facsimile thereof) and any other documents required
by this Letter of Transmittal must be received by the Depositary within three
New York Stock Exchange, Inc. trading days after the date of execution of such
Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to
Purchase.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING STOCKHOLDER. IF CERTIFICATES FOR SHARES ARE
SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
IS RECOMMENDED.
Except as specifically permitted by Section 6 of the Offer to Purchase, no
alternative or contingent tenders will be accepted. Fractional Shares will be
purchased, unless proration of tendered Shares is required (in which case only
fractional Shares held by participants in the Reinvestment Plan (as such term
is defined in the Offer to Purchase) will be purchased). See Section 1 of the
Offer to Purchase. By executing this Letter of Transmittal (or a facsimile
thereof), the tendering stockholder waives any right to receive any notice of
the acceptance for payment of the Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box entitled "Number of Shares Tendered." In
such case, a new certificate for the remainder of the Shares represented by the
old certificate will be sent to the person(s) signing
7
<PAGE>
this Letter of Transmittal, unless otherwise provided in the "Special Payment
Instructions" or "Special Delivery Instructions" boxes on this Letter of
Transmittal, as promptly as practicable following the expiration or termination
of the Offer. All Shares represented by certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be
validly tendered, the stockholder must check the box indicating the price per
Share at which he or she is tendering Shares under "Price (In Dollars) Per
Share at Which Shares Are Being Tendered" on this Letter of Transmittal. Only
one box may be checked. If more than one box is checked or if no box is
checked, there is no valid tender of Shares. A stockholder wishing to tender
portions of his or her Share holdings at different prices must complete a
separate Letter of Transmittal for each price at which he or she wishes to
tender each such portion of his or her Shares. The same Shares cannot be
tendered (unless previously validly withdrawn as provided in Section 4 of the
Offer to Purchase) at more than one price.
6. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
hereby, the signature(s) must correspond with the name(s) as written on the
face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares hereby is held of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the Purchase Price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
If this Letter of Transmittal is signed by a person other than the registered
holder(s) of the Shares tendered hereby, certificates must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name(s) of the registered holder(s) appear(s) on the certificates for such
Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Company of the authority of such person so to act must be submitted.
7. STOCK TRANSFER TAXES. The Company will pay or cause to be paid any stock
transfer taxes with respect to the sale and transfer of any Shares to it or its
order pursuant to the Offer. If, however, payment of the purchase price is to
be made to, or Shares not tendered or not purchased are to be registered in the
name of, any person other than the registered holder(s), or if tendered Shares
are registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s), such other person or otherwise) payable on account
of the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted. See Section 5 of the Offer to Purchase. EXCEPT AS PROVIDED IN THIS
INSTRUCTION 7, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE
CERTIFICATES REPRESENTING SHARES TENDERED HEREBY.
8. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase
price of any Shares purchased is to be issued in the name of, and/or any Shares
not tendered or not purchased are to be returned
8
<PAGE>
to, a person other than the person(s) signing this Letter of Transmittal or if
the check and/or any certificates for Shares not tendered or not purchased are
to be mailed to someone other than the person(s) signing this Letter of
Transmittal or to an address other than that shown above in the box captioned
"Description of Shares Tendered," then the boxes captioned "Special Payment
Instructions" and/or "Special Delivery Instructions" on this Letter of
Transmittal should be completed. Stockholders tendering Shares by book-entry
transfer will have any Shares not accepted for payment returned by crediting
the account maintained by such stockholder at the Book-Entry Transfer Facility
from which such transfer was made.
9. ODD LOTS. As described in the Offer to Purchase, if fewer than all Shares
validly tendered at or below the Purchase Price and not withdrawn on or prior
to the Expiration Date are to be purchased, the Shares purchased first will
consist of all Shares tendered by any stockholder who owned beneficially an
aggregate of fewer than 100 Shares (including Shares held in the Reinvestment
Plan) as of the close of business on August 22, 1995 who validly and
unconditionally tendered all such Shares at or below the Purchase Price.
Partial or conditional tenders of Shares will not qualify for this preference.
This preference will not be available unless the box captioned "Odd Lots" in
this Letter of Transmittal and the Notice of Guaranteed Delivery, if any, is
completed.
10. SUBSTITUTE FORM W-9 AND FORM W-8. The tendering stockholder is required
to provide the Depositary with either a correct Taxpayer Identification Number
("TIN") on Substitute Form W-9, which is provided under "Important Tax
Information" below, or a properly completed Form W-8. Failure to provide the
information on either Substitute Form W-9 or Form W-8 may subject the tendering
stockholder to 31% federal income tax backup withholding on the payment of the
Purchase Price. The box in Part 2 of Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a number or
intends to apply for a number in the near future. If the box in Part 2 is
checked and the Depositary is not provided with a TIN by the time of payment,
the Depositary will withhold 31% on all payments of the Purchase Price
thereafter until a TIN is provided to the Depositary.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Manager
at their respective telephone numbers and addresses listed below. Requests for
additional copies of the Offer to Purchase, this Letter of Transmittal or other
tender offer materials may be directed to the Information Agent or the Dealer
Manager and such copies will be furnished promptly at the Company's expense.
Stockholders may also contact their local broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
12. IRREGULARITIES. All questions as to the Purchase Price, the form of
documents and the validity, eligibility (including time of receipt) and
acceptance of any tender of Shares will be determined by the Company, in its
sole discretion, and its determination shall be final and binding. The Company
reserves the absolute right to reject any or all tenders of Shares that it
determines are not in proper form or the acceptance for payment of or payment
for Shares that may, in the opinion of the Company's counsel, be unlawful. The
Company also reserves the absolute right to waive any of the conditions to the
Offer or any defect or irregularity in any tender of Shares and the Company's
interpretation of the terms and conditions of the Offer (including these
instructions) shall be final and binding. Unless waived, any defects or
irregularities in connection with tenders must be cured within such time as the
Company shall determine. None of the Company, the Dealer Manager, the
Depositary, the Information Agent or any other person shall be under any duty
to give notice of any defect or irregularity in tenders, nor shall any of them
incur any liability for failure to give any such notice. Tenders will not be
deemed to have been made until all defects and irregularities have been cured
or waived.
13. REINVESTMENT PLAN. If a tendering stockholder desires to have tendered
pursuant to the Offer Shares which such stockholder has accumulated through
August 22, 1995 under the Reinvestment Plan, the box captioned "Dividend
Reinvestment and Cash Stock Purchase Plan Shares" should be completed. A
participant in the Reinvestment Plan may complete such box on only one Letter
of Transmittal submitted by such participant. If a participant submits more
than one Letter of Transmittal and completes such box on
9
<PAGE>
more than one Letter of Transmittal, the participant will be deemed to have
elected to tender all Shares which such participant has accumulated under the
Reinvestment Plan through August 22, 1995 at the lowest of the prices specified
in such Letters of Transmittal.
If a stockholder authorizes a tender of his or her Shares held in the
Reinvestment Plan, all such Shares held in such stockholder's Reinvestment Plan
account(s), including fractional Shares, will be tendered, unless otherwise
specified in the appropriate space in the box captioned "Dividend Reinvestment
and Cash Stock Purchase Plan Shares."
In the event that the box captioned "Dividend Reinvestment and Cash Stock
Purchase Plan Shares" is not completed, no Shares held in the tendering
stockholder's Reinvestment Plan account will be tendered.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY THEREOF) TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE EXPIRATION DATE
(AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
either such stockholder's correct TIN on Substitute Form W-9 below or a
properly completed Form W-8. If such stockholder is an individual, the TIN is
his or her social security number. For businesses and other entities, the
number is the employer identification number. If the Depositary is not provided
with the correct TIN or properly completed Form W-8, the stockholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding. The Form W-8 can be
obtained from the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If federal income tax backup withholding applies, the Depositary is required
to withhold 31% of any payments made to the stockholder. Backup withholding is
not an additional tax. Rather, the federal income tax liability of persons
subject to federal income tax backup withholding will be reduced by the amount
of the tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on payments that are made to a stockholder with
respect to Shares purchased pursuant to the Offer, the stockholder is required
to notify the Depositary of his or her correct TIN by completing the Substitute
Form W-9 on page 11 hereof certifying that the TIN provided on Substitute Form
W-9 is correct and that (1) the stockholder has not been notified by the
Internal Revenue Service that he or she is subject to federal income tax backup
withholding as a result of failure to report all interest or dividends or (2)
the Internal Revenue Service has notified the stockholder that he or she is no
longer subject to federal income tax backup withholding. Foreign stockholders
must submit a properly completed Form W-8 in order to avoid the applicable
backup withholding; provided, however, that backup withholding will not apply
to foreign stockholders subject to 30% (or lower treaty rate) withholding on
gross payments received pursuant to the Offer.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security number
or employer identification number of the registered owner of the Shares. If the
Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to
report.
10
<PAGE>
PAYER'S NAME: THE FIRST NATIONAL BANK OF BOSTON
--------------------------------------------------------------------------------
SUBSTITUTE PART 1-PLEASE PROVIDE YOUR TIN _________________________
FORM W-9 TIN IN THE BOX AT RIGHT Social Security Number or
AND CERTIFY BY SIGNING AND Employer Identification Number
DATING BELOW.
-----------------------------
DEPARTMENT OF NAME (Please Print)
THE TREASURY
----------------------------- PART 2
INTERNAL REVENUE ADDRESS Awaiting
SERVICE TIN [_]
-----------------------------
CITY STATE ZIP CODE
PAYER'S REQUEST
FOR TAXPAYER ------------------------------------------------------------
IDENTIFICATION Part 3--CERTIFICATION-UNDER THE PENALTIES OF PERJURY, I
NUMBER (TIN) AND CERTIFY THAT (1) the number shown on this form is my
CERTIFICATION correct taxpayer identification number (or a TIN has not
been issued to me but I have mailed or delivered an
application to receive a TIN or intend to do so in the near
future), (2) I am not subject to backup withholding either
because I have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup withholding
as a result of a failure to report all interest or
dividends or the IRS has notified me that I am no longer
subject to backup withholding and (3) all other information
provided on this form is true, correct and complete.
SIGNATURE ___________________________________ DATE ________
You must cross out item (2) above if you have been notified
by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends
on your tax return.
--------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE
THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2 OF THE
SUBSTITUTE FORM W-9.
--------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all payments of the purchase price made to me
thereafter will be withheld until I provide a number.
Signature _____________________________ Date: ____________, 1995
--------------------------------------------------------------------------------
11
<PAGE>
The Information Agent:
[LOGO OF GEORGESON & COMPANY INC. APPEARS HERE]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect:
(212) 440-9800
ALL OTHERS CALL TOLL FREE:
1-800-223-2064
The Dealer Manager:
MORGAN STANLEY & CO.
Incorporated
1251 Avenue of the Americas
New York, New York 10020
(415) 576-2247 (call collect)
12
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER
ON SUBSTITUTE FORM W-9
SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.
Purpose of Form.--A person who is required to file an information return
with the IRS must obtain your correct TIN to report income paid to you, real
estate transactions, mortgage interest you paid, the acquisition or
abandonment of secured property, or contributions you made to an IRA. Use Form
W-9 to furnish your correct TIN to the requester (the person asking you to
furnish your TIN) and, when applicable, (1) to certify that the TIN you are
furnishing is correct (or that you are waiting for a number to be issued), (2)
to certify that you are not subject to backup withholding, and (3) to claim
exemption from backup withholding if you are an exempt payee. Furnishing your
correct TIN and making the appropriate certifications will prevent certain
payments from being subject to backup withholding.
Note: If a requester gives you a form other than a W-9 to request your TIN,
you must use the requester's form.
How To Obtain a TIN.--If you do not have a TIN, apply for one immediately.
To apply, get Form SS-5, Application for a Social Security Card (for
individuals), from your local office of the Social Security Administration, or
Form SS-4, Application for Employer Identification Number (for businesses and
all other entities), from your local IRS office.
To complete Form W-9 if you do not have a TIN, write "Applied for" in the
space for the TIN in Part I (or check box 2 of Substitute Form W-9), sign and
date the form, and give it to the requester. Generally, you must obtain a TIN
and furnish it to the requester by the time of payment. If the requester does
not receive your TIN by the time of payment, backup withholding, if
applicable, will begin and continue until you furnish your TIN to the
requester.
Note: Writing "Applied for" (or checking box 2 of the Substitute Form W-9)
on the form means that you have already applied for a TIN OR that you intend
to apply for one in the near future.
As soon as you receive your TIN, complete another Form W-9, include your
TIN, sign and date the form, and give it to the requester.
What Is Backup Withholding?--Persons making certain payments to you are
required to withhold and pay to the IRS 31% of such payments under certain
conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
1. You do not furnish your TIN to the requester, or
2. The IRS notifies the requester that you furnished an incorrect TIN, or
3. You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax
return (for reportable interest and dividends only), or
4. You do not certify to the requester that you are not subject to backup
withholding under 3 above (for reportable interest and dividend accounts
opened after 1983 only), or
5. You do not certify your TIN. This applies only to reportable interest,
dividend, broker, or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
<PAGE>
Except as explained in 5 above, other reportable payments are subject to
backup withholding only if 1 or 2 above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See Payees and
Payments Exempt From Backup Withholding, below, and Example Payees and
Payments under Specific Instructions, below, if you are an exempt payee.
Payees and Payments Exempt From Backup Withholding.--The following is a list
of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are
exempt except item (9). For broker transactions, payees listed in (1) through
(13) and a person registered under the Investment Advisers Act of 1940 who
regularly acts as a broker are exempt. Payments subject to reporting under
sections 6041 and 6041A are generally exempt from backup withholding only if
made to payees described in items (1) through (7), except a corporation that
provides medical and health care services or bills and collects payments for
such services is not exempt from backup withholding or information reporting.
Only payees described in items (2) through (6) are exempt from backup
withholding for barter exchange transactions, patronage dividends, and
payments by certain fishing boat operators.
(1) A corporation. (2) An organization exempt from tax under section 501(a),
or an IRA, or a custodial account under section 403(b)(7). (3) The United
States or any of its agencies or instrumentalities. (4) A state, the District
of Columbia, a possession of the United States, or any of their political
subdivisions or instrumentalities. (5) A foreign government or any of its
political subdivisions, agencies, or instrumentalities. (6) An international
organization or any of its agencies or instrumentalities. (7) A foreign
central bank of issue. (8) A dealer in securities or commodities required to
register in the United States or a possession of the United States. (9) A
futures commission merchant registered with the Commodity Futures Trading
Commission. (10) A real estate investment trust. (11) An entity registered at
all times during the tax year under the Investment Company Act of 1940. (12) A
common trust fund operated by a bank under section 584(a). (13) A financial
institution. (14) A middleman known in the investment community as a nominee
or listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List. (15) A trust exempt from tax under section
664 or described in section 4947.
Payments of dividend and patronage dividends generally not subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section
1441.
. Payments to partnerships not engaged in a trade or business in the
United States and that have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct TIN to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments Mortgage interest paid by you.
2
<PAGE>
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and their regulations.
PENALTIES
Failure to Furnish TIN.--If you fail to furnish your correct TIN to a
requester, you are subject to a penalty of $50 for each such failure unless
your failure is due to reasonable cause and not to willful neglect.
Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
Misuse of TINs.--If the requester discloses or uses TlNs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
Name.--If you are an individual, you must generally provide the name shown
on your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security
Administration of the name change, please enter your first name, the last name
shown on your social security card, and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name or "doing
business as" name on the business name line. Enter your name(s) as shown on
your social security card and/or as it was used to apply for your EIN on Form
SS-4.
SIGNING THE CERTIFICATION.
1. Interest, Dividend, and Barter Exchange Accounts Opened Before 1984 and
Broker Accounts Considered Active During 1983. You are required to furnish
your correct TIN, but you are not required to sign the certification.
2. Interest, Dividend, Broker, and Barter Exchange Accounts Opened After
1983 and Broker Accounts Considered Inactive During 1983. You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester,
you must cross out item 2 in the certification before signing the form.
3. Real Estate Transactions. You must sign the certification. You may cross
out item 2 of the certification.
4. Other Payments. You are required to furnish your correct TIN, but you are
not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills
for merchandise), medical and health care services, payments to a nonemployee
for services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
5. Mortgage Interest Paid by You, Acquisition or Abandonment of Secured
Property, or IRA Contributions. You are required to furnish your correct TIN,
but you are not required to sign the certification.
6. Exempt Payees and Payments. If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part I, write "EXEMPT" in the block in Part II, and
sign and date the form. If you are a nonresident alien or foreign entity not
subject to backup withholding, give the requester a complete Form W-8,
Certificate of Foreign Status.
7. TIN "Applied for." Follow the instructions under How To Obtain a TIN, on
page 1, and sign and date this form.
Signature.--For a joint account, only the person whose TIN is shown in Part
I should sign.
3
<PAGE>
Privacy Act Notice.--Section 6109 requires you to furnish your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid,
the acquisition or abandonment of secured property, or contributions you made
to an IRA. The IRS uses the numbers for identification purposes and to help
verify the accuracy of your tax return. You must provide your TIN whether or
not you are required to file a tax return. Payers must generally withhold 31%
of taxable interest, dividend, and certain other payments to a payee who does
not furnish a TIN to a payer. Certain penalties may also apply.
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<S> <C>
For this type of account: Give name and SSN of:
1. Individual The individual
2. Two or more individuals (joint account) The actual owner of the account or, if combined
funds, the first individual on the account(1)
3. Custodian account of a minor (Uniform Gift The minor(2)
to Minors Act)
4. a. The usual revocable savings trust (grantor the grantor-trustee(1)
is also trustee)
b. So-called trust account that is not a legal The actual owner(1)
or valid trust under state law
5. Sole proprietorship The owner(3)
For this type of account: Give name and EIN of:
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or pension trust Legal entity(4)
8. Corporate The corporation
9. Association, club, religious, charitable, The organization
educational, or other tax-exempt organization
10. Partnership The partnership
11. A broker or registered nominee The broker or nominee
12. Account with the Department of Agriculture The public entity
in the name of a public entity (such as a state
or local government, school district or prison)
that receives agriculture program payments
</TABLE>
--------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Show your individual name. You may also enter your business name. You may
use your SSN or EIN.
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the TIN of the personal representative or trustee
unless the legal entity itself is not designated in the account title.)
Note: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
4
<PAGE>
EXHIBIT a.3
[LETTERHEAD OF VARIAN APPEARS HERE]
August 23, 1995
Dear Stockholder:
Varian Associates, Inc. is offering to purchase up to 3,000,000 shares of its
common stock (representing approximately 8.85% of the currently outstanding
shares), at a price not greater than $58 nor less than $51 per share. The
Company is conducting the offer through a procedure commonly referred to as a
"dutch auction." This procedure allows you to select the price within that
range at which you are willing to sell all or a portion of your shares to the
Company.
Based upon the number of shares tendered and the prices specified by the
tendering stockholders, the Company will determine the single per-share price
within that range that will allow it to buy 3,000,000 shares (or such lesser
number of shares that are properly tendered). All of the shares that are
properly tendered at prices at or below that purchase price (and are not
withdrawn) will--subject to possible proration, conditional tenders and
provisions relating to the tender of "odd lots"--be purchased for cash at that
purchase price, net to the selling stockholder. All other shares that have been
tendered and not purchased will be returned to the stockholder.
If you do not wish to participate in the offer, you do not need to take any
action.
The offer is explained in detail in the enclosed Offer to Purchase and Letter
of Transmittal. If you want to tender your shares, the instructions on how to
do so are also explained in detail in the enclosed materials. I encourage you
to read carefully these materials before making any decision with respect to
the offer.
The Company believes that the purchase of its shares of common stock at this
time represents an attractive business opportunity that will benefit Varian and
its stockholders. However, neither the Company nor its Board of Directors makes
any recommendation to any stockholder whether to tender all or any shares.
Neither I nor any other director or executive officer intends to tender shares
pursuant to the offer.
Sincerely,
/s/ J. Tracy O'Rourke
J. Tracy O'Rourke
Chairman of the Board and Chief
Executive Officer
<PAGE>
EXHIBIT a.4
VARIAN ASSOCIATES, INC.
Notice of Guaranteed Delivery
of Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if certificates for the shares of Common
Stock of Varian Associates, Inc. are not immediately available, if the
procedure for book-entry transfer cannot be completed on a timely basis, or if
time will not permit all other documents required by the Letter of Transmittal
to be delivered to the Depositary on or prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase defined below). Such form may be
delivered by hand or transmitted by mail, or (for Eligible Institutions only)
by facsimile transmission, to the Depositary. See Section 3 of the Offer to
Purchase. THE ELIGIBLE INSTITUTION, WHICH COMPLETES THIS FORM, MUST COMMUNICATE
THE GUARANTEE TO THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND
CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN HEREIN. FAILURE
TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE INSTITUTION.
To: THE FIRST NATIONAL BANK OF BOSTON, Depositary
By Mail: By Facsimile By Overnight Courier:
P.O. Box 1889 Transmission: Shareholder Services
Mail Stop 45-01-19 (617) 575-2233 Division
Boston, Massachusetts 02105 150 Royall Street,
Mail Stop 45-01-19
Canton, Massachusetts 02021
By Hand: Confirm by Telephone: By Hand:
100 Federal Street, (617) 575-2700 BancBoston Trust Company
Floor 1-B of New York
Boston, Massachusetts 55 Broadway, 3rd Floor
Attn: Receipt and New York, New York
Delivery Window
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
Ladies and Gentlemen:
The undersigned hereby tenders to Varian Associates, Inc., a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated August 23, 1995 (the "Offer to
Purchase"), and the related Letter of Transmittal (which together constitute
the "Offer"), receipt of which is hereby acknowledged, the number of shares of
Common Stock, par value $1.00 per share (the "Shares") (including the
associated preferred stock purchase rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of August 25, 1986, as amended, between the
Company and The First National Bank of Boston, as Rights Agent), of the Company
listed below, pursuant to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase.
Number of Shares:
-------------------------------------
Certificate Nos.: (if available)
------------------------------------- -------------------------------------
Signature(s)
-------------------------------------
If Shares will be tendered by book- -------------------------------------
entry transfer: Name(s) (Please Print)
Name of Tendering Institution:
-------------------------------------
------------------------------------- Address
Account No. __________ at (check one) -------------------------------------
[_] The Depository Trust Company
[_] Midwest Securities Trust Company -------------------------------------
[_] Philadelphia Depository Trust Area Code and Telephone Number
Company
<PAGE>
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
--------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS CHECKED,
THERE IS NO VALID TENDER OF SHARES.
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[_] $51.000 [_] $52.000 [_] $53.000 [_] $54.000 [_] $55.000 [_] $56.000 [_] $57.000
[_] $51.125 [_] $52.125 [_] $53.125 [_] $54.125 [_] $55.125 [_] $56.125 [_] $57.125
[_] $51.250 [_] $52.250 [_] $53.250 [_] $54.250 [_] $55.250 [_] $56.250 [_] $57.250
[_] $51.375 [_] $52.375 [_] $53.375 [_] $54.375 [_] $55.375 [_] $56.375 [_] $57.375
[_] $51.500 [_] $52.500 [_] $53.500 [_] $54.500 [_] $55.500 [_] $56.500 [_] $57.500
[_] $51.625 [_] $52.625 [_] $53.625 [_] $54.625 [_] $55.625 [_] $56.625 [_] $57.625
[_] $51.750 [_] $52.750 [_] $53.750 [_] $54.750 [_] $55.750 [_] $56.750 [_] $57.750
[_] $51.875 [_] $52.875 [_] $53.875 [_] $54.875 [_] $55.875 [_] $56.875 [_] $57.875
[_] $58.000
</TABLE>
CONDITIONAL TENDER ODD LOTS
UNLESS THIS BOX HAS BEEN COM- To be completed ONLY if Shares
PLETED AND A MINIMUM SPECIFIED, are being tendered or on behalf of
THE TENDER WILL BE DEEMED UNCONDI- persons owning beneficially an ag-
TIONAL (see Sections 6 and 13 of gregate of fewer than 100 Shares
the Offer to Purchase). as of the close of business on Au-
gust 22, 1995.
Minimum number of Shares that
must be purchased, if any are The undersigned either (check
purchased: one):
____________ Shares [_] was the beneficial owner of an
aggregate of fewer than 100
Shares (including Shares held
in the Reinvestment Plan (as
such term is defined in the Of-
fer to Purchase)) as of the
close of business on August 22,
1995, all of which are ten-
dered, or
[_] is a broker, dealer, commercial
bank, trust company or other
nominee that (i) is tendering,
for the beneficial owners
thereof, Shares with respect to
which it is the record owner,
and (ii) believes, based upon
representations made to it by
each such beneficial owner,
that such beneficial owner
owned an aggregate of fewer
than 100 Shares (including
Shares held in the Reinvestment
Plan) as of the close of busi-
ness on August 22, 1995 and is
tendering all of such Shares.
2
<PAGE>
GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national securities
exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the
United States, guarantees (a) that the above-named person(s) has a net long
position in the Shares (and associated Rights) being tendered within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as
amended, (b) that such tender of Shares complies with Rule 14e-4 and (c) to
deliver to the Depositary at one of its addresses set forth above
certificate(s) for the Shares tendered hereby, in proper form for transfer, or
a confirmation of the book-entry transfer of the Shares tendered hereby into
the Depositary's account at The Depository Trust Company, Midwest Securities
Trust Company or Philadelphia Depository Trust Company, in each case together
with a properly completed and duly executed Letter(s) of Transmittal (or
facsimile(s) thereof), with any required signature guarantee(s) and any other
required documents, all within three New York Stock Exchange, Inc. trading days
after the date hereof.
------------------------------------- -------------------------------------
Name of Firm Authorized Signature
------------------------------------- -------------------------------------
Address Name
------------------------------------- -------------------------------------
City, State, Zip Code Title
-------------------------------------
Area Code and Telephone Number
Dated: _______________________ , 1995
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM.
YOUR STOCK CERTIFICATES MUST BE SENT WITH
THE LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT a.5
MORGAN STANLEY & CO.
INCORPORATED
1251 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10020
VARIAN ASSOCIATES, INC.
OFFER TO PURCHASE FOR CASH
UP TO 3,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 20, 1995, UNLESS THE
OFFER IS EXTENDED.
August 23, 1995
To Brokers, Dealers, Commercial
Banks, Trust Companies and
Other Nominees:
In our capacity as Dealer Manager (the "Dealer Manager"), we are enclosing
the material listed below relating to the offer of Varian Associates, Inc., a
Delaware corporation (the "Company"), to purchase up to 3,000,000 shares of
its Common Stock, par value $1.00 per share (the "Shares") (including the
associated preferred stock purchase rights issued pursuant to the Rights
Agreement, dated as of August 25, 1986, as amended, between the Company and
The First National Bank of Boston, as the Rights Agent), at prices not greater
than $58 nor less than $51 per Share, net to the seller in cash, specified by
tendering stockholders, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated August 23, 1995 (the "Offer to Purchase"), and
in the related Letter of Transmittal (which together constitute the "Offer").
The Company will determine a single price (not greater than $58 nor less than
$51 per Share) that it will pay for Shares validly tendered pursuant to the
Offer (the "Purchase Price"), taking into account the number of Shares so
tendered and the prices specified by tendering stockholders. The Company will
select the Purchase Price that will enable it to purchase 3,000,000 Shares (or
such lesser number of Shares as are validly tendered at prices not greater
than $58 nor less than $51 per Share) pursuant to the Offer. The Company will
purchase all Shares validly tendered at prices at or below the Purchase Price
and not withdrawn, upon the terms and subject to the conditions of the Offer,
including the provisions relating to proration and conditional tenders
described in the Offer to Purchase.
The Purchase Price will be paid in cash, net to the seller, with respect to
all Shares purchased. Shares tendered at prices in excess of the Purchase
Price and Shares not purchased because of proration and conditional tenders
will be returned.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. The Offer is, however, subject to other conditions. See Section 7 of
the Offer to Purchase.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible. The Company will, upon request, reimburse you for
reasonable and customary handling and mailing expenses incurred by you in
forwarding any of the enclosed materials to your clients.
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase, which includes as annexes thereto the Company's
Quarterly Report on Form 10-Q for the third quarter of the Company's 1995
fiscal year and the Company's Current Report on Form 8-K (in each case,
other than the exhibits thereto), dated August 23, 1995.
2. The Letter of Transmittal for your use and for the information of your
clients.
3. A letter to stockholders of the Company from the Chairman of the Board
and Chief Executive Officer of the Company.
<PAGE>
4. The Notice of Guaranteed Delivery to be used to accept the Offer if
the Shares and all other required documents cannot be delivered to the
Depositary by the Expiration Date (as defined in the Offer to Purchase).
5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
for obtaining such clients' instructions with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding.
7. A return envelope addressed to The First National Bank of Boston, the
Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 20, 1995, UNLESS THE
OFFER IS EXTENDED.
The Company will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer (other
than the Dealer Manager). The Company will, upon request, reimburse brokers,
dealers, commercial banks and trust companies for reasonable and customary
handling and mailing expenses incurred by them in forwarding materials
relating to the Offer to their customers. The Company will pay all stock
transfer taxes applicable to its purchase of Shares pursuant to the Offer,
subject to Instruction 7 of the Letter of Transmittal.
As described in the Offer to Purchase, if more than 3,000,000 Shares have
been validly tendered at or below the Purchase Price and not withdrawn on or
prior to the Expiration Date, as defined in Section 1 of the Offer to
Purchase, the Company will purchase Shares in the following order of priority:
(a) all Shares validly tendered at or below the Purchase Price and not
withdrawn on or prior to the Expiration Date by any stockholder who owned
beneficially an aggregate of fewer than 100 Shares (including any Shares held
in the Dividend Reinvestment and Cash Stock Purchase Plan (the "Reinvestment
Plan")) as of the close of business on August 22, 1995 and who validly tenders
all of such Shares (partial and conditional tenders will not qualify for this
preference) and completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, the Notice of Guaranteed Delivery; and (b)
after purchase of all the foregoing Shares, subject to the conditional tender
provisions described in Section 6 of the Offer to Purchase, all other Shares
validly tendered at or below the Purchase Price and not withdrawn on or prior
to the Expiration Date on a pro rata basis, if necessary (with appropriate
adjustments to avoid purchases of fractional Shares, other than Shares held in
the Reinvestment Plan).
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. STOCKHOLDERS MUST
MAKE THEIR OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER.
Any questions or requests for assistance or additional copies of the
enclosed materials may be directed to Georgeson & Company Inc. (the
"Information Agent") or the Dealer Manager at their respective addresses and
telephone numbers set forth on the back cover of the enclosed Offer to
Purchase.
Very truly yours,
MORGAN STANLEY & CO.
INCORPORATED
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF THE COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE
DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE
ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN
THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
2
<PAGE>
EXHIBIT a.6
VARIAN ASSOCIATES, INC.
Offer to Purchase for Cash
Up to 3,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 20, 1995, UNLESS THE
OFFER IS EXTENDED
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated August 23,
1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") setting forth an offer by Varian Associates,
Inc., a Delaware corporation (the "Company"), to purchase up to 3,000,000
shares of its Common Stock, par value $1.00 per share (the "Shares") (including
the associated preferred stock purchase rights issued pursuant to the Rights
Agreement, dated as of August 25, 1986, as amended, between the Company and The
First National Bank of Boston, as the Rights Agent), at prices not greater than
$58 nor less than $51 per Share, net to the seller in cash, specified by
tendering stockholders, upon the terms and subject to the conditions of the
Offer. The Company will determine a single per Share price (not greater than
$58 nor less than $51 per Share) that it will pay for the Shares validly
tendered pursuant to the Offer and not withdrawn (the "Purchase Price"), taking
into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the Purchase Price that will
enable it to purchase 3,000,000 Shares (or such lesser number of Shares as are
validly tendered at prices not greater than $58 nor less than $51 per Share)
pursuant to the Offer. The Company will purchase all Shares validly tendered at
prices at or below the Purchase Price and not withdrawn, upon the terms and
subject to the conditions of the Offer, including the provisions thereof
relating to proration and conditional tenders.
We are the holder of record of Shares held for your account. A tender of such
Shares can be made only by us as the holder of record and pursuant to your
instructions. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish us to tender any or all of the
Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Offer to Purchase and the Letter of Transmittal.
Your attention is invited to the following:
(1) You may tender Shares at prices (in multiples of $.125), not greater
than $58 nor less than $51 per Share, as indicated in the attached
instruction form, net to you in cash.
(2) The Offer is for up to 3,000,000 Shares, constituting approximately
8.85% of the total Shares outstanding as of August 22, 1995. Although it
has no present intention of so doing, the Company reserves the right to
purchase more than 3,000,000 Shares pursuant to the Offer. The Offer is not
conditioned upon any minimum number of Shares being tendered.
(3) The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Wednesday, September 20, 1995,
unless the Offer is extended. Your instructions to us should be forwarded
to us in ample time to permit us to submit a tender on your behalf. If you
would like to withdraw your Shares that we have tendered, you can withdraw
them so long as the Offer remains open or any time after the expiration of
forty business days from the commencement of the Offer if they have not
been accepted for payment.
<PAGE>
(4) As described in the Offer to Purchase, if more than 3,000,000 Shares
have been validly tendered at or below the Purchase Price and not withdrawn
on or prior to the Expiration Date, as defined in Section 1 of the Offer to
Purchase, the Company will purchase Shares in the following order of
priority:
(a) all Shares validly tendered at or below the Purchase Price and
not withdrawn on or prior to the Expiration Date by any stockholder who
owned beneficially an aggregate of fewer than 100 Shares (including any
Shares held in the Dividend Reinvestment and Cash Stock Purchase Plan
(the "Reinvestment Plan")) as of the close of business on August 22,
1995 and who validly tenders all of such Shares (partial and
conditional tenders will not qualify for this preference) and completes
the box captioned "Odd Lots" on the Letter of Transmittal and, if
applicable, the Notice of Guaranteed Delivery; and (b) after purchase
of all the foregoing Shares, subject to the conditional tender
provisions described in Section 6 of the Offer to Purchase, all other
Shares validly tendered at or below the Purchase Price and not
withdrawn on or prior to the Expiration Date on a pro rata basis, if
necessary (with appropriate adjustments to avoid purchases of
fractional Shares, other than Shares held in the Reinvestment Plan).
See Section 1 of the Offer to Purchase for a discussion of proration.
(5) Any stock transfer taxes applicable to the sale of Shares to the
Company pursuant to the Offer will be paid by the Company, except as
otherwise provided in Instruction 7 of the Letter of Transmittal.
(6) If you owned beneficially an aggregate of fewer than 100 Shares
(including Shares held in the Reinvestment Plan) as of the close of
business on August 22, 1995, and you instruct us to tender at or below the
Purchase Price on your behalf all such Shares on or prior to the Expiration
Date and check the box captioned "Odd Lots" in the instruction form, all
such Shares will be accepted for purchase before proration, if any, of the
purchase of other tendered Shares.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
ANY STOCKHOLDER AS TO WHETHER TO TENDER ALL OR ANY SHARES. STOCKHOLDERS MUST
MAKE THEIR OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NO DIRECTOR OR EXECUTIVE
OFFICER INTENDS TO TENDER SHARES PURSUANT TO THE OFFER.
If you wish to have us tender any or all of your Shares held by us for your
account upon the terms and subject to the conditions set forth in the Offer,
please so instruct us by completing, executing, detaching and returning to us
the instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Shares, all
such Shares will be tendered unless otherwise specified on the detachable part
hereof. Your instructions should be forwarded to us in ample time to permit us
to submit a tender on your behalf by the expiration of the Offer.
A tendering stockholder may condition the tender of Shares upon the purchase
by the Company of a specified minimum number of Shares tendered, all as
described in Section 6 of the Offer to Purchase. Unless such specified minimum
is purchased by the Company pursuant to the terms of the Offer to Purchase and
the related Letter of Transmittal, none of the Shares tendered by the
stockholder will be purchased. If you wish us to condition your tender upon the
purchase of a specified minimum number of Shares, please complete the box
entitled "Conditional Tender" on the instruction form. It is the tendering
stockholder's responsibility to calculate such minimum number of Shares, and
you are urged to consult your own tax advisor.
The Offer is being made to all holders of Shares. The Company is not aware of
any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to a valid state statute. If the Company becomes aware
of any valid state statute prohibiting the making of the Offer, the Company
will make a good faith effort to comply with such statute. If, after such good
faith effort, the Company cannot comply with such statute, the Offer will not
be made to, nor will tenders be accepted from or on behalf of, holders of
Shares in such state. In those jurisdictions whose securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of the Company by Morgan Stanley &
Co. Incorporated, as the Dealer Manager, or one or more registered brokers or
dealers licensed under the laws of such jurisdictions.
2
<PAGE>
Instructions
With Respect to Offer to Purchase for Cash
Up to 3,000,000 Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of
Varian Associates, Inc.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated August 23, 1995, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the Offer by Varian
Associates, Inc., a Delaware corporation (the "Company"), to purchase up to
3,000,000 shares of its Common Stock, par value $1.00 per share (the "Shares")
(including the associated preferred stock purchase rights), at prices not
greater than $58 nor less than $51 per Share, net to the undersigned in cash,
specified by the undersigned.
This will instruct you to tender to the Company the number of Shares
indicated below (or, if no number is indicated below, all Shares) which are
held by you for the account of the undersigned, at the price per Share
indicated below, upon the terms and subject to the conditions of the Offer.
CONDITIONAL TENDER
By completing this box, the undersigned conditions the tender authorized
hereby on the following minimum number of Shares being purchased if any are
purchased:
_________ Shares
Unless this box is completed, the tender authorized hereby will be made
unconditionally.
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
--------------------------------------------------------------------------------
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR
IF NO BOX IS CHECKED, THERE IS NO VALID TENDER OF SHARES.
--------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
[_] $51.000 [_] $52.000 [_] $53.000 [_] $54.000 [_] $55.000 [_] $56.000 [_] $57.000
[_] $51.125 [_] $52.125 [_] $53.125 [_] $54.125 [_] $55.125 [_] $56.125 [_] $57.125
[_] $51.250 [_] $52.250 [_] $53.250 [_] $54.250 [_] $55.250 [_] $56.250 [_] $57.250
[_] $51.375 [_] $52.375 [_] $53.375 [_] $54.375 [_] $55.375 [_] $56.375 [_] $57.375
[_] $51.500 [_] $52.500 [_] $53.500 [_] $54.500 [_] $55.500 [_] $56.500 [_] $57.500
[_] $51.625 [_] $52.625 [_] $53.625 [_] $54.625 [_] $55.625 [_] $56.625 [_] $57.625
[_] $51.750 [_] $52.750 [_] $53.750 [_] $54.750 [_] $55.750 [_] $56.750 [_] $57.750
[_] $51.875 [_] $52.875 [_] $53.875 [_] $54.875 [_] $55.875 [_] $56.875 [_] $57.875
[_] $58.000
</TABLE>
ODD LOTS
[_] By checking this box, the undersigned represents that the undersigned
owned beneficially an aggregate of fewer than 100 Shares (including Shares
held in the Dividend Reinvestment and Cash Stock Purchase Plan) as of the
close of business on August 22, 1995 and is tendering all of such Shares.
Number of Shares to be Tendered: SIGN HERE
__________________________________________
___________ Shares* Signature(s)
Dated: ____________, 1995 Name _____________________________________
Address __________________________________
__________________________________________
__________________________________________
Social Security or Taxpayer ID No.
--------
*Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
EXHIBIT a.7
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated August
23, 1995, and the related Letter of Transmittal. The Offer is being made to all
holders of Shares; provided, that the Offer is not being made to, nor will
tenders be accepted from or on behalf of, holders of Shares in any jurisdiction
in which making or accepting the Offer would violate that jurisdiction's laws.
In those jurisdictions whose securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of the Company by Morgan Stanley & Co. Incorporated or one or
more registered brokers or dealers licensed under the laws of such
jurisdictions.
Notice of Offer to Purchase for Cash
by
VARIAN ASSOCIATES, INC.
Up to 3,000,000 Shares of its Common Stock
(Including the Associated Preferred Stock Purchase Rights)
at a Purchase Price Not Greater Than
$58 Nor Less Than $51 Per Share
Varian Associates, Inc., a Delaware corporation (the "Company"), invites
its stockholders to tender shares of its Common Stock, par value $1.00 per share
(the "Shares")(including the associated preferred stock purchase rights issued
pursuant to the Rights Agreement, dated as of August 25, 1986, as amended,
between the Company and The First National Bank of Boston, as the Rights Agent),
at prices not greater than $58 nor less than $51 per Share, net to the seller in
cash, specified by such stockholders, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated August 23, 1995 (the "Offer
to Purchase"), and in the related Letter of Transmittal (which together
constitute the "Offer").
The Offer is not conditioned upon any minimum number of Shares being
tendered. The Offer is, however, subject to other conditions. See Section 7 of
the Offer to Purchase.
--------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 20, 1995, UNLESS THE OFFER IS
EXTENDED.
--------------------------------------------------------------------------------
The Company will determine a single per Share price (not greater than $58
nor less than $51 per Share) that it will pay for Shares validly tendered
pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into
account the number of Shares so tendered and the prices specified by tendering
stockholders. The Company will select the Purchase Price that will enable it to
buy 3,000,000 Shares (or such lesser number of Shares as are validly tendered at
prices not greater than $58 nor less than $51 per Share) pursuant to the Offer.
The Company will purchase all Shares validly tendered at prices at or below the
Purchase Price and not withdrawn, upon the terms and subject to the conditions
of the Offer, including the provisions relating to proration and conditional
tenders described below. The Purchase Price will be paid in cash, net to the
seller, with respect to all Shares purchased. Shares rendered at prices in
excess of the Purchase Price and Shares not purchased because of proration and
conditional tenders will be returned.
Shares tendered and purchased by the Company will not receive or otherwise
be entitled to the regular quarterly cash dividend of $.07 per Share to be paid
by the Company on October 20, 1995 to holders of record on October 2, 1995,
unless the Offer is extended beyond, or Shares are accepted for payment after,
October 2, 1995 for any reason whatsoever. Shares which are tendered but not
purchased as a result of proration or otherwise will remain entitled to receipt
of the dividend to be paid on October 20, 1995.
<PAGE>
Upon the terms and subject to the conditions of the Offer, if more than
3,000,000 Shares have been validly tendered at or below the Purchase Price and
not withdrawn on or prior to the Expiration Date (as defined in the Offer to
Purchase), the Company will purchase Shares in the following order of priority:
(a) first, all Shares validly tendered at or below the Purchase Price and not
withdrawn on or prior to the Expiration Date by any stockholder who owned
beneficially an aggregate of fewer than 100 Shares (including any Shares held in
the Dividend Reinvestment and Cash Stock Purchase Plan (the "Reinvestment
Plan")) as of the close of business on August 22, 1995 and who validly tenders
all of such Shares (partial and conditional tenders will not qualify for this
preference) and completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, the Notice of Guaranteed Delivery; and (b) then,
after purchase of all the foregoing Shares, subject to the conditional tender
provisions described in Section 6 of the Offer to Purchase, all other Shares
validly tendered at or below the Purchase Price and not withdrawn on or prior to
the Expiration Date on a pro rata basis, if necessary (with appropriate
adjustments to avoid purchases of fractional Shares, other than Shares held in
the Reinvestment Plan).
The Company believes that the purchase of its Shares at this time
represents an attractive investment opportunity that will benefit the Company
and its remaining stockholders. The Offer will afford to stockholders who are
considering the sale of all or a portion of their Shares the opportunity to
determine the price (not greater than $58 nor less than $51 per Share) at which
they are willing to sell their Shares and, in the event the Company accepts such
Shares, to dispose of Shares without the usual transaction costs associated with
a market sale. The Offer will also allow qualifying stockholders owning
beneficially fewer than 100 Shares to avoid the payment of brokerage
commissions and the applicable odd lot discount payable on a sale of Shares in a
transaction effected on a securities exchange.
Neither the Company nor its Board of Directors makes any recommendation to
any stockholder as to whether to tender all or any Shares. Each stockholder must
make his or her own decision as to whether to tender shares and, if so, how many
Shares to tender and at what price. The Company has been informed that no
director or executive officer intends to tender Shares pursuant to the Offer.
The Company reserves the right, at any given time or from time to time, to
extend the period of time during which the Offer is open by giving oral or
written notice of such extension to the Depositary, followed by a public
announcement thereof no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after October 19, 1995 unless theretofore accepted
for payment by the Company as provided in the Offer to Purchase. For a
withdrawal to be effective, a written or facsimile transmission notice of
withdrawal must be timely received by the Depositary at one of the addresses or
the facsimile number set forth on the back cover of the Offer to Purchase and
must specify the name of the person who tendered the Shares to be withdrawn and
the number of Shares to be withdrawn. If the Shares to be withdrawn have been
delivered to the Depositary, a signed notice of withdrawal with signatures
guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to
Purchase) (except in the case of Shares tendered by an Eligible Institution)
must be submitted prior to the release of such Shares. In addition, such notice
must specify, in the case of Shares tendered by delivery of certificates, the
name of the registered holder (if different from that of the tendering
stockholder) and the serial numbers shown on the particular certificates
evidencing the Shares to be withdrawn or, in the case of Shares tendered by
book-entry transfer, the name and number of the account at one of the Book-Entry
Transfer Facilities (as defined in the Offer to Purchase) to be credited with
the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
However, withdrawn Shares may be retendered by again following one of the
procedures described in Section 3 of the Offer to purchase at any time prior to
the Expiration Date.
The Company will be deemed to have purchased tendered Shares as, if and
when it gives oral or written notice to the Depositary of its acceptance for
payment of Shares.
The information required to be disclosed by Rule 13e-4(d)(1) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference.
2
<PAGE>
Copies of the Offer to Purchase and the related Letter of Transmittal are
being mailed to record holders of Shares and will be furnished to brokers, banks
and similar persons whose names, or the names of whose nominees, appear on the
Company's stockholder list or, if applicable, who are listed as participants in
a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain
important information that should be read before any decision is made with
respect to the Offer.
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
listed below. Requests for additional copies of the Offer to Purchase, the
Letter of Transmittal or other tender offer materials may be directed to the
Information Agent or the Dealer Manager, and such copies will be furnished
promptly at the Company's expense. Stockholders may also contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
--------------
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect:
(212) 440-9800
All Other Call Toll Free:
1-800-223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
Incorporated
1251 Avenue of the Americans
New York, New York 10020
(415) 576-2247 (collect)
August 23, 1995
3
<PAGE>
EXHIBIT a.8
[LOGO OF VARIAN APPEARS HERE]
NEWS
RELEASE
VARIAN ASSOCIATES, INC., 3050 HANSEN WAY, PALO ALTO, CALIFORNIA 94304-1000
FOR INFORMATION CONTACT:
Gary Simpson (415) 424-5782
[email protected]
For Immediate Release:
August 23, 1995
VARIAN ASSOCIATES' BOARD AUTHORIZES DUTCH AUCTION
SELF TENDER OFFER TO BUY UP TO 3,000,000 COMMON SHARES
Palo Alto, Calif. -- Varian Associates, Inc., today announced that its
Board of Directors has authorized a "dutch auction" self tender offer to
purchase up to 3 million shares of its common stock. The company said the offer
will commence immediately and will expire at midnight, New York City time, on
September 20, 1995 unless extended.
Under the terms of the offer, Varian will invite stockholders to tender
shares at prices between $51.00 and $58.00 per share, with the precise amount to
be specified by the tendering stockholders. Based upon the number of shares
tendered and the prices specified, Varian will determine the single per-share
price within that price range that will allow the company to buy 3 million
shares, or whatever lesser number are properly tendered.
-more-
<PAGE>
-2-
The company will use the proceeds from the recently completed sale of its
Electron Devices business to purchase the shares tendered under the offer.
Varian's common stock closed at $52-7/8 on the New York Stock Exchange composite
tape on August 22, 1995.
Morgan Stanley & Co. Incorporated is acting as dealer manager for the
offer. Georgeson & Company Inc. is acting as the information agent.
# # #
Palo Alto-based Varian Associates, Inc., is a diversified, $1.5 billion,
high-technology company with core businesses in health care systems,
semiconductor equipment, and analytical instruments that provide products and
services to worldwide markets.
Press announcements and other information about Varian are available on the
Internet via the World Wide Web using a tool such as Netscape or NCSA Mosaic.
Type http://www.varian.com at the prompt.
<PAGE>
EXHIBIT g.1
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS
The management of Varian Associates, Inc. (the Company) is responsible for
the integrity of the financial statements of the Company and its subsidiaries.
This responsibility involves preparation of financial statements in accordance
with generally accepted accounting principles and reporting data which
objectively reflect the assets, liabilities, revenues, and expenses of the
Company and its subsidiaries.
In accumulating and controlling its financial data, the Company establishes
and maintains accounting systems designed to ensure adequate internal controls.
Management believes a high level of internal control is maintained by the
selection and continual training of qualified personnel, by the establishment
and communication of accounting and business policies, and by internal audits.
In establishing internal controls, management evaluates the cost of such systems
against the benefits received. Management believes the internal control systems
in use are adequate to prevent significant misuse of Company assets or
misstatement of financial reports.
Coopers & Lybrand, independent accountants, are engaged to render an
opinion on the consolidated financial statements. Their opinion expresses an
informed judgment on whether management's financial statements, considered in
their entirety, present fairly in all material respects, in conformity with
generally accepted accounting principles, the Company's financial condition,
operating results and cash flows. It is based on procedures described in the
second paragraph of their report, which include obtaining an understanding of
the Company's systems and procedures and performing tests and other procedures
sufficient to provide reasonable assurance that the financial statements are
neither materially misleading nor contain material errors. The audits make
extensive tests of Company procedures. It is neither practical nor necessary
for them to scrutinize a large portion of the Company's transactions.
The Board of Directors, through its Audit and Corporate Responsibility
Committee consisting of five independent directors, is responsible for engaging
the independent accountants and assuring that management fulfills its
responsibilities in the preparation of the financial statements. The Audit and
Corporate Responsibility Committee discusses audit and financial reporting
matters with both management and Coopers & Lybrand. To ensure complete
independence, Coopers & Lybrand meets with the Audit and Corporate
Responsibility Committee with and without the presence of management
representatives.
With the established system of internal accounting controls, internal
audit, and the independent audit by Coopers & Lybrand, the integrity and
objectivity of the Company's financial statements are maintained.
/s/ Robert A. Lemos /s/ Wayne P. Somrak
--------------------------------- -----------------------------
Robert A. Lemos Wayne P. Somrak
Vice President, Finance and Chief Vice President and Controller
Financial Officer
<PAGE>
Consolidated Statements of Earnings
Varian Associates, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
Fiscal Years
---------------------------------------
(Dollars in thousands except per share amounts) 1994 1993 1992
============================================================================================
<S> <C> <C> <C>
Sales $1,552,477 $1,310,984 $1,288,024
---------- ---------- ----------
Operating Costs and Expenses
Cost of sales 1,031,956 876,480 871,667
Research and development 81,326 73,932 76,653
Marketing 187,332 173,443 172,688
General and administrative 121,873 108,765 101,490
---------- ---------- ----------
Total operating costs and expenses 1,422,487 1,232,620 1,222,498
---------- ---------- ----------
Operating Earnings 129,990 78,364 65,526
Interest expense (6,345) (6,555) (5,853)
Interest income 4,353 2,064 2,683
---------- ---------- ----------
Earnings Before Taxes 127,998 73,873 62,356
Taxes on earnings 48,640 28,070 23,700
---------- ---------- ----------
Net Earnings $ 79,358 $ 45,803 $ 38,656
========== ========== ==========
Earnings Per Share - Fully Diluted $ 2.22 $ 1.26 $ 1.02
========== ========== ==========
</TABLE>
See accompanying Notes to the Consolidated Financial Statements.
<PAGE>
Consolidated Balance Sheets
Varian Associates, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
Fiscal Year-End
------------------------
(Dollars in thousands except par values) 1994 1993
---------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 78,872 $ 73,307
Accounts receivable 338,448 290,513
Inventories 179,176 161,413
Other current assets 72,243 65,493
--------- ---------
Total Current Assets 668,739 590,726
--------- ---------
Property, Plant, and Equipment 574,402 544,316
Accumulated depreciation and amortization (339,082) (313,841)
--------- ---------
Net Property, Plant, and Equipment 235,320 230,475
--------- ---------
Other Assets 58,364 57,506
--------- ---------
Total Assets $ 962,423 $ 878,707
========= =========
Liabilities and Stockholders' Equity
Current Liabilities
Notes payable $ 4,816 $ 22,858
Accounts payable - trade 78,094 58,654
Accrued expenses 248,751 203,848
Product warranty 41,682 35,615
Advance payments from customers 58,440 61,282
--------- ---------
Total Current Liabilities 431,783 $ 382,257
Long-Term Debt 60,399 60,470
Deferred Taxes 20,788 21,919
--------- ---------
Total Liabilities 512,970 464,646
--------- ---------
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 33,979,000 shares (1994), 34,684,000
shares (1993) 33,979 17,342
Retained earnings 415,474 396,719
--------- ---------
Total Stockholders' Equity 449,453 414,061
--------- ---------
Total Liabilities and Stockholders' Equity $ 962,423 $ 878,707
========= =========
</TABLE>
See accompanying Notes to the Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Stockholders' Equity
Varian Associates, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
Capital in Treasury
(Dollars in thousands except Common Excess of Retained Stock
per share amounts) Stock Par Value Earnings at Cost Total
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, Fiscal Year-End, 1991 $ 19,119 $ 76,530 $ 330,829 $ - $ 426,478
Net earnings for the year - - 38,656 - 38,656
Issuance of stock under omnibus
stock and employee stock
purchase plans (including tax
benefit of $1,179) 536 15,546 - - 16,082
Purchase of common stock - - - (54,468) (54,468)
Retirement of treasury stock (1,495) (52,973) - 54,468 -
Dividends declared
($0.175 per share) - - (6,492) - (6,492)
-------- --------- ---------- --------- ---------
Balances, Fiscal Year-End, 1992 18,160 39,103 362,993 - 420,256
Net earnings for the year - - 45,803 - 45,803
Issuance of stock under omnibus
stock and employee stock
purchase plans (including tax
benefit of $3,845) 775 26,292 - - 27,067
Purchase of common stock - - - (72,228) (72,228)
Retirement of treasury stock (1,593) (65,395) (5,240) 72,228 -
Dividends declared
($0.195 per share) - - (6,837) - (6,837)
-------- --------- ---------- --------- ---------
Balances, Fiscal Year-End, 1993 17,342 - 396,719 - 414,061
Net earnings for the year - - 79,358 - 79,358
Issuance of stock under omnibus
stock and employee stock
purchase plans (including tax
benefit of $4,821) 839 26,753 - - 27,592
Purchase of common stock - - - (63,669) (63,669)
Retirement of treasury stock (1,423) (26,753) (35,493) 63,669 -
Dividends declared
($0.23 per share) - - (7,889) - (7,889)
Two-for-one stock split 17,221 - (17,221) - -
-------- --------- ---------- --------- ---------
Balances, Fiscal Year-End, 1994 $ 33,979 $ - $ 415,474 $ - $ 449,453
======== ========= ========== ========= =========
</TABLE>
See accompanying Notes to the Consolidated Financial Statements.
<PAGE>
Consolidated Statements of Cash Flows
Varian Associates, Inc. and Subsidiary Companies
<TABLE>
<CAPTION>
Fiscal Years
--------------------------------------
(Dollars in thousands) 1994 1993 1992
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net Cash Provided by Operating Activities $ 120,251 $ 89,815 $ 130,812
Investing Activities
Proceeds from sale of property, plant, and equipment 18,320 5,228 2,735
Purchase of property, plant, and equipment (62,584) (45,102) (48,605)
Purchase of businesses, net of cash acquired 133 (11,879) -
Other (7,252) (6,099) (6,361)
---------- --------- ---------
Net Cash Used by Investing Activities (51,383) (57,852) (52,231)
---------- --------- ---------
Financing Activities
Net borrowings (payments) on short-term obligations (12,042) 12,549 1,232
Proceeds from long-term borrowings - 60,000 -
Principal payments on long-term debt (6,071) (49,238) (18,512)
Proceeds from common stock issued to employees 27,592 27,067 16,082
Purchase of common stock (63,669) (72,228) (54,468)
Dividends paid (7,590) (6,761) (6,373)
Other 392 512 (801)
---------- --------- ---------
Net Cash Used by Financing Activities (61,388) (28,099) (62,840)
---------- --------- ---------
Effects of Exchange Rate Changes on Cash (1,915) 2,700 (3,363)
---------- --------- ---------
Net Increase in Cash and Cash Equivalents 5,565 6,564 12,378
Cash and Cash Equivalents at Beginning of Year 73,307 66,743 54,365
---------- --------- ---------
Cash and Cash Equivalents at End of Year $ 78,872 $ 73,307 $ 66,743
========== ========= =========
Detail of Net Cash Provided by Operating Activities
Net Earnings $ 79,358 45,803 $ 38,656
Adjustments to reconcile net earnings to
net cash provided by operating activities
Depreciation 48,029 45,266 44,465
Deferred taxes (8,283) 2,900 1,062
Amortization of intangibles 4,484 4,429 4,477
Changes in assets and liabilities:
Accounts receivable (40,765) (26,214) (4,760)
Inventories (17,374) 16,003 10,263
Other current assets 550 (1,646) 3,935
Accounts payable - trade 18,226 1,972 (3,376)
Accrued expenses 37,929 (5,955) 20,394
Product warranty 5,871 2,056 75
Advance payments from customers (3,503) 1,629 10,315
Other (4,271) 3,572 5,306
---------- --------- --------
Net Cash Provided by Operating Activities $ 120,251 $ 89,815 $130,812
========== ========= ========
</TABLE>
See accompanying Notes to the Consolidated Financial Statements.
<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year
------------
The Company's fiscal years reported are the 52- or 53- week periods which end on
the Friday nearest September 30.
Principles of Consolidation
---------------------------
The consolidated financial statements include those of the Company and its
subsidiaries. Significant intercompany balances, transactions, and stock
holdings have been eliminated in consolidation. Investments in less-than-
majority-owned affiliated companies are stated at equity in the net assets of
these companies.
Foreign Currency Translation
----------------------------
Assets and liabilities of subsidiaries outside of the United States representing
cash and amounts receivable or payable are translated into U.S. dollars at the
exchange rates in effect at year end. Other accounts including inventories and
property, plant and equipment are translated at historical exchange rates.
Revenue and expense items are translated at effective rates of exchange
prevailing during each year, except that inventories are charged to cost of
sales and depreciation is expensed at historical exchange rates. The aggregate
exchange gain (loss) included in general and administrative expenses for 1994,
1993, and 1992 was $(0.1) million, $(8.3) million, and $4.5 million,
respectively.
The Company enters into forward exchange contracts to mitigate the effects of
operational (sales orders and purchase commitments) and balance sheet exposures
to fluctuations in foreign currency exchange rates. When the Company's foreign
exchange contracts hedge operational exposure, the effects of movements in
currency exchange rates on these instruments are recognized in income when the
related revenues and expenses are recognized. When foreign exchange contracts
hedge balance sheet exposure, such effects are recognized in income when the
exchange rate changes. Because the impact of movements in currency exchange
rates on foreign exchange contracts generally offsets the related impact on the
underlying items being hedged, these instruments do not subject the Company to
risk that would otherwise result from changes in currency exchange rates. At
fiscal year-end 1994, the Company had forward exchange contracts with maturities
of twelve months or less to sell foreign currencies totaling $9.1 million ($5.4
million of British pounds and $3.7 million of Canadian dollars) and to buy
foreign currencies totaling $71.8 million ($14.7 million of British pounds and
$57.1 million of Japanese yen).
Revenue Recognition
-------------------
Sales and related cost of sales are recognized primarily upon shipment of
products. Sales and related cost of sales under long-term contracts to
commercial customers and the U.S. Government are recognized primarily as units
are delivered.
Statements of Cash Flows
------------------------
The Company considers currency on hand, demand deposits, and all highly liquid
investments with an original maturity of three months or less to be cash and
cash equivalents.
Accounts Receivable
-------------------
Accounts receivable are stated net of allowances for doubtful accounts of $2.4
million at the end of fiscal year 1994 and $2.2 million at the end of fiscal
year 1993.
Inventories
-----------
Inventories are valued at the lower of cost or market (realizable value) using
last-in, first-out (LIFO) cost for the U.S. inventories of the Health Care
Systems, except X-ray Tube Products, Instruments, and Semiconductor Equipment
<PAGE>
Notes to the Consolidated Financial Statements (continued)
----------------------------------------------------------
segments. All other inventories are valued principally at average cost.
Approximately half of total gross inventories are valued using LIFO method. If
the first-in, first-out (FIFO) method had been used, inventories would have been
higher than reported by $49.0 million in fiscal 1994, $50.8 million in fiscal
1993, and $52.0 million in fiscal 1992. The main components of inventories are
as follows:
<TABLE>
<CAPTION>
(Dollars in Millions) 1994 1993
--------------------------------------------------
<S> <C> <C>
Raw materials and parts $ 104.2 $ 89.7
Work in process 60.3 44.7
Finished goods 14.7 27.0
-------- --------
Total Inventories $ 179.2 $ 161.4
======== ========
</TABLE>
Property, Plant, and Equipment
------------------------------
Property, plant, and equipment are stated at cost. Major improvements are
capitalized, while maintenance and repairs are expensed currently . Plant and
equipment are depreciated over their estimated useful lives using the straight-
line method for financial reporting purposes and accelerated methods for tax
purposes. Leasehold improvements are amortized using the straight-line method
over their estimated useful lives, or the remaining term of the lease, whichever
is less.
The main components of property, plant, and equipment are as follows:
<TABLE>
<CAPTION>
(Dollars in Millions) 1994 1993
---------------------------------------------------------------
<S> <C> <C>
Land and land leaseholds $ 10.8 $ 11.3
Buildings 201.4 194.2
Machinery and equipment 347.2 331.1
Construction in progress 15.0 7.7
-------- --------
Total Property, Plant, and Equipment $ 574.4 $ 544.3
======== ========
</TABLE>
Taxes on Earnings
-----------------
Effective the beginning of fiscal year 1994, the Company adopted Statement of
Financial Accounting Standards No.109 (SFAS 109), Accounting for Income Taxes.
The Company elected to adopt this new standard by restating the prior three
years. Retained earnings for all years restated was decreased by $7.8 million
as a result of adoption, and the income tax provision did not change for any of
the three years restated. Adopting SFAS 109 has not caused a significant change
in the Company's provision for income taxes. The adoption has not caused a
change in the Company's reconciliation of the effective tax rate with the
federal statutory rate or a change in the significant components of the income
tax expense.
Postemployment Benefits
------------------------
During 1994, the Company adopted SFAS 112, Employers' Accounting for
Postemployment Benefits. Its adoption did not have a material effect on the
financial statements of the Company.
Postretirement Benefits Other Than Pensions
-------------------------------------------
The Company adopted SFAS 106, Employers' Accounting for Postretirement Benefits
Other Than Pensions, during 1994. Its adoption did not have a material effect
on the financial statements of the Company.
<PAGE>
Notes to the Consolidated Financial Statements (continued)
----------------------------------------------------------
Research and Development
------------------------
Company-sponsored research and development costs related to both present and
future products are expensed currently. Costs related to research and
development contracts are included in inventory and charged to cost of sales
upon recognition of related revenue. Total expenditures on research and
development for fiscal 1994, 1993, and 1992, were $93.1 million, $83.4 million,
and $86.4 million, respectively, of which $11.8 million, $9.5 million, and $9.7
million, respectively, were funded by customers.
Computation of Earnings Per Share (Shares in thousands)
-------------------------------------------------------
Earnings-per-share computations are based on the weighted average common shares
outstanding and common share equivalents (dilutive stock options). The average
number of common shares and common share equivalents used in the computation of
earnings per share in 1994, 1993, and 1992, was 35,676, 36,292, and 37,912
shares, respectively. There is no significant difference between fully diluted
earnings per share and primary earnings per share.
Stock Split
-----------
On February 17, 1994, the Board of Directors declared a two-for-one stock split
in the form of a stock dividend, issued on March 17, 1994, to stockholders of
record on March 3, 1994. All share and per share information has been restated
to reflect the stock split on a retroactive basis.
ACCRUED EXPENSES
<TABLE>
<CAPTION>
(Dollars in Millions) 1994 1993
-------------------------------------------------------------
<S> <C> <C>
Taxes, including taxes on earnings $ 52.5 $ 40.6
Payroll and employee benefits 90.8 68.3
Estimated loss contingencies 17.9 14.9
Deferred income 23.1 15.4
Other 64.5 64.6
--------- --------
Total Accrued Expenses $ 248.8 $ 203.8
========= ========
</TABLE>
SHORT-TERM DEBT
Short-term notes payable and the current portion of long-term debt amounted to
$4.8 million and $22.9 million at the end of fiscal years 1994 and 1993,
respectively. Total debt is subject to limitations included in long-term debt
agreements.
At fiscal year-end 1994, the Company had total unused committed lines of credit
amounting to $50 million.
<PAGE>
Notes to the Consolidated Financial Statements (continued)
----------------------------------------------------------
LONG-TERM DEBT
<TABLE>
<CAPTION>
(Dollars in Millions) 1994 1993
--------------------------------------------------------------
<S> <C> <C>
Unsecured term loan, 7.29% due in
semi-annual installments of $6.0
payable 1998-2002 $ 60.0 $ 60.0
Unsecured term loan, 9.9% - 6.0
Other debt 0.5 1.0
------- -------
Long-term borrowings 60.5 67.0
Less current portion 0.1 6.5
------- -------
Long-term Debt $ 60.4 $ 60.5
======= =======
</TABLE>
The unsecured term loans contain covenants which limit future borrowings and
require the Company to maintain certain levels of working capital and operating
results. At fiscal year-end 1994, the Company was in compliance with all
restrictive covenants of the loan agreements, including a restriction on payment
of cash dividends. Approximately $44.8 million of retained earnings were
unrestricted for payment of cash dividends.
The annual maturities of long-term debt (in millions) for fiscal years 1995
through 1999, are as follows: $0.1, $0.1, $0.1, $12.1, and $12.1.
Interest paid (in millions) on short and long-term debt was $6.4, $6.4, and
$6.1, in fiscal 1994, 1993, and 1992, respectively.
OMNIBUS STOCK AND EMPLOYEE STOCK PURCHASE PLANS (SHARES IN THOUSANDS)
During fiscal 1991, the Company adopted the Omnibus Stock Plan (the Plan) under
which shares of common stock can be issued to officers, directors, and key
employees. The maximum number of shares of common stock available for awards
under the Plan during each fiscal year (including incentive stock options) is 5%
of the total outstanding shares of the Company on the last business day of the
preceding fiscal year. The maximum number of shares of the common stock
available for incentive stock option grants under the Plan is 6,000. The
exercise price for incentive and nonqualified stock options granted under the
Plan may not be less than 100% and 50%, respectively, of the fair market value
at the date of the grant. Options granted will be exercisable at such times and
be subject to such restrictions and conditions as determined by the Organization
and Compensation Committee of the Company's Board of Directors, but no option
shall be exercisable later than ten years from the date of grant. Restricted
stock grants may be awarded at prices ranging from 0% to 50% of the fair market
value of the stock and may be subject to restrictions on transferability and
continued employment as determined by the Organization and Compensation
Committee.
Options granted are generally exercisable in cumulative installments of one-
third each year, commencing one year following date of grant, and expire if not
exercised within seven or ten years from date of grant.
<PAGE>
Notes to the Consolidated Financial Statements (continued)
----------------------------------------------------------
Option activity under the Plans is presented below.
<TABLE>
<CAPTION>
1994 1993 1992
--------------------- --------------------- ---------------------
(Dollars in Millions) Shares Dollars Shares Dollars Shares Dollars
--------------------- ------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Beginning of year 3,785 $ 60.6 3,871 $ 55.5 3,565 $ 46.2
Granted 1,161 29.5 1,153 22.6 919 17.6
Terminated or expired (63) (1.4) (82) (1.4) (79) (1.2)
Exercised (884) (14.5) (1,158) (16.0) (534) (7.1)
----- ---------- ------ ---------- ----- ----------
End of Year 3,999 $ 74.2 3,784 $ 60.7 3,871 $ 55.5
===== ========== ===== ========== ===== ==========
Shares exercisable 1,692 1,476 1,661
Available shares remaining 634 735 1,368
===== ====== =====
</TABLE>
Options were outstanding at prices ranging from $10.60 to $38.31 per share at
fiscal year-end 1994. Options were exercised at prices ranging from $10.60 to
$24.25 for fiscal 1994, $10.60 to $23.72 for fiscal 1993, and $10.60 to $16.63
for fiscal 1992.
During fiscal years 1994, 1993, and 1992, 64, 15, and 82, shares, respectively,
were awarded under restricted stock grants at no cost to the employees. The
restricted stock grants vest over a three year period. Compensation expense
from restricted stock was approximately $1.2 million, $0.9 million, and $1.2
million, in fiscal years 1994, 1993, and 1992, respectively.
The Employee Stock Purchase Plan (ESPP) covers substantially all employees in
the United States and Canada. The participants' purchase price is the lower of
85% of the closing market price on the first or last trading day of the fiscal
quarter. The discount is treated as equivalent to the cost of issuing stock for
financial reporting purposes. During fiscal 1994, 1993, and 1992, 266 shares,
382 shares, and 466 shares, were issued under the ESPP for $7.0 million, $6.3
million, and $6.6 million, respectively. At fiscal year-end 1994, the Company
had a balance of 3,330 shares reserved for ESPP.
PREFERRED STOCK PURCHASE RIGHTS (SHARES IN THOUSANDS)
At fiscal year-end, there were issued and outstanding 33,979 preferred stock
purchase rights (one right for each outstanding common share). Each right
entitles the holder to buy one two-hundredth of a share of the Company's Series
A Junior Participating Preferred Stock for $62.50. Of the 1,000 shares of
authorized preferred stock, 280 shares have been designated as Series A Junior
Participating Preferred Stock, to be issued upon exercise of the rights. Upon
issuance, these preferred shares will have certain voting, dividend, and
liquidation preferences over the common stock, as described in the Rights
Agreement of August 25, 1986, as amended.
The rights are exercisable ten days after a person or group has acquired 15% or
more of the Company's voting stock, or the tenth day (or such later date as may
be determined by the Board of Directors) after the date of the commencement of
announcement of a person's or group's intention to commence a tender or exchange
offer whose consummation will result in the ownership of 30% or more of stock.
If a person or group becomes the beneficial owner of 15% or more of
<PAGE>
Notes to the Consolidated Financial Statements (continued)
----------------------------------------------------------
the voting stock, each right would entitle the holder, other than the acquiring
person or group, to buy shares of the Company's Series A Junior Participating
Preferred Stock, having a market value of $125, for the exercise price of
$62.50. If the Company were to be merged into another entity, or merged with
another entity, and the common stock were changed into other securities or
assets, each right would entitle the holder to purchase for the exercise price
of $62.50 common stock of the acquiring company equal to a market value of twice
the exercise price, or $125.
The rights expire on August 25, 1996, but may be redeemed by the Board of
Directors of the Company for $.025 per right at any time before they become
exercisable.
RETIREMENT PLANS
The Company has defined contribution retirement plans covering substantially all
of its domestic and Canadian employees. The Company's major obligation is to
contribute an amount based on a percentage of each participant's base pay. The
Company also contributes 5% of its consolidated earnings from continuing
operations before taxes, as adjusted for discretionary items, as retirement plan
profit sharing. Participants are entitled, upon termination or retirement, to
their portion of the retirement fund assets, which are held by a third-party
trustee. In addition, a number of the Company's foreign subsidiaries have
defined benefit retirement plans for regular full-time employees. Total pension
expense for all plans amounted to $23.1 million, $18.4 million, and $17.9
million, for fiscal 1994, 1993, and 1992, respectively.
TAXES ON EARNINGS
U.S. federal income tax returns for the years through 1992 have been settled
with the Internal Revenue Service. It is believed that adequate provision has
been made for all open years and unresolved issues. The detail of taxes on
earnings is as follows:
<TABLE>
<CAPTION>
(Dollars in millions) 1994 1993 1992
-------------------------------------------------------------
<S> <C> <C> <C>
Current
U.S. federal $ 33.3 $ 11.5 $ 7.2
Non-U.S. 15.8 11.7 13.0
State and local 7.8 2.0 2.4
------- ------- -------
Total current 56.9 25.2 22.6
------- ------- -------
Deferred
U.S. federal (8.8) 2.4 0.2
Non-U.S. 0.5 0.5 0.9
------- ------- -------
Total deferred (8.3) 2.9 1.1
------- ------- -------
Taxes on Earnings $ 48.6 $ 28.1 $ 23.7
======= ======= =======
</TABLE>
<PAGE>
Notes to the Consolidated Financial Statements (continued)
----------------------------------------------------------
Significant items making up deferred tax liabilities, reported separately as
long-term liabilities, and deferred tax assets, included in other current
assets, are as follows:
<TABLE>
<CAPTION>
(Dollars in millions) 1994 1993
------------------------------------------------------------------
<S> <C> <C>
Assets:
Product Warranty $ 13,427 $ 11,313
Deferred Compensation 11,435 8,034
Special Provisions 6,595 6,591
Inventory Adjustments 17,741 11,560
Deferred Income 3,550 2,433
Insurance Reserves 1,183 3,293
Alternative minimum tax credit
carryforward - 1,850
Other 1,309 3,014
--------- ---------
55,240 48,088
Liabilities:
Accelerated Depreciation 20,522 21,966
Other 266 (47)
--------- ---------
20,788 21,919
Net $ 34,452 $ 26,169
========= =========
</TABLE>
The reconciliation between the effective tax rates and the statutory federal
income tax rates is shown in the following schedule:
<TABLE>
<CAPTION>
1994 1993 1992
-------- --------- --------
<S> <C> <C> <C>
Statutory federal income tax rate 35.0 % 34.8 % 34.0 %
State and local taxes, net of federal
tax benefit 4.0 1.7 2.6
Foreign taxes, net (0.6) 2.7 3.8
Foreign Sales Corporation (1.8) (3.7) (2.7)
Other 1.4 2.5 0.3
-------- --------- --------
Effective Tax Rate 38.0 % 38.0 % 38.0 %
======== ========= ========
</TABLE>
Income taxes paid (refunded) are as follows:
<TABLE>
<CAPTION>
(Dollars in millions) 1994 1993 1992
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income taxes paid (refunded), net $ 25.2 $ 4.5 $ (8.0)
State income taxes paid, net 6.2 1.7 2.0
Foreign income taxes paid, net 11.8 14.9 8.0
-------- --------- --------
Total Paid $ 43.2 $ 21.1 $ 2.0
======== ========= ========
</TABLE>
<PAGE>
Notes to the Consolidated Financial Statements (continued)
----------------------------------------------------------
LEASE COMMITMENTS
At fiscal year-end 1994, the Company was committed to minimum rentals under
noncancellable operating leases for fiscal years 1995 through 1999 and
thereafter, as follows, in millions: $9.0, $6.8, $4.5, $3.9, $1.9, and $7.1.
Rental expense for fiscal years 1994, 1993 and 1992, in millions, was $20.6,
$23.8, and $24.3, respectively.
CONTINGENCIES
In February 1990, a purported class action was brought by Panache Broadcasting
of Pennsylvania, Inc. on behalf of all purchasers of electron tubes in the U.S.
against the Company and a joint-venture partner, alleging that the activities of
their joint venture in the power-grid tube industry violated antitrust laws.
The complaint seeks injunctive relief and unspecified damages which may be
trebled under the antitrust laws. In February 1993, the U.S. District Court in
Chicago granted the Company's motion to dismiss the complaint with leave to
amend. Panache Broadcasting filed an amended complaint in March 1993. The
Company's motion to dismiss that complaint was granted in part and denied in
part. 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
seven 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. 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.
<PAGE>
Notes to the Consolidated Financial Statements (continued)
----------------------------------------------------------
SUBSEQUENT EVENT
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.
INDUSTRY SEGMENTS
The Company's operations are grouped into four business segments: Health Care
Systems, Instruments, Semiconductor Equipment, and Electron Devices. Indirect
and common costs have been allocated through the use of estimates. Accordingly,
the following information is provided for purposes of achieving an understanding
of operations, but may not be indicative of the financial results of the
reported segments were they independent organizations. In addition, comparisons
of the Company's operations to similar operations of other companies may not be
meaningful.
The Health Care Systems business includes linear accelerators used for cancer
therapy, industrial testing, and inspection, as well as cancer treatment
planning systems, and data management systems for medical facilities. It also
designs and manufactures a broad range of X-ray generating tubes for the medical
diagnostic imaging market worldwide. The Instruments business consists of
analytical instruments widely used in the fields of chemistry, environmental
monitoring, biology, life sciences, and metallurgy. It also manufactures high
vacuum pumps, instrumentation, gauges and components. The Semiconductor
Equipment business includes systems used for semiconductor wafer fabrication.
The Electron Devices business covers a broad line of electron devices used in
broadcasting, communications, and other commercial and military applications.
Included in Eliminations and Other are certain insignificant support operations.
The Company operates various manufacturing and marketing operations outside the
United States. No single country outside the United States accounts for more
than 10% of total sales or total assets. Sales between geographic areas are
accounted for at cost plus prevailing markups arrived at through negotiations
between independent profit centers. Related profits are eliminated in
consolidation.
Included in the total of United States sales are export sales of $304 million in
fiscal 1994, $207 million in fiscal 1993, and $208 million in fiscal 1992.
Sales under prime contracts from the U.S. Government were approximately $71
million in fiscal 1994, $69 million in fiscal 1993, and $79 million in fiscal
1992.
<PAGE>
Industry Segments
<TABLE>
<CAPTION>
Pretax Identifiable
Sales Earnings (Loss) Assets
----------------------------------------------------------------------
(Dollars in millions) 1994 1993 1992 1994 1993 1992 1994 1993 1992
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Health Care Systems $ 426 $ 387 $374 $86 $75 $ 68 $201 $187 $171
Instruments 372 352 352 33 35 30 196 180 179
Semiconductor Equipment 477 291 275 36 1 (4) 196 148 146
Electron Devices 275 278 285 18 12 (1) 170 172 182
Eliminations & Other 2 3 2 (9) (7) (7) 8 9 12
------ ------ ------ ---- ---- ----- ---- ---- ----
Total Industry
Segments 1,552 1,311 1,288 164 116 86 771 696 690
General Corporate - - - (34) (38) (21) 191 183 189
Interest, Net - - - (2) (4) (3) - - -
------ ------ ------ ---- ---- ----- ---- ---- ----
Total Company $1,552 $1,311 $1,288 $128 $ 74 $ 62 $962 $879 $879
====== ====== ====== ==== ==== ===== ==== ==== ====
<CAPTION>
Capital
Expenditures Depreciation
-----------------------------------------
(Dollars in millions) 1994 1993 1992 1994 1993 1992
-------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Health Care Systems $11 $ 8 $ 8 $ 9 $ 8 $ 8
Instruments 17 12 13 10 10 10
Semiconductor Equipment 6 5 10 9 9 9
Electron Devices 13 9 8 13 12 11
Eliminations & Other 1 1 - 1 1 1
--- --- --- --- --- ---
Total Industry
Segments 48 35 39 42 40 39
General Corporate 15 12 10 6 5 5
Interest, Net - - - - - -
--- --- --- --- --- ---
Total Company $63 $47 $49 $48 $45 $44
=== === === === === ===
<CAPTION>
Geographic Segments
Sales to Intergeographic
Unaffiliated Sales to Total
Customers Affiliates Sales
------------------- ------------------ --------------------
(Dollars in millions) 1994 1993 1992 1994 1993 1992 1994 1993 1992
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States $1,098 $932 $879 $297 $223 $ 229 $1,395 $1,155 $1,108
International 453 378 408 61 56 52 514 434 460
Eliminations & Other 1 1 1 (358) (279) (281) (357) (278) (280)
------ ------ ------ ----- ---- ----- ------ ------ ------
Total Geographic
Segments 1,552 1,311 1,288 - - - 1,552 1,311 1,288
General Corporate - - - - - - - - -
Interest, Net - - - - - - - - -
------ ------ ------ ----- ---- ----- ------ ------ ------
Total Company $1,552 $1,311 $1,288 $ - $ - $ - $1,552 $1,311 $1,288
====== ====== ====== ===== ==== ===== ====== ====== ======
<CAPTION>
Geographic Segments
Pretax Identifiable
Earnings (Loss) Assets
---------------- -----------------
(Dollars in millions) 1994 1993 1992 1994 1993 1992
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United States $139 $106 $71 $538 $494 $ 456
International 34 17 22 225 193 222
Eliminations & Other (9) (7) (7) 8 9 12
---- --- --- ---- --- ----
Total Geographic
Segments 164 116 86 771 696 690
General Corporate (34) (38) (21) 191 183 189
Interest, Net (2) (4) (3) - - -
---- --- --- ---- --- ----
Total Company $128 $74 $62 $962 $879 $879
==== === === ==== === ====
</TABLE>
Total sales is based on the location of the operation furnishing goods and
services. International sales based on final destination of products sold are
$732 million, $561 million, and $587 million, in 1994, 1993, and 1992,
respectively.
<PAGE>
Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
1994 1993
-------------------------------------------- -------------------------------------------------
(Dollars in millions except First Second Third Fourth Total First Second Third Fourth Total
per share amounts) Quarter Quarter Quarter Quarter Year Quarter Quarter Quarter Quarter Year
--------------------------------------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales $323.8 394.5 393.0 441.2 1,552.5 $291.3 325.3 327.9 366.5 1,311.0
------ ----- ----- ----- ------- ------ ----- ----- ----- -------
Gross Profit $104.1 129.8 130.4 156.2 520.5 $ 90.9 108.6 108.6 126.4 434.5
------ ----- ----- ----- ------- ------ ----- ----- ----- -------
Net Earnings $ 11.7 18.3 22.4 27.0 79.4 $ 6.6 9.3 12.0 17.9 45.8
====== ===== ===== ===== ======= ====== ===== ===== ===== =======
Net Earnings Per Share -
Fully Diluted $ 0.33 0.51 0.63 0.76 2.22 $ 0.18 0.25 0.33 0.51 1.26
====== ===== ===== ===== ======= ====== ===== ===== ===== =======
</TABLE>
The four quarters for net earnings per share may not add for the year because of
the different number of shares outstanding during the year.
Common Stock Prices (Unaudited)
<TABLE>
<CAPTION>
1994 1993
----------------------------------- -----------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
---------------------------------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common Stock
High $ 30 39 35 5/8 38 5/8 $ 22 3/8 23 7/8 26 3/4 27
Low $ 26 32 1/2 32 1/4 35 7/8 $ 16 7/8 19 22 23 7/8
Dividends Declared
Per Share $ .050 .060 .060 .060 $ .045 .050 .050 .050
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of Varian Associates, Inc.
We have audited the accompanying consolidated balance sheets of Varian
Associates, Inc. and subsidiary companies as of September 30, 1994 and October
1, 1993, and the related consolidated statements of earnings, stockholders'
equity, and cash flows for each of the three fiscal years in the period ended
September 30, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Varian
Associates, Inc. and subsidiary companies as of September 30, 1994 and October
1, 1993, and the consolidated results of their operations and their cash flows
for each of the three fiscal years in the period ended September 30, 1994 in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
------------------------------
COOPERS & LYBRAND L.L.P.
San Jose, California
October 19, 1994
<PAGE>
EXHIBIT g.2
------------------
Varian Associates, Inc. Bulk Rate
3050 Hansen Way U.S. Postage
Palo Alto, California 94304-1000 PAID
Redwood City, CA
Permit No. 99
------------------
[ART WORK APPEARS HERE]
Third
Quarter
Report
1995
[LOGO OF VARIAN ASSOCIATES, INC. APPEARS HERE]
<PAGE>
Record Third-Quarter Earnings;
Net Rose 42% On Strong Orders and Sales
---------------------------------------
On July 20, Varian reported the highest third-quarter earnings in the
company's 47-year history. Net profits rose to $31.8 million ($0.90/share), up
42% from last year's $22.4 million ($0.63/share). Orders exceeded $400
million for the seventh consecutive quarter at $417 million versus $441 million
in the year-ago period. In fact, order receipts for the quarter rose 16% from
the prior year when adjusted for the effect of a distribution agreement with
Tokyo Electron Ltd. (TEL), which ended at the close of fiscal 1994.
Third-quarter sales climbed to a new high of $459 million, growing 17% over the
$393 million of a year ago. Backlog of $764 million was down 5% from $804
million in the 1994 quarter.
For the first nine months of fiscal 1995, orders were $1.35 billion versus
1994's $1.29 billion, an increase of 19% on a TEL-adjusted basis. Sales for the
period reached $1.35 billion compared to last year's $1.11 billion. Earnings for
the nine months were $82.2 million ($2.32/share), up 57% over the prior year's
$52.4 million ($1.47/share).
Chairman and Chief Executive J. Tracy O'Rourke attributed the higher
results largely to continued strong performances by the company's Semiconductor
Equipment and Health Care Systems businesses. "The markets for these products,
particularly semiconductor equipment, continue to be quite strong, allowing us
to take full advantage of our significantly enhanced operational strengths," Mr.
O'Rourke noted. "Our earnings achievements continue to demonstrate the benefits
of our multi-year drive for Operational Excellence."
Operations
Orders for Varian's Health Care Systems business rose modestly year-to-
date, marking the ninth straight quarter of over $100 million in bookings for
these operations. Sales for the nine months were up 15%, and operating margins
improved. Backlog declined slightly from 1994's level. The X-ray Tube Products
side of this business continued to experience strong demand for its high-end
products, with particularly good interest from the Japanese market. Health care
providers are responding very positively to new Oncology Systems products that
enable them to deliver enhanced treatments while reducing or controlling their
costs. The outlook for Varian's health care activities remains good with the
likelihood of continued sales and earnings growth.
Orders for the company's Instruments business grew slightly during the nine
months on improved market conditions in the U.S. and the Far East, driven by
particularly strong demand for vacuum products. Sales were slightly higher for
the year-to-date, while backlog declined. Instrument markets worldwide continue
to be extremely competitive. Operating margins for this business declined from
the year-ago period.
Nine-month orders for Varian's Semiconductor Equipment business rose 54%
over the year-ago period, after the previously noted adjustment for the
dissolved Tokyo Electron Ltd. distribution agreement. Sales grew 49% over the
1994 level. Backlog rose 53% over the prior year on a TEL-adjusted basis.
Operating margins continue in the double-digit range, and are more than twice
the level of those achieved in the first nine months of the prior year.
The strong year-to-date demand for the company's chip-making equipment was
worldwide, with particularly heavy orders from Korea and other Pacific Rim
nations. Interest in Varian's ion implantation products was especially robust,
particularly for leading-edge, medium-current systems and the new VISion high-
current system. The latter machine offers numerous advantages to semiconductor
manufacturers, particularly in terms of reduced operating costs over the life of
the system. With the multitude of new chip-manufacturing facilities currently
under construction or being planned, demand for Varian systems should continue
to be quite good through the end of the year and in the foreseeable future. As
operating improvements continue to be made in this business, profitability
should remain at a very respectable level.
Varian's Electron Devices business posted higher orders and sales over the
year-ago period, and backlog rose slightly. Operating margins for this business
improved modestly during the quarter, and these activities continued to run
smoothly.
Outlook
"It was gratifying to see Varian's record-setting performance continue into
the second half," Mr. O'Rourke said. "We are taking better advantage of the
robust growth in the semiconductor equipment market than in the past, and we
believe there is still more room to improve. That, along with the continued
contributions
<PAGE>
of our health care activities, is driving us toward a very strong close to
fiscal 1995. Varian is well along on a course that should see it post
substantial gains in revenues and profits over 1994's record levels."
Third Quarter Business Briefs
--------------------------------------------------------------------------------
Leonard Green & Partners Acquires Electron Devices
In mid-August, Varian completed the sale of its Electron Devices business
to an investor group led by an equity fund sponsored by Leonard Green & Partners
(LGP) for approximately $200 million and the assumption of certain liabilities.
According to Mr. O'Rourke, proceeds from the sale will be used primarily to
repurchase shares of Varian stock.
Los Angeles-based LGP is a private, merchant banking firm that specializes
in organizing, structuring, and sponsoring management buyouts of established
companies. The former Varian Electron Devices operations are now known as
Communications & Power Industries, Inc. Former Varian Executive Vice President
Al Wilunowski has joined the new company as its chief executive officer.
Hospitals Save $1 Million in Group Purchase
The first systems are now being installed under one of the largest single
cancer therapy equipment purchase agreements ever negotiated by Varian Oncology
Systems. Last year, members of the Premier Health Alliance committed to purchase
multiple Clinac(R) linear accelerator and Ximatron(R) simulator systems, valued
at a total of approximately $18 million. Nine U.S. hospitals participated in the
arrangement, which has resulted in an aggregate savings of more than $1 million.
According to Oncology Systems President Tim Guertin, interaction with top-level
administrators, open communication, and the willingness to step beyond the
bounds of typical purchasing strategies made the agreement possible.
Varian and Samsung Move to Phase 3 of Joint Program
Varian and its Korean affiliate, Varian Korea, Ltd. (VKL), have entered the
third phase of a joint program with Samsung Electronics Co. Ltd to develop
advanced process technologies for next-generation, dynamic random access memory
(DRAM) semiconductor devices. With this agreement, Varian is able to develop
fabrication tools qualified for processes that are one to two generations ahead
of the marketplace. In the current phase, expected to be completed by mid-1996,
the companies are developing and qualifying metallization processes that Samsung
will use to manufacture 256-Mbit and 1-Gbit DRAM chips. Varian is concurrently
altering its sputtering systems to meet the increased demands of the new
processes.
New Product Developments
The U.S. Food and Drug Administration (FDA) granted registration for
Varian's Dynamic Multileaf Collimator (MLC), a beam-shaping device for Oncology
Systems' Clinac medical accelerators. Because its individual "leaves" can be
moved during treatment, the MLC has the potential to allow physicians to deliver
significantly higher amounts of radiation to tumors through multiple-shaped
fields, resulting in less dose to healthy tissue and correspondingly lower
complications. Varian is the first radiotherapy equipment manufacturer to
receive FDA registration for this advanced MLC usage. Varian's earlier MLC
version, which conforms the beam to the tumor but does not move during
treatment, is already in use at more than 150 hospitals worldwide.
[PHOTO APPEARS HERE]
The Dynamic Multileaf Collimator has 52 motorized leaves that move under
computer control to emulate the shape of tumors and deliver effective cancer
treatments.
During the quarter, the first /UNITY/INOVA research NMR spectrometers were
shipped to customers. A state-of-the-art product introduced in March, the INOVA
is aimed specifically at handling demanding applications in chemistry,
biochemistry, and physics. The newest UNITY
<PAGE>
product will be used in such fields as biomolecular research for designing
drugs to combat AIDS. With improvements in data acquisition complexity,
accuracy, speed, and data management, the product is expected to be
well-received by pharmaceutical, chemical, and academic researchers. Distinct
from other manufacturers' spectrometer lines, this modular system can be
purchased new or provided through an upgrade of UNITYplus, Varian's previous
system.
Faster Access to Quarterly Earnings Reports
In the interest of making its quarterly results available to shareholders in
a more timely and efficient manner, Varian is replacing its formal, printed
quarterly report with several more desirable options. Beginning with the final
quarter of fiscal 1995, shareholders may obtain a copy of the earnings (now
scheduled for release on October 19) and supporting financial tables in any of
the following ways.
Those who would like the results by facsimile may request them to be sent
the day they are reported by calling 1-800-544-4636. Same-day service is also
available via the Internet on the World Wide Web at the URL"http://www.varian.
com" (under Corporate Info, click on the financial information button). Those
who prefer to continue receiving this information by mail may do so by writing
the Investor Relations Department, 3100 Hansen Way, M/S E-327, Palo Alto, CA
94304, and specifying the address where it should be sent.
Vice President and Chief Financial Officer Robert Lemos noted that the
change will allow broader as well as more timely communication of the quarterly
results. He said the fourth-quarter earnings, which were previously sent to
shareholders as part of the annual report published in December, will now be
covered in a separate, specific report which will be issued to those who wish to
receive such information. Varian's Annual Report to Shareholders is also now
available electronically on the World Wide Web, as well as in the traditional
printed format.
[LOGO OF OPERATIONAL EXCELLENCE APPEARS HERE]
<PAGE>
Consolidated Statements of Earnings (Unaudited)
(Dollars and shares in thousands except per share amounts)
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
---------------------------- ------------------------------
June 30, July 1, June 30, July 1,
FY 1995 FY 1994 FY 1995 FY 1994
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 458,907 $ 393,054 $1,350,403 $1,111,338
---------- ---------- ---------- ----------
Operating Costs and Expenses
Cost of sales 303,242 262,599 903,926 747,006
Research and development 26,421 19,513 72,470 59,418
Marketing 54,520 48,225 153,950 136,058
General and administrative 23,595 27,530 87,344 83,150
---------- ---------- ---------- ----------
Total Operating Costs and Expenses 407,776 357,867 1,217,690 1,025,632
---------- ---------- ---------- ----------
Operating Earnings 51,131 35,187 132,713 85,706
Interest expense, net 748 (991) 2,258 1,136
---------- ---------- ---------- ----------
Earnings Before Taxes 50,383 36,178 130,455 84,570
Taxes on earnings 18,640 13,750 48,270 32,140
---------- ---------- ---------- ----------
Net Earnings $ 31,743 $ 22,428 82,185 52,430
========== ========== ========== ==========
Average Shares Outstanding Including
Common Stock Equivalents 35,431 35,528 35,480 35,703
---------- ---------- ---------- ----------
Net Earnings Per Share $ 0.90 $ 0.63 2.32 1.47
========== ========== ========== ==========
</TABLE>
<PAGE>
Consolidated Balance Sheets (Unaudited)
(Dollars and shares in thousands except per share amounts)
<TABLE>
<CAPTION>
June 30, July 1,
1995 1994
---------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 90,120 $ 76,806
Accounts receivable 378,462 314,266
Inventories 225,932 193,981
Other current assets 75,199 72,174
Property, plant and
equipment, net 238,190 230,570
Other assets 61,181 49,724
----------- -----------
Total Assets $ 1,069,084 $ 937,521
=========== ===========
Liabilities and Stockholders'
Equity
Current notes payable $ 32,968 $ 38,854
Other current liabilities 459,281 382,729
Long-term liabilities 60,329 60,399
Deferred income taxes 20,773 21,950
Stockholders' equity 495,733 433,589
----------- -----------
Total Liabilities and
Stockholders' Equity $ 1,069,084 $ 937,521
=========== ===========
Other Data
Actual shares outstanding 33,833 34,290
Stockholders' equity per share $ 14.65 $ 12.64
Order backlog $ 764,000 $ 803,506
Employees 8,700 8,000
</TABLE>
