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news release:
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, CA, 25 April 2007:
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 .
For Information Contact:
Investor Relations
Varian, Inc.
650.213.8000, Ext. 3752
ir@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, March 31,
2007 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, March 31,
2007 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, September 29,
2007 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, March 31, March 30, March 31,
2007 2006 2007 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, March 31, March 30, March 31,
2007 2006 2007 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, March 31, March 30, March 31,
2007 2006 2007 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, March 31, March 30, March 31,
2007 2006 2007 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, March 31, March 30, March 31,
2007 2006 2007 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, March 31, March 30, March 31,
2007 2006 2007 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
TOTAL COMPANY Range of Projected Results
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
SOURCE Varian, Inc.
04/25/2007
CONTACT: Investor Relations of Varian, Inc., +1-650-213-8000, ext. 3752,
ir@varianinc.com
Web site: http://www.varianinc.com
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