Varian Medical Systems Reports Results for Second Quarter of Fiscal Year 2010 | Varian

Varian Medical Systems Reports Results for Second Quarter of Fiscal Year 2010

PALO ALTO, Calif., April 28 /en-gb/PRNewswire-FirstCall/en-gb/ -- Varian Medical Systems (NYSE: VAR) today is reporting net earnings from continuing operations of $0.73 per diluted share in the second quarter of fiscal year 2010, up 14 percent from $0.64 per diluted share in the year-ago quarter.  Revenues for the quarter were $586 million, up 6 percent from the prior-year period and up 3 percent on a constant currency basis.

Varian's second quarter net orders totaled $593 million, up 13 percent from the year-ago period and up 10 percent on a constant currency basis.  The quarter-ending backlog was $2 billion, up 6 percent versus the year-ago quarter.

"Strength in our international regions drove revenue and order growth for the total company and more than offset declines in North America during the quarter," said Tim Guertin, president and CEO of Varian Medical Systems.  "Higher revenues from our Oncology and X-Ray Products businesses, ongoing cost controls, improved company operating margins, and a lower tax rate contributed to the improvement in our quarterly net earnings versus the year-ago period."

The company ended the quarter with a record $655 million in cash and cash equivalents and $30 million of debt.  During the second quarter, the company spent $72 million to repurchase 1.5 million shares of common stock. Compared to the same period last year, accounts receivable days sales outstanding was 76, an improvement of 11 days.

Oncology Systems

Oncology Systems' second quarter revenues from sales of products and services for radiotherapy, radiosurgery, and brachytherapy totaled $465 million, up 4 percent from the same period last fiscal year.  Second quarter net orders totaled $476 million, up 10 percent versus the year-ago period.  Net orders rose 34 percent in international markets, more than offsetting a 12 percent decline in North America.

"Oncology Systems revenues grew strongly in all international regions and gross margins for this business improved with the help of a favorable mix of service and software products," Guertin said.  

"Oncology's solid net orders growth was also driven by our service business as well as demand for our newer accelerators," he added.  "We saw increased demand for UNIQUE™, our new accelerator for fast, affordable image-guided RapidArc treatments in international clinics and encouraging early interest in our new TrueBeam platform for advanced image-guided radiotherapy and radiosurgery."

X-Ray Products

X-Ray Products second quarter revenues from sales of X-ray tubes and digital detectors for filmless imaging were $102 million, up 19 percent from the year-ago quarter.  Compared to the same period in fiscal year 2009, X-Ray Products' second quarter net orders rose 52 percent to a record $105 million.  

"Total orders for both X-ray tubes and flat panel detectors recovered nicely from depressed year-ago levels," Guertin said.  "We saw signs of a recovery in the global imaging industry with renewed orders from existing customers as well as accelerated orders growth from new customers for our flat panel detectors."  

Other

The company's Other category, which is comprised of the Security and Inspection Products (SIP) business, the Varian Particle Therapy business, and the Ginzton Technology Center, recorded second quarter revenues of $19 million, down 19 percent from the year-ago period.  Net orders in the Other category were $12 million, down 42 percent from the year-ago period.  

Outlook

"We now believe that revenues for fiscal year 2010 can grow by about 6 to 7 percent over fiscal 2009 and that net earnings per diluted share for the fiscal year could be in the range of $2.82 to $2.88," said Guertin. "We believe that for the third quarter of fiscal year 2010 revenues could increase by about 13 percent over the prior year period.  Third quarter operating earnings should increase by about 16 to 17 percent, but including a higher quarterly tax rate, net earnings per diluted share are expected to be in the range of $0.60 to $0.63."

Investor Conference Call

Varian Medical Systems is scheduled to conduct its second quarter fiscal year 2010 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/en-gb/en-gb/en-gb/investor where it will be archived for a year.  To access the call via telephone, dial 1-800-706-7748 from inside the U.S. or 1-617-614-3473 from outside the U.S. and enter confirmation code 44942626.  The replay can be accessed by dialing 1-888-286-8010 from inside the U.S or 1-617-801-6888 from outside the U.S. and entering confirmation code 99270459.  The telephone replay will be available through 5 p.m. PT, Friday, April 30, 2010.

For automatic "e-mail alerts" regarding Varian news, events, and new investor materials on the website, investors can subscribe on the company website: http:/en-gb//en-gb/varian.investorroom.com/en-gb/index.php?s=58  For additional information, contact investor relations at 1 650 424-5834.

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, proton therapy, 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 5,100 people who are located at manufacturing sites in North America, Europe, and China and approximately 79 sales and support offices around the world. For more information, visit http:/en-gb//en-gb/www.varian.com.

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 RapidArc, image-guided radiation therapy, stereotactic radiosurgery, filmless X-rays, proton therapy, and security and inspection, and any statements using the terms "expect," "continuing," "can," "could," "believe," "estimate," "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 the effect of economic conditions, including the strength of any recovery from the global recession; the impact of recently enacted federal health care legislation and any further health care reforms, and/en-gb/or changes in third-party reimbursement levels; credit availability for capital expenditures for cancer care; 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; the effect of adverse publicity; the company's reliance on sole or limited-source suppliers; the impact of reduced or limited demand by sole purchasers of certain X-ray tubes; the company's ability to maintain or increase operating margins; the impact of competitive products and pricing; the ability to make strategic acquisitions and to successfully integrate the acquired operations into the company's business; the company's ability to protect the company's intellectual property; 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 amounts)


Q2 QTR

2010


Q2 QTR

2009


Q2 YTD

2010


Q2 YTD

2009



Net orders

$

593.2


524.2


1,088.8


1,075.5



 Oncology Systems


476.2


434.2


912.7


861.8



 X-Ray Products


104.7


68.8


203.7


159.9



 Other


12.3


21.2


(27.6)


53.8














Order backlog

$

2,016.7


1,901.0


2,016.7


1,901.0














Revenues

$

585.6


553.6


1,126.5


1,062.3



 Oncology Systems


464.5


444.6


894.6


842.8



 X-Ray Products


102.2


85.8


193.6


171.9



 Other


18.9


23.2


38.3


47.6














Cost of revenues

$

331.6


313.2


631.5


602.9














Gross margin


254.0


240.4


495.0


459.4



 As a percent of revenues


43.4%


43.4%


43.9%


43.2%



Operating expenses











 Research and development  


38.9


37.0


77.3


74.0



 Selling, general and administrative  


79.6


81.1


163.1


164.4














Operating earnings


135.5


122.3


254.6


221.0



 As a percent of revenues


23.1%


22.1%


22.6%


20.8%















Interest income/en-gb/(expense), net


(0.3)


(0.4)


(0.6)


1.0



Earnings from continuing operations before taxes


135.2


121.9


254.0


222.0



Taxes on earnings


44.1


42.6


84.1


73.1



Earnings from continuing operations  


91.1


79.3


169.9


148.9



 As a percent of revenues


15.6%


14.3%


15.1%


14.0%



Loss  from discontinued operations – net of  taxes  (1)


-


(11.5)


-


(12.3)



Net earnings

$

91.1


67.8


169.9


136.6














Net earnings (loss) per share – basic:











  Continuing operations

$

0.74


0.64


1.38


1.20



  Discontinued operations  (1)


-


(0.09)


-


(0.10)



  Net earnings per share

$

0.74


0.55


1.38


1.10



Net earnings (loss)  per share – diluted:











  Continuing operations

$

0.73


0.64


1.36


1.19



  Discontinued operations  (1)


-


(0.10)


-


(0.10)



  Net earnings per share

$

0.73


0.54


1.36


1.09














Shares used in the calculation of net earnings per share:    











Average shares outstanding - basic


122.9


123.8


123.3


123.8



Average shares outstanding - diluted


124.3


124.5


124.5


124.8













(1) The operating results of ACCEL research instruments are classified as discontinued operations for all periods presented.




Varian Medical Systems, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets






(In thousands)


April 2,


October 2,

2010

2009 (1)

(Unaudited)


Assets





Current assets





   Cash and cash equivalents

     $

654,727

$

553,529

   Accounts receivable, net


497,320


580,918

   Inventories  


371,496


321,861

   Deferred tax assets and other                                


206,057


216,143

Total current assets                                        


1,729,600


1,672,451






Property, plant and equipment                                            


538,157


527,135

   Accumulated depreciation and amortization                    


(279,678)


(263,075)

Property, plant and equipment, net                          


258,479


264,060






Goodwill


207,146


210,346

Other assets                                                    


154,664


161,391

Total assets                                    

     $

2,349,889

$

2,308,248






Liabilities and Stockholders' Equity





Current liabilities                                                        





   Accounts payable                                              

     $

111,610

$

116,093

   Accrued expenses                                              


252,882


304,402

   Deferred revenues                                              


131,313


130,588

   Advance payments from customers                              


266,104


226,964

   Product warranty                                                        


49,580


50,823

   Short-term borrowings


-


4,445

   Current maturities of long-term debt                              


6,515


9,005

Total current liabilities                                  


818,004


842,320

Other long-term liabilities


115,100


130,751

Long-term debt                                                            


23,259


23,394

Total liabilities                                          


956,363


996,465






Stockholders' Equity





Common stock


123,460


125,281

Capital in excess of par value


528,544


516,478

Retained earnings and accumulated other comprehensive loss  


741,522


670,024

Total stockholders' equity                                  


1,393,526


1,311,783

Total liabilities and stockholders' equity              

     $

2,349,889

$

2,308,248


(1)  The condensed consolidated balance sheet as of October 2, 2009 was derived from audited financial statements as of that date.



FOR MORE INFORMATION CONTACT:


Elisha Finney (650) 424-6803

elisha.finney@varian.com


Spencer Sias (650) 424-5782

spencer.sias@varian.com



SOURCE Varian Medical Systems, Inc.