- Sales Up 8%
PALO ALTO, Calif., April 23 /PRNewswire-FirstCall/ -- Varian, Inc. (NasdaqGS: VARI) today reported second quarter 2008 revenues of $248.2 million, representing an increase of 7.9% over revenues of $229.9 million in the second quarter of fiscal year 2007. The increase was broad-based, with growth in sales of products for both life science and industrial (which includes environmental, food and energy) applications. Sales increased in all geographic regions, with double-digit growth in Europe and Latin America.
Non-GAAP (adjusted) net earnings for the second quarter of fiscal year 2008 increased 10.3% to $21.6 million, or $0.71 diluted earnings per share, compared to $19.5 million, or $0.63 diluted earnings per share, in the second quarter of fiscal year 2007. On a GAAP basis, net earnings in the second quarter of fiscal year 2008 were $15.8 million, or $0.52 diluted earnings per share, compared to $16.3 million, or $0.53 diluted earnings per share, in the second quarter of fiscal year 2007. Current-quarter GAAP net earnings were negatively impacted by $1.9 million, or $0.06 per diluted share, due to the full write-off of the Company's equity investment in a small private company.
Adjusted operating earnings increased 11.9% to $32.7 million in the second quarter of fiscal year 2008, compared to $29.2 million in the second quarter last year. Adjusted operating profit margin was a record 13.2% in the second quarter of fiscal year 2008, compared to 12.7% in the prior-year quarter. This improvement was primarily the result of favorable sales mix, sales volume leverage and cost reduction activities favorably impacting SG&A expenses. On a GAAP basis, operating earnings were $27.1 million and operating profit margin was 10.9% in the second quarter of fiscal year 2008, compared to $24.1 million and 10.5% in the same quarter a year ago.
"It was a sound quarter, with record revenues, adjusted diluted EPS and adjusted operating margins," said Garry W. Rogerson, President and CEO. "With the many new products we recently released, the breadth of applications we serve and our global reach, we feel confident with our position for the rest of the 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.
Results by Segment Scientific Instruments revenues for the second quarter of fiscal year 2008 were $204.4 million, representing an increase of 7.4% over revenues of $190.3 million in the second quarter of the prior fiscal year. Adjusted operating profit margin was 12.7% in the second quarter of fiscal year 2008 compared to 13.0% in the second quarter of the prior fiscal year. The decrease was attributable to the timing of costs related to new product introductions and other initiatives. On a GAAP basis, operating profit margin was 11.0% in the second quarter of fiscal year 2008, compared to 11.4% in the same quarter a year ago.
Vacuum Technologies revenues increased 10.5% to $43.7 million in the second quarter of fiscal year 2008, compared to $39.6 million in the second quarter of fiscal year 2007. Adjusted operating profit margin was 20.6% in the second quarter of fiscal year 2008, compared to 19.6% in the second quarter of the prior fiscal year. On a GAAP basis, operating profit margin was 20.1% in the second quarter of fiscal year 2008, compared to 19.3% in the prior-year quarter.
Webcast Conference Call Varian, Inc. will be providing a live webcast (in listen-only mode) of its investor conference call to review its second quarter results later today, April 23, 2008, at 2:00 p.m. Pacific time. The call may be heard via the Internet by going to http://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, operating earnings, operating profit margins, impairment of private company equity investments, income tax expense, net earnings and diluted earnings per share. These non-GAAP financial measures exclude share- based compensation expense, impairment of private company equity investments, acquisition-related intangible and inventory write-up amortization 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 provides supplemental information and an alternative presentation useful to investors' understanding of the company's core operating results and trends. In addition, investors have indicated to us that they analyze the benefits of acquisitions based on the cash return on the investment made, and thus consider financial measures excluding acquisition- related intangible and inventory write-up amortization as important, useful information.
We similarly believe that excluding share-based compensation expense, restructuring and other related costs (principally related to facility closures and employee terminations to improve operational efficiency), and impairment of private company equity investments provides supplemental information and an alternative presentation useful to investors' understanding of the company's core operating results and trends, especially when comparing those results on a consistent basis to results for previous periods and anticipated results for future periods. Investors have indicated that they consider financial measures of our results of operations excluding share-based compensation expense, restructuring and other related costs, and impairment of private company equity investments as important supplemental information useful to their understanding of our historical results and estimating of our future results.
We also believe that, in excluding share-based compensation expense, acquisition-related intangible and inventory write-up amortization, restructuring and other related costs, and impairment of private company equity investments, our non-GAAP financial measures provide investors with transparency into what is used by management to measure and forecast our results of operations, to compare on a consistent basis our results of operations for the current period to that of prior periods, to compare our results of operations on a more consistent basis against that of other companies, in making financial and operating decisions and to establish certain management compensation.
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 stronger growth in sales for life science applications; whether we can achieve continued sales growth in Europe and Asia Pacific and/or stronger growth in sales in the U.S.; risks arising from the timing of shipments, installations and the recognition of revenue on certain magnet-based products, including nuclear magnetic resonance (NMR), magnetic resonance (MR) imaging and fourier-transform mass spectrometer (FTMS) systems and superconducting magnets; the impact of shifting product mix on profit margins; competitive products and pricing; economic conditions in 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 continued investment in capital equipment, in particular given global liquidity and credit concerns; 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 activities (such as our Northern California facility consolidation) and other efficiency improvement activities (such as our global procurement and outsourcing initiatives); 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 products, laboratory consumable supplies, software, training and support through its global distribution and support systems. Varian, Inc. employs approximately 4,000 people worldwide and operates manufacturing facilities in North America, Europe and Asia Pacific. Varian, Inc. had fiscal year 2007 sales of $921 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: http://www.varianinc.com/.
For Information Contact:
Investor Relations
Varian, Inc. 650.424.5471
VARIAN, INC. AND SUBSIDIARY COMPANIES UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except per share amounts) Second Quarter FY 2008 and Second Quarter FY 2007 Fiscal Quarter Ended
-----------------------
March 28, March 30,
2008 2007
---------- ----------
Sales $248,165 $229,930
Cost of sales 135,289 (1) 124,435 (8)
---------- ----------
Gross profit 112,876 105,495
---------- ----------
Operating expenses
Selling, general and administrative 67,603 (2) 65,255 (9)
Research and development 18,190 (3) 16,103 (10)
---------- ----------
Total operating expenses 85,793 81,358
---------- ----------
Operating earnings 27,083 (4) 24,137 (11)
Impairment of private company
equity investment (3,018)(5) -
Interest income 1,751 1,368
Interest expense (435) (456)
---------- ----------
Earnings before income taxes 25,381 25,049
Income tax expense 9,594 (6) 8,767 (12)
---------- ----------
Net earnings $15,787 (7) $16,282 (13)
========== ==========
Net earnings per diluted share $0.52 (7) $0.53 (13)
========== ==========
Diluted shares outstanding 30,243 30,932
========== ========== NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations of GAAP to Adjusted results for each of these measures): (1) $133,410 on an adjusted basis excluding $1,515 in acquisition-related
intangible amortization, $110 in acquisition-related inventory
write-up amortization, $162 in restructuring and other related costs
and $92 in share-based compensation expense. (2) $64,159 on an adjusted basis excluding $402 in acquisition-related
intangible amortization, $211 in restructuring and other related
costs and $2,831 in share-based compensation expense. (3) $17,916 on an adjusted basis excluding $175 in restructuring and
other related costs and $99 in share-based compensation expense. (4) $32,680 on an adjusted basis excluding the adjustments described in
items (1) - (3) above. (5) $0 on an adjusted basis excluding $3,018 related to the impairment of
a private company equity investment. (6) $12,442 on an adjusted basis excluding the tax impact of the
adjustments described in items (1) - (3) and (5) above. (7) $21,554 and $0.71 per diluted share, respectively, on an adjusted
basis excluding the adjustments (net of related tax effects)
described in items (1) - (3) and (5) above. (8) $122,861 on an adjusted basis excluding $1,279 in acquisition-related
intangible amortization, $184 in acquisition-related inventory write-
up amortization and $111 in share-based compensation expense. (9) $61,884 on an adjusted basis excluding $675 in acquisition-related
intangible amortization, $64 in restructuring and other related costs
and $2,632 in share-based compensation expense. (10) $15,977 on an adjusted basis excluding $126 in share-based
compensation expense. (11) $29,208 on an adjusted basis excluding the adjustments described in
items (8) - (10) above. (12) $10,572 on an adjusted basis excluding the tax impact of the
adjustments described in items (8) - (10) above. (13) $19,548 and $0.63 per diluted share, respectively, on an adjusted
basis excluding the adjustments (net of related tax effects)
described in items (8) - (10) above.
VARIAN, INC. AND SUBSIDIARY COMPANIES UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
(In thousands, except per share amounts) First Six Months FY 2008 and First Six Months FY 2007 Six Months Ended
-----------------------
March 28, March 30,
2008 2007
---------- ----------
Sales $485,596 $447,868
Cost of sales 265,418 (1) 242,674 (8)
---------- ----------
Gross profit 220,178 205,194
---------- ----------
Operating expenses
Selling, general and administrative 133,583 (2) 126,456 (9)
Research and development 35,370 (3) 31,713 (10)
---------- ----------
Total operating expenses 168,953 158,169
---------- ---------- Operating earnings 51,225 (4) 47,025 (11)
Impairment of private company
equity investment (3,018)(5) -
Interest income 3,688 2,637
Interest expense (884) (990)
---------- ----------
Earnings before income taxes 51,011 48,672
Income tax expense 17,640 (6) 17,035 (12)
---------- ----------
Net earnings $33,371 (7) $31,637 (13)
========== ==========
Net earnings per diluted share $1.09 (7) $1.02 (13)
========== ==========
Diluted shares outstanding 30,598 30,956
========== ========== NON-GAAP (ADJUSTED) FINANCIAL MEASURES (see also attached reconciliations of GAAP to Adjusted results for each of these measures): (1) $261,071 on an adjusted basis excluding $2,906 in acquisition-related
intangible amortization, $590 in acquisition-related inventory
write-up amortization, $650 in restructuring and other related costs
and $201 in share-based compensation expense. (2) $127,094 on an adjusted basis excluding $840 in acquisition-related
intangible amortization, $1,404 in restructuring and other related
costs and $4,245 in share-based compensation expense. (3) $34,661 on an adjusted basis excluding $495 in restructuring and
other related costs and $214 in share-based compensation expense. (4) $62,770 on an adjusted basis excluding the adjustments described in
items (1) - (3) above. (5) $0 on an adjusted basis excluding $3,018 related to the impairment of
a private company equity investment. (6) $22,525 on an adjusted basis excluding the tax impact of the
adjustments described in items (1) - (3) and (5) above. (7) $43,049 and $1.41 per share, respectively, on an adjusted basis
excluding the adjustments (net of related tax effects) described in
items (1) - (3) and (5) above. (8) $239,375 on an adjusted basis excluding $2,625 in acquisition-related
intangible amortization, $455 in acquisition-related inventory write-
up amortization and $219 in share-based compensation expense. (9) $119,460 on an adjusted basis excluding $1,576 in acquisition-related
intangible amortization, $179 in restructuring and other related
costs and $5,241 in share-based compensation expense. (10) $31,459 on an adjusted basis excluding $254 in share-based
compensation expense. (11) $57,574 on an adjusted basis excluding the adjustments described in
items (8) - (10) above. (12) $20,787 on an adjusted basis excluding the tax impact of the
adjustments described in items (8) - (10) above. (13) $38,434 and $1.24 per share, respectively, on an adjusted basis
excluding the adjustments (net of related tax effects) described in
items (8) - (10) above.
VARIAN, INC. AND SUBSIDIARY COMPANIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except par value amounts) March 28, September 28,
2008 2007
------------- -------------
ASSETS Current assets
Cash and cash equivalents $157,423 $196,396
Accounts receivable, net 201,328 187,429
Inventories 172,446 140,533
Deferred taxes 38,415 38,068
Prepaid expenses and other current assets 19,158 17,332
------------- -------------
Total current assets 588,770 579,758
Property, plant and equipment, net 113,389 110,792
Goodwill 208,118 193,760
Intangible assets, net 32,445 31,572
Other assets 18,756 20,951
------------- -------------
Total assets $961,478 $936,833
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities
Current portion of long-term debt $6,250 $6,250
Accounts payable 79,252 72,588
Deferred profit 9,290 13,641
Accrued liabilities 168,546 159,109
------------- -------------
Total current liabilities 263,338 251,588
Long-term debt 18,750 18,750
Deferred taxes 4,039 4,050
Other liabilities 42,835 44,358
------------- -------------
Total liabilities 328,962 318,746
------------- ------------- 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 -- 29,481 shares at
March 28, 2008 and 30,345 shares at
September 28, 2007 357,214 351,330
Retained earnings 179,607 199,471
Accumulated other comprehensive income 95,695 67,286
------------- -------------
Total stockholders' equity 632,516 618,087
------------- -------------
Total liabilities and stockholders' equity $961,478 $936,833
============= ============= VARIAN, INC. AND SUBSIDIARY COMPANIES UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands, except par value amounts) Fiscal Quarter Ended Six Months Ended
-------------------- -------------------
March 28, March 30, March 28, March 30,
2008 2007 2008 2007
---------- --------- --------- ---------
Cash flows from
operating activities
Net earnings $15,787 $16,282 $33,371 $31,637
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Depreciation and amortization 6,445 7,279 13,279 14,072
Gain on disposition of property,
plant and equipment (76) (173) (298) (207)
Impairment of private company
equity investment 3,018 - 3,018 -
Share-based compensation expense 3,103 2,869 4,822 5,714
Deferred taxes (2,421) (349) (1,656) (1,146)
Changes in assets and
liabilities, excluding effects of
acquisitions:
Accounts receivable, net (15,505) (8,738) (1,732) 1,330
Inventories (8,566) (1,341) (23,718) (7,004)
Prepaid expenses and other
current assets (1,264) 1,084 (992) -
Other assets (11) (361) (35) (75)
Accounts payable 4,659 (3,426) 3,287 (3,763)
Deferred profit (2,220) (330) (4,474) (455)
Accrued liabilities 7,132 (3,534) 3,813 (8,001)
Other liabilities 2,548 2,713 1,047 2,265
--------- --------- --------- ---------
Net cash provided by
operating activities 12,629 11,975 29,732 34,367
--------- --------- --------- ---------
Cash flows from
investing activities
Proceeds from sale of property,
plant and equipment 446 3,035 787 3,154
Purchase of property,
plant and equipment (5,749) (3,916) (9,208) (5,970)
Purchase of businesses, net of
cash acquired (5,222) (1,781) (15,209) (4,781)
Private company
equity investments (18) - (18) -
--------- --------- --------- ---------
Net cash used in
investing activities (10,543) (2,662) (23,648) (7,597)
--------- --------- --------- ---------
Cash flows from financing
activities
Repayments of debt - - - (1,250)
Repurchase of common stock (56,421) (14,900) (71,523) (51,955)
Issuance of common stock 3,715 17,856 13,233 20,209
Excess tax benefit from
share-based plans 573 4,574 2,963 5,747
Transfers to Varian Medical
Systems, Inc. (210) (141) (422) (348)
--------- --------- --------- ---------
Net cash (used in) provided by
financing activities (52,343) 7,389 (55,749) (27,597)
--------- --------- --------- ---------
Effects of exchange rate changes
on cash and cash equivalents 10,000 2,297 10,692 6,974
--------- --------- --------- ---------
Net (decrease) increase in cash
and cash equivalents (40,257) 18,999 (38,973) 6,147
Cash and cash equivalents at
beginning of period 197,680 141,303 196,396 154,155
--------- --------- --------- ---------
Cash and cash equivalents at
end of period $157,423 $160,302 $157,423 $160,302
========= ========= ========= ========= VARIAN, INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
UNAUDITED RESULTS OF OPERATIONS
(In thousands)
Second Quarter FY 2008 and Second Quarter FY 2007
and
First Six Months FY 2008 and First Six Months FY 2007 Fiscal Quarter Ended Six Months Ended
-------------------- -------------------
March 28, March 30, March 28, March 30,
2008 2007 2008 2007
---------- --------- --------- ---------
TOTAL COMPANY Cost of Sales
U.S. GAAP as reported $135,289 $124,435 $265,418 $242,674
Adjustments:
Share-based compensation
expense (92) (111) (201) (219)
Acquisition-related
intangible amortization (1,515) (1,279) (2,906) (2,625)
Acquisition-related inventory
write-up amortization (110) (184) (590) (455)
Restructuring and other
related costs (162) - (650) -
--------- --------- --------- ---------
As adjusted $133,410 $122,861 $261,071 $239,375
========= ========= ========= =========
Selling, General and
Administrative
U.S. GAAP as reported $67,603 $65,255 $133,583 $126,456
Adjustments:
Share-based compensation
expense (2,831) (2,632) (4,245) (5,241)
Acquisition-related
intangible amortization (402) (675) (840) (1,576)
Restructuring and other
related costs (211) (64) (1,404) (179)
--------- --------- --------- ---------
As adjusted $64,159 $61,884 $127,094 $119,460
========= ========= ========= ========= Research and Development
U.S. GAAP as reported $18,190 $16,103 $35,370 $31,713
Adjustments:
Share-based compensation
expense (99) (126) (214) (254)
Restructuring and other
related costs (175) - (495) -
--------- --------- --------- ---------
As adjusted $17,916 $15,977 $34,661 $31,459
========= ========= ========= ========= Impairment of Private Company
Equity Investment
U.S. GAAP as reported $3,018 $ - $3,018 $ -
Adjustments:
Impairment of private
company equity investment (3,018) - (3,018) -
--------- --------- --------- ---------
As adjusted $ - $ - $ - $ -
========= ========= ========= =========
VARIAN, INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
UNAUDITED RESULTS OF OPERATIONS
(In thousands, except margin data)
Second Quarter FY 2008 and Second Quarter FY 2007
and
First Six Months FY 2008 and First Six Months FY 2007 Fiscal Quarter Ended Six Months Ended
-------------------- -------------------
March 28, March 30, March 28, March 30,
2008 2007 2008 2007
---------- --------- --------- ---------
TOTAL COMPANY (Continued) Operating Earnings
U.S. GAAP as reported $27,083 $24,137 $51,225 $47,025
Adjustments:
Share-based compensation
expense 3,022 2,869 4,660 5,714
Acquisition-related
intangible amortization 1,917 1,954 3,746 4,201
Acquisition-related inventory
write-up amortization 110 184 590 455
Restructuring and other
related costs 548 64 2,549 179
--------- --------- --------- ---------
As adjusted $32,680 $29,208 $62,770 $57,574
========= ========= ========= ========= Operating Margins
U.S. GAAP as reported 10.9% 10.5% 10.5% 10.5%
Adjustments:
Share-based compensation
expense 1.2 1.2 1.0 1.3
Acquisition-related
intangible amortization 0.9 0.8 0.8 1.0
Acquisition-related inventory
write-up amortization - 0.2 0.1 0.1
Restructuring and other
related costs 0.2 - 0.5 -
--------- --------- --------- --------- As adjusted 13.2% 12.7% 12.9% 12.9%
========= ========= ========= ========= Income Tax Expense
U.S. GAAP as reported $9,594 $8,767 $17,640 $17,035
Tax impact of adjustments:
Share-based compensation
expense 730 1,062 1,263 2,085
Acquisition-related
intangible amortization 639 660 1,278 1,449
Acquisition-related inventory
write-up amortization 82 62 249 157
Impairment of private company
equity investment 1,154 - 1,154 -
Restructuring and other
related costs 243 21 941 61
--------- --------- --------- ---------
As adjusted $12,442 $10,572 $22,525 $20,787
========= ========= ========= ========= VARIAN, INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
UNAUDITED RESULTS OF OPERATIONS
(In thousands, except per share data)
Second Quarter FY 2008 and Second Quarter FY 2007
and
First Six Months FY 2008 and First Six Months FY 2007 Fiscal Quarter Ended Six Months Ended
-------------------- -------------------
March 28, March 30, March 28, March 30,
2008 2007 2008 2007
---------- --------- --------- ---------
TOTAL COMPANY (Continued) Net Earnings
U.S. GAAP as reported $15,787 $16,282 $33,371 $31,637
Adjustments:
Share-based compensation
expense 2,292 1,807 3,397 3,628
Acquisition-related
intangible amortization 1,278 1,296 2,468 2,752
Acquisition-related inventory
write-up amortization 28 122 341 298
Impairment of private company
equity investment 1,864 - 1,864 -
Restructuring and other
related costs 305 41 1,608 119
--------- --------- --------- ---------
As adjusted $21,554 $19,548 $43,049 $38,434
========= ========= ========= ========= Diluted Earnings Per Share
U.S. GAAP as reported $0.52 $0.53 $1.09 $1.02
Adjustments:
Share-based compensation
expense 0.07 0.06 0.11 0.12
Acquisition-related
intangible amortization 0.05 0.04 0.09 0.09
Acquisition-related inventory
write-up amortization - - 0.01 0.01
Impairment of private company
equity investment 0.06 - 0.06 -
Restructuring and other
related costs 0.01 - 0.05 -
--------- --------- --------- ---------
As adjusted $0.71 $0.63 $1.41 $1.24
========= ========= ========= ========= VARIAN, INC. AND SUBSIDIARY COMPANIES
RECONCILIATION OF GAAP TO ADJUSTED RESULTS - ACTUAL
UNAUDITED RESULTS OF OPERATIONS
(In thousands, except margin data)
Second Quarter FY 2008 and Second Quarter FY 2007
and
First Six Months FY 2008 and First Six Months FY 2007 Fiscal Quarter Ended Six Months Ended
-------------------- -------------------
March 28, March 30, March 28, March 30,
2008 2007 2008 2007
---------- --------- --------- ---------
SCIENTIFIC INSTRUMENTS SEGMENT Operating Earnings
U.S. GAAP as reported $22,508 $21,789 $42,310 $40,657
Adjustments:
Share-based compensation
expense 891 840 1,737 1,869
Acquisition-related
intangible amortization 1,917 1,954 3,746 4,201
Acquisition-related inventory
write-up amortization 110 184 590 455
Restructuring and other
related costs 548 64 2,549 179
--------- --------- --------- ---------
As adjusted $25,974 $24,831 $50,932 $47,361
========= ========= ========= ========= Operating Margins
U.S. GAAP as reported 11.0% 11.4% 10.5% 11.1%
Adjustments:
Share-based compensation
expense 0.4 0.4 0.4 0.5
Acquisition-related
intangible amortization 0.9 1.1 1.1 1.2
Acquisition-related inventory
write-up amortization 0.1 0.1 0.1 0.1
Restructuring and other
related costs 0.3 - 0.6 -
--------- --------- --------- ---------
As adjusted 12.7% 13.0% 12.7% 12.9%
========= ========= ========= ========= VACUUM TECHNOLOGIES SEGMENT Operating Earnings
U.S. GAAP as reported $8,771 $7,630 $16,504 $16,015
Adjustments:
Share-based compensation
expense 249 139 398 863
--------- --------- --------- ---------
As adjusted $9,020 $7,769 $16,902 $16,878
========= ========= ========= ========= Operating Margins
U.S. GAAP as reported 20.1% 19.3% 19.6% 19.9%
Adjustments:
Share-based compensation
expense 0.5 0.3 0.5 1.0
--------- --------- --------- ---------
As adjusted 20.6% 19.6% 20.1% 20.9%
========= ========= ========= ========= GENERAL (UNALLOCATED) CORPORATE Operating Earnings
U.S. GAAP as reported $(4,196) $(5,282) $(7,589) $(9,647)
Adjustments:
Share-based compensation
expense 1,882 1,891 2,525 2,983
--------- --------- --------- ---------
As adjusted $(2,314) $(3,391) $(5,064) $(6,664)
========= ========= ========= =========
DATASOURCE: Varian, Inc.
CONTACT: Investor Relations of Varian, Inc., +1-650-424-5471, Web site: http://www.varianinc.com/
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