Varian Medical Systems 2010 Forecast Below Expectations

PALO ALTO, Calif., Oct. 29 /PRNewswire-FirstCall/ -- Varian Medical Systems today is reporting net earnings from continuing operations of $0.78 per diluted share in the fourth quarter of fiscal year 2009, up 15 percent from $0.68 in the year-ago quarter. Net earnings per diluted share from continuing operations for the full fiscal year 2009 climbed to $2.65, also up 15 percent from $2.31 in fiscal year 2008. The sale of the non-proton therapy portion of the ACCEL business earlier in the year and its resulting classification as a discontinued operation reduced net earnings per diluted share by $0.01 to $0.77 for the quarter and by $0.10 to $2.55 for the fiscal year.

"Our company has encountered a challenging business environment in North America, but we achieved excellent earnings growth for the quarter and the fiscal year as a result of mix shifts towards newer higher margin oncology products and services as well as successful ongoing initiatives to cut costs," said Tim Guertin, president and CEO of Varian Medical Systems. "Our Oncology Systems and X-Ray Products businesses each contributed to solid revenue growth for the quarter versus strong year-ago comparisons. Net orders increased with the help of the company's first proton therapy system order and continued demand for oncology products in international markets."

Oncology Systems

Oncology Systems' fourth quarter revenues in fiscal year 2009 totaled $527 million, up 9 percent from the same period last fiscal year. Oncology revenues for the fiscal year were $1.8 billion, up 8 percent from the fiscal year 2008 total.

"Our Oncology Systems business is weathering a climate of uncertainty in North America created by economic recession as well as the prospects of healthcare reform and reimbursement cuts," Guertin said. "Meanwhile, we have had a healthy year in the international oncology market. Oncology Systems achieved solid revenue growth and improved its margins through increased sales of software and services."

"X-Ray Products orders and sales grew with the help of demand for its new line of radiographic imaging panels," Guertin said. "Aftermarket X-ray tubes also contributed to growth in orders and revenues for this segment. A strong focus on cost control led to higher operating earnings for this business."

Fourth-quarter net orders in the Other category were $89 million, up $68 million from the year-ago quarter with strong contributions from the particle therapy and security businesses. As previously announced, the company was awarded a $62 million contract by Skandion Kliniken following a public tender to deliver the equipment for Sweden's first proton therapy system. "As is common in these public tenders, this award is being challenged by a competitor in Swedish courts, we believe that the award was proper and we booked the order during the fourth quarter," Guertin said. Including this order, fiscal year 2009 net orders for the Other category totaled $151 million, up $56 million from the fiscal year 2008 total.

Investor Conference Call

Varian Medical Systems is scheduled to conduct its fiscal year 2009 conference call at 2 p.m. PT today. To hear a live webcast or replay of the call, visit the investor relations page on the company's web site at www.varian.com/investor where it will be archived for a year. To access the call via telephone, dial 1-866-700-6067 from inside the U.S. or 1- 617-213-8834 from outside the U.S. and enter confirmation code 74581862. The replay can be accessed by dialing 1-888-286-8010 from inside the U.S. or 1-617-801-6888 from outside the U.S. and entering confirmation code 40919568. The telephone replay will be available through 5 p.m. PT, October 30, 2009.

Forward-Looking Statements

Except for historical information, this news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements concerning industry outlook, including growth drivers; the company's future orders, revenues, backlog, or earnings growth; future financial results; market acceptance of or transition to new products or technology such as RapidArc, image-guided radiation therapy, stereotactic radiosurgery, filmless X-rays, proton therapy, and security and inspection, and any statements using the terms "expect," "could," "believe," "estimate," "outlook," or similar statements are forward-looking statements that involve risks and uncertainties that could cause the company's actual results to differ materially from those anticipated. Such risks and uncertainties include the effect of economic conditions, including the current global recession; the impact of health care reforms, and/or changes in third-party reimbursement levels; credit availability for capital expenditures for cancer care; currency exchange rates and tax rates; demand for the company's products; the company's ability to develop and commercialize new products; the company's reliance on sole or limited-source suppliers; the impact of reduced or limited demand by sole purchasers of certain X-ray tubes; the company's ability to maintain or increase operating margins; the impact of competitive products and pricing; the company's ability to meet Food and Drug Administration (FDA) and other regulatory requirements for product clearances or to comply with FDA and other regulatory regulations or procedures; the ability to make strategic acquisitions and to successfully integrate the acquired operations into the company's business; the company's ability to protect the company's intellectual property; the potential loss of key distributors or key personnel; challenges to public tender awards; and the other risks listed from time to time in the company's filings with the Securities and Exchange Commission, which by this reference are incorporated herein. The company assumes no obligation to update or revise the forward-looking statements in this release because of new information, future events, or otherwise.

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

Web site: http://www.varian.com/