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| 8-K - FORM 8-K - VARIAN MEDICAL SYSTEMS INC | v342305_8k.htm |
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 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 million
PALO ALTO, Calif., April 24, 2013 – 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.
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| Varian Medical Systems Reports Results for Second Quarter of Fiscal Year 2013 | Page 2 |
“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.”
Other
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.
Outlook
“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 www.varian.com/investor 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.
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| Varian Medical Systems Reports Results for Second Quarter of Fiscal Year 2013 | Page 3 |
# # #
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 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 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.
A summary of earnings and other financial information follows.
| Varian Medical Systems Reports Results for Second Quarter of Fiscal Year 2013 | Page 4 |
Varian Medical Systems, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited)
(Dollars and shares in millions, except per share amounts) | Q2 QTR 2013 | Q2 QTR 2012 | Q2 YTD 2013 | Q2 YTD 2012 | ||||||||||||
| 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 Reports Results for Second Quarter of Fiscal Year 2013 | Page 5 |
Varian Medical Systems, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
| (In thousands) | March 29, 2013 (Unaudited) | September 28, 2012 (1) | ||||||
| Assets | ||||||||
| 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 equipment | 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 | ||||||||
| Current liabilities | ||||||||
| 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 warranty | 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 debt | 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.