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Varian, Inc. Reports Second Quarter 2009 Results
Date:4/29/2009

PALO ALTO, Calif., April 29 /PRNewswire-FirstCall/ -- Varian, Inc. (NasdaqGS: VARI) today reported second quarter fiscal year 2009 revenues of $205.4 million, a decrease of 17.2% from the second quarter of fiscal year 2008.

Non-GAAP (adjusted) diluted earnings per share for the second quarter of 2009 were $0.55 (including $0.05 of share-based compensation expense), a decrease of 14.1% from the $0.64 (including $0.07 of share-based compensation expense) in the second quarter of 2008. On a GAAP basis, diluted earnings per share in the second quarter of 2009 were $0.35, compared to $0.52 in the second quarter of 2008.

Adjusted operating profit margin was 11.8% in the second quarter of 2009, compared to 12.0% in the prior-year quarter. On a GAAP basis, operating profit margin was 7.5% in the second quarter of 2009, compared to 10.9% in the same quarter a year ago.

Free cash flow, which is defined as operating cash flow less net fixed asset purchases, was $25.5 million, or 250% of GAAP net earnings, in the second quarter of 2009.

"We were able to maintain solid adjusted operating profit margins in the quarter even with the expected lower revenues," said Garry W. Rogerson, Chairman and Chief Executive Officer. "This was primarily due to the positive impact of efficiency improvements we have implemented in recent years, combined with benefits from the cost reduction activities we announced on January 16, 2009 and positive foreign currency movements. We also generated excellent free cash flow, which demonstrates the fundamental strength and flexibility of our business, even in a challenging economic environment."

On a sequential basis, second quarter 2009 revenues of $205.4 million decreased only 1.3% from first quarter 2009 revenues of $208.2 million. Second quarter 2009 adjusted diluted earnings per share were $0.55, an increase of 1.9% from the $0.54 reported in the first quarter of 2009. On a GAAP basis, second quarter 2009 diluted earnings per share were $0.35, compared to $0.45 in the prior quarter. Second quarter 2009 adjusted operating profit margin was 11.8%, an increase of 40 basis points compared to the 11.4% reported in the first quarter of 2009. On a GAAP basis, second quarter 2009 operating profit margin was 7.5%, compared to 9.6% in the prior quarter.

"We are encouraged by the stability reflected in the sequential results, with essentially flat revenues and profitability on an adjusted basis," said Rogerson. "Looking forward, the diversity of our products, the applications we serve and our worldwide distribution position us well. There are a few positive signs for the future, including governmental spending initiatives, a global focus on environmental, food and product testing, and investments in alternative energies such as solar, nuclear and biofuels. We believe that our strategy is sound, but will remain vigilant with respect to the economic situation, making the appropriate decisions to maintain solid profitability and cash flow through this very difficult period and position ourselves for profitable growth with the economic recovery."

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.

Results by Segment

Scientific Instruments revenues for the second quarter of 2009 were $170.9 million, a decrease of 16.4% from the second quarter of the prior year. Adjusted operating profit margin was 12.0% in the second quarter of 2009, compared to 12.3% in the second quarter of the prior year. On a GAAP basis, operating profit margin was 7.3% in the second quarter of 2009, compared to 11.0% in the same quarter a year ago.

Vacuum Technologies revenues were $34.5 million in the second quarter of 2009, a decrease of 21.0% from the second quarter of 2008. Adjusted operating profit margin was 21.4% in the second quarter of 2009, compared to 20.1% in the second quarter of the prior year. On a GAAP basis, operating profit margin was 19.2% in the second quarter of 2009, compared to 20.1% in the prior-year quarter.

Webcast Conference Call

Varian, Inc. will be providing a live webcast (in listen-only mode) of its investor conference call to review its second quarter results later today, April 29, 2009, 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 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, operating earnings, operating profit margins, impairment of private company equity investments, income tax expense, net earnings, diluted earnings per share and free cash flow. With the exception of free cash flow, these non-GAAP financial measures exclude acquisition-related intangible and inventory write-up amortization, restructuring and other related costs, and impairment of private company equity investments. Reconciliations of each of these non-GAAP financial measures to the most directly comparable GAAP 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 and our cash flows.

We believe that excluding acquisition-related intangible and inventory write-up amortization 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 as important, useful information.

We similarly believe that excluding restructuring and other related costs (principally related to facility closures and employee terminations to reduce costs and improve operational efficiency) and impairment of private company equity investments 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 restructuring and other related costs and impairment of private company equity investments as important supplemental information useful to their understanding of our historical results and estimating of our future results.

We also believe that, in excluding acquisition-related intangible and inventory write-up amortization, restructuring and other related costs, and impairment of private company equity investments, 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.

We believe that the presentation of free cash flow provides investors with useful information on what is used by management to measure cash management performance, 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 and our cash flows, 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: when and how quickly global economic conditions improve, and whether conditions worsen before they improve; whether we will succeed in new product development, release, commercialization, performance and acceptance; whether we can achieve growth in sales for life science, environmental, energy and/or applied research and other applications; whether we can achieve sales growth in Europe, North America, Asia Pacific and/or Latin America; risks arising from the timing of shipments, installations and the recognition of revenue on certain research products, including nuclear magnetic resonance (NMR) spectroscopy systems, magnetic resonance (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 our various 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/or earnings; whether we will see continued investment in capital equipment, in particular given the global liquidity and credit crisis; whether we will see reduced demand from customers that operate in cyclical industries; whether the global liquidity and credit crisis will impact the collectability of accounts receivable from our customers; the extent and timing of government funding for research; our ability to successfully evaluate, negotiate, complete and integrate acquisitions, in particular given the greater difficulty to borrow in the current credit environment; the actual costs, timing and benefits of restructuring activities (such as the employee reductions and other actions announced on January 16, 2009 and our Northern California operations consolidation) and other efficiency improvement activities (such as our global procurement, lower-cost manufacturing and outsourcing initiatives); variability in our effective income tax rate (due to factors including the timing and amount of discrete tax events and changes to unrecognized tax benefits); the timing and amount of share-based compensation; and other risks detailed from time to time in our filings with the U.S. Securities and Exchange Commission. We undertake no special obligation to update 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, environmental, energy, and applied research and other applications. The company provides complete solutions, including instruments, vacuum products, laboratory consumable supplies, software, training and support through its global distribution and support systems. Varian, Inc. employs approximately 3,600 people worldwide and operates manufacturing facilities in North America, Europe and Asia Pacific. Varian, Inc. had fiscal year 2008 sales of $1.0 billion, 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 at http://www.varianinc.com.

    For Information Contact:
    Investor Relations
    Varian, Inc.
    650.424.5471
    ir@varianinc.com

                        VARIAN, INC. AND SUBSIDIARY COMPANIES
                 UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                      (In thousands, except per share amounts)
                 Second Quarter FY 2009 and Second Quarter FY 2008

                                                Fiscal Quarter Ended
                                           ------------------------------
                                            April 3,            March 28,
                                             2009                 2008
                                           ---------           ----------
    Sales                                  $205,426            $248,165
    Cost of sales                           115,902 (1)         135,289   (7)
                                           ---------           ----------
    Gross profit                             89,524             112,876
                                           ---------           ----------
    Operating expenses
    Selling, general and administrative      59,278 (2)          67,603   (8)
    Research and development                 14,745 (3)          18,190   (9)
                                           ---------           ----------
    Total operating expenses                 74,023              85,793
                                           ---------           ----------

    Operating earnings                       15,501 (4)          27,083  (10)
    Impairment of private company
     equity investment                            -              (3,018) (11)
    Interest income                             338               1,751
    Interest expense                           (335)               (435)
                                           ---------           ----------
    Earnings before income taxes             15,504              25,381
    Income tax expense                        5,318 (5)           9,594  (12)
                                           ---------           ----------
    Net earnings                            $10,186 (6)         $15,787  (13)
                                           =========           ==========



    Net earnings per diluted share            $0.35 (6)           $0.52  (13)
                                           =========           ==========
    Diluted shares outstanding               28,952              30,243
                                           =========           ==========

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

    (1)   $112,079 on an adjusted basis excluding $1,471 in acquisition-
          related intangible amortization, $42 in acquisition-related
          inventory write-up amortization and $2,310 in restructuring and
          other related costs.
    (2)   $55,175 on an adjusted basis excluding $283 in acquisition-related
          intangible amortization and $3,820 in restructuring and other
          related costs.
    (3)   $13,901 on an adjusted basis excluding $844 in restructuring and
          other related costs.
    (4)   $24,271 on an adjusted basis excluding the adjustments described in
          items (1) - (3) above.
    (5)   $8,350 on an adjusted basis excluding the tax impact of the
          adjustments described in items (1) - (3) above.
    (6)   $15,924 and $0.55 per diluted share, respectively, on an adjusted
          basis excluding the adjustments (net of related tax effects)
          described in items (1) - (3) above.
    (7)   $133,502 on an adjusted basis excluding $1,515 in acquisition-
          related intangible amortization, $110 in acquisition-related
          inventory write-up amortization and $162 in restructuring and
          other related costs.
    (8)   $66,990 on an adjusted basis excluding $402 in acquisition-related
          intangible amortization and $211 in restructuring and other related
          costs.
    (9)   $18,015 on an adjusted basis excluding $175 in restructuring and
          other related costs.
    (10)  $29,658 on an adjusted basis excluding the adjustments described in
          items (7) - (9) above.
    (11)  $0 on an adjusted basis excluding $3,018 related to the impairment
          of a private company equity investment.
    (12)  $11,712 on an adjusted basis excluding the tax impact of the
          adjustments described in items (7) - (9) and (11) above.
    (13)  $19,262 and $0.64 per diluted share, respectively, on an adjusted
           basis excluding the adjustments (net of related tax effects)
          described in items (7) - (9) and (11) above.



                        VARIAN, INC. AND SUBSIDIARY COMPANIES
              UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
                       (In thousands, except per share amounts)
              First Six Months FY 2009 and First Six Months FY 2008

                                                  Six Months Ended
                                           ------------------------------
                                            April 3,            March 28,
                                             2009                 2008
                                           ---------           ----------
    Sales                                  $413,662           $485,596
    Cost of sales                           228,817 (1)        265,418   (7)
                                           ---------           ----------
    Gross profit                            184,845            220,178
                                           ---------           ----------
    Operating expenses
    Selling, general and administrative     120,194 (2)        133,583   (8)
    Research and development                 29,259 (3)         35,370   (9)
                                           ---------           ----------
    Total operating expenses                149,453            168,953
                                           ---------           ----------

    Operating earnings                       35,392 (4)         51,225  (10)
    Impairment of private company
     equity investment                            -             (3,018) (11)
    Interest income                             925              3,688
    Interest expense                           (657)              (884)
                                           ---------           ----------Earnings before income taxes             35,660             51,011
    Income tax expense                       12,433 (5)         17,640  (12)
                                           ---------           ----------
    Net earnings                            $23,227 (6)        $33,371  (13)
                                           =========           ==========

    Net earnings per diluted share            $0.80 (6)          $1.09  (13)
                                           =========           ==========
    Diluted shares outstanding               28,963             30,598
                                           =========           ==========

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

    (1)   $222,439 on an adjusted basis excluding $3,074 in acquisition-
          related intangible amortization, $59 in acquisition-related
          inventory write-up amortization and $3,245 in restructuring and
          other related costs.
    (2)   $115,080 on an adjusted basis excluding $735 in acquisition-
          related intangible amortization and $4,379 in restructuring and
          other related costs.
    (3)   $28,197 on an adjusted basis excluding $1,062 in restructuring and
          other related costs.
    (4)   $47,946 on an adjusted basis excluding the adjustments described
          in items (1) - (3) above.
    (5)   $16,729 on an adjusted basis excluding the tax impact of the
          adjustments described in items (1) - (3) above.
    (6)   $31,485 and $1.09 per share, respectively, on an adjusted basis
          excluding the adjustments (net of related tax effects) described
          in items (1) - (3) above.
    (7)   $261,272 on an adjusted basis excluding $2,906 in acquisition-
          related intangible amortization, $590 in acquisition-related
          inventory write-up amortization and $650 in restructuring and
          other related costs.
    (8)   $131,339 on an adjusted basis excluding $840 in acquisition-
          related intangible amortization and $1,404 in restructuring
          and other related costs.
    (9)   $34,875 on an adjusted basis excluding $495 in restructuring
          and other related costs.
    (10)  $58,110 on an adjusted basis excluding the adjustments
          described in items (7) - (9) above.
    (11)  $0 on an adjusted basis excluding $3,018 related to the
          impairment of a private company equity investment.
    (12)  $21,262 on an adjusted basis excluding the tax impact of
          the adjustments described in items (7) - (9) and (11) above.
    (13)  $39,652 and $1.30 per share, respectively, on an adjusted
          basis excluding the adjustments (net of related tax
          effects) described in items (7) - (9) and (11) above.



                      VARIAN, INC. AND SUBSIDIARY COMPANIES
                   UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
                     (In thousands, except par value amounts)

                                                 April 3,      October 3,
                                                   2009           2008
                                                 ---------      ---------
    ASSETS

    Current assets
    Cash and cash equivalents                     $130,505       $103,895
    Accounts receivable, net                       156,694        199,420
    Inventories                                    146,963        161,039
    Deferred taxes                                  33,132         33,618
    Prepaid expenses and other
     current assets                                 14,239         15,663
                                                  ---------      ---------
    Total current assets                           481,533        513,635
    Property, plant and equipment, net             111,064        110,343
    Goodwill                                       203,573        218,208
    Intangible assets, net                          29,511         36,972
    Other assets                                    23,899         24,089
                                                   ---------      ---------
    Total assets                                  $849,580       $903,247
                                                  =========      =========

    LIABILITIES AND STOCKHOLDERS' EQUITY

    Current liabilities
    Accounts payable                               $57,924        $70,923
    Deferred profit                                 12,252         10,957
    Accrued liabilities                            148,662        167,173
                                                 ---------      ---------
    Total current liabilities                      218,838        249,053
    Long-term debt                                  18,750         18,750
    Deferred taxes                                   3,320          4,341
    Other liabilities                               42,869         43,431
                                                  ---------      ---------
    Total liabilities                              283,777        315,575
                                                  ---------      ---------

    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-28,778 shares
     at April 3, 2009 and 28,917
     shares at October 3, 2008                     358,274        356,192
    Retained earnings                              206,115        186,009
    Accumulated other comprehensive income           1,414         45,471
                                                  ---------      ---------
    Total stockholders' equity                     565,803        587,672
                                                  ---------      ---------
    Total liabilities and
     stockholders' equity                         $849,580       $903,247
                                                  =========      =========



                        VARIAN, INC. AND SUBSIDIARY COMPANIES
               UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                     (In thousands)

                               Fiscal Quarter Ended      Six Months Ended
                              ----------------------  ---------------------
                               April 3,    March 28,    April 3,  March 28,
                                 2009        2008        2009       2008
                              ---------   ----------  ---------   ---------
    Cash flows from
     operating activities
    Net earnings               $10,186     $15,787     $23,227     $33,371
    Adjustments to reconcile
     net earnings to net cash
     provided by operating
     activities:
    Depreciation
     and amortization            6,528       6,445      13,371      13,279
    Loss (gain) on
     disposition of property,
     plant and equipment            23         (76)         (4)       (298)
    Impairment of private
     company equity investment       -       3,018           -       3,018
    Share-based
     compensation expense        1,945       3,103       4,311       4,822
    Deferred taxes                (768)     (2,421)       (655)     (1,656)
    Unrealized loss (gain) on
     currency remeasurement        323         971      (6,363)        642
    Changes in assets and
     liabilities, excluding
     effects of acquisitions:
      Accounts receivable, net   7,549     (15,505)      32,119     (1,732)
      Inventories                9,124      (8,566)       1,182    (23,718)
      Prepaid expenses and
       other current assets        336      (1,264)        229        (992)
      Other assets                (119)        (11)     (1,148)        (35)
      Accounts payable          (5,776)      4,659      (9,394)      3,287
      Deferred profit            1,245      (2,220)      1,548      (4,474)
      Accrued liabilities        8,719       7,132      (6,900)      3,813
      Other liabilities         (5,736)      1,577      (1,013)        405
                              ---------   ----------  ---------   ---------
    Net cash provided
     by operating activities    33,579      12,629      50,510      29,732
                              ---------   ----------  ---------   ---------
    Cash flows from
     investing activities
    Proceeds from sale
     of property, plant
     and equipment                  80         446       5,246         787
    Purchase of property,
     plant and equipment        (8,194)     (5,749)    (15,137)     (9,208)
    Acquisitions, net of
     cash acquired              (1,521)     (5,222)     (2,247)    (15,209)
    Private company
     equity investments              -         (18)          -         (18)
                              ---------   ----------  ---------   ---------
    Net cash used in
     investing activities       (9,635)    (10,543)    (12,138)    (23,648)
                              ---------   ----------  ---------   ---------
    Cash flows from
     financing activities
    Repurchase of common stock  (7,196)    (56,421)     (7,475)    (71,523)
    Issuance of common stock     1,406       3,715       2,315      13,233
    Excess tax benefit
     from share-based plans          -         573           -       2,963
    Transfers to Varian
     Medical Systems, Inc.        (219)       (210)       (365)       (422)

                              ---------   ----------  ---------   ---------
    Net cash used in
     financing activities       (6,009)    (52,343)     (5,525)    (55,749)
                              ---------   ----------  ---------   ---------
    Effects of exchange
     rate changes on cash
     and cash equivalents       (4,359)     10,000      (6,237)     10,692
                              ---------   ----------  ---------   ---------
    Net increase
     (decrease) in cash and
     cash equivalents           13,576     (40,257)     26,610     (38,973)
    Cash and cash
     equivalents at
     beginning of period       116,929     197,680     103,895     196,396
                              ---------   ----------  ---------   ---------
    Cash and cash
     equivalents at
     end of period            $130,505    $157,423    $130,505    $157,423
                              =========   ==========  =========   =========



                         VARIAN, INC. AND SUBSIDIARY COMPANIES
                   RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
                          UNAUDITED RESULTS OF OPERATIONS
                                   (In thousands)

                 Second Quarter FY 2009 and Second Quarter FY 2008
                                        and
               First Six Months FY 2009 and First Six Months FY 2008

                               Fiscal Quarter Ended      Six Months Ended
                              ----------------------  ---------------------
                               April 3,    March 28,    April 3,  March 28,
                                 2009        2008        2009       2008
                              ---------   ----------  ---------   ---------
    TOTAL COMPANY

    Cost of Sales
      U.S. GAAP as reported   $115,902    $135,289    $228,817    $265,418
      Adjustments:
        Acquisition-related
         intangible
         amortization           (1,471)     (1,515)     (3,074)     (2,906)
        Acquisition-related
         inventory write-up
         amortization              (42)       (110)        (59)       (590)
        Restructuring and
         other related costs    (2,310)       (162)     (3,245)       (650)
                              ---------   ----------  ---------   ---------
      As adjusted             $112,079    $133,502    $222,439    $261,272
                              =========   ==========  =========   =========

    Selling, General
     and Administrative
      U.S. GAAP as reported    $59,278     $67,603    $120,194    $133,583
      Adjustments:
        Acquisition-related
         intangible
         amortization             (283)       (402)       (735)       (840)
        Restructuring and
         other related costs    (3,820)       (211)     (4,379)     (1,404)
                              ---------   ----------  ---------   ---------
      As adjusted              $55,175     $66,990    $115,080    $131,339
                              =========   ==========  =========   =========

    Research and
     Development
     U.S. GAAP as reported     $14,745     $18,190     $29,259     $35,370
      Adjustments:
        Restructuring and
         other related costs      (844)       (175)     (1,062)       (495)
                              ---------   ----------  ---------   ---------
      As adjusted              $13,901     $18,015     $28,197     $34,875
                              =========   ==========  =========   =========



                         VARIAN, INC. AND SUBSIDIARY COMPANIES
                   RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
                          UNAUDITED RESULTS OF OPERATIONS
                        (In thousands, except margin data)

                 Second Quarter FY 2009 and Second Quarter FY 2008
                                        and
               First Six Months FY 2009 and First Six Months FY 2008

                               Fiscal Quarter Ended      Six Months Ended
                              ----------------------  ---------------------
                               April 3,    March 28,    April 3,  March 28,
                                 2009        2008        2009       2008
                              ---------   ----------  ---------   ---------
    TOTAL COMPANY (Continued)

    Operating Earnings
      U.S. GAAP as reported    $15,501     $27,083     $35,392     $51,225
      Adjustments:
        Acquisition-related
         intangible
         amortization            1,754       1,917       3,809       3,746
        Acquisition-related
         inventory write-up
         amortization               42         110          59         590
        Restructuring and
         other related costs     6,974         548       8,686       2,549
                              ---------   ----------  ---------   ---------
      As adjusted              $24,271     $29,658     $47,946     $58,110
                              =========   ==========  =========   =========

    Operating Margins
      U.S. GAAP as reported        7.5%       10.9%        8.6%       10.5%
      Adjustments:
        Acquisition-related
         intangible amortization   0.9         0.9         0.9         0.9
        Acquisition-related
         inventory write-up
         amortization              0.0         0.0         0.0         0.1
        Restructuring and
          other related costs      3.4         0.2         2.1         0.5
                              ---------   ----------  ---------   ---------
      As adjusted                 11.8%       12.0%       11.6%       12.0%
                              =========   ==========  =========   =========

    Impairment of Private
     Company Equity Investment
      U.S. GAAP as reported      $   -      $3,018     $     -      $3,018
      Adjustments:
        Impairment of
         private company
         equity investment           -      (3,018)          -      (3,018)
                              ---------   ----------  ---------   ---------
      As adjusted                $   -      $    -     $     -     $     -
                              =========   ==========  =========   =========

    Income Tax
     Expense
      U.S. GAAP as reported     $5,318      $9,594     $12,433     $17,640
      Adjustments:
        Tax impact
         of adjustments:
        Acquisition-related
         intangible amortization   578         639       1,252       1,278
        Acquisition-related
         inventory write-up
         amortization               12          82          17         249
        Impairment of
         private company
         equity investment           -       1,154           -       1,154
        Restructuring and
         other related costs     2,442         243       3,027         941
                              ---------   ----------  ---------   ---------
      As adjusted               $8,350     $11,712     $16,729     $21,262
                              =========   ==========  =========   =========



                        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 2009 and Second Quarter FY 2008
                                        and
               First Six Months FY 2009 and First Six Months FY 2008

                               Fiscal Quarter Ended      Six Months Ended
                              ----------------------  ---------------------
                               April 3,    March 28,    April 3,  March 28,
                                 2009        2008        2009       2008
                              ---------   ----------  ---------   ---------

    TOTAL COMPANY (Continued)

    Net Earnings
      U.S. GAAP as reported    $10,186     $15,787     $23,227     $33,371
      Adjustments:
        Acquisition-related
         intangible
         amortization            1,176       1,278       2,557       2,468
        Acquisition-related
         inventory write-up
         amortization               30          28          42         341
        Impairment of
         private company
         equity investment           -       1,864           -       1,864
        Restructuring and
         other related costs     4,532         305       5,659       1,608
                              ---------   ----------  ---------   ---------
      As adjusted              $15,924     $19,262     $31,485     $39,652
                              =========   ==========  =========   =========


    Diluted Earnings
     Per Share
      U.S. GAAP as reported      $0.35       $0.52       $0.80       $1.09
      Adjustments:
        Acquisition-related
         intangible
         amortization             0.04        0.05        0.09        0.09
        Acquisition-related
         inventory write-up
         amortization             0.00        0.00        0.00        0.01
        Impairment of
         private company
         equity investment           -        0.06           -        0.06
        Restructuring and
         other related costs      0.16        0.01        0.20        0.05
                              ---------   ----------  ---------   ---------
    As adjusted                  $0.55       $0.64       $1.09       $1.30
                              =========   ==========  =========   =========


    Free Cash Flow
      U.S. GAAP as reported -
       Net cash provided by
        operating activities   $33,579     $12,629     $50,510     $29,732
      Adjustments:
        Proceeds from sale of
         property, plant
         and equipment              80         446       5,246         787
        Purchase of
         property, plant
         and equipment          (8,194)     (5,749)    (15,137)     (9,208)
                              ---------   ----------  ---------   ---------
      As adjusted
       - Free Cash Flow        $25,465      $7,326     $40,619     $21,311
                              =========   ==========  =========   =========



                        VARIAN, INC. AND SUBSIDIARY COMPANIES
                   RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
                            UNAUDITED RESULTS OF OPERATIONS
                          (In thousands, except margin data)

                 Second Quarter FY 2009 and Second Quarter FY 2008
                                        and
               First Six Months FY 2009 and First Six Months FY 2008


                               Fiscal Quarter Ended      Six Months Ended
                              ----------------------  ---------------------
                               April 3,    March 28,    April 3,  March 28,
                                 2009        2008        2009       2008
                              ---------   ----------  ---------   ---------
    SCIENTIFIC INSTRUMENTS
     SEGMENT

    Operating Earnings
      U.S. GAAP as reported    $12,426    $22,508     $28,849    $42,310
      Adjustments:
        Acquisition-related
         intangible
         amortization            1,754      1,917       3,809      3,746
        Acquisition-related
         inventory write-up
         amortization               42        110          59        590
        Restructuring and
         other related costs     6,216        548       7,807      2,549
                              ---------   ----------  ---------   ---------
      As adjusted              $20,438    $25,083     $40,524    $49,195
                              =========   ==========  =========   =========

    Operating Margins
      U.S. GAAP as Reported        7.3%      11.0%        8.4%      10.5%
      Adjustments:
        Acquisition-related
         intangible
         amortization              1.0        0.9         1.1        1.1
        Acquisition-related
         inventory write-up
         amortization              0.0        0.1         0.0        0.1
        Restructuring and
         other related costs       3.7        0.3         2.3        0.6
                              ---------   ----------  ---------   ---------
      As adjusted                 12.0%      12.3%       11.8%      12.3%
                              =========   ==========  =========   =========

    VACUUM TECHNOLOGIES
     SEGMENT

    Operating Earnings
      U.S. GAAP as reported     $6,640     $8,771     $13,676    $16,504
      Adjustments:
        Restructuring and
         other related costs       758          -         879          -
                              ---------   ----------  ---------   ---------
      As adjusted               $7,398     $8,771     $14,555    $16,504
                              =========   ==========  =========   =========

    Operating Margins
      U.S. GAAP as reported       19.2%      20.1%       19.3%      19.6%
      Adjustments:
        Restructuring and
         other related costs       2.2          -         1.2          -
                              ---------   ----------  ---------   ---------
      As adjusted                 21.4%      20.1%       20.5%      19.6%
                              =========   ==========  =========   =========



                       VARIAN, INC. AND SUBSIDIARY COMPANIES
                RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
                         UNAUDITED RESULTS OF OPERATIONS

              Second Quarter FY 2009 and First Quarter FY 2009 (Sequential)

                                                    Fiscal Quarter Ended
                                                ----------------------------
                                                 April 3,         January 2,
                                                   2009              2009
                                                ----------        ----------
    TOTAL COMPANY
    Operating Margins
      U.S. GAAP as reported                         7.5%              9.6%
      Adjustments:
        Acquisition-related
         intangible amortization                    0.9               1.0
        Restructuring and other
         related costs                              3.4               0.8
                                                ----------        ----------
      As adjusted                                  11.8%             11.4%
                                                ==========        ==========

    Diluted Earnings Per Share
      U.S. GAAP as reported                       $0.35             $0.45
      Adjustments:
        Acquisition-related
         intangible amortization                   0.04              0.05
        Restructuring and other
         related costs                             0.16              0.04
                                                ----------        ----------
      As adjusted                                 $0.55             $0.54
                                                ==========        ==========


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SOURCE Varian, Inc.
Copyright©2009 PR Newswire.
All rights reserved


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