Net earnings per diluted share from continuing operations rise 13
percent to $0.63; revenues rise 6 percent to $541 million; company
raises guidance for fiscal year PALO ALTO, Calif., Jan. 27
/PRNewswire-FirstCall/ -- Varian Medical Systems (NYSE:VAR) today
is reporting net earnings of $0.63 per diluted share in the first
quarter of fiscal year 2010, up 13 percent from earnings of $0.56
per diluted share from continuing operations in the year-ago
quarter. Revenues for the quarter were $541 million, up 6 percent
from the prior-year period and up 3 percent on a constant currency
basis. Varian's first quarter net orders, including a $62 million
reversal of a previously announced proton therapy order, totaled
$496 million, down 10 percent from the year-ago period and down 14
percent on a constant currency basis. Excluding the proton order
reversal, net orders would have totaled $558 million, up 1 percent
from the prior year period. The quarter-ending backlog was $2
billion, up 4 percent versus the year-ago quarter. "Stronger than
expected revenue growth and product mix shifts together with
successful cost control initiatives contributed to healthy gains in
margins and net earnings for the company during the first quarter,"
said Tim Guertin, president and CEO of Varian Medical Systems. "In
a positive sign for the economy and our company, net orders
increased in both our Oncology Systems and X-Ray Products
businesses. Despite net orders declines for our particle therapy
and security and inspection products businesses, we remain
confident in their long-term growth prospects." The company ended
the quarter with a record $625 million in cash and cash equivalents
and $37 million of debt. During the first quarter, the company
spent $55 million to repurchase 1.3 million shares of common stock
which helped to reduce average diluted shares outstanding by
100,000 from the prior-year quarter to 125.1 million. Compared to
the same point last year, accounts receivable days sales
outstanding was 84, up 1 day. Oncology Systems Oncology Systems'
first quarter revenues from sales of products and services for
radiotherapy, radiosurgery, and brachytherapy totaled $430 million,
up 8 percent from the same period last fiscal year. First quarter
net orders totaled $437 million, up 2 percent versus the year-ago
period and down 3 percent on a constant currency basis. Reported
net orders were up 19 percent in international markets, more than
offsetting a 13 percent decline in North America. "Our Oncology
Systems business achieved solid double-digit orders growth in Asia
and Europe," Guertin said. "Net orders for both hospital and free
standing clinics in North America were down from the year-ago
quarter, but we are seeing signs of renewed interest, particularly
among free-standing clinics." X-Ray Products X-Ray Products first
quarter revenues from sales of X-ray tubes and digital detectors
for filmless imaging were $91 million, up 6 percent from the
year-ago quarter. Compared to the same period in fiscal year 2009,
X-Ray Products' first quarter net orders rose 9 percent to a record
$99 million. "Demand for our digital detectors from several new
customers in Asia and Europe helped to drive the growth in our
X-ray business, and detector orders topped tube orders for the
first time," Guertin said. "Strong international demand offset
weakness in the North American market for both tubes and
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 first quarter revenues of $19 million, down 20 percent
from the year-ago period. Net orders in the Other category were a
negative $40 million, down $73 million from the year-ago period.
This included the reversal of a $62 million proton order following
a Swedish court directing Skandion Kliniken to commence a new
public tender in response to a competitor's challenge to the bid
process. First-quarter SIP orders declined $10 million from a
record level in the year-ago quarter. "We are prepared to compete
in a new tender process to win back the proton therapy business at
Skandion Kliniken and we are continuing to hit important milestones
in the development and commercialization of this technology,"
Guertin said. "Our SIP business had tough comparisons with very
strong revenues and orders in the year-ago quarter and we continue
to see significant growth opportunities for this business." Outlook
"Given our revenue growth, improved margins, and the strength of
our earnings in the first quarter, we now believe that revenues for
fiscal year 2010 can grow by about 6 percent over the fiscal 2009
total and that annual net earnings per diluted share could be in
the range of $2.76 to $2.83," Guertin said. "We believe that for
the second quarter of fiscal year 2010 total company revenues could
increase by about 4 percent over the prior year period and that net
earnings per diluted share could be in the range of $0.66 to $0.68.
Investor Conference Call Varian Medical Systems is scheduled to
conduct its first 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
http://www.varian.com/investor where it will be archived for a
year. To access the call via telephone, dial 1-800-299-7635 from
inside the U.S. or 1-617-786-2901 from outside the U.S. and enter
confirmation code 14117939. 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 34681127. The telephone
replay will be available through 5 p.m. PT, Thursday, January 28,
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://varian.investorroom.com/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
5,000 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://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," "hope,"
"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 current global recession; the impact of health care reforms,
and/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 and commercialize new products;
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 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; 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
Consolidated Statements of Earnings (Unaudited) (Dollars and shares
in millions, except per share amounts) Q1 QTR Q1 QTR 2010 2009 ----
---- Net orders $495.6 $551.3 Oncology Systems 436.5 427.6 X-Ray
Products 99.0 91.1 Other (39.9) 32.6 Order backlog $2,009.1
$1,930.5 Revenues $540.9 $508.7 Oncology Systems 430.1 398.2 X-Ray
Products 91.4 86.1 Other 19.4 24.4 Cost of revenues $299.9 $289.7
Gross margin 241.0 219.0 As a percent of revenues 44.6% 43.0%
Operating expenses Research and development 38.4 37.0 Selling,
general and administrative 83.5 83.3 Operating earnings 119.1 98.7
As a percent of revenues 22.0% 19.4% Interest income /(expense),
net (0.3) 1.4 Earnings from continuing operations before taxes
118.8 100.1 Taxes on earnings 40.0 30.5 Earnings from continuing
operations 78.8 69.6 As a percent of revenues 14.6% 13.7% Loss from
discontinued operations - net of taxes (1) - (0.8) Net earnings
$78.8 $68.8 Net earnings per share - basic: Continuing operations
$0.64 $0.56 Discontinued operations (1) $- $- --- --- Net earnings
per share $0.64 $0.56 Net earnings (loss) per share - diluted:
Continuing operations $0.63 $0.56 Discontinued operations (1) $-
$(0.01) --- ------ Net earnings per share $0.63 $0.55 Shares used
in the calculation of net earnings per share: Average shares
outstanding - basic 123.7 123.8 Average shares outstanding -
diluted 125.1 125.2 (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) January 1,
October 2, 2010 2009(1) (Unaudited) -------------- -----------
Assets Current assets Cash and cash equivalents $625,495 $553,529
Accounts receivable, net 507,411 580,918 Inventories 350,845
321,861 Deferred tax assets and other 239,527 216,143 -------
------- Total current assets 1,723,278 1,672,451 ---------
--------- Property, plant and equipment 530,503 527,135 Accumulated
depreciation and amortization (272,071) (263,075) -------- --------
Property, plant and equipment, net 258,432 264,060 ------- -------
Goodwill 210,563 210,346 Other assets 165,721 161,391 -------
------- Total assets $2,357,994 $2,308,248 ========== ==========
Liabilities and Stockholders' Equity Current liabilities Accounts
payable $103,450 $116,093 Accrued expenses 275,427 304,402 Deferred
revenues 154,795 130,588 Advance payments from customers 253,862
226,964 Product warranty 50,728 50,823 Short-term borrowings 4,296
4,445 Current maturities of long-term debt 9,010 9,005 ----- -----
Total current liabilities 851,568 842,320 Other long-term
liabilities 128,874 130,751 Long-term debt 23,327 23,394 ------
------ Total liabilities 1,003,769 996,465 --------- -------
Stockholders' Equity Common stock 124,357 125,281 Capital in excess
of par value 521,208 516,478 Retained earnings and accumulated
other comprehensive loss 708,660 670,024 ------- ------- Total
stockholders' equity 1,354,225 1,311,783 --------- --------- Total
liabilities and stockholders' equity $2,357,994 $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 INFORMATION CONTACT: Elisha Finney (650)
424-6803 Spencer Sias (650) 424-5782 DATASOURCE: Varian Medical
Systems CONTACT: Elisha Finney, +1-650-424-6803, , or Spencer Sias,
+1-650-424-5782, , both of Varian Medical Systems Web Site:
http://www.varian.com/
Copyright