Varian Medical Systems Reports Results for First Quarter of Fiscal Year 2013

 Varian Medical Systems Reports Results for First Quarter of Fiscal Year 2013

First quarter net earnings per diluted share rise 9 percent to $0.86 including
a $0.03 restructuring charge; revenues increase 8 percent to $678 million

PR Newswire

PALO ALTO, Calif., Jan. 23, 2013

PALO ALTO, Calif., Jan. 23, 2013 /PRNewswire/ -- Varian Medical Systems
(NYSE:VAR) today is reporting net earnings of $0.86 per diluted share in the
first quarter of fiscal year 2013, up 9 percent from $0.79 in the year-ago
quarter. The results for the first quarter of fiscal year 2013 included a
$4.1 million restructuring charge related to an enhanced retirement program.
Varian's company-wide revenues totaled $678 million for the first quarter of
fiscal year 2013, up 8 percent from the year-ago quarter. Varian ended the
first quarter of fiscal year 2013 with a $2.8 billion backlog, up 11 percent
from the end of the first quarter of fiscal year 2012.

"The company's first quarter revenues and net earnings grew in line with our
expectations for both our Oncology Systems and X-Ray Products businesses,"
said Dow R. Wilson, CEO of Varian Medical Systems. "Margins were also in line
with our expectations. Excluding the restructuring charge in the quarter, our
operating margin improved versus the year-ago quarter. Net orders rose
robustly in our X-Ray Products business, but declined in our Oncology
business, which experienced weaker orders in Europe and Asia versus very
strong year-ago results."

The company finished the first quarter of fiscal year 2013 with $755 million
in cash and cash equivalents and $206 million of debt. Cash flow from
operations for the first quarter was $72 million. During the first quarter of
fiscal year 2013, the company spent $104 million to repurchase 1.5 million
shares of common stock.

Oncology Systems
Oncology Systems' first quarter revenues totaled $524 million, up 8 percent
from the same period of fiscal year 2012. First-quarter net orders were $477
million, down 2 percent versus the comparable year-ago period, with a 2
percent gain in North America and a 4 percent decline outside North America.
Markets outside North America represented 56 percent of Oncology net orders
for the first quarter of fiscal year 2013. On a constant currency basis,
Oncology Systems first quarter net orders were down 1 percent from the first
quarter of fiscal year 2012 with a 2 percent decline in orders outside North
America.

"Oncology customers took delivery during the quarter as expected but order
placements were slower than anticipated," said Wilson. "We believe the order
slowness is principally a timing issue and that the market fundamentals remain
sound."

X-Ray Products
First quarter revenues for the X-Ray Products business were $133 million, up
18 percent from the year-ago quarter. X-Ray Products' first quarter net
orders were $133 million, up 21 percent from the year-ago period.

"Our X-Ray Products business had a very good first quarter with strong revenue
and order growth for both our X-ray tubes and flat panel detectors," Wilson
said. "Our tube business benefited from new products and apparent customer
share gains in the CT market. Market traction among our new products helped
to drive flat panel growth during the quarter."

Other
The company's Other category, which is comprised of the Security and
Inspection Products business, the Varian Particle Therapy business, and the
Ginzton Technology Center, recorded first quarter revenues of $21 million
versus $25 million in the year-ago quarter. Net orders for the Other category
were $9 million for the first quarter, down $2 million from the year-ago
quarter.

Outlook
"We are pleased with our first quarter results in revenues and earnings, which
should keep the company on track for hitting its fiscal 2013 growth targets,"
said Wilson. "We remain confident in the fundamental long-term strategy for
serving our markets. For the second quarter of fiscal year 2013, total
company revenues could increase by about 5 to 6 percent over the prior year
quarter. With the balance of restructuring charges from the enhanced
retirement program, net earnings per diluted share for the second quarter
should be in the range of $0.98 to $1.03. For the fiscal year, we continue to
believe that total company revenues could increase by about 8 to 9 percent
over the prior fiscal year. Net earnings per diluted share for the fiscal
year could be in the range of $4.08 to $4.16."

Investor Conference Call
Varian Medical Systems is scheduled to conduct its first quarter fiscal year
2013 conference call at 2 p.m. PT today. To hear a live webcast or replay of
the call, visit the investor relations page on the company's web site at
www.varian.com/investor where it will be archived for a year. To access the
call via telephone, dial 1-877-869-3847 from inside the U.S. or 1-201-689-8261
from outside the U.S. The replay can be accessed by dialing 1-877-660-6853
from inside the U.S or 1-201-612-7415 from outside the U.S. and entering
confirmation code 406360. The telephone replay will be available through 5
p.m. PT, Friday, January 25, 2013.

About Varian Medical Systems
Varian Medical Systems, Inc., of Palo Alto, California, is the world's leading
manufacturer of medical devices and software for treating cancer and other
medical conditions with radiotherapy, radiosurgery, and brachytherapy. The
company supplies informatics software for managing comprehensive cancer
clinics, radiotherapy centers and medical oncology practices. Varian is a
premier supplier of tubes, digital detectors, and image processing
workstations for X-ray imaging in medical, scientific, and industrial
applications and also supplies high-energy X-ray devices for cargo screening
and non-destructive testing applications. Varian Medical Systems employs
approximately 6,200 people who are located at manufacturing sites in North
America, Europe, and China and approximately 70 sales and support offices
around the world. For more information, visit http://www.varian.com or follow
us on Twitter.

Forward-Looking Statements
Except for historical information, this news release contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Statements concerning industry outlook, including growth drivers; the
company's future orders, revenues, backlog, or earnings growth; future
financial results; market acceptance of or transition to new products or
technology such as our Edge™ radiosurgery system, TrueBeam™ and radiographic
flat panel detectors, image-guided radiation therapy, stereotactic
radiosurgery, filmless X-rays, proton therapy, and security and inspection,
and any statements using the terms "could," "believe," "outlook," or similar
statements are forward-looking statements that involve risks and uncertainties
that could cause the company's actual results to differ materially from those
anticipated. Such risks and uncertainties include global economic conditions;
the impact of the Affordable Health Care for America Act (including excise
taxes on medical devices) and any further health care reforms (including
changes to Medicare and Medicaid), and/or changes in third-party reimbursement
levels; currency exchange rates and tax rates; demand for the company's
products; the company's ability to develop, commercialize, and deploy new
products such as the TrueBeam platform; the company's ability to meet Food and
Drug Administration (FDA) and other regulatory requirements for product
clearances or to comply with FDA and other regulatory regulations or
procedures; changes in the regulatory environment, including with respect to
FDA requirements; challenges associated with the successful commercialization
of the company's particle therapy business; the effect of adverse publicity;
the company's reliance on sole or limited-source suppliers; the impact of
reduced or limited demand by purchasers of certain X-ray products, including
those located in Japan; the company's ability to maintain or increase margins;
the impact of competitive products and pricing; the potential loss of key
distributors or key personnel; challenges to public tender awards and the loss
of such awards or other orders; and the other risks listed from time to time
in the company's filings with the Securities and Exchange Commission, which by
this reference are incorporated herein. The company assumes no obligation to
update or revise the forward-looking statements in this release because of new
information, future events, or otherwise.

A summary of earnings and other financial information follows.

 Varian Medical Systems, Inc. and Subsidiaries

 Condensed Consolidated Statements of Earnings

 (Unaudited)
 (Dollars and shares in millions, except per share     Q1 QTR     Q1 QTR
 amounts)
                                                       2013       2012
 Net orders                                          $ 619.2    $ 606.1
  Oncology Systems                                    476.9      484.7
  X-Ray Products                                      133.2      109.8
  Other                                               9.1        11.6
 Order backlog                                       $ 2,785.2  $ 2,510.2
 Revenues ^                                      $ 678.4    $ 625.3
  Oncology Systems                                    524.3      487.6
  X-Ray Products                                      132.9      113.0
  Other                                               21.2       24.7
 Cost of revenues ^                               $ 387.3    $ 356.5
 Gross margin                                        291.1      268.8
  As a percent of revenues                            42.9%      43.0%
 Operating expenses
  Research and development                            47.1       43.8
  Selling, general and administrative                106.5      96.1
 Operating earnings                                    137.5      128.9
  As a percent of revenues                            20.3%      20.6%
 Interest income, net                                  0.7        0.3
 Earnings before taxes                                 138.2      129.2
 Taxes on earnings                                    42.9       39.0
 Net earnings ^                                    $ 95.3     $ 90.2
  As a percent of revenues                            14.0%      14.4%
 Net earnings per share – basic                      $ 0.87     $ 0.80
 Net earnings per share – diluted                   $ 0.86     $ 0.79
 Shares used in the calculation of net earnings per
 share:
 Average shares outstanding - basic                    109.3      112.3
 Average shares outstanding - diluted                  111.1      114.4

 

 Varian Medical Systems, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
                                                                     December      September
(In thousands)                                                       28,          28,
                                                                     2012          2012 ^(1)
                                                                     (Unaudited)
Assets
Current assets
 Cash and cash equivalents                                      $ 755,489     $ 704,570
 Short-term investment                                            51,804        49,709
 Accounts receivable, net                                         637,473       691,806
 Inventories               499,616       457,869
 Deferred tax assets and other    283,931       266,561
Total current assets          2,228,313     2,170,515
Property, plant and                                                  669,119       653,424
equipment
 Accumulated depreciation and amortization    (370,586)     (356,832)
Property, plant and equipment, net          298,533       296,592
Goodwill                                                             223,914       222,242
Other assets      187,804       189,377
Total assets         $ 2,938,564   $ 2,878,726
Liabilities and Stockholders' Equity
Current
liabilities
 Accounts payable  $ 145,172     $ 180,736
 Accrued expenses    306,785       336,568
 Deferred revenues   132,881       130,883
 Advance payments from customers    396,229       380,545
 Product                                                          50,705        52,799
warranty
 Short-term borrowings                                            200,000       155,000
Total current liabilities          1,231,772     1,236,531
Other long-term liabilities                                          123,654       126,169
Long-term                                                            6,250         6,250
debt
Total liabilities          1,361,676     1,368,950
Stockholders' Equity
Common stock                                                         109,322       109,407
Capital in excess of par value                                       609,246       563,875
Retained earnings and accumulated other comprehensive loss          858,320       836,494
Total stockholders' equity          1,576,888     1,509,776
Total liabilities and stockholders' equity           $ 2,938,564   $ 2,878,726



(1) The condensed consolidated balance sheet as of September 28, 2012 was
derived from audited financial statements as of that date.



FOR INFORMATION CONTACT:

Elisha Finney (650) 424-6803
elisha.finney@varian.com

Spencer Sias (650) 424-5782
spencer.sias@varian.com

SOURCE Varian Medical Systems

Website: http://www.varian.com
 
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