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| 8-K - VARIAN MEDICAL SYSTEMS INC | v200206_8k.htm |
Exhibit
99.1
FOR
INFORMATION CONTACT:
Elisha Finney (650)
424-6803
elisha.finney@varian.com
Spencer Sias (650)
424-5782
spencer.sias@varian.com
For
Immediate Release:
Varian
Medical Systems Reports Results for Fourth Quarter of Fiscal Year
2010
Net
earnings per diluted share from continuing operations rise 12 percent to $0.87
for the quarter and $2.96 for fiscal year 2010; net orders grow by 15 percent in
Oncology Systems and X-Ray Products businesses for the quarter
PALO ALTO, Calif., Oct. 28,
2010 – Varian Medical Systems (NYSE:VAR) today is reporting net earnings
from continuing operations of $0.87 per diluted share in the fourth quarter of
fiscal year 2010, up 12 percent from $0.78 in the year-ago
quarter. Net earnings per diluted share from continuing operations
for fiscal year 2010 climbed to $2.96, also up 12 percent from $2.65 in fiscal
year 2009. Including discontinued operations, net earnings were $0.87
per diluted share for the fourth quarter and $2.91 for the fiscal
year. Compared to the same periods in fiscal year 2009,
fourth-quarter revenues grew 2 percent to $652 million and revenues for fiscal
year 2010 rose by 6 percent to $2.4 billion.
Net
orders rose by 12 percent to $777 million for the fourth quarter and increased
by 10 percent to $2.6 billion for the fiscal year, excluding from the year-ago
periods a $62 million proton therapy system order that has been
cancelled. Excluding the proton order, the year-ending backlog rose
10 percent to $2.2 billion. Including the proton order in the
year-ago periods, net orders rose 3 percent for the fourth quarter and 5 percent
for the fiscal year, and the year-ending backlog rose 7 percent.
“Our
Oncology Systems and X-Ray Products businesses each generated solid order gains
and achieved double-digit increases in backlog with the help of strong demand
for new products, particularly our TrueBeam™ system and flat panel detectors,”
said Tim Guertin, president and CEO of Varian Medical Systems. “Total
revenues expanded modestly, reflecting the economic challenges and slower order
activity that we experienced in the previous year, particularly in North
America. Product and territorial mix shifts within the Oncology
business, a comparatively stronger dollar, and product launch costs contributed
to a decline in the company’s margins for the fourth quarter, but margins were
up for the year.”
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Varian
Medical Systems Reports Results for Fourth Quarter of Fiscal Year
2010
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2
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The
company ended the fiscal year with $520 million in cash and cash equivalents and
$43 million of debt. During the fourth quarter, the company spent $255 million
to repurchase 4.8 million shares of common stock, including an accelerated
buyback of 3.9 million shares. The company ended the quarter with
accounts receivable days sales outstanding of 82, an increase of one day from
the year-ago quarter.
Oncology
Systems
Oncology
Systems’ fourth quarter revenues totaled $512 million, down 3 percent from the
same period of fiscal year 2009. Oncology revenues for fiscal year
2010 were $1.9 billion, up 4 percent from fiscal year
2009. Fourth-quarter net orders were $657 million, up 15 percent,
with a 24 percent gain in North America and a 7 percent increase in
international markets. Net orders for the fiscal year rose to $2.1
billion, up 10 percent from the last fiscal year, with a 4 percent gain in North
America and a 16 percent increase in international markets.
“Customers
placed more than 60 orders for our TrueBeam radiotherapy and radiosurgery system
during the quarter, bringing cumulative orders for this exciting new product to
more than 125 units since its introduction in the second quarter of this year,”
said Guertin. “TrueBeam together with RapidArc helped to stimulate a
recovery in the North American oncology market. Service added to
growth for Oncology Systems and it now represents nearly 30 percent of annual
orders and revenue for this business.”
X-Ray
Products
Fourth quarter revenues for the X-Ray
Products business were $107 million, up 16 percent from the year-ago quarter, and
revenues for fiscal year 2010 were $403 million, up 22 percent from the prior
year. Compared to the corresponding periods in fiscal year 2009,
X-Ray Products’ fourth quarter net orders rose 15 percent to $112 million, and
fiscal year net orders rose 24 percent to $419
million.
“This was
a record quarter for our X-Ray Products business with strong growth in orders
and sales,” Guertin said. “Flat panel detectors, including our newer panels for
digital radiography, led the expansion in this business. Orders
for X-ray tubes grew solidly for the quarter and the year. Record sales volumes
and a mix shift toward panel shipments contributed to strong gross margins and
record quarterly operating earnings for this business.”
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 fourth quarter revenues of $33 million, up 47
percent or $11 million from the year-ago period. Revenues for fiscal
year 2010 totaled $91 million, up 8 percent from
fiscal year 2009.
Excluding
the cancelled proton order, fourth quarter net orders in the Other category were
$8 million, down $19 million from the year-ago quarter, and net orders
for
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Varian
Medical Systems Reports Results for Fourth Quarter of Fiscal Year
2010
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fiscal
year 2010 totaled $61 million, down $27 million from the prior
year. “Tender award protests in the U.S. continued to hinder our
security business,” Guertin said. “Consequently, the company
restructured this business and booked a $2 million restructuring charge in the
fourth quarter to bring costs in line with actual business
activity.”
Outlook
“Strengthened
order activity for our Oncology Systems business in the second half of this
fiscal year as well as ongoing momentum in our X-Ray Products business has set
the stage for better growth in the company’s revenues and earnings in fiscal
2011,” said Guertin. “For fiscal year 2011, we believe that revenues
and operating earnings could increase by 10 to 11 percent over fiscal 2010
totals and that net earnings per diluted share from continuing operations could
rise around 14 percent to a range of $3.34 to $3.39. For the first
quarter of fiscal year 2011, total company revenues could increase by about 8
percent over the prior year, and net earnings per diluted share from continuing
operations could also rise around 15 percent to a range of $0.71 to
$0.74.”
Investor
Conference Call
Varian
Medical Systems is scheduled to conduct its fourth 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/investor where it will be archived for a year. To
access the call via telephone, dial 1-866-831-6270 from inside the
U.S. or 1- 617-213-8858
from outside the U.S. and enter confirmation code 77390623. 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 92095527. The
telephone replay will be available through 5 p.m. PT, October 29,
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
5,300 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.
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Varian
Medical Systems Reports Results for Fourth Quarter of Fiscal Year
2010
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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 TrueBeam and our 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 “expect,” “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/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 in reducing or
eliminating ongoing commitments retained from our discontinued research
instruments business; 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 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.
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Varian
Medical Systems Reports Results for Fourth Quarter of Fiscal Year
2010
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Page
5
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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)
|
Q4 QTR
2010
|
Q4 QTR
2009
|
Q4 YTD
2010
|
Q4 YTD
2009
|
||||||||||||
|
Net orders
|
$ | 776.7 | 755.3 | 2,494.8 | 2,380.6 | |||||||||||
|
Oncology
Systems
|
657.1 | 569.6 | 2,076.4 | 1,890.7 | ||||||||||||
|
X-Ray
Products
|
112.0 | 97.0 | 418.9 | 339.1 | ||||||||||||
|
Other
|
7.6 | 88.7 | (0.5 | ) | 150.8 | |||||||||||
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Order backlog (1)
|
$ | 2,192.7 | 2,054.4 | 2,192.7 | 2,054.4 | |||||||||||
|
Revenues
|
$ | 652.1 | 642.0 | 2,356.6 | 2,214.1 | |||||||||||
|
Oncology
Systems
|
511.6 | 526.8 | 1,862.1 | 1,797.8 | ||||||||||||
|
X-Ray
Products
|
107.3 | 92.6 | 403.2 | 331.7 | ||||||||||||
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Other
|
33.2 | 22.6 | 91.3 | 84.6 | ||||||||||||
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Cost of
revenues
|
$ | 375.9 | 357.1 | 1,331.0 | 1,253.6 | |||||||||||
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Gross
margin
|
276.2 | 284.9 | 1,025.6 | 960.5 | ||||||||||||
|
As a percent of
revenues
|
42.4 | % | 44.4 | % | 43.5 | % | 43.4 | % | ||||||||
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Operating
expenses
|
||||||||||||||||
|
Research and
development
|
40.5 | 38.1 | 156.7 | 147.4 | ||||||||||||
|
Selling, general and
administrative
|
86.9 | 96.2 | 334.7 | 339.0 | ||||||||||||
|
Operating
earnings
|
148.8 | 150.6 | 534.2 | 474.1 | ||||||||||||
|
As a percent of
revenues
|
22.8 | % | 23.5 | % | 22.7 | % | 21.4 | % | ||||||||
|
Interest income/(expense), net
|
0.2 | (0.2 | ) | (1.3 | ) | 0.5 | ||||||||||
|
Earnings from continuing
operations before taxes
|
149.0 | 150.4 | 532.9 | 474.6 | ||||||||||||
|
Taxes on
earnings
|
43.3 | 53.2 | 165.4 | 143.1 | ||||||||||||
|
Earnings from continuing
operations
|
105.7 | 97.2 | 367.5 | 331.5 | ||||||||||||
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As a percent of
revenues
|
16.2 | % | 15.1 | % | 15.6 | % | 15.0 | % | ||||||||
|
Loss from discontinued
operations – net of taxes (2)
|
(0.7 | ) | (0.2 | ) | (7.1 | ) | (12.5 | ) | ||||||||
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Net
earnings
|
$ | 105.0 | 97.0 | 360.4 | 319.0 | |||||||||||
|
|
||||||||||||||||
|
Net earnings (loss) per share –
basic:
|
||||||||||||||||
|
Continuing
operations
|
$ | 0.89 | 0.78 | 3.02 | 2.67 | |||||||||||
|
Discontinued operations
(2)
|
(0.01 | ) | - | (0.06 | ) | (0.10 | ) | |||||||||
|
Net earnings per
share
|
$ | 0.88 | 0.78 | 2.96 | 2.57 | |||||||||||
|
Net earnings (loss) per
share – diluted:
|
||||||||||||||||
|
Continuing
operations
|
$ | 0.87 | 0.78 | 2.96 | 2.65 | |||||||||||
|
Discontinued operations
(2)
|
- | (0.01 | ) | (0.05 | ) | (0.10 | ) | |||||||||
|
Net earnings per
share
|
$ | 0.87 | 0.77 | 2.91 | 2.55 | |||||||||||
|
|
||||||||||||||||
|
Shares used in the calculation of
net earnings per share:
|
||||||||||||||||
|
Average shares outstanding -
basic
|
119.0 | 124.3 | 121.8 | 124.0 | ||||||||||||
|
Average shares outstanding -
diluted
|
121.4 | 125.3 | 124.0 | 125.0 | ||||||||||||
|
(1)
|
Net orders for both
Q4 QTR 2009 and Q4 YTD 2009 include $62 million for the Skandion Kliniken
proton therapy system order that was cancelled
in the first quarter of fiscal year
2010.
|
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(2)
|
The
operating results of ACCEL research instruments are classified as
discontinued operations for all periods
presented.
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Varian
Medical Systems Reports Results for Fourth Quarter of Fiscal Year
2010
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Condensed Consolidated Balance
Sheets
|
||||||||
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(In
thousands)
|
October 1,
2010
(Unaudited)
|
October 2,
2009 (1)
|
||||||
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Assets
|
||||||||
|
Current
assets
|
||||||||
|
Cash and cash
equivalents
|
$ | 520,221 | $ | 553,529 | ||||
|
Accounts receivable,
net
|
591,677 | 580,918 | ||||||
|
Inventories
|
363,933 | 321,861 | ||||||
|
Deferred tax assets and
other
|
205,513 | 216,143 | ||||||
|
Total current
assets
|
1,681,344 | 1,672,451 | ||||||
|
Property, plant and
equipment
|
562,763 | 527,135 | ||||||
|
Accumulated depreciation and
amortization
|
(294,836 | ) | (263,075 | ) | ||||
|
Property, plant and equipment,
net
|
267,927 | 264,060 | ||||||
|
Goodwill
|
208,451 | 210,346 | ||||||
|
Other
assets
|
166,230 | 161,391 | ||||||
|
Total
assets
|
$ | 2,323,952 | $ | 2,308,248 | ||||
|
Liabilities and Stockholders’
Equity
|
||||||||
|
Current
liabilities
|
||||||||
|
Accounts
payable
|
$ | 119,018 | $ | 116,093 | ||||
|
Accrued
expenses
|
287,851 | 304,402 | ||||||
|
Deferred
revenues
|
141,916 | 130,588 | ||||||
|
Advance payments from
customers
|
275,998 | 226,964 | ||||||
|
Product
warranty
|
53,233 | 50,823 | ||||||
|
Short-term
borrowings
|
20,000 | 4,445 | ||||||
|
Current maturities of long-term
debt
|
5,525 | 9,005 | ||||||
|
Total current
liabilities
|
903,541 | 842,320 | ||||||
|
Other long-term
liabilities
|
127,175 | 130,751 | ||||||
|
Long-term
debt
|
17,869 | 23,394 | ||||||
|
Total
liabilities
|
1,048,585 | 996,465 | ||||||
|
Stockholders’
Equity
|
||||||||
|
Common
stock
|
118,007 | 125,281 | ||||||
|
Capital in excess of par
value
|
508,366 | 516,478 | ||||||
|
Retained earnings and accumulated
other comprehensive loss
|
648,994 | 670,024 | ||||||
|
Total stockholders’
equity
|
1,275,367 | 1,311,783 | ||||||
|
Total liabilities and
stockholders’ equity
|
$ | 2,323,952 | $ | 2,308,248 | ||||
(1) The condensed consolidated balance sheet as of October 2, 2009 was derived from audited financial statements as of that date.