Item 2. PROPERTIES
The following table sets forth certain information with respect to the principal properties of the Registrant. The expiration date of each applicable lease is given for leased properties; all other properties are owned. Unless otherwise noted, all properties are manufacturing facilities. All of the Registrant's listed plants are being utilized, are in good operating condition and are suitable for its current needs. These facilities are expected to meet the Registrant's manufacturing needs in the foreseeable future.
Expiration Date Approximate Approximate of Lease Capacity Operation Square Feet (if applicable) Utilization(1) - --------- ----------- --------------- --------------
Executive Office 10,000(2) 10/15/97 N/A Naperville, IL
Transportation Products - -----------------------
Portland, OR 166,000 N/A 75% Clackamas, OR 55,000 N/A 85% Bryson City, NC 162,000 N/A 60%(3) Cashiers, NC 94,000 N/A 85% Monroe, NC 114,000 N/A 90% Saginaw, MI 77,000 N/A 65% Melvindale, MI 45,000 N/A 50% Vassar, MI 76,000 N/A 70% Petersburg, VA 394,000 N/A 55% Little Rock, AR 52,000 N/A 25% Louisville, KY 45,000 1/31/99 25% Sparks, NV 36,000 9/30/00 25% Camp Hill, PA 95,000 N/A 50% McPherson, KS 94,000 N/A 50% Halberstadt, Germany 16,000 N/A 50% Neitersen, Germany 79,000 12/31/11 50% Ploermel, France 70,000 N/A 60% Oak Creek, WI 72,000 N/A 40% Bell Gardens, CA 18,000 N/A 40% Chicago, IL 32,000 N/A 50% Atchison, KS 60,000 N/A 45%
Analytical Instruments - ----------------------
Bellwood, IL 42,000 5/31/01 35% San Antonio, TX 28,000 4/30/99 35% Lauda, Germany 24,000 N/A 20%
(1) Full capacity being deemed a 24 hour day, 7 day week for this purpose. (2) Office space. (3) Location purchased in March 1995. Production began in the first fiscal quarter of 1996. N/A - Not Applicable.
Item 3.
Item 3. LEGAL PROCEEDINGS
Not applicable
Item 4.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
PART II
Item 5.
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Reference is made to the information set forth under the captions "Quarterly Market and Dividend Information" and "Shares Listed" in the Registrant's Proxy Statement filed pursuant to Regulation 14A within 120 days after January 31, 1997, which information is hereby incorporated herein by reference. Note: The information contained under the caption "Quarterly Market and Dividend Information" in the Registrant's Proxy Statement includes over-the-counter market quotations which reflect interdealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
Item 6.
Item 6. SELECTED FINANCIAL DATA
Reference is made to the information set forth under the captions "Summary of Operations" and "Summary of Financial Condition" in the Registrant's Proxy Statement filed pursuant to Regulation 14A within 120 days after January 31, 1997, which information is hereby incorporated herein by reference.
Item 7.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the information set forth under the caption, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Registrant's Proxy Statement filed pursuant to Regulation 14A within 120 days after January 31, 1997, which information is hereby incorporated herein by reference.
Item 8.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the information set forth under the captions "Consolidated Balance Sheets", "Consolidated Statements of Earnings", "Consolidated Statements of Stockholders' Equity", "Consolidated Statements of Cash Flows", "Notes to Consolidated Financial Statements" and "Independent Auditors' Report" in the Registrant's Proxy Statement filed pursuant to Regulation 14A within 120 days after January 31, 1997, which information is hereby incorporated herein by reference.
Item 9.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable
PART III
Item 10.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Reference is made to the information set forth under the caption "Election of Directors" in the Registrant's Proxy Statement filed pursuant to Regulation 14A within 120 days after January 31, 1997, which information is incorporated herein by reference, and to the information set forth under the caption "Executive Officers of the Registrant", which appears as a separate item immediately preceding Item 2 included in PART I hereof, which information is incorporated herein by reference.
None of the executive officers bear any family relationship to one another. The executive officers of the Registrant are elected annually by the Board of Directors.
Item 11.
Item 11. EXECUTIVE COMPENSATION
Reference is made to the information set forth under the caption "Executive Compensation" in the Registrant's Proxy Statement filed pursuant to Regulation 14A within 120 days after January 31, 1997, which information is hereby incorporated herein by reference.
Item 12.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Reference is made to the information set forth under the captions "Election of Directors" and "Security Ownership of Certain Beneficial Owners and Management" in the Registrant's Proxy Statement filed pursuant to Regulation 14A within 120 days after January 31, 1997, which information is hereby incorporated herein by reference.
Item 13.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PART IV
Item 14.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a)(1), (a)(2) & (d) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE The consolidated financial statements, together with the related notes and supporting schedule filed as part of this Form 10-K, are listed in the accompanying Index to Consolidated Financial Statements and Schedule.
(b) REPORTS ON FORM 8-K
None
(a)(3) & (c) EXHIBITS
Set forth below is a list of the Exhibits to this Form 10-K in accordance with the requirements of Items 14(a)(3) and (c) of Form 10-K and Item 601 of Regulation S-K:
(3) (i) Registrant's Articles of Incorporation, as amended through May 26, 1987 (incorporated herein by reference to Exhibit (3)(a) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1988) and as further amended through June 17, 1993 (incorporated herein by reference to Exhibit (3)(i) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1996).
(ii) Registrant's By-laws, as amended through November 20, 1995 (incorporated herein by reference to Exhibit (3)(ii) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1996) as further amended on June 17, 1996 (incorporated herein by reference to Exhibit (3)(ii) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 1996).
(4) (a) Rights Agreement dated as of June 17, 1996 (incorporated herein by reference to Exhibit 4(a) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 1996).
(b) Credit Agreement by and among the Registrant, the Borrowing Subsidiaries and the Lenders Party Thereto and The First National Bank of Chicago, as Agent, dated as of July 19, 1996 (incorporated herein by reference to Exhibit (4)(b) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 1996).
(c) Amendment No. 1 dated as of October 15, 1996 to Credit Agreement dated as of July 19, 1996 (incorporated herein by reference to Exhibit (4)(a) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended November 2, 1996).
(d) Amendment No. 2 dated as of January 17, 1997 to Credit Agreement dated as of July 19, 1996.
(10) (a) Registrant's 1980 Incentive Stock Option Plan, as amended (incorporated herein by reference to Exhibit (10)(b) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1989) and as further amended on March 26, 1990 (incorporated herein by reference to Exhibit (10)(b) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1990).
(b) Varlen Corporation Profit Sharing and Retirement Savings Plan as amended and restated generally effective July 1, 1994 (incorporated herein by reference to Exhibit (10)(b) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1995).
(c) Registrant's 1989 Incentive Stock Option Plan, (incorporated herein by reference to Exhibit (10)(h) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1989) and as further amended on March 26, 1990 (incorporated herein by
reference to Exhibit (10)(g) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1990).
(d) Varlen Corporation Excess Benefits Plan (incorporated herein by reference to Exhibit (10)(i) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1990).
(e) Varlen Corporation Supplemental Executive Retirement Plan (incorporated herein by reference to Exhibit (10)(j) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1990).
(f) Trust Agreement Between Varlen Corporation and Fidelity Management Trust Company dated November 30, 1992 (incorporated herein by reference to Exhibit (10)(g) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1993).
(g) Stock Purchase Agreement dated December 17, 1992 between The Dyson-Kissner-Moran Corporation and the Registrant (incorporated herein by reference to Exhibit 5(a) to the Registrant's Report on Form 8-K dated January 8, 1993).
(h) Form of letter agreement between the Registrant and Richard L. Wellek (incorporated herein by reference to Exhibit (10)(j) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1993).
(i) Form of letter agreement between the Registrant and each of Richard A. Nunemaker, Raymond A. Jean and George W. Hoffman (incorporated herein by reference to Exhibit (10)(k) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1993).
(j) Trust Indenture for the Registrant's $69,000,000 6 1/2% Convertible Subordinated Debentures Due 2003 from the Registrant to the Harris Trust and Savings Bank (incorporated herein by reference to Exhibit (4) to the Registrant's Report on Form 8-K dated May 27, 1993).
(k) Registrant's 1993 Incentive Stock Option Plan adopted May 25, 1993 (incorporated herein by reference to Exhibit (10)(k) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1994).
(l) Registrant's 1993 Directors Incentive Stock Grant Plan adopted May 25, 1993 (incorporated herein by reference to Exhibit (10)(l) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1994).
(m) Registrant's 1993 Deferred Incentive Stock Purchase Plan adopted May 25, 1993 (incorporated herein by reference to Exhibit (10)(m) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1994) as amended on February 3, 1997.
(n) Varlen Corporation Excess Benefit Plan Trust Agreement dated December 1, 1994 (incorporated herein by reference to Exhibit (10)(n) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1995).
(o) Form of Indemnification Agreement Dated as of June 17, 1996 (incorporated herein by reference to Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 1996).
(11) Computation of Per Share Earnings for the Fiscal Years Ended January 31, 1997, 1996 and 1995.
(13) 1996 Summary Annual Report to Stockholders.
(21) List of Subsidiaries.
(23) Consent of Deloitte & Touche LLP.
(24) Board of Directors' power of attorney for the signing of Varlen Corporation's 1996 Annual Report on Form 10-K.
(27) Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
VARLEN CORPORATION (Registrant)
By: /s/ Richard A. Nunemaker ------------------------ Richard A. Nunemaker Vice President, Finance and Chief Financial Officer
Dated: April 18, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ----
/s/ Richard L. Wellek President, Chief Executive April 18, 1997 Richard L. Wellek Officer and Director (Principal Executive Officer)
/s/ Richard A. Nunemaker Vice President, Finance April 18, 1997 Richard A. Nunemaker and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
Signature Date - --------- ----
/s/ Richard A. Nunemaker April 18, 1997 - ------------------------ Richard A. Nunemaker as attorney-in-fact for Rudolph Grua, Director
/s/ Richard A. Nunemaker April 18, 1997 - ------------------------ Richard A. Nunemaker as attorney-in-fact for Ernest H. Lorch, Director
/s/ Richard A. Nunemaker April 18, 1997 - ------------------------ Richard A. Nunemaker as attorney-in-fact for L. William Miles, Director
/s/ Richard A. Nunemaker April 18, 1997 - ------------------------ Richard A. Nunemaker as attorney-in-fact for Greg A. Rosenbaum, Director
/s/ Richard A. Nunemaker April 18, 1997 - ------------------------ Richard A. Nunemaker as attorney-in-fact for Joseph J. Ross, Director
/s/ Richard A. Nunemaker April 18, 1997 - ------------------------ Richard A. Nunemaker as attorney-in-fact for Theodore A. Ruppert, Director
VARLEN CORPORATION AND SUBSIDIARIES
Annual Report (Form 10-K)
Consolidated Financial Statements and Schedule
Submitted in Response to Item 14
Years ended January 31, 1997, 1996 and 1995
VARLEN CORPORATION AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Consolidated financial statements incorporated by reference - ---------------------------------
The consolidated balance sheets of the Registrant and subsidiaries as of January 31, 1997 and 1996, and the related consolidated statements of earnings, consolidated statements of stockholders' equity and consolidated statements of cash flows for each of the years in the three-year period ended January 31, 1997, together with the related notes and the report of Deloitte & Touche LLP, independent auditors, all contained in the Registrant's Proxy Statement filed pursuant to Regulation 14A within 120 days after January 31, 1997, are incorporated herein by reference thereto. The following additional consolidated financial information should be read in conjunction with the consolidated financial statements in such Proxy Statement. All other schedules are omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
Additional consolidated financial information - ---------------------------------------------
- Schedule:
- II - Valuation and Qualifying Accounts
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders Varlen Corporation Naperville, Illinois
We have audited the consolidated financial statements of Varlen Corporation and subsidiaries as of January 31, 1997 and 1996, and for each of the three years in the period ended January 31, 1997, and have issued our report thereon dated March 3, 1997; such consolidated financial statements and report are included in your Proxy Statement for the 1997 Annual Meeting of Stockholders and are incorporated herein by reference. Our audits also included the consolidated financial statement schedule of Varlen Corporation and subsidiaries, listed in Item 14. This consolidated financial statement schedule is the responsibility of the corporation's management. Our responsibility is to express an opinion based upon our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
March 3, 1997 Chicago, Illinois
Schedule II
VARLEN CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Three years ended January 31, 1997 (in thousands)
(a) Includes additions from companies acquired during the period.
(b) Write-offs, net of recoveries, foreign currency translation adjustments and reserves related to certain companies disposed of during the period.
(c) Includes $748 related to acquired net operating losses.
(d) Current and projected utilization and current expiration of acquired operating losses.
(e) The amounts were offset against goodwill and not net earnings.
INDEX TO EXHIBITS
(3) (i) Registrant's Articles of Incorporation, as amended through May 26, 1987 (incorporated herein by reference to Exhibit (3)(a) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1988) and as further amended through June 17, 1993 (incorporated herein by reference to Exhibit (3)(i) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1996).
(ii) Registrant's By-laws, as amended through November 20, 1995 (incorporated herein by reference to Exhibit (3)(ii) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1996) as further amended on June 17, 1996 (incorporated herein by reference to Exhibit (3)(ii) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 1996).
(4) (a) Rights Agreement dated as of June 17, 1996 (incorporated herein by reference to Exhibit 4(a) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 1996).
(b) Credit Agreement by and among the Registrant, the Borrowing Subsidiaries and the Lenders Party Thereto and The First National Bank of Chicago, as Agent, dated as of July 19, 1996 (incorporated herein by reference to Exhibit (4)(b) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 1996).
(c) Amendment No. 1 dated as of October 15, 1996 to Credit Agreement dated as of July 19, 1996 (incorporated herein by reference to Exhibit (4)(a) to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended November 2, 1996).
(d) Amendment No. 2 dated as of January 17, 1997 to Credit Agreement dated as of July 19, 1996.
(10) (a) Registrant's 1980 Incentive Stock Option Plan, as amended (incorporated herein by reference to Exhibit (10)(b) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1989) and as further amended on March 26, 1990 (incorporated herein by reference to Exhibit (10)(b) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1990).
(b) Varlen Corporation Profit Sharing and Retirement Savings Plan as amended and restated generally effective July 1, 1994 (incorporated herein by reference to Exhibit (10)(b) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1995).
(c) Registrant's 1989 Incentive Stock Option Plan, (incorporated herein by reference to Exhibit (10)(h) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1989) and as further amended on March 26, 1990 (incorporated herein by reference to Exhibit (10)(g) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1990).
(d) Varlen Corporation Excess Benefits Plan (incorporated herein by reference to Exhibit (10)(i) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1990).
(e) Varlen Corporation Supplemental Executive Retirement Plan (incorporated herein by reference to Exhibit (10)(j) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1990).
(f) Trust Agreement Between Varlen Corporation and Fidelity Management Trust Company dated November 30, 1992 (incorporated herein by reference to Exhibit (10)(g) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1993).
(g) Stock Purchase Agreement dated December 17, 1992 between The Dyson-Kissner-Moran Corporation and the Registrant (incorporated herein by reference to Exhibit 5(a) to the Registrant's Report on Form 8-K dated January 8, 1993).
(h) Form of letter agreement between the Registrant and Richard L. Wellek (incorporated herein by reference to Exhibit (10)(j) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1993).
(i) Form of letter agreement between the Registrant and each of Richard A. Nunemaker, Raymond A. Jean and George W. Hoffman (incorporated herein by reference to Exhibit (10)(k) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1993).
(j) Trust Indenture for the Registrant's $69,000,000 6 1/2% Convertible Subordinated Debentures Due 2003 from the Registrant to the Harris Trust and Savings Bank (incorporated herein by reference to Exhibit (4) to the Registrant's Report on Form 8-K dated May 27, 1993).
(k) Registrant's 1993 Incentive Stock Option Plan adopted May 25, 1993 (incorporated herein by reference to Exhibit (10)(k) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1994).
(l) Registrant's 1993 Directors Incentive Stock Grant Plan adopted May 25, 1993 (incorporated herein by reference to Exhibit (10)(l) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1994).
(m) Registrant's 1993 Deferred Incentive Stock Purchase Plan adopted May 25, 1993 (incorporated herein by reference to Exhibit (10)(m) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1994) as amended on February 3, 1997.
(n) Varlen Corporation Excess Benefit Plan Trust Agreement dated December 1, 1994 (incorporated herein by reference to Exhibit (10)(n) to the Registrant's Annual Report on Form 10-K for the fiscal year ended January 31, 1995).
(o) Form of Indemnification Agreement Dated as of June 17, 1996 (incorporated herein by reference to Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended August 3, 1996).
(11) Computation of Per Share Earnings for the Fiscal Years Ended January 31, 1997, 1996 and 1995.
(13) 1996 Annual Report to Stockholders.
(21) List of Subsidiaries.
(23) Consent of Deloitte & Touche LLP.
(24) Board of Directors' power of attorney for the signing of Varlen Corporation's 1996 Annual Report on Form 10-K.
(27) Financial Data Schedule.