Statement Of Income
Statement Of Income (USD $) | |||
In Thousands, except Per Share data | 12 Months Ended
Oct. 02, 2009 | 12 Months Ended
Sep. 26, 2008 | 12 Months Ended
Sep. 28, 2007 |
Revenues: | |||
Product | $1,766,929 | $1,689,724 | $1,447,746 |
Service contract and other | 447,131 | 380,006 | 307,326 |
Total revenues | 2,214,060 | 2,069,730 | 1,755,072 |
Cost of revenues: | |||
Product | 1,013,973 | 985,133 | 852,980 |
Service contracts and other | 239,582 | 207,065 | 169,229 |
Total cost of revenues | 1,253,555 | 1,192,198 | 1,022,209 |
Gross margin | 960,505 | 877,532 | 732,863 |
Operating expenses: | |||
Research and development | 147,375 | 135,599 | 117,320 |
Selling, general and administrative | 338,984 | 322,529 | 276,918 |
Total operating expenses | 486,359 | 458,128 | 394,238 |
Operating earnings | 474,146 | 419,404 | 338,625 |
Interest income | 4,594 | 11,498 | 12,165 |
Interest expense | (4,097) | (4,879) | (4,791) |
Earnings from continuing operations before taxes | 474,643 | 426,023 | 345,999 |
Taxes on earnings | 143,167 | 130,767 | 103,083 |
Earnings from continuing operations | 331,476 | 295,256 | 242,916 |
Loss from discontinued operations, net of taxes | (12,454) | (15,772) | (3,460) |
Net Earnings | $319,022 | $279,484 | $239,456 |
Net earnings (loss) per share-basic: | |||
Continuing operations | 2.67 | 2.37 | 1.91 |
Discontinued operations | -0.1 | -0.13 | -0.03 |
Net earnings per share | 2.57 | 2.24 | 1.88 |
Net earnings (loss) per share-diluted: | |||
Continuing operations | 2.65 | 2.31 | 1.86 |
Discontinued operations | -0.1 | -0.12 | -0.03 |
Net earnings per share | 2.55 | 2.19 | 1.83 |
Shares used in the calculation of net earnings per share: | |||
Weighted average shares outstanding-Basic | 124,034 | 124,800 | 127,407 |
Weighted average shares outstanding-Diluted | 124,995 | 127,604 | 130,622 |
Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Thousands | 12 Months Ended
Oct. 02, 2009 | 12 Months Ended
Sep. 26, 2008 |
Current assets: | ||
Cash and cash equivalents | $553,529 | $397,306 |
Accounts receivable, net of allowance for doubtful accounts of $4,347 at October 2, 2009 and $3,110 at September 26, 2008 | 580,918 | 486,310 |
Inventories | 321,861 | 282,980 |
Prepaid expenses and other current assets | 71,751 | 78,018 |
Deferred tax assets | 144,392 | 130,988 |
Current assets of discontinued operations | 0 | 18,799 |
Total current assets | 1,672,451 | 1,394,401 |
Property, plant and equipment, net | 264,060 | 218,183 |
Goodwill | 210,346 | 209,146 |
Other assets | 161,391 | 150,694 |
Long-term assets of discontinued operations | 0 | 3,088 |
Total assets | 2,308,248 | 1,975,512 |
Current liabilities: | ||
Accounts payable | 116,093 | 105,281 |
Accrued expenses | 304,402 | 252,915 |
Product warranty | 50,823 | 51,141 |
Deferred revenues | 130,588 | 141,368 |
Advance payments from customers | 226,964 | 201,783 |
Short-term borrowings | 4,445 | 0 |
Current maturities of long-term debt | 9,005 | 7,987 |
Current liabilities of discontinued operations | 0 | 21,202 |
Total current liabilities | 842,320 | 781,677 |
Long-term debt | 23,394 | 32,399 |
Other long-term liabilities | 130,751 | 134,251 |
Total liabilities | 996,465 | 948,327 |
Commitments and contingencies (Note 9) | - | - |
Stockholders' equity: | ||
Preferred stock of $1 par value: 1,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock of $1 par value: 189,000 shares authorized; 125,281 and 125,590 shares issued and outstanding at October 2, 2009 and at September 26, 2008, respectively | 125,281 | 125,590 |
Capital in excess of par value | 516,478 | 468,384 |
Retained earnings | 696,409 | 451,439 |
Accumulated other comprehensive loss | (26,385) | (18,228) |
Total stockholders' equity | 1,311,783 | 1,027,185 |
Total liabilities and stockholders' equity | $2,308,248 | $1,975,512 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
In Thousands, except Per Share data | Oct. 02, 2009
| Sep. 26, 2008
|
Accounts receivable, allowance for doubtful accounts | $4,347 | $3,110 |
Preferred stock, par value | $1 | $1 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value | $1 | $1 |
Common stock, shares authorized | 189,000 | 189,000 |
Common stock, shares issued | 125,281 | 125,590 |
Common stock, shares outstanding | 125,281 | 125,590 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | |||
In Thousands | 12 Months Ended
Oct. 02, 2009 | 12 Months Ended
Sep. 26, 2008 | 12 Months Ended
Sep. 28, 2007 |
Cash flows from operating activities: | |||
Net earnings | $319,022 | $279,484 | $239,456 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Share-based compensation expense | 42,577 | 40,994 | 44,882 |
Tax benefits from exercises of share-based payment awards | 8,270 | 45,656 | 21,144 |
Excess tax benefits from share-based compensation | (9,639) | (42,020) | (19,678) |
Depreciation | 41,008 | 32,247 | 26,957 |
Amortization of intangible assets | 3,601 | 4,462 | 5,249 |
Deferred taxes | (22,008) | 3,097 | 2,609 |
Provision for doubtful accounts receivable | 2,038 | 250 | 1,086 |
Net change in fair value of derivatives and underlying commitments | 1,920 | 2,200 | (3,509) |
(Income) loss on equity investment in affiliate | 905 | (286) | 301 |
Impairment loss on long-lived assets and goodwill | 0 | 3,324 | 0 |
Loss on sale of Research Instruments | 8,062 | 0 | 0 |
Other | (3,334) | (2,391) | (1,180) |
Changes in assets and liabilities: | |||
Accounts receivable | (86,012) | 21,978 | (4,697) |
Inventories | (39,575) | (56,062) | (30,066) |
Prepaid expenses and other current assets | (3,495) | (36,806) | (12,771) |
Accounts payable | 6,042 | 10,462 | 5,281 |
Accrued expenses | 47,139 | 3,045 | (1,969) |
Product warranty | (1,492) | 14 | 6,706 |
Deferred revenues | (10,819) | 39,529 | (15,974) |
Advance payments from customers | 22,349 | 23,038 | 35,485 |
Other long-term liabilities | (22,126) | 12 | 881 |
Net cash provided by operating activities | 304,433 | 372,227 | 300,193 |
Cash flows from investing activities: | |||
Proceeds from maturities or sale of marketable securities | 0 | 0 | 193,470 |
Purchases of marketable securities | 0 | 0 | (99,900) |
Purchases of property, plant and equipment | (62,562) | (81,424) | (64,135) |
Equity and cost investments | 0 | (7,783) | (24,504) |
(Increase) decrease in cash surrender value of life insurance | (2,505) | 4,330 | (6,407) |
Acquisition of businesses, net of cash acquired | (2,550) | (2,092) | (52,374) |
Notes repayment (receivable) from affiliate and other | (5,662) | (315) | 1,242 |
Other, net | (4,627) | (301) | (3,050) |
Net cash used in investing activities | (77,906) | (87,585) | (55,658) |
Cash flows from financing activities: | |||
Repurchases of common stock | (101,485) | (261,558) | (319,300) |
Proceeds from issuance of common stock to employees | 27,825 | 128,743 | 44,504 |
Excess tax benefits from share-based compensation | 9,639 | 42,020 | 19,678 |
Employees' tax withheld and paid for restricted performance shares | (3,193) | (1,134) | (84) |
Repayments on bank borrowings | (7,987) | (8,971) | (14,547) |
Net borrowings (repayments) under line of credit agreements | 4,171 | (41,000) | 41,000 |
Payment of mandatorily redeemable financial instrument | 0 | 0 | (11,771) |
Other | (251) | (176) | 0 |
Net cash used in financing activities | (71,281) | (142,076) | (240,520) |
Effects of exchange rate changes on cash and cash equivalents | 977 | (8,506) | (13,277) |
Net increase (decrease) in cash and cash equivalents | 156,223 | 134,060 | (9,262) |
Cash and cash equivalents at beginning of fiscal year | 397,306 | 263,246 | 272,508 |
Cash and cash equivalents at end of fiscal year | $553,529 | $397,306 | $263,246 |
Statement Of Shareholders Equit
Statement Of Shareholders Equity And Other Comprehensive Income (USD $) | ||||||
In Thousands | Common Stock Amount
| Capital in Excess of Par Value
| Retained Earnings
| Accumulated Other Comprehensive Loss
| Total
| |
Beginning Balances at Sep. 29, 2006 | $129,721 | $265,214 | $406,849 | ($4,531) | $797,253 | |
Beginning Balances at Sep. 29, 2006 | 129,721 | |||||
Net earnings | 239,456 | 239,456 | ||||
Currency translation adjustment | 2,615 | 2,615 | ||||
Minimum pension liability adjustment, net of taxes of $1,968 | 4,531 | 4,531 | ||||
Defined benefit pension and post-retirement benefit plans: | ||||||
Adjustment to initially apply the recognition and disclosure provisions of ASC 715 | (13,528) | (13,528) | ||||
Issuance of common stock | 2,226 | |||||
Issuance of common stock | 2,226 | 42,278 | 44,504 | |||
Tax benefits from exercises of share-based payment awards | 21,144 | 21,144 | ||||
Issuance of common stock in settlement of deferred stock units and restricted stock, net of shares withheld for employee taxes and cancellation | 268 | |||||
Issuance of common stock in settlement of deferred stock units and restricted stock, net of shares withheld for employee taxes and cancellation | 268 | (352) | (84) | |||
Share-based compensation expense | 44,864 | 44,864 | ||||
Repurchases of common stock | (7,000) | |||||
Repurchases of common stock | (7,000) | (61,737) | (250,563) | (319,300) | ||
Ending Balances at Sep. 28, 2007 | 125,215 | |||||
Ending Balances at Sep. 28, 2007 | 125,215 | 311,411 | 395,742 | (10,913) | 821,455 | |
Net earnings | 279,484 | 279,484 | ||||
Currency translation adjustment | 29 | 29 | ||||
Unrealized gain (loss) on derivatives, net of taxes of $2,616 in 2009 and $307 in 2008 | (487) | (487) | ||||
Defined benefit pension and post-retirement benefit plans: | ||||||
Net loss arising during the year, net of taxes of $2,352 in 2009 and $2,675 in 2008 | (7,473) | (7,473) | ||||
Amortization of transition obligation, net of taxes of $191 | 304 | 304 | ||||
Amortization of prior service cost, net of taxes of $19 | 127 | 127 | ||||
Amortization and settlement of net actuarial loss, net of taxes of $287 in 2009 and $144 in 2008 | 185 | 185 | ||||
Adoption of the provisions in ASC 740 relating to accounting for uncertainty in income taxes | (19,064) | (19,064) | ||||
Issuance of common stock | 4,973 | |||||
Issuance of common stock | 4,973 | 123,770 | 128,743 | |||
Tax benefits from exercises of share-based payment awards | 45,656 | 45,656 | ||||
Issuance of common stock in settlement of deferred stock units and restricted stock, net of shares withheld for employee taxes and cancellation | 512 | |||||
Issuance of common stock in settlement of deferred stock units and restricted stock, net of shares withheld for employee taxes and cancellation | 512 | (1,646) | (1,134) | |||
Share-based compensation expense | 40,918 | 40,918 | ||||
Repurchases of common stock | (5,110) | |||||
Repurchases of common stock | (5,110) | (51,725) | (204,723) | (261,558) | ||
Ending Balances at Sep. 26, 2008 | 125,590 | |||||
Ending Balances at Sep. 26, 2008 | 125,590 | 468,384 | 451,439 | (18,228) | 1,027,185 | |
Net earnings | 319,022 | 319,022 | ||||
Currency translation adjustment | 2,362 | 2,362 | ||||
Reclassification of foreign currency translation resulting from the sale of Research Instruments | (778) | (778) | ||||
Unrealized gain (loss) on derivatives, net of taxes of $2,616 in 2009 and $307 in 2008 | 4,164 | 4,164 | ||||
Reclassification adjustments, net of taxes of $2,310 | (3,677) | (3,677) | ||||
Defined benefit pension and post-retirement benefit plans: | ||||||
Net loss arising during the year, net of taxes of $2,352 in 2009 and $2,675 in 2008 | (11,265) | (11,265) | ||||
Amortization of transition obligation, net of taxes of $191 | 301 | 301 | ||||
Amortization of prior service cost, net of taxes of $19 | 132 | 132 | ||||
Amortization and settlement of net actuarial loss, net of taxes of $287 in 2009 and $144 in 2008 | 535 | 535 | ||||
Adoption of measurement date provision of ASC 715 | (122) | 69 | (53) | |||
Issuance of common stock | 1,500 | |||||
Issuance of common stock | 1,500 | 26,325 | 27,825 | |||
Tax benefits from exercises of share-based payment awards | 8,270 | 8,270 | ||||
Issuance of common stock in settlement of deferred stock units and restricted stock, net of shares withheld for employee taxes and cancellation | 439 | |||||
Issuance of common stock in settlement of deferred stock units and restricted stock, net of shares withheld for employee taxes and cancellation | 439 | (3,631) | (3,192) | |||
Share-based compensation expense | 42,437 | 42,437 | ||||
Repurchases of common stock | (2,248) | |||||
Repurchases of common stock | (2,248) | (25,307) | (73,930) | (101,485) | ||
Ending Balances at Oct. 02, 2009 | 125,281 | |||||
Ending Balances at Oct. 02, 2009 | $125,281 | $516,478 | $696,409 | ($26,385) | $1,311,783 |
2_Statement Of Shareholders Equ
Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $) | |||
In Thousands | 12 Months Ended
Oct. 02, 2009 | 12 Months Ended
Sep. 26, 2008 | 12 Months Ended
Sep. 28, 2007 |
Minimum pension liability adjustment, taxes | $1,968 | ||
Unrealized gain (loss) on derivatives, taxes | 2,616 | (307) | |
Reclassification adjustments, taxes | (2,310) | ||
Net loss arising during the year, taxes | (2,352) | (2,675) | |
Amortization of transition obligation, taxes | 191 | 191 | |
Amortization of prior service cost, taxes | 19 | 19 | |
Amortization and settlement of net actuarial loss, taxes | $287 | $144 |
1. SUMMARY OF SIGNIFICANT ACCOU
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business Varian Medical Systems, Inc. (VMS) and subsidiaries (collectively, the Company) designs, manufactures, sells and services equipment and software products for treating cancer with radiotherapy, stereotactic radiosurgery and brachytherapy. The Company also designs, manufactures, sells and services x-ray tubes for original equipment manufacturers; replacement x-ray tubes; and flat panel digital image detectors for filmless x-rays imaging in medical, dental, veterinary, scientific and industrial applications. It designs, manufactures, sells and services linear accelerators, digital image detectors, image processing software and image detection products for security and inspection purposes. The Company also develops, designs, manufacturers and services proton therapy products and systems for cancer treatment. Basis of Presentation The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (GAAP). On July1, 2009, the Financial Accounting Standards Board (FASB) released the authoritative version of its new Accounting Standards Codification (ASC) as the single source for GAAP, which replaces all previous GAAP accounting standards. While not intended to change GAAP, ASC significantly changes the way in which the accounting literature is organized. In the fourth quarter of fiscal year 2009, the Company adopted ASC to reference GAAP accounting standards in its consolidated financial statements. The adoption of ASC did not have an effect on the Companys consolidated financial position, results of operations or cash flows. Fiscal Year The fiscal years of the Company as reported are the 52- or 53- week periods ending on the Friday nearest September30. Fiscal year2009 was the 53-week period that ended on October2, 2009. Fiscal year2008 was the 52-week period that ended on September26, 2008 and fiscal year 2007 was the 52-week period that ended on September28, 2007. Distribution On April2, 1999, Varian Associates, Inc. reorganized into three separate publicly traded companies by spinning off, through a tax-free distribution, two of its businesses to stockholders (the Spin-offs). The Spin-offs resulted in the following three companies: 1) the Company (renamed from Varian Associates, Inc. to Varian Medical Systems, Inc. following the Spin-offs); 2) Varian, Inc. (VI); and 3) Varian Semiconductor Equipment Associates, Inc. (VSEA). The Spin-offs resulted in a non-cash dividend to stockholders. In connection with the Spin-offs, the Company, VI and VSEA also entered into various agreements that set forth the principles to be applied in separating the companies and allocating certain related costs and specified portions of contingent liabilities (see Note 9). Reclassifications Certain financial statement items have been reclassified to conform to the current fiscal years format. As discussed in Note 16 Discontinued Operations, the Company has classified the assets and liabilities of the scientific research instruments business (Research Instruments) of ACCEL Instruments GmbH (ACCEL, which has sin |
2. BALANCE SHEET COMPONENTS
2. BALANCE SHEET COMPONENTS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
2. BALANCE SHEET COMPONENTS | 2. BALANCE SHEET COMPONENTS (In millions) October2, 2009 September26, 2008 Inventories: Raw materials and parts $ 183.1 $ 156.8 Work-in-progress 54.7 36.6 Finished goods 84.1 89.6 Total inventories $ 321.9 $ 283.0 Property, plant and equipment: Land and land improvements $ 42.5 $ 11.4 Buildings and leasedhold improvements 185.8 167.6 Machinery and equipment 280.0 226.3 Construction in progress 18.1 46.5 Assets subject to lease 0.8 0.8 527.2 452.6 Accumulated depreciation and amortization (263.1 ) (234.4 ) Property, plant and equipment, net $ 264.1 $ 218.2 Accrued expenses: Accrued compensation and benefits $ 125.0 $ 128.8 Income taxes payable 48.0 20.4 Current deferred tax liabilities 1.9 8.6 Other 129.5 95.1 Total accrued expenses $ 304.4 $ 252.9 Other long-term liabilities: Long-term income taxes payable $ 67.8 $ 89.5 Other 63.0 44.8 Total other long-term liabilities $ 130.8 $ 134.3 As of October2, 2009, the Other category of other long-term liabilities primarily consisted of accruals for environmental costs, accrued pension and post-retirement benefits, deferred income tax liabilities and deferred rental income. As of September26, 2008, the Other category of other long-term liabilities primarily consisted of accruals for environmental costs, accrued pension and post-retirement benefits and deferred income tax liabilities. Accruals for environmental costs, accrued pension and post-retirement benefits and deferred rental income that are included in other long-term liabilities are not expected to be recognized in the following fiscal year. The current portion of the accruals for environmental costs, accrued pension and post-retirement benefits and deferred rental income are included within Accrued expenses. |
3. FAIR VALUE
3. FAIR VALUE | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
3. FAIR VALUE | 3. FAIR VALUE Effective September27, 2008, the Company adopted the provisions of ASC 820, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level1Quoted prices in active markets for identical assets or liabilities. Level2Observable inputs other than quoted prices included in Level1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. Level3Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Companys financial assets and liabilities are valued using Level 1 and Level 2 inputs. Level1 instrument valuations are obtained from quotes for transactions in active exchange markets involving identical assets. Level2 instruments include valuations obtained from quoted prices for identical assets in markets that are not active. In addition, the Company has elected to use the income approach to value its derivative instruments using standard valuation techniques and Level 2 inputs, such as currency spot rates, forward points and credit default swap spreads. The Companys derivative instruments are short-term in nature, typically one month to twelve months in duration. As of October2, 2009, the Company did not have any financial assets or liabilities without observable market values that would require a high level of judgment to determine fair value (Level3 instruments). The Companys adoption of the provisions of ASC 820-10 did not have a material impact on its consolidated financial statements. The Company has segregated all financial assets and liabilities that are measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The Company is not required to apply the provisions of ASC 820-10 for nonfinancial assets and liabilities until the first quarter of fiscal year 2010, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. Effective September27, 2008, the Company adopted the provisions of ASC 825-10-25, which provides entities the option to measure many financial instruments and certain other items at fair value. The Company has currently chosen not to elect the fair value option for any items that are not already required to be measured at fair value in accordance with GAAP. Assets/Liabilities M |
4. GOODWILL AND INTANGIBLE ASSE
4. GOODWILL AND INTANGIBLE ASSETS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
4. GOODWILL AND INTANGIBLE ASSETS | 4. GOODWILL AND INTANGIBLE ASSETS The following table reflects the gross carrying amount and accumulated amortization of the Companys intangible assets included in Other assets on the Consolidated Balance Sheets as follows: (In millions) October2, 2009 September26, 2008 Intangible Assets: Acquired existing technology $ 20.8 $ 19.7 Patents, licenses and other 15.2 14.5 Customer contracts and supplier relationship 10.4 10.5 Accumulated amortization (37.2 ) (33.6 ) Net carrying amount $ 9.2 $ 11.1 Amortization expense for intangible assets was $3.6 million, $4.3 million and $5.1 million for fiscal years2009, 2008 and 2007, respectively. The Company estimates amortization expense on a straight-line basis for fiscal years 2010 through 2014 and thereafter, to be as follows (in millions): $3.2, $2.5, $1.6, $1.2 and $0.7. The following table reflects the allocation of goodwill: (In millions) October2, 2009 September26, 2008 Oncology Systems $ 126.7 $ 125.4 X-ray Products 2.7 2.7 Other 80.9 81.0 Total $ 210.3 $ 209.1 The decrease in goodwill balance in the Other category reflects the impact of foreign currency translation adjustments and the sale of Research Instruments. The increase in goodwill balance in Oncology Systems was due to an acquisition. |
5. RELATED PARTY TRANSACTIONS
5. RELATED PARTY TRANSACTIONS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
5. RELATED PARTY TRANSACTIONS | 5. RELATED PARTY TRANSACTIONS In fiscal years 1999 and 2000, VMS invested a total of $5million in a three member consortium for a 20% ownership interest in dpiX Holding LLC (dpiX Holding), which in turn invested $25 million for an 80.1% ownership interest in dpiX LLC (dpiX), a supplier of amorphous silicon based thin-film transistor arrays (flat panels) for the Companys X-ray Products digital image detectors and for its Oncology Systems On-Board Imager, or OBI, and PortalVisionTM imaging products. VMS had the right to appoint one manager of the five person board of managers. In accordance with the dpiX Holding agreement, net losses were to be allocated to the three members, in succession, until their capital accounts equaled zero, then to the three members in accordance with their ownership interests. The dpiX Holding agreement also provided that net profits were to be allocated to the three members, in succession, until their capital accounts equaled the net losses previously allocated, then to the three members in accordance with their ownership interests. In September 2004, VMS acquired another members 20% ownership interest in dpiX Holding for $1 million. As a result, VMS has the right to appoint two managers of the five person board of managers and its ownership interest in dpiX Holding increased to 40% with the remaining 60% being held by the other original member. When VMS acquired this additional 20% ownership interest, the capital account of the selling member was nearly zero because it was the first in the consortium to be allocated losses. As a result, when dpiX Holding recorded net profits after VMS acquired the additional 20% ownership interest, VMS was the first to be allocated net profits to recover previously allocated losses. The investment in dpiX Holding is accounted for under the equity method of accounting. When VMS recognizes its share of net profits or losses of dpiX Holding, profits in inventory purchased from dpiX are eliminated until realized by VMS. In fiscal year 2009, VMS recorded a loss on the equity investment in dpiX Holding of $0.9 million. In fiscal year 2008, VMS recorded income on the equity investment in dpiX Holding of $0.3 million. VMS recorded a loss on the equity investment in dpiX Holding of $0.3 million in fiscal year 2007. Incomes and losses on the equity investment in dpiX Holding are included in Selling, general and administrative expenses in the Consolidated Statements of Earnings. The member that owned the other 19.9% ownership interest in dpiX had the right to sell back to dpiX on dpiXs last business day in December 2004, 2005 and 2006, cumulatively all of that members ownership interest for $5 million if dpiX had not become a publicly traded company as of the last business day in December 2004. In December 2004, that member exercised its right to sell back to dpiX its 19.9% ownership interest. On each of December22, 2005 and December24, 2004, dpiX repurchased from that member a 7.96% ownership interest for a payment of $2 million (in aggregate, a 15.92% interest for $4 million). On December22, 2006, dpiX repurchased the remaining 3.98% ownership interest for $1 million and VMSs indi |
6. LONG-TERM DEBT
6. LONG-TERM DEBT | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
6. LONG-TERM DEBT | 6. LONG-TERM DEBT Long-term debt outstanding at October2, 2009 and September26, 2008 is summarized as follows: (Dollars in millions) October2, 2009 September26, 2008 Unsecured term loan, 6.70% due in installments of $6.25 payable in fiscal years 2010, 2012, and 2014 $ 18.8 $ 18.8 Unsecured term loan, 6.76% due in installments of $5.25 payable in fiscal year 2011 5.3 10.5 Unsecured term loan, 7.15% due in installments of $2.5 payable in fiscal years 2010 2.5 5.0 Loans assumed through purchases of land and buildings, 7.34% and 7.58% due in monthly installments (including principal and interest) of $0.7 payable in fiscal years 20102011 and balloon payments of $5.5 in fiscal year 2012(1) 5.8 6.1 32.4 40.4 Less: current maturities of long-term debt 9.0 8.0 Long-term debt $ 23.4 $ 32.4 (1) As of October2, 2009, land and buildings with a carrying amount of $13.7 million were pledged as collateral against these loans. The term loan agreements contain a covenant that requires the Company to pay prepayment penalties if the Company elects to pay off this debt before the maturity dates and the market interest rate is lower than the fixed interest rates of the debt at the time of repayment. They also contain covenants that limit future borrowings and cash dividend payments and require the Company to maintain specified levels of working capital and operating results. For all fiscal years presented within these consolidated financial statements, the Company was in compliance with all restrictive covenants of the unsecured term loan agreements. Interest paid on long-term debt was $2.6 million for fiscal year 2009, $3.2 million for fiscal year2008 and $3.8 million for fiscal year 2007. At October2, 2009, aggregate debt maturities for fiscal years 2010, 2011, 2012, 2013, 2014 and thereafter are as follows (in millions): $9.0, $5.5, $11.6, $0.0, $6.3 and $0.0, respectively. The fair value of the Companys long-term debt was estimated to be $34.8 million at October2, 2009 and $42.2 million at September26, 2008. The fair value of long-term debt was estimated based on the then-current rates available to the Company for debt of similar terms and remaining maturities. The Company determined the estimated fair value amount by using available market information and commonly accepted valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Accordingly, the fair value estimate presented herein is not necessarily indicative of the amount that the Company or holders of the instruments could realize in a current market exchange. The use of different assumptions and/or estimation methodologies may have a material effect on the estimated fair value. |
7. CREDIT FACILITY
7. CREDIT FACILITY | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
7. CREDIT FACILITY | 7. CREDIT FACILITY In July 2007, VMS entered into a credit agreement with Bank of America, N.A. (BofA) providing for an unsecured revolving credit facility that enabled the Company to borrow and have outstanding at any given time a maximum of $100 million (the BofA Credit Facility). On November10, 2008, VMS amended and restated the BofA Credit Facility to increase the line of credit to $150 million and collateralize a portion of the credit facility with a pledge of stock of certain of the VMSs present and future subsidiaries that are deemed to be material subsidiaries. As of October2, 2009, VMS has pledged to BofA 65% of the voting shares that it holds in Varian Medical Systems Nederland B.V., a wholly-owned subsidiary. OnJuly 14,2009, the Company further amended and restated the credit facility (the Amended BofA Credit Facility) to enable VMSs Japanese subsidiary (VMS KK) to borrow up to 2.7 billion Japanese Yen as part of the overall credit facility (the Japanese Line of Credit). At any time amounts are outstanding under the Japanese Line of Credit, the full borrowing capacity is deemed committed for use in Japan and therefore the maximum amount VMS can otherwise borrow under the Amended BofA Credit Facility will be reduced by $30 million to $120 million. VMS guarantees the payment of the outstanding balance under the Japanese Line of Credit. The Amended BofA Credit Facilitymay be used for working capital, capital expenditures, permitted acquisitions and other lawful corporate purposes. Borrowings under the Japanese Line of Credit can be used by VMS KK for refinancing certain intercompany debts, working capital, capital expenditures and other lawful corporate purposes. Borrowings under theAmended BofA Credit Facility (outside of the Japanese Line of Credit) accrue interest either (i)based on the London Inter Bank Offered Rate (LIBOR) plus a margin of1.25% to1.50% based on a leverage ratio involving funded indebtedness and earnings before interest, taxes, depreciation and amortization (EBITDA), or (ii)based upon a base rate of either the federal funds rate plus 0.5% or BofAs announced prime rate, whichever is greater,minus a margin of0.5% to0% based on a leverage ratio involving funded indebtedness and EBITDA, depending upon the Companys instructions to BofA. The Company may select borrowing periods of one, two, three or six months for advances based on the LIBOR rate. Interest rates on advances based on the base rate are adjustable daily. Under the Amended BofA Credit Facility, the Company paid commitment fees at an annual rate of 0.2% to 0.3% based on a leverage ratio involving funded indebtedness and EBITDA. Borrowings under the Japanese Line of Credit accrue interest at the basic loan rate announced by the Bank of Japan plus a margin of1.25% to1.50% based on a leverage ratio involving funded indebtedness and EBITDA. TheAmended BofA Credit Facility will expire, if not extended by mutual agreement ofVMS andBofA, on November10, 2011. The Japanese Line of Credit will expire on November10, 2010. As of October2, 2009, there was no outstanding balance under the Amended BofA Credit Facility other than $4.4 million outstanding under the |
8. DERIVATIVE INSTRUMENTS AND H
8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 8. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Pursuant to ASC 815, the Company measures all derivatives at fair value on the Consolidated Balance Sheets. The accounting for gains or losses resulting from changes in the fair value of those derivatives depends upon the use of the derivative and whether it qualifies for hedge accounting. Changes in the fair value of derivatives that do not qualify for hedge accounting treatment must be recognized in earnings, together with elements excluded from effectiveness testing and the ineffective portion of a particular hedge. The Companys derivative instruments are recorded at their fair value in Prepaid expenses and other current assets and Accrued expenses on the Companys Consolidated Balance Sheets. As of October2, 2009, the fair value of derivative instruments reported on the Companys Consolidated Balance Sheet was zero. See Note 3, Fair Value and Valuation of Derivative Instruments under Critical Accounting Estimates in Item7, Managements Discussion and Analysis of Financial Condition and Results of Operations regarding valuation of the Companys derivative instruments. Also see Note1, Significant Accounting Policies to the Consolidated Financial Statements regarding credit risk associated with the Companys derivative instruments. Cash Flow Hedging Activities The Company has many transactions denominated in foreign currencies and addresses certain of those financial exposures through a program of risk management that includes the use of derivative financial instruments. The Company sells products throughout the world, often in the local currency of the customers country, and typically hedges certain of these larger foreign currency transactions when they are not in the subsidiaries functional currency. These foreign currency sales transactions are hedged using forward exchange contracts. The Company may use other derivative instruments in the future. The Company enters into foreign currency forward exchange contracts primarily to reduce the effects of fluctuating foreign currency exchange rates. The Company does not enter into forward exchange contracts for speculative or trading purposes. The forward exchange contracts range from one to twelve months in maturity. As of October2, 2009, the Company did not have any forward exchange contracts with an original maturity greater than 12 months. The hedges of foreign currency denominated forecasted revenues are accounted for in accordance with ASC 815, pursuant to which the Company has designated its hedges of forecasted foreign currency revenues as cash flow hedges. For derivative instruments that are designated and qualify as cash flow hedges under ASC 815, the Company formally documents for each derivative contract at the hedges inception the relationship between the hedging instrument (forward contract) and hedged item (forecasted foreign currency revenues), the nature of the risk being hedged, as well as its risk management objective and strategy for undertaking the hedge. The Company records the effective portion of the gain or loss on the derivative instrument in Accumulated other comprehensive income (loss) and reclassifies these amo |
9. COMMITMENTS AND CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
9. COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES Indemnification Agreements In conjunction with the sale of the Companys products in the ordinary course of business, the Company provides standard indemnification of business partners and customers for losses suffered or incurred for property damages, death and injury and for patent, copyright or any other intellectual property infringement claims by any third parties with respect to its products. The terms of these indemnification arrangements are generally perpetual. Except for losses related to property damages, the maximum potential amount of future payments the Company could be required to make under these arrangements is unlimited. As of October2, 2009, the Company had not incurred any significant costs since the Spin-offs to defend lawsuits or settle claims related to these indemnification arrangements. As a result, the Company believes the estimated fair value of these arrangements is minimal. VMS has entered into indemnification agreements with its directors and officers and certain of its employees that serve as officers or directors of its foreign subsidiaries that may require VMS to indemnify its directors and officers and those certain employees against liabilities that may arise by reason of their status or service as directors or officers, and to advance their expenses incurred as a result of any legal proceeding against them as to which they could be indemnified. Product Warranty The Company discloses estimated future costs of warranty obligations in accordance with ASC 460-10, which requires an entity to disclose and recognize a liability for the fair value of the obligation it assumes upon issuance of a guarantee. The Company warrants most of its products for a specific period of time, usually 12 months, against material defects. The Company provides for the estimated future costs of warranty obligations in cost of revenues when the related revenues are recognized. The accrued warranty costs represent the best estimate at the time of sale of the total costs that the Company will incur to repair or replace product parts that fail while still under warranty. The amount of the accrued estimated warranty costs obligation for established products is primarily based on historical experience as to product failures adjusted for current information on repair costs. For new products, estimates include the historical experience of similar products, as well as reasonable allowance for warranty expenses associated with new products. On a quarterly basis, the Company reviews the accrued warranty costs and updates the historical warranty cost trends, if required. The following table reflects the changes in the Companys accrued product warranty during fiscal years 2009 and 2008: Fiscal Years (In millions) 2009 2008 Accrued product warranty, beginning of fiscal year $ 51.1 $ 51.3 Charged to cost of revenues 54.9 50.8 Actual product warranty expenditures (55.2 ) (51.0 ) Accrued product warranty, end of fiscal year $ 50.8 $ 51.1 Lease Commitments At October2, 2009, the Company |
10. RETIREMENT PLANS
10. RETIREMENT PLANS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
10. RETIREMENT PLANS | 10. RETIREMENT PLANS The Company sponsors the Varian Medical Systems, Inc. Retirement Plan (the Retirement Plan)a defined contribution plan that is available to substantially all of its employees in the United States. Under Section401(k) of the Internal Revenue Code, the Retirement Plan allows for tax-deferred salary contributions by eligible employees. Participants can contribute from 1% to 40% of their eligible base compensation to the Retirement Plan (up to 25% on a pre-tax basis and an additional 15% on an after-tax basis. However, participant contributions are limited to a maximum annual amount as determined periodically by the Internal Revenue Service. The Company matches eligible participant contributions dollar for dollar for the first 6% of eligible base compensation (for those employees with one or more years of service with the Company). In addition, should a participant elect to contribute his or her bonus under the Employee Incentive Plan to the Retirement Plan, the Company matches 6% of this contribution. All matching contributions vest immediately. The Retirement Plan allows participants to invest up to 25% of their contributions in shares of VMS common stock as an investment option. The Company also sponsors six defined benefit pension plans for regular full-time employees in Germany, Japan, Switzerland and the United Kingdom. In fiscal year 2009, the Company terminated one pension plan in Germany as a result of the sale of Research Instruments. In July 2007, the Company (i)terminated the accrual of additional benefits for existing participants and (ii)suspended the enrollment of new participants under the defined benefit pension plan in the United Kingdom (the U.K. Pension Plan). The Company did not make any changes to the participants accrued retirement pensions, including the continuing linkage to future salary growth. At the same time, the Company established a defined contribution plan that is available to regular full-time employees in the United Kingdom (the U.K. Savings Plan). Participants can contribute from 1% to 100% of their eligible base compensation to the U.K. Savings Plan. The Company matches participant contributions up to 6% of participants eligible base compensation, based on the participants level of contributions under this UK Savings Plan. For the first and second years after the establishment of the U.K. Savings Plan, the Company also matched an additional 2% and 1%, respectively, of eligible base compensation when the participants contributed 6% or more of their eligible base compensation. All matching contributions vest immediately. The Company also sponsors a post-retirement benefit plan that provides healthcare benefits to certain eligible retirees in the United States. In fiscal year 2009, the Company adopted the measurement date provisions pursuant to ASC 715, which requires the Company to measure the assets and obligations of its defined benefit pension and post-retirement benefit plans to determine their funded status as of the end of the Companys fiscal year. As a result of the adoption of the measurement date provisions, the Company recorded a charge to retained earnings of $122,000, |
11. STOCKHOLDERS' EQUITY
11. STOCKHOLDERS' EQUITY | |
9/27/2008 - 10/2/2009
USD / shares | |
Notes to Financial Statements [Abstract] | |
11. STOCKHOLDERS' EQUITY | 11. STOCKHOLDERS EQUITY Stockholder Rights Plan Until December 2008, the Company had a stockholder rights plan. Under the plan, a dividend distribution of one preferred stock purchase right (a Right) for each outstanding share of VMS common stock was made to stockholders of record on December4, 1998 and one Right was issued in connection with each share of VMS common stock issued thereafter. The Rights were exercisable only if a person or group acquired 15% or more of VMS common stock (an Acquiring Person) or announced a tender offer for 15% or more of VMS common stock. Each Right entitled stockholders to buy one one-thousandth of a share of VMSs Participating Preferred Stock, par value $1.00 per share, at an exercise price of $105 per Right, subject to adjustment from time to time. However, if any person became an Acquiring Person, each Right could have entitled its holder (other than the Acquiring Person) to purchase at the exercise price VMS common stock (or, in certain circumstances, VMS participating preferred stock) having a market value at that time of twice the Rights exercise price. The Rights would also have entitled holders (other than the Acquiring Person) to purchase at the exercise price common stock of the Acquiring Person having a market value at that time of twice the Rights exercise price if the Acquiring Person were to control VMSs Board of Directors and cause VMS to enter into certain mergers or other transactions. In addition, if an Acquiring Person acquired between 15% and 50% of VMSs voting stock, VMSs Board of Directors could have, at its option, exchanged one share of VMS common stock for each Right held (other than Rights held by the Acquiring Person). The Rights expired on December4, 2008. Stock Repurchase Program During fiscal years 2009, 2008 and 2007, the Company paid $101 million, $262 million and $319 million, respectively, to repurchase 2,248,000 shares, 5,110,000 shares and 7,000,000 shares, respectively, of VMS common stock under various authorizations by VMSs Board of Directors. All shares that have been repurchased have been retired. As of October2, 2009, 7,300,000 shares of VMS common stock remained available for repurchase under an authorization that expires on December31, 2009. |
12. EMPLOYEE STOCK PLANS
12. EMPLOYEE STOCK PLANS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
12. EMPLOYEE STOCK PLANS | 12. EMPLOYEE STOCK PLANS Employee Stock Plans During fiscal year 1991, VMS adopted the stockholder-approved Omnibus Stock Plan (the Omnibus Plan) under which shares of common stock could be issued to officers, directors, key employees and consultants. The Omnibus Plan was amended and restated as of the Spin-offs. The maximum number of shares that could have been issued was limited to 20,000,000 shares. Stock options granted under the Omnibus Plan have an exercise price equal to the closing market price of the underlying stock on the grant date (unless the stock market was closed on the grant date, in which case the exercise price was equal to the average of the highest and lowest quoted selling prices on the stock market on the day before and the day after the grant date) and expire no later than ten years from the grant date. Options granted under the Omnibus Plan before November 2000 were generally exercisable in cumulative installments of one third each year, commencing one year following the date of grant. Options granted after November 2000 were exercisable in the following manner: the first one-third one year from the date of grant, with the remainder vesting monthly during the following two-year period. No further awards may be made under the Omnibus Plan. In November 2000, VMS adopted the 2000 Stock Option Plan (the 2000 Plan), which was intended to supplement the Omnibus Plan. The maximum number of shares that could have been issued was limited to 12,000,000 shares. The 2000 Plan is similar to the Omnibus Plan in all material respects, with the exception that shares available for awards under the 2000 Plan could not be issued to directors or officers of VMS. Stock options granted under the 2000 Plan are exercisable for the first one-third of the option shares one year from the date of grant, with the remainder vesting monthly during the following two-year period. Other terms of the 2000 Plan mirror the Omnibus Plan. No further awards may be made under the 2000 Plan. In February 2005, VMSs stockholders approved the 2005 Omnibus Stock Plan (the 2005 Plan), which was amended and restated in February 2006 and February 2007 and further amended in 2008 and 2009. The 2005 Plan, as amended and restated to date, is referred to as the Second Amended 2005 Plan. The Second Amended 2005 Plan provides for the grant of equity incentive awards, including stock options, restricted stock, stock appreciation rights, performance units, restricted stock units and performance shares to officers, directors, key employees and consultants. The Second Amended 2005 Plan also provides for the grant of deferred stock units to non-employee directors. Including the 4,200,000 shares added to the number of shares available for grant under the Second Amended 2005 Plan upon VMS stockholder approval in February 2009, the maximum number of shares issuable under the Second Amended 2005 Plan is (a)13,450,000, plus (b)the number of shares authorized for issuance, but never issued, under the Omnibus Plan and the 2000 Plan, plus (c)the number of shares subject to awards previously granted under the Omnibus Plan and 2000 Plan that terminate, expire, or lapse, plus |
13. TAXES ON EARNINGS
13. TAXES ON EARNINGS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
13. TAXES ON EARNINGS | 13. TAXES ON EARNINGS The Company accounts for income taxes in accordance with ASC 740. ASC 740 provides for an asset and liability approach under which deferred income taxes are based upon enacted tax laws and rates applicable to the periods in which the taxes become payable. Taxes on earnings from continuing operations were as follows: Fiscal Years Ended (In millions) 2009 2008 2007 Current provision: Federal $ 104.1 $ 75.6 $ 67.6 State and local 19.7 10.1 9.5 Foreign 41.4 42.0 23.4 Total current 165.2 127.7 100.5 Deferred provision (benefit): Federal (14.5 ) (0.7 ) (12.9 ) State and local (1.8 ) (1.0 ) 0.3 Foreign (5.7 ) 4.8 15.2 Total deferred (22.0 ) 3.1 2.6 Taxes on earnings $ 143.2 $ 130.8 $ 103.1 Earnings from continuing operations before taxes are generated from the following geographic areas: Fiscal Years Ended (In millions) 2009 2008 2007 United States $ 261.0 $ 195.6 $ 165.0 Foreign 213.6 230.4 181.0 $ 474.6 $ 426.0 $ 346.0 The effective tax rate differs from the U.S. federal statutory tax rate as a result of the following: Fiscal Years Ended 2009 2008 2007 Federal statutory income tax rate 35.0 % 35.0 % 35.0 % State and local taxes, net of federal tax benefit 2.1 1.6 1.6 Non-U.S. income taxed at different rates, net (3.0 ) (4.7 ) (5.5 ) Resolution of tax contingencies due to lapses of statute of limitations (3.5 ) (0.9 ) (0.7 ) Other (0.4 ) (0.3 ) (0.6 ) Effective tax rate 30.2 % 30.7 % 29.8 % During fiscal years 2009, 2008, and 2007, the Companys effective tax rate was lower than the U.S. federal statutory rate primarily because the Companys foreign earnings are taxed at rates that, on average, are lower than the U.S. federal rate. This reduction is partly offset by the fact that the Companys domestic earnings are also subject to state income taxes. Significant components of deferred tax assets and liabilities are as follows: (In millions) October2, 2009 September26, 2008 Deferred Tax Assets: Deferred revenues $ 70.6 $ 56.4 Deferred compensation 25.6 26.5 Product Warranty 14.2 14.0 Inventory adjustments 18.4 24.4 Equity-based compensation 44.4 35.9 Environmental Reserve 8.0 8.5 Net operating loss carryforwards 28.6 17.7 Contingent loss reserve 7.4 8.5 Other 38.5 16.0 255.7 207.9 Valuation allowance (35.4 ) (20.8 ) Total deferred tax assets 220.3 187.1 |
14. BUSINESS COMBINATIONS
14. BUSINESS COMBINATIONS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
14. BUSINESS COMBINATIONS | 14. BUSINESS COMBINATIONS In January 2007, the Company acquired all of the outstanding equity of ACCEL, a German privately-held supplier of scientific research instruments and proton therapy systems for cancer treatment. The acquisition of ACCEL leverages the Companys existing technology in treatment planning, image guidance and cancer informatics and it enables Varian to offer all the products needed for delivering proton therapy. In the quarter ended March30, 2007, the Company recorded the preliminary purchase price allocation for this acquisition. In September 2007, the Company completed its purchase price allocation related to a contingency that was associated with an unresolved lawsuit, existing at the time of the acquisition. As part of the settlement of this lawsuit, the Company agreed to perform under a contract for a fixed price. From January to September 2007, the Company was gathering information related to the expected cost of satisfying this contract commitment and completed its assessment as of September28, 2007. As a result, the Company recorded an additional loss related to this contingency of 25.6million, or approximately $36.1 million, based on the exchange rate as of September28, 2007, in Accrued Liabilities and a reduction to net deferred tax liabilities of $2.7 million, with a corresponding net increase in goodwill of approximately $33.4 million. The final purchase price allocation includes a total contingent loss accrual of 28.3million, or approximately $40 million, based on the exchange rate as of September28, 2007. See Note 9, Commitments and Contingencies for a detail discussion of this contingency. In May 2007, the Company acquired all of the outstanding equity of Bio-Imaging Research, Inc. (BIR), a privately-held supplier of x-ray imaging products for security and inspection, for $21.9 million. The acquisition enables the Company to offer security and inspection customers x-ray imaging detectors and image processing software in addition to its existing line of specialized linear accelerators for cargo screening, inspection and non-destructive testing. BIR operates under the Companys SIP business. The following is the final allocation of the purchase considerations for these acquisitions: (In millions) Consideration Net Assets (Liabilities) Acquired Identifiable Intangible Assets Goodwill ACCEL $ 20.5 $ (46.4 ) $ 4.9 $ 62.0 BIR 21.9 3.5 2.2 16.2 Total $ 42.4 $ (42.9 ) $ 7.1 $ 78.2 The Companys methodology for allocating the purchase price to intangible assets is determined using commonly accepted valuation techniques in the high-technology industry. The valuation method used by the Company included the income approach which established the fair value of the assets based on the value of the cash flows that the assets can be expected to generate in the future using the discounted cash flow method. The purchase prices were allocated to the acquired assets and liabilities based on their estimated fair values as of the date of acquisition, including identifiable intangi |
15. SEGMENT INFORMATION
15. SEGMENT INFORMATION | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
15. SEGMENT INFORMATION | 15. SEGMENT INFORMATION Description of Segments The Companys operations are grouped into two reportable operating segments: Oncology Systems and X-ray Products. These reportable operating segments were determined based on how the Companys Chief Executive Officer, its Chief Operating Decision Maker (CODM), views and evaluates the Companys operations. The Companys Ginzton Technology Center (GTC), SIP business and Varian Particle Therapy (previously known as ACCEL Proton Therapy) are reflected in the Other category because these operations do not meet the criteria of a reportable operating segment as defined under ASC 280. The CODM allocates resources to and evaluates the financial performance of each operating segment primarily based on operating earnings. The Oncology Systems business segment designs, manufacturers, sells and services hardware and software products for treating cancer. Products include linear accelerators, brachytherapy afterloaders, treatment simulation and verification equipment and accessories; as well as information management, treatment planning and image processing software. Oncology Systems products enable radiation oncology departments in hospitals and clinics to perform conventional radiotherapy treatments and offer advanced treatments such as fixed field intensity-modulated radiation therapy (IMRT), image-guided radiation therapy (IGRT), volumetric modulated arc therapy (VMAT), and stereotactic radiotherapy, as well as to treat patients using brachytherapy techniques, which involve temporarily implanting radioactive sources. Our Oncology Systems products are also used by neurosurgeons to perform stereotactic radiosurgery. Oncology Systems customers worldwide include university research and community hospitals, private and governmental institutions, healthcare agencies, physicians offices and cancer care clinics. The X-ray Products business segment, designs, manufactures and sells: (i)x-ray tubes for use in a range of applications including computed tomography (CT), scanning, radiographic or fluoroscopic imaging, mammography, special procedures and industrial applications; and (ii)flat panel digital image detectors for filmless x-ray imaging (commonly referred to as flat panel detectors or digital image detectors), which are for radiography an alternative to image intensifier tubes for fluoroscopy and x-ray film and computed radiography (CR) systems. X-ray tubes and flat panel detectors are sold to large imaging systems original equipment manufacturers (OEMs) that incorporate our X-ray tube products and flat panel detectors into their medical diagnostic, dental, veterinary, IGRT and industrial imaging systems. X-ray tubes are also sold directly to end-users for replacement purposes. The Company has three other businesses that are reported together under the Other category. SIP designs, manufactures, sells and services Linatron x-ray accelerators, imaging processing software and image detection products (including IntellXTM) for security and inspection purposes, such as cargo screening at ports and borders and nondestructive examination in a variety of applications. The Company generally sells SIP product |
16. DISCONTINUED OPERATIONS
16. DISCONTINUED OPERATIONS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
16. DISCONTINUED OPERATIONS | 16. DISCONTINUED OPERATIONS In September 2008, the Company approved a plan to sell Research Instruments, which develops, manufactures and services highly customized scientific instrument components and systems for fundamental and applied physics research primarily for national research laboratories worldwide. Research Instruments was part of the January 2007 ACCEL acquisition and was previously included in the Other category in the Companys Consolidated Financial Statements. The Company decided to sell Research Instruments in order to focus exclusively on the development of its Varian Particle Therapy business. In the second quarter of fiscal year 2009, the Company completed the sale of Research Instruments for total cash proceeds of $0.4 million. In connection with the sale of Research Instruments, the Company entered into a non-binding supply agreement with the buyer to supply certain inventory parts for the Varian Particle Therapy business. The supply agreement can be terminated by either party upon a six months notice after December31, 2011. The inventory purchases under this supply agreement are not expected to have a significant impact on the cash flows of Research Instruments. The Company classified the assets and liabilities of Research Instruments as assets of discontinued operations and liabilities of discontinued operations in the Consolidated Balance Sheets and classified its operating results as a discontinued operation in the Consolidated Statements of Earnings for all periods presented. Because the amounts related to Research Instruments are not material in the Consolidated Statements of Cash Flows and in the Consolidated Statements of Stockholders Equity and Comprehensive Earnings for all periods presented, the Company has not segregated them from continuing operations. Total revenues of Research Instruments, reported in discontinued operations, for fiscal years 2009, 2008 and 2007 were $9.8 million, $35.2 million and $21.6 million, respectively. Loss reported in discontinued operations for fiscal years 2009, 2008 and 2007 was $12.5 million, $15.8 million and $3.4 million, respectively. In fiscal year 2009, loss in discontinued operations included a loss of $8.1 million on the disposal of Research Instruments. In fiscal year 2008, loss from discontinued operations included goodwill impairment and impairment of long-lived assets related to Research Instruments business. |
17. SUBSEQUENT EVENTS
17. SUBSEQUENT EVENTS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
17. SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS On November13, 2009, the Companys Board of Directors authorized the repurchase of an additional 5,000,000 shares of VMS common stock from January1, 2010 through December31, 2010. |
18. QUARTERLY FINANCIAL DATA
18. QUARTERLY FINANCIAL DATA (UNAUDITED) | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
18. QUARTERLY FINANCIAL DATA (UNAUDITED) | 18. QUARTERLY FINANCIAL DATA (UNAUDITED) Fiscal Year 2009 (In millions, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Total Year Revenue $ 508.7 $ 553.6 $ 509.8 $ 642.0 $ 2,214.1 Gross margin $ 219.0 $ 240.4 $ 216.2 $ 284.9 $ 960.5 Net earnings from continuing operations $ 69.6 $ 79.3 $ 85.4 $ 97.2 $ 331.5 Net loss from discontinued operations $ (0.8 ) $ (11.5 ) $ $ (0.2 ) $ (12.5 ) Net earnings $ 68.8 $ 67.8 $ 85.4 $ 97.0 $ 319.0 Net earnings (loss) per sharebasic: Continuing operations $ 0.56 $ 0.64 $ 0.69 $ 0.78 $ 2.67 Discontinued operations $ $ (0.09 ) $ $ $ (0.10 ) Net earnings per share $ 0.56 $ 0.55 $ 0.69 $ 0.78 $ 2.57 Net earnings (loss) per sharediluted: Continuing operations $ 0.56 $ 0.64 $ 0.68 $ 0.78 $ 2.65 Discontinued operations $ (0.01 ) $ (0.10 ) $ $ (0.01 ) $ (0.10 ) Net earnings per share $ 0.55 $ 0.54 $ 0.68 $ 0.77 $ 2.55 Fiscal Year 2008 (In millions, except per share amounts) First Quarter Second Quarter Third Quarter Fourth Quarter Total Year Revenue $ 451.2 $ 518.4 $ 507.4 $ 592.7 $ 2,069.7 Gross margin $ 191.1 $ 211.6 $ 212.3 $ 262.5 $ 877.5 Net earnings from continuing operations $ 58.2 $ 72.9 $ 77.1 $ 87.1 $ 295.3 Net loss from discontinued operations $ (2.7 ) $ (1.6 ) $ (2.9 ) $ (8.6 ) $ (15.8 ) Net earnings $ 55.5 $ 71.3 $ 74.2 $ 78.5 $ 279.5 Net earnings (loss) per sharebasic: Continuing operations $ 0.47 $ 0.58 $ 0.62 $ 0.70 $ 2.37 Discontinued operations $ (0.03 ) $ (0.01 ) $ (0.02 ) $ (0.07 ) $ (0.13 ) Net earnings per share $ 0.44 $ 0.57 $ 0.60 $ 0.63 $ 2.24 Net earnings (loss) per sharediluted: Continuing operations $ 0.46 $ 0.57 $ 0.61 $ 0.68 $ 2.31 Discontinued operations $ (0 |
VALUATION AND QUALIFYING ACCOUN
VALUATION AND QUALIFYING ACCOUNTS | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
VALUATION AND QUALIFYING ACCOUNTS | Schedule II VARIAN MEDICAL SYSTEMS, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS Fiscal Year Description Balanceat Beginning of Period ChargedtoBad Debt Expense Write-Offs/ Adjustments Charged to Allowance Balanceat EndofPeriod (In thousands) 2009 Allowance for doubtful accounts receivable $ 3,110 $ 2,038 $ 801 $ 4,347 2008 Allowance for doubtful accounts receivable $ 3,859 $ 250 $ 999 $ 3,110 2007 Allowance for doubtful accounts receivable $ 4,473 $ 1,086 $ 1,700 $ 3,859 Fiscal Year Description Balance at Beginning of Period Increases Deductions Balance at End of Period (In thousands) 2009 Valuation allowance for deferred tax assets $ 20,757 $ 15,450 $ 778 $ 35,429 2008 Valuation allowance for deferred tax assets $ 17,951 $ 3,783 $ 977 $ 20,757 2007 Valuation allowance for deferred tax assets $ 1,608 $ 16,435 $ 92 $ 17,951 |
Document Information
Document Information | |
12 Months Ended
Oct. 02, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-K |
Amendment Flag | false |
Document Period End Date | 2009-10-02 |
Entity Information
Entity Information (USD $) | |||
12 Months Ended
Oct. 02, 2009 | Nov. 19, 2009
| Apr. 03, 2009
| |
Entity [Text Block] | |||
Trading Symbol | VAR | ||
Entity Registrant Name | VARIAN MEDICAL SYSTEMS INC | ||
Entity Central Index Key | 0000203527 | ||
Current Fiscal Year End Date | --10-02 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 124,451,760 | ||
Entity Public Float | $3,713,775,200 |