8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 25, 2007

Varian, Inc.

(Exact name of Registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation)

000-25393

(Commission File Number)

77-0501995

(IRS Employer Identification No.)

3120 Hansen Way, Palo Alto, California	94304-1030
(Address of principal executive offices)	(Zip Code)

(650) 213-8000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

The information in this report and the exhibit attached hereto are being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall they be deemed incorporated by reference in any filing with the Securities and Exchange Commission under the Securities Exchange Act of 1934 or the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

On April 25, 2007, Varian, Inc., a Delaware corporation, is issuing a press release announcing its financial results for the fiscal quarter ended March 30, 2007, and is subsequently holding a webcast conference call regarding those financial results. A copy of the press release is attached hereto as Exhibit 99.1.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

Exhibit Number	Exhibit Title or Description
99.1	Press Release issued April 25, 2007.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

VARIAN, INC. (Registrant)
By	/s/ G. Edward McClammy
	G. Edward McClammy Senior Vice President, Chief Financial Officer and Treasurer

Date: April 25, 2007

EXHIBIT INDEX

Exhibit Number	Exhibit Title or Description
99.1	Press Release issued April 25, 2007.

EX-99.1

Exhibit 99.1

For Information Contact:

Investor Relations

Varian, Inc.

650.213.8000, Ext. 3752

ir@varianinc.com

VARIAN, INC. REPORTS SECOND QUARTER 2007 RESULTS

• Sales Up 10%

• Non-GAAP Operating Earnings Up 28%, GAAP Operating Earnings Up 43%

• Non-GAAP Diluted EPS Up 31%, GAAP Diluted EPS Up 47%

PALO ALTO, Calif. — Varian, Inc. (NasdaqGS: VARI) today reported that revenues for the second quarter of fiscal year 2007 increased 9.7% from the second quarter of fiscal year 2006. The increase was driven by strong growth in sales of Scientific Instruments products for industrial applications. Demand was strong within Europe, Asia Pacific and Latin America, which more than offset continued softness in North America. Revenues were $229.9 million in the second quarter of fiscal year 2007, compared to $209.6 million in the second quarter of fiscal year 2006.

Non-GAAP (adjusted) net earnings for the second quarter of fiscal year 2007 increased 29.9% to $19.5 million, or $0.63 diluted earnings per share, compared to $15.1 million, or $0.48 diluted earnings per share, in the second quarter of fiscal year 2006. On a GAAP basis, net earnings in the second quarter of fiscal year 2007 were $16.3 million, or $0.53 diluted earnings per share, compared to $11.2 million, or $0.36 diluted earnings per share, in the second quarter of fiscal year 2006.

Adjusted operating earnings increased 28.2% to $29.2 million in the second quarter of fiscal year 2007, compared to $22.8 million in the second quarter last year. Adjusted operating profit margin was 12.7% in the second quarter of fiscal year 2007, compared to 10.9% in the prior-year quarter. The improvements in adjusted operating earnings and adjusted operating profit margin were primarily the result of a mix shift toward higher-margin products, efficiency improvements impacting SG&A expense and sales volume leverage in the Scientific Instruments segment. On a GAAP basis, operating earnings were $24.1 million and operating profit margin was 10.5% in the second quarter of fiscal year 2007, compared to $16.9 million and 8.1%, respectively, in the same quarter a year ago.

“Our investment in research and development continues to pay off,” said Garry W. Rogerson, President and Chief Executive Officer. “Of particular note was the fast pace of customer demand for some of our newer information rich detection products, including our new routine 400MHz NMR and some of our mass spec systems. We are in a position to deliver another record year.”

For a complete reconciliation of non-GAAP (adjusted) financial information used in this press release to the most directly comparable GAAP financial information, please refer to the attached Reconciliations of GAAP to Adjusted Results, Actual and Projected.

Results by Segment

Scientific Instruments revenues for the second quarter of fiscal year 2007 were $190.3 million, representing an increase of 11.0% over revenues of $171.4 million in the second quarter of the prior fiscal year. Adjusted operating profit margin was 13.0% in the second quarter of fiscal year 2007, compared to 10.6% in the prior-year quarter. On a GAAP basis, operating profit margin was 11.4% in the second quarter of fiscal year 2007, compared to 8.2% in the same quarter a year ago.

Vacuum Technologies revenues increased 3.7% to $39.6 million in the second quarter of fiscal year 2007, compared to $38.2 million in the second quarter of fiscal year 2006. Adjusted operating profit margin was 19.6% in the second quarter of both fiscal years 2007 and 2006. On a GAAP basis, operating profit margin was 19.3% in the second quarter of fiscal year 2007, compared to 18.9% in the prior-year quarter.

For the combined segments, adjusted operating profit margin before unallocated corporate costs was 14.2% in the second quarter of fiscal year 2007, compared to 12.3% in the prior-year quarter. On a GAAP basis, operating profit margin before unallocated corporate costs was 12.8% in the second quarter of fiscal year 2007, compared to 10.1% in the second quarter of fiscal year 2006.

Outlook

Varian, Inc. increased its guidance for fiscal year 2007. Adjusted diluted earnings per share are now expected to be $2.40 to $2.50 for fiscal year 2007, compared to prior guidance of $2.28 to $2.40. On a GAAP basis, diluted earnings per share are expected to be $1.88 to $2.01 for fiscal year 2007, compared to prior guidance of $1.86 to $1.98.

The company’s GAAP diluted earnings per share for the full fiscal year 2007 are expected to include the following items:

— Share-based compensation expense of approximately $0.21,

— Acquisition-related intangible amortization of approximately $0.17,

— Amortization of approximately $0.03 related to inventory written up in connection with the acquisition of IonSpec Corporation in fiscal year 2006, and

— Restructuring and other related costs of approximately $0.08 to $0.11, substantially all of which are expected to be incurred in connection with activities described in a separate press release issued today.

Varian, Inc. will be holding a conference call later today, April 25, 2007, at 2:00 p.m. Pacific time. The call may be heard via the Internet by going to www.varianinc.com, clicking on the Investors link at the top of the right side of the page, and then clicking on the Live Webcast link.

Non-GAAP (Adjusted) Financial Measures

This press release includes non-GAAP (adjusted) financial measures for cost of sales, selling, general and administrative expenses, research and development expenses, purchased in-process research and development, operating earnings, operating profit margins, income tax expense, net earnings and diluted earnings per share. These non-GAAP financial measures exclude share-based compensation expense, acquisition-related intangible and inventory write-up amortization, in-process research and development charges and restructuring and other related costs. Reconciliations of each of these non-GAAP financial measures to the most directly comparable financial measures are detailed in the Reconciliations of GAAP to Adjusted Results attached to this press release. We believe that presentation of these non-GAAP financial measures provides useful information to investors regarding our results of operations.

We believe that excluding acquisition-related intangible and inventory write-up amortization and in-process research and development charges provides supplemental information and an alternative presentation useful to investors’ understanding of the company’s core operating results and trends. In addition, investors have indicated to us that they analyze the benefits of acquisitions based on the cash return on the investment made, and thus consider financial measures excluding acquisition-related intangible and inventory write-up amortization and in-process research and development charges as important, useful information.

We similarly believe that excluding share-based compensation expense and restructuring and other related costs (principally related to facility closures and employee terminations to improve operational efficiency) provides supplemental information and an alternative presentation useful to investors’ understanding of the company’s core operating results and trends, especially when comparing those results on a consistent basis to results for previous periods and anticipated results for future periods. Investors have indicated that they consider financial measures of our results of operations excluding share-based compensation expense and restructuring and other related costs as important supplemental information useful to their understanding of our historical results and estimating of our future results.

We also believe that, in excluding share-based compensation expense, acquisition-related intangible and inventory write-up amortization, in-process research and development charges and restructuring and other related costs, our non-GAAP financial measures provide investors with transparency into what is used by management to measure and forecast our results of operations, to compare on a consistent basis our results of operations for the current period to that of prior periods, to compare our results of operations on a more consistent basis against that of other companies, in making financial and operating decisions and to establish certain management compensation.

Although we believe, for the foregoing reasons, that our presentation of non-GAAP financial measures provides useful supplemental information to investors regarding our results of operations, our non-GAAP financial measures should only be considered in addition to, and not as a substitute for or superior to, our financial measures prepared in accordance with GAAP.

Caution Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based on management’s current expectations, are not guarantees of future performance, and involve certain risks and uncertainties that could cause the company’s actual results to differ materially from management’s current expectations

and the forward-looking statements made in this press release. Those risks and uncertainties include, but are not limited to, the following: whether we will succeed in new product development, commercialization, performance and acceptance; whether we can achieve continued growth in sales for industrial applications and/or renewed growth in sales for life science applications; whether we can achieve continued sales growth in Europe and Asia Pacific and/or renewed growth in sales in the U.S.; risks arising from the timing of shipments, installations and the recognition of revenue on certain magnetic resonance (MR) products, including nuclear magnetic resonance (NMR), MR imaging and fourier-transform mass spectrometer (FTMS) systems and superconducting magnets; the impact of shifting product mix on profit margins; competitive products and pricing; economic conditions in the company’s product and geographic markets; whether we will see continued and timely delivery of key raw materials and components by suppliers; foreign currency fluctuations that could adversely impact revenue growth and earnings; whether we will see sustained or improved market investment in capital equipment; whether we will see reduced demand from customers that operate in cyclical industries; the impact of any delay or reduction in government funding for research; our ability to successfully evaluate, negotiate and integrate acquisitions; the actual costs, timing and benefits of restructuring and other efficiency improvement activities; the timing and amount of discrete tax events; the timing and amount of share-based compensation; and other risks detailed from time to time in the company’s filings with the Securities and Exchange Commission. We disclaim any intent or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise.

About Varian, Inc.

Varian, Inc. is a leading worldwide supplier of scientific instruments and vacuum technologies for life science and industrial applications. The company provides complete solutions, including instruments, vacuum components, laboratory consumable supplies, software, training and support through its global distribution and support systems. Varian, Inc. employs approximately 3,800 people and operates manufacturing facilities in 13 locations in North America, Europe and Asia Pacific. Varian, Inc. had fiscal year 2006 sales of $835 million, and its common stock is traded on the NASDAQ Global Select Market under the symbol, “VARI.” Further information is available on the company’s Web site: www.varianinc.com.

VARIAN, INC. AND SUBSIDIARY COMPANIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS

(In thousands, except per share amounts)

Second Quarter FY 2007 and Second Quarter FY 2006

	Fiscal Quarter Ended
	March 30, 2007			March 31, 2006
Sales	$	229,930		$	209,626
Cost of sales		124,435	(1)		116,676	(7)
Gross profit		105,495			92,950
Operating expenses
Selling, general and administrative		65,255	(2)		61,347	(8)
Research and development		16,103	(3)		14,683	(9)
Total operating expenses		81,358			76,030
Operating earnings		24,137	(4)		16,920	(10)
Interest income (expense)
Interest income		1,368			880
Interest expense		(456	)		(504	)
Total interest income, net		912			376
Earnings before income taxes		25,049			17,296
Income tax expense		8,767	(5)		6,054	(11)
Net earnings	$	16,282	(6)	$	11,242	(12)
Net earnings per diluted share	$	0.53	(6)	$	0.36	(12)
Diluted shares outstanding		30,932			31,412

NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations of GAAP to Adjusted results for each of these measures):

(1) $122,861 on an adjusted basis excluding $1,279 in acquisition-related intangible amortization, $184 in acquisition-related inventory write-up amortization and $111 in share-based compensation expense.

(2) $61,884 on an adjusted basis excluding $675 in acquisition-related intangible amortization, $64 in restructuring and other related costs and $2,632 in share-based compensation expense.

(3) $15,977 on an adjusted basis excluding $126 in share-based compensation expense.

(4) $29,208 on an adjusted basis excluding the adjustments described in items (1) – (3) above.

(5) $10,572 on an adjusted basis excluding the tax impact of the adjustments described in items (1) – (3) above.

(6) $19,548 and $0.63 per share, respectively, on an adjusted basis excluding the adjustments (net of related tax effects) described in items (1) – (3) above.

(7) $114,140 on an adjusted basis excluding $1,062 in acquisition-related intangible amortization, $1,366 in acquisition-related inventory write-up amortization and $108 in share-based compensation expense.

(8) $58,179 on an adjusted basis excluding $813 in acquisition-related intangible amortization, $165 in restructuring and other related costs, and $2,190 in share-based compensation expense.

(9) $14,528 on an adjusted basis excluding $155 in share-based compensation expense.

(10) $22,779 on an adjusted basis excluding the adjustments described in items (7) – (9) above.

(11) $8,104 on an adjusted basis excluding the tax impact of the adjustments described in items (7) – (9) above.

(12) $15,051 and $0.48 per share, respectively, on an adjusted basis excluding the adjustments (net of related tax effects) described in items (7) – (9) above.

VARIAN, INC. AND SUBSIDIARY COMPANIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS

(In thousands, except per share amounts)

First Six Months FY 2007 and First Six Months FY 2006

	Six Months Ended
	March 30, 2007			March 31, 2006
Sales	$	447,868		$	405,363
Cost of sales		242,674	(1)		226,492	(7)
Gross profit		205,194			178,871
Operating expenses
Selling, general and administrative		126,456	(2)		117,923	(8)
Research and development		31,713	(3)		28,622	(9)
Purchased in-process research and development		—			756	(10)
Total operating expenses		158,169			147,301
Operating earnings		47,025	(4)		31,570	(11)
Interest income (expense)
Interest income		2,637			1,975
Interest expense		(990	)		(1,041	)
Total interest income, net		1,647			934
Earnings before income taxes		48,672			32,504
Income tax expense		17,035	(5)		11,603	(12)
Net earnings	$	31,637	(6)	$	20,901	(13)
Net earnings per diluted share	$	1.02	(6)	$	0.66	(13)
Diluted shares outstanding		30,956			31,649

NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations of GAAP to Adjusted results for each of these measures):

(1) $239,375 on an adjusted basis excluding $2,625 in acquisition-related intangible amortization, $455 in acquisition-related inventory write-up amortization and $219 in share-based compensation expense.

(2) $119,460 on an adjusted basis excluding $1,576 in acquisition-related intangible amortization, $179 in restructuring and other related costs and $5,241 in share-based compensation expense.

(3) $31,459 on an adjusted basis excluding $254 in share-based compensation expense.

(4) $57,574 on an adjusted basis excluding the adjustments described in items (1) – (3) above.

(5) $20,787 on an adjusted basis excluding the tax impact of the adjustments described in items (1) – (3) above.

(6) $38,434 and $1.24 per share, respectively, on an adjusted basis excluding the adjustments (net of related tax effects) described in items (1) – (3) above.

(7) $220,895 on an adjusted basis excluding $2,086 in acquisition-related intangible amortization, $3,314 in acquisition-related inventory write-up amortization and $197 in share-based compensation expense.

(8) $112,245 on an adjusted basis excluding $1,550 in acquisition-related intangible amortization, $165 in restructuring and other related costs and $3,963 in share-based compensation expense.

(9) $28,360 on an adjusted basis excluding $262 in share-based compensation expense.

(10) $0 on an adjusted basis excluding $756 related to an acquisition-related in-process research and development charge.

(11) $43,863 on an adjusted basis excluding the adjustments described in items (7) – (10) above.

(12) $15,679 on an adjusted basis excluding the tax impact of the adjustments described in items (7) – (9) above.

(13) $29,118 and $0.92 per share, respectively, on an adjusted basis excluding the adjustments (net of related tax effects) described in items (7) – (9) above.

VARIAN, INC. AND SUBSIDIARY COMPANIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands, except par value amounts)

	March 30, 2007		September 29, 2006
ASSETS
Current assets
Cash and cash equivalents	$	160,302	$	154,155
Accounts receivable, net		180,500		177,037
Inventories		143,722		133,662
Deferred taxes		33,491		33,235
Prepaid expenses and other current assets		16,407		15,728
Total current assets		534,422		513,817
Property, plant and equipment, net		107,847		112,528
Goodwill		189,170		181,563
Intangible assets, net		34,897		39,143
Other assets		16,173		14,543
Total assets	$	882,509	$	861,594
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	1,250	$	2,500
Accounts payable		71,284		73,138
Deferred profit		13,304		13,796
Accrued liabilities		165,167		169,063
Total current liabilities		251,005		258,497
Long-term debt		25,000		25,000
Deferred taxes		3,381		3,721
Other liabilities		20,645		22,336
Total liabilities		300,031		309,554
Stockholders’ equity
Preferred stock—par value $0.01, authorized—1,000 shares; issued—none		—		—
Common stock—par value $0.01, authorized—99,000 shares; issued and outstanding—30,561 shares at March 30, 2007 and 30,870 shares at September 29, 2006		339,475		319,090
Retained earnings		195,468		204,182
Accumulated other comprehensive income		47,535		28,768
Total stockholders’ equity		582,478		552,040
Total liabilities and stockholders’ equity	$	882,509	$	861,594

VARIAN, INC. AND SUBSIDIARY COMPANIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands, except par value amounts)

	Fiscal Quarter Ended						Six Months Ended
	March 30, 2007			March 31, 2006			March 30, 2007			March 31, 2006
Cash flows from operating activities
Net earnings	$	16,282		$	11,242		$	31,637		$	20,901
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		7,279			6,044			14,072			12,388
(Gain) loss on disposition of property, plant and equipment		(173	)		169			(207	)		258
Purchased in-process research and development		—			—			—			756
Share-based compensation expense		2,869			2,453			5,714			4,422
Tax benefit from share-based plans		4,863			1,386			6,068			3,242
Excess tax benefit from share-based plans		(4,574	)		(1,386	)		(5,747	)		(3,185	)
Deferred taxes		(638	)		(252	)		(1,467	)		(897	)
Changes in assets and liabilities, excluding effects of acquisitions and divestitures:
Accounts receivable, net		(8,738	)		(8,588	)		1,330			2,909
Inventories		(1,341	)		(11,309	)		(7,004	)		(14,937	)
Prepaid expenses and other current assets		1,084			2,029			—			3,833
Other assets		(361	)		175			(75	)		148
Accounts payable		(3,426	)		4,824			(3,763	)		8,673
Deferred profit		(330	)		(901	)		(455	)		530
Accrued liabilities		(3,534	)		771			(8,001	)		(12,641	)
Other liabilities		2,713			(1,302	)		2,265			(255	)
Net cash provided by operating activities		11,975			5,355			34,367			26,145
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		3,035			171			3,154			634
Purchase of property, plant and equipment		(3,916	)		(3,850	)		(5,970	)		(7,924	)
Purchase of businesses, net of cash acquired		(1,781	)		(17,225	)		(4,781	)		(68,529	)
Net cash used in investing activities		(2,662	)		(20,904	)		(7,597	)		(75,819	)
Cash flows from financing activities
Repayments of debt		—			—			(1,250	)		(1,250	)
Repurchase of common stock		(14,900	)		(22,898	)		(51,955	)		(38,160	)
Issuance of common stock		17,856			6,587			20,209			15,563
Excess tax benefit from share-based plans		4,574			1,386			5,747			3,185
Transfers to Varian Medical Systems, Inc.		(141	)		(105	)		(348	)		(236	)
Net cash provided by (used in) financing activities		7,389			(15,030	)		(27,597	)		(20,898	)
Effects of exchange rate changes on cash and cash equivalents		2,297			332			6,974			(1,480	)
Net increase (decrease) in cash and cash equivalents		18,999			(30,247	)		6,147			(72,052	)
Cash and cash equivalents at beginning of period		141,303			146,689			154,155			188,494
Cash and cash equivalents at end of period	$	160,302		$	116,442		$	160,302		$	116,442

VARIAN, INC. AND SUBSIDIARY COMPANIES

RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL

UNAUDITED RESULTS OF OPERATIONS

(In thousands)

Second Quarter FY 2007 and Second Quarter FY 2006

and

First Six Months FY 2007 and First Six Months FY 2006

	Fiscal Quarter Ended						Six Months Ended
	March 30, 2007			March 31, 2006			March 30, 2007			March 31, 2006
TOTAL COMPANY
Cost of Sales
U.S. GAAP as reported	$	124,435		$	116,676		$	242,674		$	226,492
Adjustments:
Share-based compensation expense		(111	)		(108	)		(219	)		(197	)
Acquisition-related intangible amortization		(1,279	)		(1,062	)		(2,625	)		(2,086	)
Acquisition-related inventory write-up amortization		(184	)		(1,366	)		(455	)		(3,314	)
As adjusted	$	122,861		$	114,140		$	239,375		$	220,895
Selling, General and Administrative
U.S. GAAP as reported	$	65,255		$	61,347		$	126,456		$	117,923
Adjustments:
Share-based compensation expense		(2,632	)		(2,190	)		(5,241	)		(3,963	)
Acquisition-related intangible amortization		(675	)		(813	)		(1,576	)		(1,550	)
Restructuring and other related costs		(64	)		(165	)		(179	)		(165	)
As adjusted	$	61,884		$	58,179		$	119,460		$	112,245
Research and Development
U.S. GAAP as reported	$	16,103		$	14,683		$	31,713		$	28,622
Adjustments:
Share-based compensation expense		(126	)		(155	)		(254	)		(262	)
As adjusted	$	15,977		$	14,528		$	31,459		$	28,360
Purchased In-Process Research and Development
U.S. GAAP as reported	$	—		$	—		$	—		$	756
Adjustments:
Acquisition-related in-process research and development charges		—			—			—			(756	)
As adjusted	$	—		$	—		$	—		$	—

VARIAN, INC. AND SUBSIDIARY COMPANIES

RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL

UNAUDITED RESULTS OF OPERATIONS

(In thousands, except margin data)

Second Quarter FY 2007 and Second Quarter FY 2006

and

First Six Months FY 2007 and First Six Months FY 2006

	Fiscal Quarter Ended						Six Months Ended
	March 30, 2007			March 31, 2006			March 30, 2007			March 31, 2006
TOTAL COMPANY (Continued)
Operating Earnings
U.S. GAAP as reported	$	24,137		$	16,920		$	47,025		$	31,570
Adjustments:
Share-based compensation expense		2,869			2,453			5,714			4,422
Acquisition-related in-process research and development charges		—			—			—			756
Acquisition-related intangible amortization		1,954			1,875			4,201			3,636
Acquisition-related inventory write-up amortization		184			1,366			455			3,314
Restructuring and other related costs		64			165			179			165
As adjusted	$	29,208		$	22,779		$	57,574		$	43,863
Operating Margins
U.S. GAAP as reported		10.5	%		8.1	%		10.5	%		7.8	%
Adjustments:
Share-based compensation expense		1.2			1.2			1.3			1.1
Acquisition-related in-process research and development charges		—			—			—			0.2
Acquisition-related intangible amortization		0.8			0.8			1.0			0.9
Acquisition-related inventory write-up amortization		0.2			0.7			0.1			0.8
Restructuring and other related costs		—			0.1			—			—
As adjusted		12.7	%		10.9	%		12.9	%		10.8	%
Income Tax Expense
U.S. GAAP as reported	$	8,767		$	6,054		$	17,035		$	11,603
Tax impact of adjustments:
Share-based compensation expense		1,062			858			2,085			1,572
Acquisition-related intangible amortization		660			656			1,449			1,280
Acquisition-related inventory write-up amortization		62			478			157			1,166
Restructuring and other related costs		21			58			61			58
As adjusted	$	10,572		$	8,104		$	20,787		$	15,679

VARIAN, INC. AND SUBSIDIARY COMPANIES

RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL

UNAUDITED RESULTS OF OPERATIONS

(In thousands, except per share data)

Second Quarter FY 2007 and Second Quarter FY 2006

and

First Six Months FY 2007 and First Six Months FY 2006

	Fiscal Quarter Ended				Six Months Ended
	March 30, 2007		March 31, 2006		March 30, 2007		March 31, 2006
TOTAL COMPANY (Continued)
Net Earnings
U.S. GAAP as reported	$	16,282	$	11,242	$	31,637	$	20,901
Adjustments:
Share-based compensation expense		1,807		1,595		3,628		2,850
Acquisition-related in-process research and development charges		—		—		—		756
Acquisition-related intangible amortization		1,296		1,219		2,752		2,356
Acquisition-related inventory write-up amortization		122		888		298		2,148
Restructuring and other related costs		41		107		119		107
As adjusted	$	19,548	$	15,051	$	38,434	$	29,118
Diluted Earnings Per Share
U.S. GAAP as reported	$	0.53	$	0.36	$	1.02	$	0.66
Adjustments:
Share-based compensation expense		0.06		0.05		0.12		0.09
Acquisition-related in-process research and development charges		—		—		—		0.02
Acquisition-related intangible amortization		0.04		0.04		0.09		0.08
Acquisition-related inventory write-up amortization		—		0.03		0.01		0.07
Restructuring and other related costs		—		—		—		—
As adjusted	$	0.63	$	0.48	$	1.24	$	0.92

VARIAN, INC. AND SUBSIDIARY COMPANIES

RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL

UNAUDITED RESULTS OF OPERATIONS

(In thousands, except margin data)

Second Quarter FY 2007 and Second Quarter FY 2006

and

First Six Months FY 2007 and First Six Months FY 2006

	Fiscal Quarter Ended						Six Months Ended
	March 30, 2007			March 31, 2006			March 30, 2007			March 31, 2006
TOTAL COMPANY EXCLUDING GENERAL (UNALLOCATED) CORPORATE COSTS
Operating Earnings
U.S. GAAP as reported	$	29,419		$	21,217		$	56,672		$	39,968
Adjustments:
Share-based compensation expense		979			1,070			2,732			2,344
Acquisition-related in-process research and development charges		—			—			—			756
Acquisition-related intangible amortization		1,954			1,875			4,201			3,636
Acquisition-related inventory write-up amortization		184			1,366			455			3,314
Restructuring and other related costs		64			165			179			165
As adjusted	$	32,600		$	25,693		$	64,239		$	50,183
Operating Margins
U.S. GAAP as reported		12.8	%		10.1	%		12.7	%		9.9	%
Adjustments:
Share-based compensation expense		0.4			0.5			0.6			0.6
Acquisition-related in-process research and development charges		—			—			—			0.2
Acquisition-related intangible amortization		0.9			0.9			0.9			0.9
Acquisition-related inventory write-up amortization		0.1			0.7			0.1			0.8
Restructuring and other related costs		—			0.1			—			—
As adjusted		14.2	%		12.3	%		14.3	%		12.4	%

VARIAN, INC. AND SUBSIDIARY COMPANIES

RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL

UNAUDITED RESULTS OF OPERATIONS

(In thousands, except margin data)

Second Quarter FY 2007 and Second Quarter FY 2006

and

First Six Months FY 2007 and First Six Months FY 2006

	Fiscal Quarter Ended						Six Months Ended
	March 30, 2007			March 31, 2006			March 30, 2007			March 31, 2006
SCIENTIFIC INSTRUMENTS SEGMENT
Operating Earnings
U.S. GAAP as reported	$	21,789		$	14,010		$	40,657		$	26,665
Adjustments:
Share-based compensation expense		840			796			1,869			1,797
Acquisition-related in-process research and development charges		—			—			—			756
Acquisition-related intangible amortization		1,954			1,875			4,201			3,636
Acquisition-related inventory write-up amortization		184			1,366			455			3,314
Restructuring and other related costs		64			165			179			165
As adjusted	$	24,831		$	18,212		$	47,361		$	36,333
Operating Margins
U.S. GAAP as reported		11.4	%		8.2	%		11.1	%		8.0	%
Adjustments:
Share-based compensation expense		0.4			0.5			0.5			0.5
Acquisition-related in-process research and development charges		—			—			—			0.2
Acquisition-related intangible amortization		1.1			1.0			1.2			1.2
Acquisition-related inventory write-up amortization		0.1			0.8			0.1			1.0
Restructuring and other related costs		—			0.1			—			—
As adjusted		13.0	%		10.6	%		12.9	%		10.9	%
VACUUM TECHNOLOGIES SEGMENT
Operating Earnings
U.S. GAAP as reported	$	7,630		$	7,207		$	16,015		$	13,303
Adjustments:
Share-based compensation expense		139			274			863			547
As adjusted	$	7,769		$	7,481		$	16,878		$	13,850
Operating Margins
U.S. GAAP as reported		19.3	%		18.9	%		19.9	%		18.3	%
Adjustments:
Share-based compensation expense		0.3			0.7			1.0			0.8
As adjusted		19.6	%		19.6	%		20.9	%		19.1	%
GENERAL (UNALLOCATED) CORPORATE
Operating Earnings
U.S. GAAP as reported	$	(5,282	)	$	(4,297	)	$	(9,647	)	$	(8,398	)
Adjustments:
Share-based compensation expense		1,891			1,383			2,983			2,078
As adjusted	$	(3,391	)	$	(2,914	)	$	(6,664	)	$	(6,320	)

VARIAN, INC. AND SUBSIDIARY COMPANIES

RECONCILIATION OF GAAP TO ADJUSTED RESULTS - PROJECTED

RESULTS OF OPERATIONS

Fiscal Year Ending September 28, 2007

	Range of Projected Results
TOTAL COMPANY
Projected Diluted Earnings Per Share
Projected U.S. GAAP	$1.88 - $2.01
Adjustments:
Projected share-based compensation expense	$0.21
Projected acquisition-related intangible amortization	$0.17
Projected acquisition-related inventory write-up amortization	$0.03
Projected restructuring and other related costs	$0.08 - $0.11
Projected as adjusted	$2.40 - $2.50