Varian Medical Systems, Inc. Reports Strong Third Quarter Earnings, Sales, Net Orders, and Backlog for Fiscal 2002.Business Editors PALO ALTO Palo Alto, city, California Palo Alto (păl`ō ăl`tō), city (1990 pop. 55,900), Santa Clara co., W Calif.; inc. 1894. Although primarily residential, Palo Alto has aerospace, electronics, and advanced research industries. , Calif.--(BUSINESS WIRE)--July 25, 2002 Net Earnings Increase 31 Percent; Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. Climbs 15 Percent to a Record $666 Million; Company Raises Earnings Estimates and Provides Growth Outlook for Fiscal 2003 Varian Medical Systems Varian Medical Systems (NYSE: VAR) is engaged in the design and manufacture of advanced equipment and software solutions for treating cancer with radiation, as well as x-ray tubes for original equipment manufacturers, replacement x-ray tubes and flat-panel digital subsystems (NYSE NYSE See: New York Stock Exchange :VAR) today reported net earnings of $22.8 million ($0.32 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) for the third quarter of fiscal 2002 versus net earnings of $17.4 million ($0.25 per diluted share) in the year-ago quarter. Sales for the quarter totaled $216 million, up 16 percent from the same period of the last fiscal year. Net orders for the quarter were $250 million, up 17 percent from the prior-year period, with growth in both major business segments. At quarter's end, the backlog for the company was at a record $666 million, up 15 percent from the third quarter of last year. "The company has had an outstanding third quarter with numbers that any company would be proud to report," said Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a M. Levy, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Varian Medical Systems. "The quarter was highlighted by continued strong growth in backlog, net orders, revenue, and earnings. We saw the beginnings of a recovery in our X-Ray X-ray Electromagnetic radiation of extremely short wavelength (100 nanometres to 0.001 nanometre) produced by the deceleration of charged particles or the transitions of electrons in atoms. Products business, with the help of important new orders for baggage screening tubes in the security industry. We have also completed a strategic acquisition that will position us for additional growth in our brachytherapy brachytherapy /brachy·ther·a·py/ (-ther´ah-pe) treatment with ionizing radiation whose source is applied to the surface of the body or within the body a short distance from the area being treated. business." "Meanwhile, we continued to strengthen our balance sheet, ending the third quarter with a record $273 million in cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has ," said Levy. The company improved days sales outstanding In accountancy, Days Sales Outstanding is a company's average collection period. A low figure indicates that the company collects its outstanding receivables quickly. Typically it is looked at either quarterly or yearly (90 or 365 days). to 90 days, down 11 days from the year-ago quarter. Oncology oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. Systems Oncology Systems' sales of Clinac(R) accelerators, Ximatron(R) simulators and ancillary Subordinate; aiding. A legal proceeding that is not the primary dispute but which aids the judgment rendered in or the outcome of the main action. A descriptive term that denotes a legal claim, the existence of which is dependent upon or reasonably linked to a main claim. products, software, and services for advanced radiotherapy radiotherapy /ra·dio·ther·a·py/ (-ther´ah-pe) treatment of disease by means of ionizing radiation; tissue may be exposed to a beam of radiation, or a radioactive element may be contained in devices (e.g. including SmartBeam(R) IMRT IMRT Intensity-modulated radiation therapy Radiation oncology A format for delivering high-dose RT to regions–eg, nasopharynx, that are surrounded by radiation-sensitive areas; in IMRT, a broad radiation field is divided into hundreds of small pencil beams, , totaled $175 million for the quarter, up 19 percent from the prior-year period. Third-quarter net orders in the Oncology Systems business totaled $205 million, up 13 percent from the prior-year period. "Oncology Systems improved gross margins with a greater mix of higher-margin ancillary product sales to the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. market where clinics are continuing to implement IMRT programs at a rapid rate," said Levy. Net orders were up sharply in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and the Far East and up modestly in Europe. Latin American net orders declined from the year-ago period when the business received an unusually large order from Brazil, resulting in an overall international orders level 9 percent lower from the year-ago quarter. "This business is experiencing broad acceptance of products related to IMRT, particularly our Helios inverse (mathematics) inverse - Given a function, f : D -> C, a function g : C -> D is called a left inverse for f if for all d in D, g (f d) = d and a right inverse if, for all c in C, f (g c) = c and an inverse if both conditions hold. treatment planning In radiotherapy, Treatment Planning is the process in which a team consisting of radiation oncologists, medical radiation physicists and dosimetrists plan the appropriate external beam radiotherapy treatment technique for a patient with cancer. Typically, medical imaging (i.e. software for IMRT," said Levy. "We have a leading position in treatment planning and we are establishing strong capabilities in the quality control and assurance tools needed to ease the implementation of IMRT." X-ray Products After a weak first half, sales in the X-Ray Products business, including tubes and amorphous silicon Silicon that does not have a crystalline structure and which is not conductive. Contrast with polysilicon. flat-panel digital imagers, were $34 million for the quarter, up 2 percent from the year-ago quarter. "We hope to see its sales for the second half of the fiscal year increase slightly over the corresponding period of last year," said Levy. The business, which in June announced a $5 million order from Analogic Corporation This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. for baggage screening tubes, has also received a $1 million baggage screening tube order from InVision Technologies InVision Technologies, Inc. was a publicly traded company based in Newark, California, that manufactured and sold airport security screening devices to detect explosives in passenger baggage. One of its most well-known products is the CTX explosive-detection device. , Inc. "Sales of these tubes began late in the third quarter and will continue into next year," said Levy. Ginzton Technology Center The company's premier research facility, the Ginzton Technology Center, which focuses on incubating technologies and businesses such as brachytherapy, reported $7 million in sales for the quarter, up $1 million from the year-ago quarter. Net orders for the Ginzton Technology Center were $5 million for the quarter, down $1 million from the prior-year period, primarily as a result of lower government research contracts in the current quarter. At the end of the quarter, the company announced the acquisition of the GammaMed brachytherapy business from MDS MDS, n See temporomandibular pain-dysfunction syndrome. MDS 1 Maternal deprivation syndrome, see there 2 Myelodysplastic syndrome, see there Nordion. "This acquisition positions our company for growth in high dose rate brachytherapy with the broadest range of products, pricing, and support," said Levy. The transaction was closed subsequent to the end of the quarter. Outlook "Our stronger than expected third quarter results have led us to increase our earnings estimates for fiscal year 2002," said Levy. "We continue to believe that sales for fiscal year 2002 will rise over fiscal 2001 totals in the low double-digit range. We now believe we can grow earnings per share for fiscal 2002 by about 24 percent above our fiscal 2001 post-split earnings of $1.04 per share." The company reported post-split earnings of $1.04 for fiscal 2001 before the net effect of changes in accounting principles and a $5 million write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. for an investment in the dpiX consortium. For fiscal 2003, the company expects sales to increase in the low-teens and earnings per diluted share to rise by nearly 20 percent over their respective totals for fiscal 2002. Investor Conference Call Varian Medical Systems is scheduled to conduct its fiscal 2002 third quarter conference call at 2 p.m. PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT today. To hear a live webcast or replay of the call, visit the investor relations Investor relations The process by which the corporation communicates with its investors. page on the company's web site at 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. Statements concerning industry outlook, including market acceptance of or transition to new products or technology such as IMRT; growth drivers; our orders, sales, backlog, or earnings growth; future financial results and any statements using the terms "hope," "will," "estimates," "believe," "expects," or similar statements are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties that could cause our actual results to differ materially from those anticipated. Such risks and uncertainties include our ability to successfully integrate acquired businesses, demand for our products; our ability to develop and commercialize new products; the impact of competitive products and pricing; the effect of economic conditions and currency exchange rates; our ability to maintain or increase operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ; our ability to meet demand for manufacturing capacity; the effect of environmental claims and expenses; our ability to protect our intellectual property; our reliance on sole or limited source suppliers; the impact of managed care initiatives or other healthcare reforms on capital expenditures and/or third-party reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. levels; our ability to meet FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. and other regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. or product clearances; the potential loss of key distributors; consolidation in the x-ray tubes X-ray tube An electronic device used for the generation of x-rays. X-rays are produced in the x-ray tube by accelerating electrons to a high velocity by an electrostatic field and then suddenly stopping them by collision with a solid body, the so-called market; the possibility that material product liability claims could harm future sales or require us to pay uninsured claims; our potential responsibility for additional liabilities arising out of the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of segments of our former businesses; the effect on our revenue recognition of changes in accounting standards; and the other risks listed from time to time in our filings with the Securities and Exchange Commission. We assume no obligation to update or revise the forward-looking statements in this release because of new information, future events or otherwise. Varian Medical Systems, Inc., (NYSE:VAR) of Palo Alto, California “Palo Alto” redirects here. For other uses, see Palo Alto (disambiguation). Palo Alto (IPA: /ˌpæloʊˈʔæltoʊ/, from Spanish: palo: "stick" and alto: "high", i.e. is the world's leading manufacturer of integrated cancer therapy systems, which are used to treat thousands of patients per day. The company is also a premier supplier of X-ray tubes and flat-panel digital subsystems for imaging in medical, scientific, and industrial applications. Varian Medical Systems employs approximately 2,600 people who are located at manufacturing sites in North America and Europe and in its 40 sales and support offices around the world. In its most recent fiscal year ended September 29, 2001, Varian Medical Systems reported sales of $774 million. Additional information is available on the company's investor relations web site at www.varian.com A summary of income and other financial information follows:
Varian Medical Systems, Inc. and Subsidiary Companies
Consolidated Statements of Earnings
(Dollars and shares in millions, except per share amounts)
(Unaudited)
Q3 QTR Q3 QTR Q3 YTD Q3 YTD
2002 2001 2002 2001
------- ------- ------- -------
Net orders $ 250.0 213.6 680.2 611.3
Oncology Systems 205.3 181.1 575.4 493.0
X-Ray Products 39.5 26.6 89.4 101.0
Ginzton Technology Center 5.2 5.9 15.4 17.3
Order backlog $ 666.2 576.9 666.2 576.9
Sales $ 216.0 186.2 611.7 547.6
Oncology Systems 174.9 147.0 506.5 429.3
X-Ray Products 33.6 33.1 86.1 103.0
Ginzton Technology Center 7.5 6.1 19.1 15.3
Gross margin 84.0 68.5 231.6 200.2
As a percent of sales 38.8% 36.8% 37.9% 36.6%
Operating expenses
Research and development 12.2 11.1 35.3 33.2
Selling, general and
administrative 36.9 31.5 103.5 98.0
Operating earnings before
reorganization expenses 34.9 25.9 92.8 69.0
Reorganization expenses -- (0.8) -- (0.5)
Operating earnings 34.9 26.7 92.8 69.5
As a percent of sales 16.1% 14.4% 15.2% 12.7%
Interest (income)/expense, net (0.3) (0.8) (0.6) (1.5)
Earnings before taxes 35.2 27.5 93.4 71.0
Taxes on earnings 12.4 10.1 33.6 26.1
Earnings before cumulative
effect of change in
accounting principle 22.8 17.4 59.8 44.9
Cumulative effect of change
in accounting principle, net
of tax (1) -- -- -- (13.7)
Net earnings $ 22.8 17.4 59.8 31.2
-------- ------- ------- -------
Net earnings per share -
basic: (2)
Earnings before cumulative
effect of change in
accounting principle $ 0.34 0.26 0.88 0.69
Cumulative effect of change
in accounting principle,
net of tax
-- -- -- (0.21)
-------- ------- ------- -------
Net earnings per share -
basic $ 0.34 0.26 0.88 0.48
======= ====== ====== ======
Net earnings per share -
diluted: (2)
Earnings before cumulative
effect of change in
accounting principle $ 0.32 0.25 0.85 0.66
Cumulative effect of change
in accounting principle,
net of tax -- -- -- (0.20)
-------- ------- ------- -------
Net earnings per share
- diluted $ 0.32 0.25 0.85 0.46
======= ====== ====== ======
Shares used in the
calculation of net earnings
per share: (2)
Average shares outstanding
- basic 67.9 66.6 67.6 65.4
======= ====== ====== ======
Average shares outstanding
- diluted 70.9 69.5 70.2 68.0
======= ====== ====== ======
(1) Note: The cumulative effect of change in accounting principle
reflects the net effect of the Company's adoption in the first quarter
of fiscal year 2001 of: (a) Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," ($0.1 million income, net of tax); and (b) Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial
Statements" ($13.8 million charge, net of tax).
(2) Note: The results for the third quarter of fiscal year 2001 and
first nine months of fiscal year 2001 have been restated for the
two-for-one stock split (effected in the form of a stock dividend)
paid on January 15, 2002.
Varian Medical Systems, Inc. and Subsidiary Companies
Consolidated Balance Sheets
(Dollars in thousands, June 28, September 28,
except par values) 2002 2001
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 162,027 $ 218,961
Short-term marketable
securities 29,990 --
Accounts receivable, net 221,265 227,794
Inventories 134,072 111,777
Other current assets 65,349 60,971
--------- ---------
Total current assets 612,703 619,503
--------- ---------
Property, plant and
equipment 222,033 209,105
Accumulated depreciation
and amortization (142,041) (133,279)
--------- ---------
Net property, plant
and equipment 79,992 75,826
--------- ---------
Long-term marketable securities 80,929 --
Goodwill 52,462 49,870
Other non-current assets 15,885 14,000
--------- ---------
Total assets $ 841,971 $ 759,199
========= =========
Liabilities and Stockholders' Equity
Current liabilities
Notes payable $ 116 $ 174
Accounts payable - trade 41,297 44,839
Accrued expenses 163,925 149,424
Product warranty 28,685 23,975
Advance payments from
customers 76,570 66,942
--------- ---------
Total current liabilities 310,593 285,354
Long-term accrued expenses and
other 18,448 20,949
Long-term debt 58,500 58,500
--------- ---------
Total liabilities 387,541 364,803
--------- ---------
Stockholders' Equity
Common stock (1) 68,031 67,359
Capital in excess of par
value (1) 112,606 87,913
Retained earnings 273,793 239,124
--------- ---------
Total stockholders' equity 454,430 394,396
--------- ---------
Total liabilities and
stockholders' equity $ 841,971 $ 759,199
========= =========
(1) Note: The consolidated balance sheets as of June 28, 2002 and
September 28, 2001 reflect the two-for-one stock split (effected in
the form of a stock dividend) paid on January 15, 2002.
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