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) | July 25, 2012 |
| VARIAN MEDICAL SYSTEMS, INC. |
| (Exact Name of Registrant as Specified in its Charter) |
| Delaware | 1-7598 | 94-2359345 |
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 3100 Hansen Way, Palo Alto, CA | 94304-1030 |
| (Address of Principal Executive Offices) | (Zip Code) |
| Registrant's telephone number, including area code | (650) 493-4000 |
| Not Applicable |
| (Former Name or Former Address, if Changed Since Last Report) |
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 (see General Instruction A.2. below):
| ¨ | 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. |
On July 25, 2012, Varian Medical Systems, Inc. announced that: “Varian Medical Systems Reports Results for Third Quarter of Fiscal Year 2012.” A copy of the press release is attached as Exhibit 99.1 and incorporated by reference into this item.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits. |
99.1 Press Release dated July 25, 2012 entitled “Varian Medical Systems Reports Results for Third Quarter of Fiscal Year 2012.”
| 2 |
SIGNATURES
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 Medical Systems, Inc. | ||
| By: | /s/ John W. Kuo | |
| Name: | John W. Kuo | |
| Title: | Corporate Senior Vice President, General Counsel and Corporate Secretary | |
Dated: July 25, 2012
| 3 |
EXHIBIT INDEX
| Number |
Exhibit |
| 99.1 | Press Release dated July 25, 2012 entitled “Varian Medical Systems Reports Results for Third Quarter of Fiscal Year 2012.” |
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 Third Quarter of Fiscal Year 2012
Net earnings per diluted share rise 16 percent to $0.96; revenues increase 9 percent to $705 million; net orders are even with the year-ago period
PALO ALTO, Calif., July 25, 2012 – Varian Medical Systems (NYSE:VAR) is today reporting net earnings of $0.96 per diluted share in the third quarter of fiscal year 2012, up 16 percent from $0.83 in the year-ago quarter. Revenues for the quarter were $705 million, up 9 percent from the year-ago quarter.
“All of our major businesses contributed to solid growth in earnings and revenues,” said Tim Guertin, president and CEO of Varian Medical Systems. “Gross margins for the company improved with increases in our X-Ray Products and Oncology businesses. We continued to operate in a challenging global environment with big swings in European currency exchange rates. Net orders were even for the total company compared with the year-ago quarter and up slightly on a constant currency basis.” The quarter ending backlog was $2.6 billion, up 16 percent from the year-ago period.
The company ended the quarter with $633 million in cash and cash equivalents and $175 million of debt. During the third quarter, the company spent $97 million to repurchase 1.5 million shares of common stock. The company ended the quarter with accounts receivable days sales outstanding of 80 days, an improvement of 1 day from the year-ago quarter.
Oncology Systems
Oncology Systems’ third quarter revenues totaled $546 million, up 7 percent from the same period of fiscal year 2011. Third-quarter net orders were $562 million, up 2 percent, with a 4 percent increase in North America and a 1 percent decline in international markets versus the comparable year-ago period. On a constant currency basis, Oncology Systems third quarter net orders were up 4 percent, with double-digit growth in Asia and mid-single-digit growth in Europe. Year-to-date, Oncology Systems net orders were 5 percent higher than the comparable period in fiscal year 2011, and up 6 percent on a constant currency basis.
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| Varian Medical Systems Reports Results for Third Quarter of Fiscal Year 2012 | Page 2 |
X-Ray Products
Third quarter revenues for the X-Ray Products business were $127 million, up 5 percent from the year-ago quarter. Compared to the corresponding period in fiscal year 2011, X-Ray Products’ third quarter net orders fell 1 percent to $120 million. The X-Ray Products business experienced the effects of a weaker economy during the quarter in the face of softer demand from major customers. Gross margins for this business rose by more than 4 points to a record 45 percent, driven mainly by a greater proportion of higher margin products and improved quality costs in the panel business.
Other
The company’s Other category, which includes Security and Inspection Products and Varian Particle Therapy, recorded third quarter revenues of $32 million, double the year-ago quarter. Revenues from Security and Inspection Products were up strongly in the quarter. Third-quarter orders for the Other category totaled $7 million, down $10 million from the year-ago quarter. Results from these businesses generally vary significantly from quarter to quarter.
Outlook
“With tremendous movements in currency exchange rates, particularly the substantial weakening of the Euro, as well as sluggish market conditions, we are adjusting our outlook for fiscal 2012,” said Guertin. “Compared with fiscal 2011 totals, we now believe that for fiscal year 2012 revenues could increase by about 8 percent and net earnings per diluted share from continuing operations could grow by 8 to 9 percent.”
Investor Conference Call
Varian Medical Systems is scheduled to conduct its third quarter fiscal year 2012 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 1-877-556-5921 from inside the U.S. or 1-617-597-5474 from outside the U.S. and enter confirmation code 19437371. 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 56507486. The telephone replay will be available through 5 p.m. PT, Friday, July 27, 2012.
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.
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| Varian Medical Systems Reports Results for Third Quarter of Fiscal Year 2012 | 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 6,100 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 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 the effect of global economic conditions; the impact of the 2010 federal health care legislation (including excise taxes on medical devices) and any further health care 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 Third Quarter of Fiscal Year 2012 | Page 4 |
Varian Medical
Systems, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited)
(Dollars and shares in millions, except per share amounts) | Q3 QTR
2012
| Q3 QTR
2011
| Q3 YTD
2012
| Q3 YTD
2011
| ||||||||||||
| Net orders | $ | 689.4 | 691.3 | 2,158.3 | 1,965.6 | |||||||||||
| Oncology Systems | 562.0 | 553.2 | 1,611.5 | 1,532.3 | ||||||||||||
| X-Ray Products | 120.1 | 120.9 | 360.3 | 356.5 | ||||||||||||
| Security & Inspection Products | 6.1 | 15.7 | 60.9 | 74.1 | ||||||||||||
| Varian Particle Therapy | 0.8 | 1.1 | 125.0 | 2.3 | ||||||||||||
| Ginzton Technology Center | 0.4 | 0.4 | 0.6 | 0.4 | ||||||||||||
| Order backlog | $ | 2,636.9 | 2,280.5 | 2,636.9 | 2,280.5 | |||||||||||
| Revenues | $ | 705.3 | 649.4 | 2,050.9 | 1,877.7 | |||||||||||
| Oncology Systems | 546.4 | 512.5 | 1,599.4 | 1,472.8 | ||||||||||||
| X-Ray Products | 126.7 | 120.8 | 362.5 | 350.2 | ||||||||||||
| Other | 32.2 | 16.1 | 89.0 | 54.7 | ||||||||||||
| Cost of revenues | $ | 397.7 | 369.6 | 1,177.8 | 1,042.1 | |||||||||||
| Gross margin | 307.6 | 279.8 | 873.1 | 835.6 | ||||||||||||
| As a percent of revenues | 43.6 | % | 43.1 | % | 42.6 | % | 44.5 | % | ||||||||
| Operating expenses | ||||||||||||||||
| Research and development | 48.9 | 44.4 | 139.8 | 126.8 | ||||||||||||
| Selling, general and administrative | 105.1 | 94.9 | 307.0 | 280.1 | ||||||||||||
| Operating earnings | 153.6 | 140.5 | 426.3 | 428.7 | ||||||||||||
| As a percent of revenues | 21.8 | % | 21.6 | % | 20.8 | % | 22.8 | % | ||||||||
| Interest income, net | 0.4 | 0.1 | 1.1 | 0.2 | ||||||||||||
| Earnings before taxes | 154.0 | 140.6 | 427.4 | 428.9 | ||||||||||||
| Taxes on earnings | 45.2 | 42.0 | 120.6 | 130.7 | ||||||||||||
| Net earnings | $ | 108.8 | 98.6 | 306.8 | 298.2 | |||||||||||
| As a percent of revenues | 15.4 | % | 15.2 | % | 15.0 | % | 15.9 | % | ||||||||
| Net earnings per share – basic | $ | 0.98 | 0.84 | 2.74 | 2.54 | |||||||||||
| Net earnings per share – diluted | $ | 0.96 | 0.83 | 2.69 | 2.49 | |||||||||||
| Shares used in the calculation of net earnings per share: | ||||||||||||||||
| Average shares outstanding - basic | 111.1 | 116.9 | 111.9 | 117.6 | ||||||||||||
| Average shares outstanding - diluted | 112.8 | 119.1 | 114.0 | 119.8 | ||||||||||||
| Varian Medical Systems Reports Results for Third Quarter of Fiscal Year 2012 | Page 5 |
| Varian Medical Systems, Inc. and Subsidiaries | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands) | June 29, | September 30, | ||||||
| 2012 | 2011 (1) | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 633,386 | $ | 564,457 | ||||
| Short-term investment | 47,155 | 19,205 | ||||||
| Accounts receivable, net | 608,834 | 635,153 | ||||||
| Inventories | 464,436 | 409,962 | ||||||
| Deferred tax assets and other | 263,676 | 225,840 | ||||||
| Total current assets | 2,017,487 | 1,854,617 | ||||||
| Property, plant and equipment | 636,607 | 601,115 | ||||||
| Accumulated depreciation and amortization | (349,271 | ) | (315,221 | ) | ||||
| Property, plant and equipment, net | 287,336 | 285,894 | ||||||
| Goodwill | 224,058 | 212,452 | ||||||
| Other assets | 189,072 | 145,798 | ||||||
| Total assets | $ | 2,717,953 | $ | 2,498,761 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 147,248 | $ | 154,946 | ||||
| Accrued expenses | 284,705 | 290,009 | ||||||
| Deferred revenues | 126,348 | 140,173 | ||||||
| Advance payments from customers | 353,943 | 299,380 | ||||||
| Product warranty | 49,323 | 50,128 | ||||||
| Short-term borrowings | 168,760 | 181,400 | ||||||
| Current maturities of long-term debt | - | 9,876 | ||||||
| Total current liabilities | 1,130,327 | 1,125,912 | ||||||
| Other long-term liabilities | 118,051 | 122,708 | ||||||
| Long-term debt | 6,250 | 6,250 | ||||||
| Total liabilities | 1,254,628 | 1,254,870 | ||||||
| Stockholders’ Equity | ||||||||
| Common stock | 110,711 | 112,344 | ||||||
| Capital in excess of par value | 568,943 | 500,922 | ||||||
| Retained earnings and accumulated other comprehensive loss | 783,671 | 630,625 | ||||||
| Total stockholders’ equity | 1,463,325 | 1,243,891 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,717,953 | $ | 2,498,761 | ||||
(1) The condensed consolidated balance sheet as of September 30, 2011 was derived from audited financial statements as of that date.