Varian Medical Systems Reports Results for Second Quarter of Fiscal Year 2009

PALO ALTO, Calif., April 29 /PRNewswire-FirstCall/ -- Varian Medical Systems
(NYSE: VAR) today reported net earnings from continuing operations of $0.64
per diluted share in the second quarter of fiscal year 2009 versus net
earnings from continuing operations of $0.57 per diluted share in the year-ago
quarter. Including the discontinued ACCEL research instruments operation, net
earnings per diluted share in the quarter were $0.54.

Compared to continuing operations in the year-ago quarter, second quarter
revenues rose 7 percent to $554 million, net orders rose 2 percent to $524
million, and the backlog rose 12 percent to $1.9 billion.

"Net orders grew in our Oncology Systems and Security and Inspection Products
businesses but fell in our X-Ray Products business," said Tim Guertin,
president and CEO of Varian Medical Systems. "Revenues from continuing
operations increased in all three businesses, and our gross margin improved by
nearly three percentage points, contributing to higher earnings versus the
year-ago quarter. However, we began to feel the effects of the global
recession during the quarter which resulted in modest net orders growth.
Currency fluctuations negatively impacted orders and revenue growth in the
quarter."

The company ended the second quarter with $375 million in cash and cash
equivalents and $43 million of debt. Days sales outstanding was 87 for the
quarter, an improvement of three days versus the year-ago period and up four
days from the preceding quarter. The company did not repurchase shares of its
stock during the period.

Oncology Systems
Oncology Systems' revenues for the quarter totaled $445 million, up 6 percent
from the second quarter of last fiscal year. This business recorded
second-quarter net orders of $434 million, up 5 percent from the same period
last year. Net orders were up 4 percent in North America and up 7 percent in
international markets.

"Oncology Systems' order growth was driven primarily by our service business
and international demand," said Guertin. "Oncology order growth was 10
percent on a constant currency basis. The North American order growth rate was
slowed by tightened capital budgets and tougher credit requirements. A shift
toward North American deliveries and a richer product mix including RapidArc
contributed to significant growth in gross margins for this business."

X-Ray Products
Revenues for the X-Ray Products business, including tubes and digital
flat-panel detectors for filmless X-ray imaging, were $86 million for the
second quarter, up 15 percent from the year-ago quarter. Net orders for this
business were $69 million, down 17 percent from the year-ago quarter.

"X-ray Product orders were impacted by customers who are now adjusting
inventory levels to reflect slower imaging equipment sales in a recessionary
environment," said Guertin. "Orders for high-tier CT and mammography tubes
declined. Decreases in dental and veterinary imaging panel orders offset
significant growth in orders for our emerging line of radiographic panels.
Higher revenues combined with operational improvements and reductions in
quality cost led to a substantial margin increase for this business."

Other Businesses
The company's Security and Inspection Products (SIP) business, proton therapy
business, and Ginzton Technology Center reported combined fiscal 2009 second
quarter revenues of $23 million, up 3 percent from the year-ago quarter. Net
orders for the quarter were $21 million, up 9 percent versus the year-ago
quarter due exclusively to the SIP business.

The company completed the sale of the ACCEL research instruments business to
Bruker Corporation during the quarter and recognized an $11.5 million loss net
of taxes from discontinued operations. The company's proton therapy business
will continue operating under the name Varian Particle Therapy.

Outlook
"Our outlook for the balance of the fiscal year is more cautious due to
tighter capital budgets and credit, currency fluctuations, a longer
order-to-delivery cycle in Oncology, and weaker demand for X-ray products,"
Guertin said. "We now believe that fiscal year 2009 revenues from continuing
operations could grow by about 5 to 8 percent. With the help of cost control
measures that the company has put in place for fiscal year 2009 and beyond, we
believe that net earnings per diluted share from continuing operations for the
fiscal year could grow to between $2.50 and $2.60 compared to $2.31 from
continuing operations in last fiscal year. For the third quarter of fiscal
year 2009, revenues could grow in the range of 5 to 7 percent, with higher
growth in operating earnings. Including a higher expected tax rate and lower
interest income, third quarter net earnings per diluted share from continuing
operations should be in the range of $0.61 to $0.65."

Investor Conference Call
Varian Medical Systems is scheduled to conduct its second quarter fiscal year
2009 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 where it will be archived for a year. To access the call via
telephone, dial 1-800-659-2037 from inside the U.S. or 1-617-614-2713 from
outside the U.S. and enter confirmation code 66725913. 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 11191883. The telephone
replay will be available through 5 p.m. PT, Friday, May 1, 2009.

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, proton therapy, and
brachytherapy. The company supplies informatics software for managing
comprehensive cancer clinics, radiotherapy centers and medical oncology
practices. Varian is a premier supplier of tubes and digital detectors for
X-ray imaging in medical, scientific, and industrial applications and also
supplies X-ray imaging products for cargo screening and industrial inspection.
Varian Medical Systems employs approximately 5,100 people who are located at
manufacturing sites in North America, Europe, and China and approximately 79
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 RapidArc therapy, image-guided radiation therapy (IGRT),
stereotactic radiosurgery, filmless X-rays, proton therapy, and security and
inspection, and any statements using the terms "believe," "could," "should,"
or similar statements are forward-looking statements that involve risks and
uncertainties that could cause the company's actual results to differ
materially from those anticipated. Such risks and uncertainties include the
effect of economic conditions, including the current global recession,
currency exchange rates and tax rates; the impact of health care reforms,
and/or third-party reimbursement levels and credit availability for capital
expenditures for cancer care; demand for the company's products; the company's
ability to develop and commercialize new products; the company's ability to
complete the planned sale of instruments portion of the company's ACCEL proton
therapy business; the company's reliance on sole or limited-source suppliers;
the impact of reduced or limited demand by sole purchasers of certain X-ray
tubes; the company's ability to maintain or increase operating margins; the
impact of competitive products and pricing; the company's ability to meet Food
and Drug Administration and other regulatory requirements for product
clearances or to comply with Food and Drug Administration and other regulatory
regulations or procedures; the ability to make strategic acquisitions and to
successfully integrate the acquired operations into the company's business;
the company's ability to protect the company's intellectual property; the
potential loss of key distributors or key personnel; 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, Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings
(Unaudited)

Q2 QTR Q2 QTR Q2 YTD Q2 YTD
2009 2008 2009 2008
(Dollars and shares in
millions, except per share
amounts)
Net orders $524.2 515.4 1,075.5 1,004.4
Oncology Systems 434.2 413.1 861.8 798.8
X-Ray Products 68.8 83.0 159.9 158.1
Other 21.2 19.3 53.8 47.5
Order backlog $1,901.0 1,690.3 1,901.0 1,690.3
Revenues $553.6 518.4 1,062.3 969.6
Oncology Systems 444.6 421.2 842.8 781.5
X-Ray Products 85.8 74.8 171.9 144.9
Other 23.2 22.4 47.6 43.2
Cost of revenues $313.2 306.8 602.9 566.9
Gross margin 240.4 211.6 459.4 402.7
As a percent of revenues 43.4% 40.8% 43.2% 41.5%
Operating expenses
Research and development 37.0 31.9 74.0 60.8
Selling, general and
administrative 81.1 75.1 164.4 150.2
Operating earnings 122.3 104.6 221.0 191.7
As a percent of revenues 22.1% 20.2% 20.8% 19.8%
Interest income/(expense), net (0.4) 1.6 1.0 3.1
Earnings from continuing
operations before taxes 121.9 106.2 222.0 194.8
Taxes on earnings 42.6 33.3 73.1 63.7
Earnings from continuing
operations 79.3 72.9 148.9 131.1
As a percent of revenues 14.3% 14.1% 14.0% 13.5%
Loss from discontinued
operations - net of taxes (1) (11.5) (1.6) (12.3) (4.3)
Net earnings $67.8 71.3 136.6 126.8

Net earnings (loss) per share
- basic:
Continuing operations $0.64 0.58 1.20 1.05

Discontinued operations (1) (0.09) (0.01) (0.10) (0.03)
Net earnings per share $0.55 0.57 1.10 1.02
Net earnings (loss) per share
- diluted:
Continuing operations $0.64 0.57 1.19 1.03

Discontinued operations (1) (0.10) (0.01) (0.10) (0.04)
Net earnings per share $0.54 0.56 1.09 0.99

Shares used in the
calculation of net earnings
per share:
Average shares outstanding -
basic 123.8 125.2 123.8 125.0
Average shares outstanding -
diluted 124.5 128.0 124.8 127.9

(1) The operating results of ACCEL research instruments are classified as
discontinued operations for all periods presented.

Varian Medical Systems, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(In thousands) April 3, September 26,
2009 2008(2)
(Unaudited)
Assets
Current assets
Cash and cash equivalents $374,617 $397,306
Restricted cash 2,340 -
Accounts receivable, net 534,789 486,310
Inventories 340,240 282,980
Deferred tax assets and other 198,168 209,006
Current assets of discontinued
operations (1) - 18,799
Total current assets 1,450,154 1,394,401

Property, plant and equipment 503,897 452,576
Accumulated depreciation and
amortization (251,624) (234,393)
Property, plant and equipment, net 252,273 218,183

Goodwill 203,871 209,146
Other assets 157,693 150,694
Long term assets of discontinued
operations (1) - 3,088
Total assets $2,063,991 $1,975,512

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $111,070 $105,281
Accrued expenses 226,756 252,915
Deferred revenues 131,464 141,368
Advance payments from customers 224,082 201,783
Product warranty 48,892 51,141
Short-term borrowings 10,000 -
Current maturities of long-term debt 2,746 7,987
Current liabilities of
discontinued operations (1) - 21,202
Total current liabilities 755,010 781,677
Other long-term liabilities 152,154 134,251
Long-term debt 29,774 32,399
Total liabilities 936,938 948,327

Stockholders' Equity
Common stock 125,360 125,590
Capital in excess of par value 486,584 468,384
Retained earnings and accumulated
other comprehensive loss 515,109 433,211
Total stockholders' equity 1,127,053 1,027,185
Total liabilities and stockholders'
equity $2,063,991 $1,975,512

(1) The assets and liabilities of ACCEL research instruments are classified
as discontinued operations.
(2) The condensed consolidated balance sheet as of September 26, 2008 was
derived from audited financial statements as of that date.

FOR INFORMATION CONTACT:
Elisha Finney (650) 424-6803
elisha.finney@varian.com

Spencer Sias (650) 424-5782
spencer.sias@varian.com

SOURCE Varian Medical Systems, Inc.

Elisha Finney, +1-650-424-6803, elisha.finney@varian.com, or Spencer Sias,
+1-650-424-5782, spencer.sias@varian.com, both of Varian Medical Systems,
Inc.