<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 29, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSISTION PERIOD FROM TO
COMMISSION FILE NUMBER: 1-7598
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER:
VARIAN ASSOCIATES, INC.
STATE OR OTHER JURISDICTION OF IRS EMPLOYER
INCORPORATION OR ORGANIZATION: IDENTIFICATION NO.:
DELAWARE 94-2359345
Address of principal executive offices:
3050 Hansen Way, Palo Alto, California 94304-1000
Telephone No., including area code:
(415) 493-4000
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 preceeding 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
--- ---
An index of exhibits filed with this Form 10-Q is located on page 14.
Number of shares of Common Stock, par value $1 per share, outstanding as of the
close of business on April 26, 1996: 31,036,000 shares.
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF EARNINGS
UNAUDITED
<TABLE>
<CAPTION>
SECOND QUARTER ENDED SIX MONTHS ENDED
- -----------------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS MARCH 29, MARCH 31, MARCH 29, MARCH 31,
EXCEPT PER SHARE AMOUNTS) 1996 1995 1996 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $417,603 $428,637 $768,850 $774,779
-------- -------- -------- --------
OPERATING COSTS AND EXPENSES
Cost of sales 263,382 285,453 481,497 516,355
Research and development 27,278 22,295 51,795 42,049
Marketing 51,016 47,598 97,740 90,419
General and administrative 23,275 30,748 46,480 54,190
-------- -------- -------- --------
Total Operating Costs and Expenses 364,951 386,094 677,512 703,013
-------- -------- -------- --------
OPERATING EARNINGS 52,652 42,543 91,338 71,766
Interest (income)/expense, net 1,055 580 (165) 1,510
-------- -------- -------- --------
EARNINGS FROM CONTINUING
OPERATIONS BEFORE TAXES 51,597 41,963 91,503 70,256
Taxes on earnings 18,570 15,528 32,940 25,998
-------- -------- -------- --------
EARNINGS FROM CONTINUING
OPERATIONS $ 33,027 $ 26,435 $ 58,563 $ 44,258
DISCONTINUED OPERATIONS - NET OF TAXES 0 3,257 0 6,184
-------- -------- -------- --------
NET EARNINGS $ 33,027 $ 29,692 $ 58,563 $ 50,442
======== ======== ======== ========
AVERAGE SHARES OUTSTANDING INCLUDING
COMMON STOCK EQUIVALENTS 32,169 35,100 32,227 35,182
======== ======== ======== ========
EARNINGS PER SHARE - FULLY DILUTED
CONTINUING OPERATIONS $ 1.03 $ 0.75 $ 1.82 $ 1.26
DISCONTINUED OPERATIONS 0.00 0.10 0.00 0.18
-------- -------- -------- --------
NET EARNINGS PER SHARE $ 1.03 $ 0.85 $ 1.82 $ 1.44
======== ======== ======== ========
- -----------------------------------------------------------------------------------------------
Dividends Declared Per Share $ 0.08 $ 0.07 $ 0.15 $ 0.13
Order Backlog $716,172 $668,834
- -----------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements
-2-
<PAGE> 3
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
UNAUDITED
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
MARCH 29, SEPTEMBER 29,
(DOLLARS IN THOUSANDS EXCEPT PAR VALUES) 1996 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 87,764 $ 122,728
Accounts receivable 363,482 346,330
Inventories
Raw materials and parts 114,681 98,402
Work in process 71,462 52,616
Finished goods 29,231 20,684
---------- ----------
Total Inventories 215,374 171,702
Other current assets 111,514 116,958
---------- ----------
TOTAL CURRENT ASSETS 778,134 757,718
Property, Plant, and Equipment 456,270 431,303
Accumulated depreciation and amortization (252,133) (239,422)
---------- ----------
NET PROPERTY, PLANT, AND EQUIPMENT 204,137 191,881
Other Assets 56,809 54,183
---------- ----------
TOTAL ASSETS $1,039,080 $1,003,782
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 56,118 $ 1,755
Accounts payable - trade 88,326 82,851
Accrued expenses 249,949 316,419
Product warranty 50,563 48,076
Advance payments from customers 58,380 51,600
---------- ----------
TOTAL CURRENT LIABILITIES 503,336 500,701
Long-Term Accrued Expenses 28,151 29,026
Long-Term Debt 60,258 60,329
Deferred Taxes 19,299 18,797
---------- ----------
TOTAL LIABILITIES 611,044 608,853
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock
Authorized 1,000,000 shares, par value $1, issued none - -
Common stock
Authorized 99,000,000 shares, par value $1, issued and outstanding
31,035,000 shares at March 29,1996 and 31,052,000 shares at
September 29, 1995 31,035 31,052
Retained earnings 397,001 363,877
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 428,036 394,929
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,039,080 $1,003,782
========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements.
-3-
<PAGE> 4
VARIAN ASSOCIATES, INC. AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
- -------------------------------------------------------------------------------------------------------
MARCH 29, MARCH 31,
(DOLLARS IN THOUSANDS) 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Cash (Used)/Provided by Operating Activities $(26,751) $ 26,555
INVESTING ACTIVITIES
Purchase of property, plant, and equipment (34,730) (27,587)
Purchase of businesses, net of cash acquired - (12,754)
Other, net (3,490) 2,593
-------- --------
Net Cash Used by Investing Activities (38,220) (37,748)
FINANCING ACTIVITIES
Net borrowings on short-term obligations 54,363 33,675
Proceeds from common stock issued to employees 17,166 14,471
Purchase of common stock (38,259) (30,452)
Other, net (4,434) (4,467)
-------- --------
Net Cash Provided by Financing Activities 28,836 13,227
EFFECTS OF EXCHANGE RATE CHANGES ON CASH 1,171 (3,750)
-------- --------
Net Decrease in Cash and Cash Equivalents (34,964) (1,716)
Cash and Cash Equivalents at Beginning of Period 122,728 78,872
-------- --------
Cash and Cash Equivalents at End of Period $ 87,764 $ 77,156
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements.
-4-
<PAGE> 5
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
second quarter and six months ended March 29, 1996, and March 31,
1995, 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 (net
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. 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 $47.7 at March 29, 1996, $45.6 at September
29, 1995, $50.2 at March 31, 1995, and $49.0 at September 30, 1994.
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
5
<PAGE> 6
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 (CONTINUED)
underlying items being hedged, these instruments do not subject the
Company to risk that would otherwise result from changes in currency
exchange rates. At March 29, 1996, the Company had forward exchange
contracts with maturities of twelve months or less to sell foreign
currencies totaling $120.2 million ($31.7 million of French francs,
$20.6 million of Japanese yen, $19.9 million of Canadian dollars,
$14.8 million of British pounds, $13.9 million of Deutsche marks,
$9.5 million of Italian lira, $3.5 million of Swiss francs, $2.7
million Swedish krona, $1.8 million each of Austrian schillings and
Australian dollars) and to buy foreign currencies totaling $64.9
million ($16.2 million of British pounds, $15.6 million of French
francs, $10.9 million of Japanese yen, $6.6 million of Swiss francs,
$4.8 million of Australian dollars, $3.2 million each of Canadian
dollars, Deutsche marks and Italian lira, and $1.2 million of Swedish
krona).
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 in part and denied in part the Company's motion to
dismiss the complaint. Panache Broadcasting filed an amended
complaint in March 1993. In October 1995, the Court affirmed a
federal Magistrate's recommendation to grant in part and deny in part
the Company's motion to dismiss the amended complaint. Also in
October 1995, the Magistrate recommended denial of plaintiff's
request to certify the purported class and recommended certification
of a different and narrower class than that defined by plaintiff. The
Company is appealing that proposed class certification to the
District Court, and believes that it has meritorious defenses to the
Panache lawsuit.
In addition to the above-referenced matter, the Company is currently
a defendant in a number of legal actions and could incur an uninsured
liability in one or more of them. In the opinion of management, the
outcome of the above litigation will not have a material adverse
effect on the financial condition of the Company.
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 eight sites to which Varian is alleged to
have shipped manufacturing waste for recycling or disposal. The
Company is also involved in various stages of environmental
investigation and/or remediation under the direction of, or in
6
<PAGE> 7
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 (CONTINUED)
consultation with, federal, state, and/or local agencies at certain
current or former Company facilities. Uncertainty as to (a) the
extent to which the Company caused, if at all, the conditions being
investigated, (b) the extent of environmental contamination and
risks, (c) the applicability of changing and complex environmental
laws, (d) the number and financial viability of other potentially
responsible parties, (e) the stage of the investigation and/or
remediation, (f) the unpredictability of investigation and/or
remediation costs (including as to when they will be incurred), (g)
applicable clean-up standards,(h) the remediation (if any) that will
ultimately be required, and (i) available technology make it
difficult to assess the likelihood and scope of further investigation
or remediation activities or to estimate the future costs of such
activities if undertaken.
Nevertheless, the Company continues to estimate the amounts of these
future costs in periodically establishing reserves, based partly on
progress made in determining the magnitude of such costs, experience
gained from sites on which remediation is ongoing or has been
completed, and the timing and extent of remedial actions required by
the applicable governmental authorities. As of March 29, 1996, the
Company estimated that the present value of the Company's future
exposure for environmental related investigation and remediation
expenditures, including operating and maintenance costs, ranged from
approximately $33.4 million to $56.0 million. The time frame over
which the Company expects to incur such costs varies with each site,
ranging up to 30 years. Management believes that no amount in the
foregoing range of estimated future costs is more probable of being
incurred than any other amount in such range and therefore has
accrued $33.4 million in estimated environmental costs at March 29,
1996.
Although any ultimate liability arising from an environmental related
matter described herein could result in significant expenditures
that, if aggregated and assumed to occur within a single fiscal year,
would be material to the Company's financial condition, the
likelihood of such occurrence is considered remote. Based on
information currently available to management and its best assessment
of the ultimate amount and timing of environmental related events,
management believes that the costs of these environmental related
matters are not reasonably likely to have a material adverse effect
on the financial condition of the Company.
The Company evaluates its liability for environmental related
investigation and remediation in light of the liability and financial
wherewithal of potentially responsible parties and insurance
companies with respect to which the Company believes that it has
rights to contribution, indemnity and/or reimbursement.
7
<PAGE> 8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4: (CONTINUED)
Claims for recovery of environmental investigation and remediation
costs already incurred and to be incurred in the future have been
asserted against various insurance companies and other third parties.
In 1992, the Company filed a lawsuit against 36 insurance companies
with respect to most of the above-referenced sites. The Company
received certain settlements during 1995 and 1996 and has a $6.5
million receivable in Other Current Assets at March 29, 1996.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
On April 18, 1996, the Company reported record second-quarter orders and
net earnings. Earnings per share also rose to a new high of $1.03 for the
quarter, up 37% from last year's $.75. Earnings for the quarter were $33.0
million, a 25% increase over last year's $26.4 million. Second-quarter orders
rose 14% to $430 million. Second-quarter sales of $418 million were slightly
below the year-ago quarter of $429 million, but rose 8% after adjusting for the
effect of an equipment distribution agreement with Tokyo Electron Ltd. (TEL)
that was terminated at the end of fiscal 1994. Backlog of $716 million was above
last year's $669 million, but declined from the first quarter's record $725
million. For the first six months of Fiscal 1996, the Company had net earnings
of $58.6 million, up 32% from the prior year's $44.3 million. Earnings per share
of $1.82 were 44% ahead of 1995's $1.26. Orders rose to $866 million from last
year's $810 million. First-half sales of $769 million were down slightly from
the year-ago's $775 million, but grew 11% when adjusted for the termination of
the TEL distribution agreement.
The strong performance was driven largely by the Company's Semiconductor
Equipment business and by continuing improved performance in its Instruments
business. Good international orders and sales were also a factor and represent a
growing proportion of the Company's totals in line with its strategy to
strengthen its presence in markets outside the U.S. All three of the Company's
business segments experienced growing demand from abroad, particularly from the
Far East.
Semiconductor Equipment orders grew 18% compared to 1995's first half and
were a record $207 million in the second quarter. First-half sales increased 28%
from the prior year, after adjustment for the previously mentioned TEL resale
agreement. Backlog rose 30% above the year-ago period to a record high of $324
million. Second-quarter operating margins for this business improved over the
prior year, and nearly matched the all-time record set in the first quarter.
Orders for both ion implantation and thin film systems were good, particularly
for the Company's leading-edge systems. However, the orders momentum may
moderate to some degree in coming months as the rapid growth of the
semiconductor industry slows somewhat. Demand for the Company's products was
spread across multiple geographic regions, with particular strength in Korea and
other areas of the Far East.
Year-to-date orders for the Company's Health Care Systems business
declined 9% from the 1995 period. Second quarter orders rose 4% from a year ago,
topping the $100 million mark for the twelfth consecutive quarter. Sales
declined 7% in the first half, and backlog increased 2%. A softening in the U.S.
market for oncology products was partially offset by strengthening international
orders for X-ray tubes and cancer treatment systems. A multi-year program to
develop and broaden distribution in overseas markets has positioned the business
to take good advantage of increasing world demand for cancer care equipment and
ancillary products, particularly in Europe and the Far East. A
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS (CONTINUED)
continuing stream of system enhancements is planned to allow the Company to
offer previously unavailable techniques and approaches in advanced cancer
therapy. Along with growing overseas demand, these developments should help this
business achieve continued, but somewhat slower, growth and maintain its
margins.
Instruments business orders, and sales rose 17% and 9%, respectively, over
the prior year's first half. Operating margins improved as well. The strong
demand was driven largely by good volume in the vacuum products and nuclear
magnetic resonance instrument sectors. Second-quarter orders of $122 million and
sales of $118 million reached new second quarter highs, while backlog rose to
$122 million, a record for any period. Instruments business has an array of new
products that should continue to fuel its growth at a pace above the prior year.
An expanding international infrastructure is also providing new distribution
channels in developing countries with good potential for future expansion.
FINANCIAL CONDITION
The Company's financial condition remained strong during the first six months of
fiscal 1996. Operating activities consumed cash of $26.8 million in the
first-half of fiscal 1996 and provided $26.6 million in the same period last
year. Investing activities in the first half of fiscal 1996 used $38.2 million,
$34.7 million for the purchase of property, plant and equipment. Investing
activities in the same period last year used $37.7 million, $12.8 million for
the purchase of businesses, and $27.6 million for the purchase of property,
plant and equipment. Financing activities provided $28.8 million during the
first-half of 1996 and $13.2 million during the same period last year. Total
debt as a percentage of total capital increased to 21.4% at the end of the
second quarter of fiscal 1996 as compared with 13.6% at fiscal year end. The
ratio of current assets to current liabilities increased to 1.55 to 1 at March
29, 1996, from 1.51 to 1 at fiscal year end, 1995. The Company has available $50
million in unused committed lines of credit.
OUTLOOK
Except for historical information, this discussion contains forward
looking statements that involve risks and uncertainties that could cause actual
results to differ materially from those projected. Such risks and uncertainties
include: product demand and market acceptance risks; the effect of general
economic conditions and foreign currency fluctuations; the impact of competitive
products and pricing; new product development and commercialization; the impact
of slower growth in worldwide semiconductor demand; the effect of the continuing
shift in growth from domestic to international health care customers, and the
impact of managed care initiatives in the United States; the continued
improvement of the various instruments markets the company serves; the ability
to hire and retain sufficient qualified personnel; and the ability to increase
operating margins on higher sales; and other risks detailed from time to time in
the Company's filings with the Securities and Exchange Commission.
10
<PAGE> 11
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Varian Associates, Inc.:
We have reviewed the consolidated balance sheet of Varian Associates, Inc. and
subsidiary companies as of March 29, 1996 and March 31, 1995, and the related
consolidated statements of earnings for the quarters and semi-annual periods
ended March 29, 1996 and March 31, 1995, and the condensed consolidated
statements of cash flows for the semi-annual periods ended March 29, 1996 and
March 31, 1995. These financial statements are the responsibility of the
Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the aforementioned financial statements for them to be in conformity
with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
------------------------------
COOPERS & LYBRAND L.L.P.
San Jose, California
April 17, 1996
11
<PAGE> 12
PART II. OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on February 15, 1996, the
stockholders of the Company voted on the election of five directors to the
Company's Board of Directors for three-year terms. The voting on each such
nominee for director was as follows:
<TABLE>
<CAPTION>
Votes Votes Broker
Nominee For Withheld Abstentions Nonvotes(1)
- -------------------- ---------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Angus A. MacNaughton 25,539,122 289,104 0
John G. McDonald 25,538,640 289,586 0
Wayne R. Moon 25,324,427 503,799 0
Burton Richter 25,543,036 285,190 0
Elizabeth E. Tallett 25,526,053 302,173 0
</TABLE>
(1) Pursuant to the Rules of the New York Stock Exchange, this election of
directors constituted a routine matter, and therefore brokers were permitted to
vote without receipt of instructions from clients.
Item 6 Exhibits and Reports on Form 8-K
- ------ --------------------------------
(a) Exhibits:
Exhibit 11 Computation of Earnings Per Share.
Exhibit 15 Letter Regarding Unaudited Interim Financial Information.
Exhibit 27 Financial Data Schedule (EDGAR filing only).
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the second quarter ended
March 29, 1996.
12
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VARIAN ASSOCIATES, INC.
Registrant
May 9, 1996
Date
/s/ Wayne P. Somrak
-----------------------------
Wayne P. Somrak
Vice President and Controller
(Chief Accounting Officer)
13
<PAGE> 14
INDEX OF EXHIBITS
Exhibit
Number Page
- ------- ----
11 Computation of Earnings Per Share 15
15 Letter Regarding Unaudited Interim Financial Information 16
27 Financial Data Schedule (EDGAR filing only) -
14
<PAGE> 1
EXHIBIT 11
COMPUTATION OF EARNINGS PER SHARE IN ACCORDANCE
WITH INTERPRETIVE RELEASE NO. 34-9083
UNAUDITED
<TABLE>
<CAPTION>
SECOND QUARTER ENDED SIX MONTHS ENDED
MARCH 29, MARCH 31, MARCH 29, MARCH 31,
(SHARES IN THOUSANDS) 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actual weighted average shares outstanding for the period 31,076 33,782 31,078 33,838
Dilutive employee stock options 1,093 1,318 1,149 1,344
------- ------- ------- -------
Weighted average shares outstanding for the period 32,169 35,100 32,227 35,182
======= ======= ======= =======
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Earnings from continuing operations 33,027 26,435 58,563 44,258
Earnings from discontinued operations - 3,257 - 6,184
------- ------- ------- -------
Earnings applicable to fully diluted earnings per share $33,027 $29,692 $58,563 $50,442
======= ======= ======= =======
Earnings per share based on SEC interpretive release
No. 34-9083:
Earnings from continuing operations 1.03 0.75 1.82 1.26
Earnings from discontinued operations - 0.10 - 0.18
------- ------- ------- -------
Earnings per share - Fully Diluted (1) $ 1.03 $ 0.85 $ 1.82 $ 1.44
======= ======= ======= =======
</TABLE>
(1) There is no significant difference between fully diluted earnings per share
and primary earnings per share.
-15-
<PAGE> 1
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Varian Associates, Inc.
Registrations on Forms S-8 and S-3
We are aware that our report dated April 17, 1996 on our review of the interim
financial information of Varian Associates, Inc. for the three-month and six
month periods ended March 29, 1996 included in this Form 10-Q is incorporated by
reference in the Company's registration statements on Forms S-8, Registration
Statement Numbers 33-46000, 33-33661, 33-33660, and 2-95139 and Forms S-8 and
S-3, Registration Statement Number 33-40460. Pursuant to Rule 436(c) under the
Securities Act of 1933 this report should not be considered a part of the
registration statements prepared or certified by us within the meaning of
Sections 7 and 11 of that Act.
/s/ Coopers & Lybrand L.L.P.
----------------------------
Coopers & Lybrand L.L.P
San Jose, California
May 9, 1996
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-27-1996
<PERIOD-START> SEP-30-1995
<PERIOD-END> MAR-29-1996
<CASH> 87,764
<SECURITIES> 0
<RECEIVABLES> 365,833
<ALLOWANCES> 2,351
<INVENTORY> 215,374
<CURRENT-ASSETS> 778,134
<PP&E> 456,270
<DEPRECIATION> 252,133
<TOTAL-ASSETS> 1,039,080
<CURRENT-LIABILITIES> 503,336
<BONDS> 0
0
0
<COMMON> 31,035
<OTHER-SE> 397,001
<TOTAL-LIABILITY-AND-EQUITY> 1,039,080
<SALES> 768,850
<TOTAL-REVENUES> 768,850
<CGS> 481,497
<TOTAL-COSTS> 677,512
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (165)
<INCOME-PRETAX> 91,503
<INCOME-TAX> 32,940
<INCOME-CONTINUING> 58,563
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,563
<EPS-PRIMARY> 0
<EPS-DILUTED> 1.82
</TABLE>
