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| 8-K - VARIAN MEDICAL SYSTEMS INC | v209023_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 First Quarter of Fiscal Year
2011
Net
earnings per diluted share from continuing operations rise 27 percent to $0.80;
revenues
rise 7 percent to $580 million; company raises guidance for fiscal
year
PALO ALTO, Calif., Jan. 26,
2011 – Varian Medical Systems (NYSE:VAR) today is reporting net earnings
of $0.80 per diluted share in the first quarter of fiscal year 2011, up 27
percent from earnings of $0.63 per diluted share from continuing operations in
the year-ago quarter. Revenues for the quarter were $580 million, up
7 percent from the prior-year period and up 8 percent on a constant currency
basis. The quarter-ending backlog rose 10 percent from the prior year quarter to
$2.2 billion.
“The
company’s gross and operating margins grew strongly during the quarter due
largely to a favorable product mix in our Oncology Systems business as well as
higher shipment volumes in our X-Ray Products business,” said Tim Guertin,
president and CEO of Varian Medical Systems. “The margin growth was
particularly gratifying given that more than 60 percent of the company’s
revenues for the quarter came from international regions.”
“Strong
net orders for Oncology in North America and Europe were partially offset by a
steep decline in Japan where a supplemental spending program contributed to
record order levels in that market in the year-ago period,” Guertin
said. “Net orders for our X-Ray Products business grew in double
digits.”
At the
end of the quarter, the company had a record $704 million in cash and cash
equivalents and $23 million of debt. The company had strong cash flow
from operations. Days sales outstanding was 78, an improvement of 6 days versus
the year-ago period. No cash was used during the quarter for stock
repurchases, however fully diluted shares outstanding were down significantly
from the year-ago quarter due primarily to the accelerated stock repurchase
program executed in the fourth quarter of fiscal 2010.
Oncology
Systems
Oncology
Systems’ first quarter revenues from sales of products and services for
radiotherapy, radiosurgery, and brachytherapy totaled $452 million, up 5 percent
from the same period last fiscal year. First quarter net orders
totaled $459 million, up 5 percent versus the year-ago period or 6 percent on a
constant currency basis. Net orders rose 20 percent in North
America. Even with double-digit net order gains in the company’s
European region as well as in China, total international net orders fell by 6
percent due to the steep decline in Japan, which is returning to more normal
spending patterns following a two-year stimulus program that ended last
March.
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Varian
Medical Systems Reports Results for First Quarter of Fiscal Year
2011
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“Oncology
Systems continued to experience healthy demand for our new TrueBeam system for
radiotherapy and radiosurgery, particularly in North America where it comprised
a majority of our machine orders,” Guertin said. “With the help of
TrueBeam shipments and software upgrades as well as improved installation and
warranty costs, the gross margin for this business unit hit a record level,
rising by about one point versus the year-ago period.”
X-Ray
Products
X-Ray
Products first quarter revenues from sales of X-ray tubes and flat panel digital
detectors for filmless imaging were $112 million, up 22 percent from the
year-ago quarter. Compared to the same period in fiscal year 2010, X-Ray
Products’ first quarter net orders rose 13 percent to $112 million.
“Strong
demand for tubes and flat panels for fast filmless X-ray imaging drove X-Ray
Products’ sales growth during the quarter,” said Guertin. “Higher
shipment volumes and improved costs of quality during the quarter led to a one
point gain and a record gross margin for this business.”
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 $16 million, down 19
percent from the year-ago period. Net orders in the Other category
were $22 million, up from the year-ago quarter when the company reversed a $62
million order in Sweden for a proton therapy system. Excluding the
proton order reversal, first quarter net orders for the Other category were even
with the year-ago period.
Outlook
“We
continue to believe that annual revenues for fiscal 2011 will grow 10 to 11
percent over the fiscal 2010 total,” said Guertin. “Given our
improved margins and the strength of our earnings in the first quarter, we now
believe that net earnings per diluted share for fiscal year 2011 could grow to a
range of $3.39 to $3.45. For the second quarter of fiscal 2011, we
believe that total company revenues could increase by about 9 to 10 percent over
the prior year period and that net earnings per diluted share could be in the
range of $0.83 to $0.86.”
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Varian
Medical Systems Reports Results for First Quarter of Fiscal Year
2011
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Investor
Conference Call
Varian
Medical Systems is scheduled to conduct its first quarter fiscal year 2011
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 1 800 901-5226 from inside the U.S. or 1-617-786-5413 from outside the
U.S. and enter confirmation code 58660413. 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 98071883. The
telephone replay will be available through 5 p.m. PT, Friday, January 28, 2011.
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, 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 5,400 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 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 First Quarter of Fiscal Year
2011
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Page
4
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Varian
Medical Systems, Inc. and Subsidiaries
Consolidated
Statements of Earnings
(Unaudited)
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(Dollars and
shares in millions, except per share amounts)
|
Q1 QTR
2011
|
Q1 QTR
2010
|
||||||
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Net
orders
|
$ | 592.8 | $ | 495.6 | ||||
|
Oncology
Systems
|
459.0 | 436.5 | ||||||
|
X-Ray
Products
|
111.9 | 99.0 | ||||||
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Security
& Inspection Products
|
21.3 | 22.1 | ||||||
|
Varian
Particle Therapy (1)
|
0.6 | (62.0 | ) | |||||
|
Order
backlog
|
$ | 2,205.6 | $ | 2,009.1 | ||||
|
Revenues
|
$ | 579.9 | $ | 540.9 | ||||
|
Oncology
Systems
|
452.4 | 430.1 | ||||||
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X-Ray
Products
|
111.6 | 91.4 | ||||||
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Other
|
15.9 | 19.4 | ||||||
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Cost of revenues
|
$ | 313.1 | $ | 299.9 | ||||
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Gross
margin
|
266.8 | 241.0 | ||||||
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As
a percent of revenues
|
46.0 | % | 44.6 | % | ||||
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Operating
expenses
|
||||||||
|
Research
and development
|
38.5 | 38.4 | ||||||
|
Selling,
general and administrative
|
91.3 | 83.5 | ||||||
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Operating
earnings
|
137.0 | 119.1 | ||||||
|
As
a percent of revenues
|
23.6 | % | 22.0 | % | ||||
|
Interest
income /(expense), net
|
0.1 | (0.3 | ) | |||||
|
Earnings
before taxes
|
137.1 | 118.8 | ||||||
|
Taxes
on earnings
|
40.6 | 40.0 | ||||||
|
Net
earnings
|
$ | 96.5 | $ | 78.8 | ||||
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Net
earnings per share – basic
|
$ | 0.82 | $ | 0.64 | ||||
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Net
earnings per share – diluted
|
$ | 0.80 | $ | 0.63 | ||||
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Shares
used in the calculation of net earnings per share:
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||||||||
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Average
shares outstanding - basic
|
118.2 | 123.7 | ||||||
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Average
shares outstanding - diluted
|
121.2 | 125.1 | ||||||
(1)
Net orders for Q1 2010 include $62 million for the cancellation of the Skandion
Kliniken proton therapy system order.
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Varian
Medical Systems Reports Results for First Quarter of Fiscal Year
2011
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Page
5
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Varian
Medical Systems, Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
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December
31,
|
October
1,
|
|||||||
|
2010
|
2010 (1)
|
|||||||
|
(In thousands)
|
(Unaudited)
|
|||||||
|
Assets
|
||||||||
|
Current
assets
|
||||||||
|
Cash
and cash equivalents
|
$ | 703,519 | $ | 520,221 | ||||
|
Accounts
receivable, net
|
496,271 | 591,677 | ||||||
|
Inventories
|
402,768 | 363,933 | ||||||
|
Deferred
tax assets and other
|
224,690 | 205,513 | ||||||
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Total
current assets
|
1,827,248 | 1,681,344 | ||||||
|
Property,
plant and equipment
|
581,128 | 562,763 | ||||||
|
Accumulated
depreciation and amortization
|
(303,578 | ) | (294,836 | ) | ||||
|
Property,
plant and equipment, net
|
277,550 | 267,927 | ||||||
|
Goodwill
|
206,946 | 208,451 | ||||||
|
Other
assets
|
159,225 | 166,230 | ||||||
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Total
assets
|
$ | 2,470,969 | $ | 2,323,952 | ||||
|
Liabilities
and Stockholders’ Equity
|
||||||||
|
Current
liabilities
|
||||||||
|
Accounts
payable
|
$ | 120,687 | $ | 119,018 | ||||
|
Accrued
expenses
|
266,293 | 287,851 | ||||||
|
Deferred
revenues
|
127,339 | 141,916 | ||||||
|
Advance
payments from customers
|
288,694 | 275,998 | ||||||
|
Product
warranty
|
52,980 | 53,233 | ||||||
|
Short-term
borrowings
|
- | 20,000 | ||||||
|
Current
maturities of long-term debt
|
7,233 | 5,525 | ||||||
|
Total
current liabilities
|
863,226 | 903,541 | ||||||
|
Other
long-term liabilities
|
123,327 | 127,175 | ||||||
|
Long-term
debt
|
16,094 | 17,869 | ||||||
|
Total
liabilities
|
1,002,647 | 1,048,585 | ||||||
|
Stockholders’
Equity
|
||||||||
|
Common
stock
|
119,894 | 118,007 | ||||||
|
Capital
in excess of par value
|
606,865 | 508,366 | ||||||
|
Retained
earnings and accumulated other comprehensive loss
|
741,563 | 648,994 | ||||||
|
Total
stockholders’ equity
|
1,468,322 | 1,275,367 | ||||||
|
Total
liabilities and stockholders’ equity
|
$ | 2,470,969 | $ | 2,323,952 | ||||
(1) The
condensed consolidated balance sheet as of October 1, 2010 was derived from
audited financial statements as of that date.