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

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

Second quarter net earnings per diluted share rise 9 percent to $1.02,
including a $0.02 restructuring charge; revenues increase 7 percent to $768

PR Newswire

PALO ALTO, Calif., April 24, 2013

PALO ALTO, Calif., April 24, 2013 /PRNewswire/ --Varian Medical Systems
(NYSE: VAR) today is reporting net earnings of $1.02 per diluted share in the
second quarter of fiscal year 2013, up 9 percent from $0.94 in the year-ago
quarter. The results for the second quarter of fiscal year 2013 included a
$2.6 million restructuring charge related to the completion of the previously
announced enhanced retirement program. Varian's company-wide revenues totaled
$768 million for the second quarter of fiscal year 2013, up 7 percent from the
year-ago quarter. Varian ended the second quarter of fiscal year 2013 with a
$2.8 billion backlog, up 4 percent from the end of the second quarter of
fiscal year 2012.

"Varian's revenues and net earnings continued to grow during the second
quarter in line with our expectations for the company," said Dow R. Wilson,
CEO of Varian Medical Systems. "Net orders rose in double digits for our
X-Ray Products business, but fell in our Oncology business, principally
because of weakness in mature U.S. and Western European markets as well as a
tough quarter-over-quarter comparison in Asia and negative fluctuations in
currency exchange rates, predominantly in Japan."

The company finished the second quarter of fiscal year 2013 with $740 million
in cash and cash equivalents and $238 million of debt. During the second
quarter of fiscal year 2013, cash flows from financing activities included $90
million toward the repurchase of 1.4 million shares of common stock.

Oncology Systems
Oncology Systems' second quarter revenues totaled $582 million, up 3 percent
from the same period of fiscal year 2012. Second-quarter net orders were $555
million, down 2 percent versus the comparable year-ago period, with a 9
percent decline in North America and a 4 percent gain outside North America.
Markets outside North America represented 58 percent of Oncology net orders
for the second quarter of fiscal year 2013. On a constant currency basis,
Oncology Systems' second quarter net orders were roughly equal to the second
quarter of fiscal year 2012. Compared to the prior-year second quarter, net
orders outside North America were up 7 percent on a constant currency basis.

"While revenues and operating income grew as expected during the second
quarter, net orders for the Oncology Systems business were disappointing,
particularly in the U.S. where ongoing uncertainties regarding healthcare
reform and reimbursement contributed to slow capital expenditures," Wilson
said. "Strong performance in emerging markets drove the orders growth outside
of North America."

X-Ray Products
Second quarter revenues for the X-Ray Products business were $140 million, up
14 percent from the year-ago quarter. X-Ray Products' second quarter net
orders were $144 million, up 10 percent from the year-ago quarter.

"The X-Ray Products business delivered another solid quarter of growth in
orders, revenues, and operating profits," Wilson said. "Revenue growth in
this business was helped by demand for new tube and panel products. Tight
cost control, together with higher shipment volumes, drove a healthy increase
in operating income."

The company's Other category, which includes the Security and Inspection
Products business and the Varian Particle Therapy business, recorded second
quarter revenues of $46 million, up $14 million from the total in the year-ago
quarter. Net orders for the Other category were $37 million for the second
quarter, down $131 million from the year-ago quarter when the company booked
two orders for proton therapy systems in Saudi Arabia and Russia.

"The company remains on track for achieving its fiscal 2013 growth targets,"
said Wilson. "For the third quarter of fiscal year 2013, total company
revenues could increase by about 7 percent over the prior-year quarter. Net
earnings per diluted share for the third quarter should be in the range of
$0.98 to $1.02. For the fiscal year, we continue to believe that total
company revenues could increase by about 8 percent over the prior fiscal year
and that net earnings per diluted share for the fiscal year could be in the
range of $4.09 to $4.14."

Investor Conference Call
Varian Medical Systems is scheduled to conduct its second 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 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 410801. The telephone replay will be available through 5
p.m. PT, Friday, April 26, 2013.

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 and digital detectors for X-ray imaging in medical,
scientific, and industrial applications and also supplies X-ray imaging
products for cargo screening and industrial inspection. 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

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 healthcare 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.


Elisha Finney (650) 424-6803

Spencer Sias (650) 424-5782

A summary of earnings and other financial information follows.

Varian Medical Systems, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
                                           Q2 QTR   Q2 QTR   Q2 YTD   Q2 YTD
                                           2013     2012     2013     2012
  (Dollars and shares in millions,
  except per share amounts)
  Net orders                             $ 735.8    862.8    1,355.0  1,468.9
   Oncology Systems                       555.1    564.8    1,032.0  1,049.5
   X-Ray Products                         143.7    130.4    276.9    240.2
   Other                                  37.0     167.6    46.1     179.2
  Order Backlog                          $ 2,752.6  2,652.8  2,752.6  2,652.8
  Revenues                               $ 768.4    720.3    1,446.8  1,345.6
   Oncology Systems                       581.8    565.4    1,106.1  1,053.0
   X-Ray Products                         140.4    122.8    273.3    235.8
   Other                                  46.2     32.1     67.4     56.8
  Cost of revenues                       $ 448.8    423.6    836.1    780.1
  Gross margin                             319.6    296.7    610.7    565.5
   As a percent of revenues               41.6%    41.2%    42.2%    42.0%
  Operating expenses
   Research and development              50.9     47.1     98.0     90.9
   Selling, general and administrative   113.0    105.8    219.5    201.9
  Operating earnings                       155.7    143.8    293.2    272.7
   As a percent of revenues               20.3%    20.0%    20.3%    20.3%
  Interest income, net                     0.6      0.4      1.3      0.7
  Earnings before taxes                    156.3    144.2    294.5    273.4
  Taxes on earnings                        43.5     36.4     86.4     75.4
  Net earnings                           $ 112.8    107.8    208.1    198.0
   As a percent of revenues               14.7%    15.0%    14.4%    14.7%
  Net earnings per share – basic         $ 1.04     0.96     1.91     1.76
  Net earnings per share – diluted      $ 1.02     0.94     1.88     1.73
  Shares used in the calculation of net
  earnings per share: ^
  Average shares outstanding - basic       108.8    112.4    109.0    112.3
  Average shares outstanding - diluted     110.7    114.5    110.9    114.4

Varian Medical Systems, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
                                                                     March 29,    September
(In thousands)                                                                     28,
                                                                     2013          2012 ^(1)
Current assets
 Cash and cash equivalents                                      $ 739,733     $ 704,570
 Short-term investment                                            56,137        49,709
 Accounts receivable, net                                         722,979       691,806
 Inventories               502,598       457,869
 Deferred tax assets and other    304,907       266,561
Total current assets          2,326,354     2,170,515
Property, plant and                                                  683,593       653,424
 Accumulated depreciation and amortization    (380,850)     (356,832)
Property, plant and equipment, net          302,743       296,592
Goodwill                                                             222,198       222,242
Other assets      210,784       189,377
Total assets         $ 3,062,079   $ 2,878,726
Liabilities and Stockholders' Equity
 Accounts payable  $ 179,859     $ 180,736
 Accrued expenses    293,594       336,568
 Deferred revenues   149,376       130,883
 Advance payments from customers    382,888       380,545
 Product                                                          51,409        52,799
 Short-term borrowings                                            231,873       155,000
Total current liabilities          1,288,999     1,236,531
Other long-term liabilities                                          138,963       126,169
Long-term                                                            6,250         6,250
Total liabilities          1,434,212     1,368,950
Stockholders' Equity
Common stock                                                         108,522       109,407
Capital in excess of par value                                       628,569       563,875
Retained earnings and accumulated other comprehensive loss          890,776       836,494
Total stockholders' equity          1,627,867     1,509,776
Total liabilities and stockholders' equity           $ 3,062,079   $ 2,878,726


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

SOURCE Varian Medical Systems

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