Increases Fiscal Year 2007 Guidance
Palo Alto, CA, 25 July 2007:
Varian, Inc. (Nasdaq:
VARI) today reported that revenues for the third
quarter of fiscal year 2007 increased 8.3% from the third quarter of fiscal year
2006. The increase was driven by solid growth in sales of Scientific Instruments
products for industrial applications. Demand was strong within Europe, Asia
Pacific and Latin America, and while still soft, North America showed sequential
improvement. Revenues were $227.1 million in the third quarter of fiscal year
2007, compared to $209.7 million in the third quarter of fiscal year 2006.
Non-GAAP (adjusted) net earnings for the third quarter of
fiscal year 2007 increased 7.1% to $19.0 million, or $0.61 diluted earnings per
share, compared to $17.7 million, or $0.57 diluted earnings per share, in the
third quarter of fiscal year 2006. On a GAAP basis, net earnings in the third
quarter of fiscal year 2007 were $14.6 million, or $0.47 diluted earnings per
share, compared to $14.5 million, or $0.46 diluted earnings per share, in the
third quarter of fiscal year 2006.
Adjusted operating earnings increased 15.5% to $27.5 million
in the third quarter of fiscal year 2007, compared to $23.8 million in the third
quarter last year. Adjusted operating profit margin was 12.1% in the third
quarter of fiscal year 2007, compared to 11.4% in the prior-year quarter. The
improvements in adjusted operating earnings and adjusted operating profit margin
were primarily the result of efficiency improvements and sales volume leverage
favorably impacting SG&A expense in the Scientific Instruments segment. On a
GAAP basis, operating earnings were $20.7 million and operating profit margin
was 9.1% in the third quarter of fiscal year 2007, compared to $18.9 million and
9.0%, respectively, in the same quarter a year ago.
Adjusted income tax expense was $9.7 million (a 33.9%
effective tax rate) in the third quarter of fiscal year 2007, compared to $6.4
million (a 26.6% effective tax rate) in the third quarter of fiscal year 2006.
The lower effective tax rate in the prior-year quarter reflects the positive
outcome of tax uncertainties during that period. On a GAAP basis, income tax
expense was $7.3 million (a 33.4% effective tax rate) in the third quarter of
fiscal year 2007, compared to $4.7 million (a 24.6% effective tax rate) in the
same quarter a year ago.
"Our results show that our strategy is working - revenue
growth continued and operating margins expanded," said Garry W. Rogerson,
President and Chief Executive Officer. "With the great products we have and
sound global demand, we are in a position to deliver a strong finish to 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 third quarter of
fiscal year 2007 were $187.0 million, representing an increase of 9.8% over
revenues of $170.3 million in the third quarter of the prior fiscal year.
Adjusted operating profit margin was 12.2% in the third quarter of fiscal year
2007, compared to 10.9% in the prior-year quarter. On a GAAP basis, operating
profit margin was 9.3% in the third quarter of fiscal year 2007, compared to
8.6% in the same quarter a year ago.
Vacuum Technologies revenues increased 1.7% to $40.1 million
in the third quarter of fiscal year 2007, compared to $39.5 million in the third
quarter of fiscal year 2006. Adjusted operating profit margin was 19.8% in the
third quarter of fiscal year 2007, compared to exceptionally high margins of
22.3% in the prior-year quarter. On a GAAP basis, operating profit margin was
19.5% in the third quarter of fiscal year 2007, compared to 21.6% in the
prior-year quarter.
For the combined segments, adjusted operating profit margin
before unallocated corporate costs was 13.5% in the third quarter of fiscal year
2007, compared to 13.1% in the prior-year quarter. On a GAAP basis, operating
profit margin before unallocated corporate costs was 11.1% in the third quarter
of both fiscal years 2007 and 2006.
Outlook
Varian, Inc. increased its guidance for fiscal year 2007.
Adjusted diluted earnings per share are now expected to be $2.44 to $2.52 for
fiscal year 2007, compared to prior guidance of $2.40 to $2.50. On a GAAP basis,
diluted earnings per share are expected to be $1.92 to $2.03 for fiscal year
2007, compared to prior guidance of $1.88 to $2.01.
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 $0.20
to $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
$0.09 to $0.11.
Varian, Inc. will be holding a conference call later today,
July 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 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.
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.
Contact: Investor Relations of Varian, Inc., +1-650-213-8000,
ext. 3752, or ir@varianinc.com.
VARIAN, INC. AND SUBSIDIARY COMPANIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except per share amounts)
Third Quarter FY 2007 and Third Quarter FY 2006
Fiscal Quarter Ended
-------------------------
June 29, June 30,
2007 2006
---------- ----------
Sales $227,095 $209,745
Cost of sales 125,176 (1) 115,193 (7)
---------- ----------
Gross profit 101,919 94,552
---------- ----------
Operating expenses
Selling, general and administrative 64,366 (2) 60,122 (8)
Research and development 16,879 (3) 15,496 (9)
---------- ----------
Total operating expenses 81,245 75,618
---------- ----------
Operating earnings 20,674 (4) 18,934 (10)
Interest income (expense)
Interest income 1,622 827
Interest expense (454) (534)
---------- ----------
Total interest income, net 1,168 293
---------- ----------
Earnings before income taxes 21,842 19,227
Income tax expense 7,291 (5) 4,736 (11)
---------- ----------
Net earnings $14,551 (6) $14,491 (12)
========== ==========
Net earnings per diluted share $0.47 (6) $0.46 (12)
========== ==========
Diluted shares outstanding 30,983 31,315
========== ==========
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations of
GAAP to Adjusted results for each of these measures):
(1) $123,075 on an adjusted basis excluding $1,306 in acquisition-
related intangible amortization, $700 in restructuring and other
related costs and $95 in share-based compensation expense.
(2) $60,033 on an adjusted basis excluding $506 in acquisition-related
intangible amortization, $1,919 in restructuring and other related
costs and $1,908 in share-based compensation expense.
(3) $16,466 on an adjusted basis excluding $287 in restructuring and
other related costs and $126 in share-based compensation expense.
(4) $27,521 on an adjusted basis excluding the adjustments described in
items (1) - (3) above.
(5) $9,721 on an adjusted basis excluding the tax impact of the
adjustments described in items (1) - (3) above.
(6) $18,968 and $0.61 per share, respectively, on an adjusted basis
excluding the adjustments (net of related tax effects) described in
items (1) - (3) above.
(7) $112,953 on an adjusted basis excluding $1,555 in acquisition-
related intangible amortization, $584 in acquisition-related
inventory write-up amortization and $101 in share-based compensation
expense.
(8) $57,601 on an adjusted basis excluding $866 in acquisition-related
intangible amortization, $88 in restructuring and other related
costs, and $1,567 in share-based compensation expense.
(9) $15,354 on an adjusted basis excluding $142 in share-based
compensation expense.
(10) $23,837 on an adjusted basis excluding the adjustments described in
items (7) - (9) above.
(11) $6,419 on an adjusted basis excluding the tax impact of the
adjustments described in items (7) - (9) above.
(12) $17,711 and $0.57 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 Nine Months FY 2007 and First Nine Months FY 2006
Nine Months Ended
-------------------------
June 29, June 30,
2007 2006
---------- ----------
Sales $674,963 $615,108
Cost of sales 367,850 (1) 341,685 (7)
---------- ----------
Gross profit 307,113 273,423
---------- ----------
Operating expenses
Selling, general and administrative 190,822 (2) 178,045 (8)
Research and development 48,592 (3) 44,118 (9)
Purchased in-process research and
development - 756 (10)
---------- ----------
Total operating expenses 239,414 222,919
---------- ----------
Operating earnings 67,699 (4) 50,504 (11)
Interest income (expense)
Interest income 4,259 2,802
Interest expense (1,444) (1,575)
---------- ----------
Total interest income, net 2,815 1,227
---------- ----------
Earnings before income taxes 70,514 51,731
Income tax expense 24,326 (5) 16,339 (12)
---------- ----------
Net earnings $46,188 (6) $35,392 (13)
========== ==========
Net earnings per diluted share $1.49 (6) $1.12 (13)
========== ==========
Diluted shares outstanding 31,028 31,494
========== ==========
NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations of
GAAP to Adjusted results for each of these measures):
(1) $362,450 on an adjusted basis excluding $3,931 in acquisition-
related intangible amortization, $455 in acquisition-related
inventory write-up amortization, $700 in restructuring and other
related costs and $314 in share-based compensation expense.
(2) $179,493 on an adjusted basis excluding $2,082 in acquisition-
related intangible amortization, $2,098 in restructuring and other
related costs and $7,149 in share-based compensation expense.
(3) $47,925 on an adjusted basis excluding $287 in restructuring and
other related costs and $380 in share-based compensation expense.
(4) $85,095 on an adjusted basis excluding the adjustments described in
items (1) - (3) above.
(5) $30,506 on an adjusted basis excluding the tax impact of the
adjustments described in items (1) - (3) above.
(6) $57,404 and $1.85 per share, respectively, on an adjusted basis
excluding the adjustments (net of related tax effects) described in
items (1) - (3) above.
(7) $333,847 on an adjusted basis excluding $3,641 in acquisition-
related intangible amortization, $3,898 in acquisition-related
inventory write-up amortization and $299 in share-based compensation
expense.
(8) $169,846 on an adjusted basis excluding $2,416 in acquisition-
related intangible amortization, $253 in restructuring and other
related costs and $5,530 in share-based compensation expense.
(9) $43,715 on an adjusted basis excluding $403 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) $67,700 on an adjusted basis excluding the adjustments described in
items (7) - (10) above.
(12) $22,097 on an adjusted basis excluding the tax impact of the
adjustments described in items (7) - (9) above.
(13) $46,830 and $1.49 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)
June 29, September 29,
2007 2006
ASSETS ---------- ----------
Current assets
Cash and cash equivalents $171,340 $154,155
Accounts receivable, net 180,578 177,037
Inventories 147,649 133,662
Deferred taxes 33,700 33,235
Prepaid expenses and other current assets 17,119 15,728
---------- ----------
Total current assets 550,386 513,817
Property, plant and equipment, net 107,988 112,528
Goodwill 190,739 181,563
Intangible assets, net 33,200 39,143
Other assets 16,952 14,543
---------- ----------
Total assets $899,265 $861,594
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt $6,250 $2,500
Accounts payable 68,909 73,138
Deferred profit 10,504 13,796
Accrued liabilities 173,835 169,063
---------- ----------
Total current liabilities 259,498 258,497
Long-term debt 18,750 25,000
Deferred taxes 3,622 3,721
Other liabilities 21,108 22,336
---------- ----------
Total liabilities 302,978 309,554
---------- ----------
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-30,472 shares at June 29, 2007
and 30,870 shares at September 29, 2006 346,247 319,090
Retained earnings 195,832 204,182
Accumulated other comprehensive income 54,208 28,768
---------- ----------
Total stockholders' equity 596,287 552,040
---------- ----------
Total liabilities and stockholders' equity $899,265 $861,594
---------- ----------
VARIAN, INC. AND SUBSIDIARY COMPANIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Fiscal Quarter Ended Nine Months Ended
-------------------- -----------------
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
--------- --------- --------- ---------
Cash flows from
operating activities
Net earnings $14,551 $14,491 $46,188 $35,392
Adjustments to reconcile net
earnings to net cash
provided by operating activities:
Depreciation and amortization 7,091 7,419 21,163 19,807
Loss (gain) on disposition of
property, plant and equipment 11 (157) (196) 101
Purchased in-process research
and development - - - 756
Share-based compensation expense 2,176 1,810 7,890 6,232
Tax benefit from share-based plans 1,890 2,701 7,958 5,943
Excess tax benefit from share-
based plans (1,323) (2,455) (7,070) (5,640)
Deferred taxes (1,223) (3,189) (2,690) (4,086)
Changes in assets and liabilities,
excluding effects of acquisitions:
Accounts receivable, net 915 (5,154) 2,245 (2,245)
Inventories (2,699) (2,173) (9,703) (17,110)
Prepaid expenses and other
current assets (436) 1,432 (436) 5,265
Other assets (137) (25) (212) 123
Accounts payable (2,725) (8,766) (6,488) (93)
Deferred profit (2,814) (793) (3,269) (263)
Accrued liabilities 8,273 1,827 272 (10,814)
Other liabilities 1,348 1,145 3,613 890
--------- --------- --------- ---------
Net cash provided by
operating activities 24,898 8,113 59,265 34,258
--------- --------- --------- ---------
Cash flows from
investing activities
Proceeds from sale of property,
plant and equipment 39 16 3,193 650
Purchase of property, plant
and equipment (4,909) (8,002) (10,879) (15,926)
Purchase of businesses, net of
cash acquired (285) (1,386) (5,066) (69,915)
--------- --------- --------- ---------
Net cash used in investing
activities (5,155) (9,372) (12,752) (85,191)
--------- --------- --------- ---------
Cash flows from financing
activities
Repayments of debt (1,250) (1,250) (2,500) (2,500)
Repurchase of common stock (17,627) (10,973) (69,582) (49,133)
Issuance of common stock 6,539 11,769 26,748 27,332
Excess tax benefit from share-
based plans 1,323 2,455 7,070 5,640
Transfers to Varian Medical
Systems, Inc. (33) (270) (381) (506)
--------- --------- --------- ---------
Net cash (used in) provided by
financing activities (11,048) 1,731 (38,645) (19,167)
--------- --------- --------- ---------
Effects of exchange rate changes
on cash and cash equivalents 2,343 7,801 9,317 6,321
--------- --------- --------- ---------
Net increase (decrease) in cash
and cash equivalents 11,038 8,273 17,185 (63,779)
Cash and cash equivalents at
beginning of period 160,302 116,442 154,155 188,494
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $171,340 $124,715 $171,340 $124,715
========= ========= ========= =========
VARIAN, INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
UNAUDITED RESULTS OF OPERATIONS
(In thousands)
Third Quarter FY 2007 and Third Quarter FY 2006
and
First Nine Months FY 2007 and First Nine Months FY 2006
Fiscal Quarter Ended Nine Months Ended
--------------------- ------------------
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
--------- --------- --------- ---------
TOTAL COMPANY
Cost of Sales
U.S. GAAP as reported $125,176 $115,193 $367,850 $341,685
Adjustments:
Share-based compensation
expense (95) (101) (314) (299)
Acquisition-related
intangible amortization (1,306) (1,555) (3,931) (3,641)
Acquisition-related inventory
write-up amortization - (584) (455) (3,898)
Restructuring and other
related costs (700) - (700) -
--------- --------- --------- ---------
As adjusted $123,075 $112,953 $362,450 $333,847
========= ========= ========= =========
Selling, General and
Administrative
U.S. GAAP as reported $64,366 $60,122 $190,822 $178,045
Adjustments:
Share-based compensation
expense (1,908) (1,567) (7,149) (5,530)
Acquisition-related
intangible amortization (506) (866) (2,082) (2,416)
Restructuring and other
related costs (1,919) (88) (2,098) (253)
--------- --------- --------- ---------
As adjusted $60,033 $57,601 $179,493 $169,846
========= ========= ========= =========
Research and Development
U.S. GAAP as reported $16,879 $15,496 $48,592 $44,118
Adjustments:
Share-based compensation
expense (126) (142) (380) (403)
Restructuring and other
related costs (287) - (287) -
--------- --------- --------- ---------
As adjusted $16,466 $15,354 $47,925 $43,715
========= ========= ========= =========
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)
Third Quarter FY 2007 and Third Quarter FY 2006
and
First Nine Months FY 2007 and First Nine Months FY 2006
Fiscal Quarter Ended Nine Months Ended
---------------------- -------------------
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
--------- --------- --------- ---------
TOTAL COMPANY (Continued)
Operating Earnings
U.S. GAAP as reported $20,674 $18,934 $67,699 $50,504
Adjustments:
Share-based
compensation expense 2,129 1,810 7,843 6,232
Acquisition-related
in-process research
and development charges - - - 756
Acquisition-related
intangible amortization 1,812 2,421 6,013 6,057
Acquisition-related inventory
write-up amortization - 584 455 3,898
Restructuring and other
related costs 2,906 88 3,085 253
--------- --------- --------- ---------
As adjusted $27,521 $23,837 $85,095 $67,700
========= ========= ========= =========
Operating Margins
U.S. GAAP as reported 9.1 % 9.0 % 10.0 % 8.2 %
Adjustments:
Share-based
compensation expense 0.9 0.9 1.2 1.0
Acquisition-related
in-process research
and development charges - - - 0.1
Acquisition-related
intangible amortization 0.8 1.2 0.8 1.1
Acquisition-related
inventory write-up
amortization - 0.3 0.1 0.6
Restructuring and other
related costs 1.3 - 0.5 -
--------- --------- --------- ---------
As adjusted 12.1 % 11.4 % 12.6 % 11.0 %
========= ========= ========= =========
Income Tax Expense
U.S. GAAP as reported $7,291 $4,736 $24,326 $16,339
Tax impact of adjustments:
Share-based
compensation expense 777 661 2,863 2,233
Acquisition-related
intangible amortization 635 800 2,088 2,092
Acquisition-related
inventory write-up
amortization - 193 158 1,346
Restructuring and other
related costs 1,018 29 1,071 87
--------- --------- --------- ---------
As adjusted $9,721 $6,419 $30,506 $22,097
========= ========= ========= =========
VARIAN, INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
UNAUDITED RESULTS OF OPERATIONS
(In thousands, except per share data)
Third Quarter FY 2007 and Third Quarter FY 2006
and
First Nine Months FY 2007 and First Nine Months FY 2006
Fiscal Quarter Ended Nine Months Ended
-------------------- -----------------
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
-------- -------- ------- --------
TOTAL COMPANY (Continued)
Net Earnings
U.S. GAAP as reported $14,551 $14,491 $46,188 $35,392
Adjustments:
Share-based compensation expense 1,352 1,149 4,980 3,999
Acquisition-related in-process
research and development charges - - - 756
Acquisition-related
intangible amortization 1,177 1,621 3,925 3,965
Acquisition-related inventory
write-up amortization - 391 297 2,552
Restructuring and other
related costs 1,888 59 2,014 166
-------- -------- -------- --------
As adjusted $18,968 $17,711 $57,404 $46,830
======== ======== ======== ========
Diluted Earnings Per Share
U.S. GAAP as reported $0.47 $0.46 $1.49 $1.12
Adjustments:
Share-based compensation expense 0.04 0.04 0.16 0.13
Acquisition-related in-process
research and development charges - - - 0.02
Acquisition-related
intangible amortization 0.04 0.06 0.13 0.13
Acquisition-related inventory
write-up amortization - 0.01 0.01 0.08
Restructuring and other
related costs 0.06 - 0.06 0.01
-------- -------- -------- --------
As adjusted $0.61 $0.57 $1.85 $1.49
======== ======== ======== ========
VARIAN, INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
UNAUDITED RESULTS OF OPERATIONS
(In thousands, except margin data)
Third Quarter FY 2007 and Third Quarter FY 2006
and
First Nine Months FY 2007 and First Nine Months FY 2006
Fiscal Quarter Ended Nine Months Ended
---------------------- -------------------
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
--------- -------- --------- ---------
TOTAL COMPANY EXCLUDING
GENERAL (UNALLOCATED)
CORPORATE COSTS
Operating Earnings
U.S. GAAP as reported $25,244 $23,258 $81,915 $63,226
Adjustments:
Share-based
compensation expense 807 1,014 3,539 3,358
Acquisition-related
in-process research and
development charges - - - 756
Acquisition-related
intangible amortization 1,812 2,421 6,013 6,057
Acquisition-related inventory
write-up amortization - 584 455 3,898
Restructuring and other
related costs 2,906 100 3,085 265
--------- -------- --------- ---------
As adjusted $30,769 $27,377 $95,007 $77,560
========= ======== ========= =========
Operating Margins
U.S. GAAP as reported 11.1 % 11.1 % 12.1 % 10.3 %
Adjustments:
Share-based
compensation expense 0.4 0.5 0.5 0.5
Acquisition-related
in-process research and
development charges - - - 0.1
Acquisition-related
intangible amortization 0.7 1.2 0.9 1.1
Acquisition-related inventory
write-up amortization - 0.3 0.1 0.6
Restructuring and other
related costs 1.3 - 0.5 -
--------- -------- --------- ---------
As adjusted 13.5 % 13.1 % 14.1 % 12.6 %
========= ======== ========= =========
VARIAN, INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
UNAUDITED RESULTS OF OPERATIONS
(In thousands, except margin data)
Third Quarter FY 2007 and Third Quarter FY 2006
and
First Nine Months FY 2007 and First Nine Months FY 2006
Fiscal Quarter Ended Nine Months Ended
-------------------- -------------------
June 29, June 30, June 29, June 30,
2007 2006 2007 2006
-------- -------- -------- ---------
SCIENTIFIC INSTRUMENTS
SEGMENT
Operating Earnings
U.S. GAAP as reported $17,406 $14,725 $58,062 $41,390
Adjustments:
Share-based
compensation expense 692 759 2,562 2,557
Acquisition-related
in-process research
and development charges - - - 756
Acquisition-related
intangible amortization 1,812 2,421 6,013 6,057
Acquisition-related
inventory write-up
amortization - 584 455 3,898
Restructuring and other
related costs 2,906 100 3,085 265
-------- -------- -------- --------
As adjusted $22,816 $18,589 $70,177 $54,923
========= ======== ======== ========
Operating Margins
U.S. GAAP as reported 9.3 % 8.6 % 10.5 % 8.2 %
Adjustments:
Share-based
compensation expense 0.4 0.4 0.5 0.5
Acquisition-related in-
process research
and development charges - - - 0.2
Acquisition-related
intangible amortization 0.9 1.5 1.0 1.1
Acquisition-related
inventory write-up
amortization - 0.3 0.1 0.8
Restructuring and other
related costs 1.6 0.1 0.6 0.1
-------- -------- -------- --------
As adjusted 12.2 % 10.9 % 12.7 % 10.9 %
========= ======== ======== ========
VACUUM TECHNOLOGIES SEGMENT
Operating Earnings
U.S. GAAP as reported $7,838 $8,533 $23,853 $21,836
Adjustments:
Share-based
compensation expense 115 255 977 801
-------- -------- -------- --------
As adjusted $7,953 $8,788 $24,830 $22,637
========= ======== ======== ========
Operating Margins
U.S. GAAP as reported 19.5 % 21.6 % 19.7 % 19.5 %
Adjustments:
Share-based
compensation expense 0.3 0.7 0.9 0.7
-------- -------- -------- --------
As adjusted 19.8 % 22.3 % 20.6 % 20.2 %
========= ======== ======== ========
GENERAL (UNALLOCATED)
CORPORATE
Operating Earnings
U.S. GAAP as reported $(4,570) $(4,324) $(14,216) $(12,722)
Adjustments:
Share-based
compensation expense 1,322 796 4,304 2,874
Restructuring and other
related costs - (12) - (12)
--------- -------- -------- --------
As adjusted $(3,248) $(3,540) $(9,912) $(9,860)
========= ======== ======== ========
VARIAN, INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP TO ADJUSTED RESULTS - PROJECTED
RESULTS OF OPERATIONS
Fiscal Year Ending September 28, 2007
Range of Projected Results
TOTAL COMPANY
Projected Diluted Earnings Per Share
Projected U.S. GAAP $1.92 - $2.03
Adjustments:
Projected share-based
compensation expense $0.20 - $0.21
Projected acquisition-related
intangible amortization $0.17
Projected acquisition-related inventory
write-up amortization $0.03
Projected restructuring and
other related costs $0.09 - $0.11
Projected as adjusted $2.44 - $2.52
SOURCE Varian, Inc. 07/25/2007
